The Use Of Performance Management In Hr Business Essay

The Use Of Performance Management In Hr Business Essay Performance management is a topic that cuts across traditional HRM boundaries, as it also has implications for employee development. Performance Management is seen as a dimension of employee resourcing and performance monitoring and review as part of the appraisal process. In many organisations, formal, systematic procedures are introduced to regularly assess employee performance, usually involving, at a minimum, an interview between a manager and an employee, with documentation of recorded performance. One major reform being undertaken in the public service is the development of a performance management system. Its primary aim is to improve performance by focusing on key areas of activity of the Ministry/department, teams and individuals through on agreed framework of planned goals, objectives and standards. 7.3 DEFINITIONS Noe et al. (2008) define performance management as the process trough which managers ensure that employees activities and outputs are congruent with the organisations goals. (This definition emphasises the need for performance management to be aligned to the strategy of the organisation). Performance management can be defined as a strategic and integrated approach to delivering sustained success to organisations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors (Armstrong and Baron, 1998). 7.4 MEANING OF PERFORMANCE Bates Holton (1995) pointed that performance is a multi-dimensional construct, the measurement of which varies depending on a variety of factors. They also state that it is important to determine whether the measurement objective is to assess performance outcomes or behaviour. Kane (1996) argues that performance is something that the person leaves behind and that exists apart from the purpose. Bernadin et al. (1995) are concerned that performance should be defined as the outcomes of work because they provide the strongest linkage to the strategic goals of the organisation, customer satisfaction and economic contributions. The Oxford dictionary defines performance as the accomplishment, execution, carrying out, working out of anything ordered or undertaken. Performance is about doing the work as well as about the results achieved. Performance can therefore be regarded as behaviour the way in which organisations, teams and individuals, get the work done. Campbell (1990) believes that: Performance is behaviour and should be distinguished from the outcomes because they can be contaminated by system factors. For Brumbach (1988), performance means both behaviours and results. Behaviours emanate from the performer and transform performance from abstraction to action. Not just the instruments for results, behaviours are also outcomes in their own right the product of mental and physical effort applied to tasks and can be judged apart from results. From this definition, we can conclude that when managing the performance of teams, and individuals, both inputs (behaviour) and outputs (results) need to be considered. This is the so-called mixed model (Martle, 1995) of performance management which covers competency levels and achievements as well as objective setting and review. 7.5 PERFORMANCE APPRAISAL AND PERFORMANCE MANAGEMENT What, in your opinion, is the difference between Performance Appraisal and Performance Management? Noe et al (2008) emphasises that Performance Appraisal is only a component of Performance Management as it involves the administrative and relatively isolated duty of measuring aspects of an employees performance. Performance Management is a broader concept than Performance Appraisal in that it provides not only for the measurement of performance, but the defining of performance according to organisational goals as well as the provision of performance feedback. Performance Appraisal (Performance Measurement Specification of Performance Criteria Performance Feedback Performance Management (Noe et al, 2008) 7.6 FEEDBACK Feedback is a method of communication, usually face-to-face with another person where the desired outcome is normally: Improved work performance. A maintenance of performance. A change of behaviour. To make another person aware of ones behaviour upon others. Performance Management is strategic in the sense that it is concerned with the broader issues facing the business if it is to function effectively in its environment, and with the general direction in which it intends to go to achieve longer terms goals. It is integrated in four senses: Vertical integration linking or aligning business, team and individual objectives. Functional integration linking functional strategies in different parts of the business. HR integration linking different aspects of HRM, specially organisational development HR development and reward. The integration of individual needs with those of the organisation, as far as this is possible. Activity 1 (i) Differentiate between Performance Appraisal and Performance Management as you see it in the local context. (ii) Discuss the importance of feedback in the management of performance. 7.7 PURPOSE OF PERFORMANCE MANAGEMENT Performance Management is a means of getting better results from the organisation, teams and individuals by understanding and managing performance within an agreed framework of planned goals, standards and competence requirements. It is a process for establishing shared understanding about what is to be achieved, and an approach to managing and developing people in a way that increases the probability that it will be achieved in the short and long term. It is owned and driven by line management (Armstrong, 2001). Activity 2 (i) Based on your experience of performance management within the organisation in which you work, what do you think is the purpose of Performance Management? Performance Management has three essential purposes: Strategic purpose. Administrative purpose. Developmental purpose. Strategic purpose A Performance Management system serves to link employee performance to the overall organisational strategy and organisational objectives. However, research has shown that very few organisations utilise Performance Management in a manner which supports the strategy of the organisation. The strategic purpose may be achieved through designing evaluation mechanism which define employee performance in terms of organisations strategy and goals. Achievement of the organisations objectives. Increased productivity. Increased profit. Motivation of employees. Administrative purpose Performance Management systems provide information which assists organisations with administrative decisions relating to issues such as salary administration (pay rises), lay-offs and promotion (Noe et al, 2008: 348). Pay related pay (increment, bonus). Developmental purpose Performance Management systems provide information about employee strengths and weaknesses and in so doing, identify employee development needs (Noe et al, 2008: 348). Identify Training Needs Activity 3 (i) Discuss the purposes of performance management in your organisation. 