Final report : USAID/Omnimax fiscal administration project

The report covers the period 1985-4/90. The project design was overly ambitious in the extreme, especially given the resistance to change within the DGR management. While extensive efforts were made in training, these efforts had little impact on management operations. For example, all audit management and supervisory personnel were given management training through courses in Ecuador and abroad, supplemented by many seminars, while 237 auditors participated in a local technical course. Nonetheless, little change in attitude of the personnel occurred. Several programs introduced to strengthen the audit system were flatly rejected by managers whose vested interests were presumably too strong to overcome. These improvements include programs for limited audits and rapid auditing of referrals from the revenue agents; a time and case reporting system; an office audit function and program; and special audit programs for businesses filing sales tax returns. While the project"s constant prodding appears to have resulted in a slight increase in audits from 1984 to 1986, production declined in 1988. Similarly, in the administrative component, programs to target stop-filers and non-filers were not fully accepted by project- trained personnel and produced only spotty results. The component to reorganize the DGR was also constrained by reluctance among management personnel to adopt modern management methods, despite many seminars and 4-week training courses in the United States (provided by the Internal Revenue Service) and a third country. The component also suffered persistent delays in securing computer equipment due to the GOE"s failure to facilitate customs clearance. These delays also affected the component to restructure the processing system, and the targets in this area were not achieved. The target of establishing a professional inspection service has been achieved. Initially, support for acting on the results of investigations was weak, but with the change in government in 1988, this support was significantly strengthened. The public relations program established under the project has been limited to serving as a conduit between the DGR and the Ministry of Finance with no real authority of its own.