7.8 APPROACHES TO PERFORMANCE MANAGEMENT Hereunder are the approaches to Performance Management: The comparative approach. The attribute approach. The behavioural approach. The results approach. The quality approach. The multi-rated approach. Note: The different approaches to Performance Management have their own strengths and weaknesses. 7.8.1 The Comparative Approach The comparative approach measures an individuals performance by comparing his/her performance to the performance of others. Three techniques adopt the comparative approach: Ranking : Supervisor ranking his subordinates from best performer to worst performer. Forced Distribution : Where employees are ranked in groups. 3) Paired Comparison : Where the supervisor compares every employee with every other employee in the work group, giving an employee a score of 1 every time he/she is considered to be the higher performer. Activity 4 (i) Discuss the comparative approach to Performance Management in your organisational context. 7.8.2 The Attribute Approach This approach focuses on the identification of employee attributes (knowledge, skills, attitude and experience) necessary for the organisations success. The employee is measured against these attributes. This approach includes techniques such as: Graphic Rating Scales : Where the supervisor rates the subordinate on particular traits and characteristics. Mixed Standard Scales : Where the supervisor rates the subordinate against relevant performance dimensions. Activity 5 (i) Describe the attribute approach to the Management of performance in your organisation. 7.8.3 The Behavioural Approach The behavioural approach defines behaviours necessary for effective performance in a particular job. In assessing performance, managers identify the extent to which a subordinate has exhibited the required behaviours. Example: (i) Behavioural Observation Scale. (ii) Assessment Centres. 7.8.4 The Results Approach This approach is based on the belief that results are the one best indicator of how a subordinates performance has contributed to organisational success. Results-based techniques include: Management by Objective (MBO) where goal setting is cascaded down throughout the organisation and the goals become the standard against which an employees performance is measured. Productivity Measurement and Evaluation System (PROMES) which involves a process of motivating employees to higher productivity. Balanced Score cards which may be used to manage the performance of individual employees, teams, business units as well as the organisation itself. The appraisal considers four related categories: Financial. Processes. Customer. Learning. The balanced score card enables managers to translate organisational goals into business unit, team and individual employee goals for each of the above categories. 7.8.5 The Quality Approach The focus of the quality approach is on improving customer satisfaction through a customer orientation and the prevention of errors. The design of a quality-based performance management system should focus on: The assessment of employee and system factors. The relationship between managers and employees in solving performance problems. Internal and external customers in setting standards and measuring performance. Using a number of sources to evaluate employee and system factors. Activity 6 (i) Enumerate the essential issues of quality based performance management system in relation to an organisation of your choice. 7.8.6 The Multi-Rated Approach Many organisations adopt a 360-degree feedback approach to performance measurement where information on an employees performance is not only provided by the employees immediate supervisor, but by those people whom he/she deals with on a day-to-day basis (eg. customers, co-workers, subordinates, suppliers, contractors, consultants). (Snell Bohlander, 2007: 343). This approach allows employees to receive an accurate view of their performance as different people see different things. (Snell Bohlander, 2007: 343). This approach usually involves the administration of a questionnaire to a number of people with whom the employee interacts, in which they indicate how well the employee performs in a number of behavioural areas. (Noe et al, 2008: 497). 7.8.6.1 Strengths of the 360-degree Feedback Approach As the employee is appraised from multiple perspectives, the approach is more comprehensive than other approaches. The information produced is of good quality. There is an emphasis on internal and external customers as well as the team. Bias and prejudice is lessened as the appraisal is not dependent on one persons view alone. Feedback from people other than the manager contributes considerably to an employees development. 7.8.6.2 Weaknesses of the 360-degree Feedback Approach It is a complex system in that numerous appraisals need to be combined. It can be intimidating, resulting in resentment on the part of the employee being appraised. Appraisals from different individuals may be different and confusing. Considerable training is required to ensure that the system works as it should. Employees could undermine the reliability of the approach through colluding in terms of the appraisal which they are to give each other. 7.9 SUMMARY [ In this Unit, the definition and meaning of Performance Management has been explained. The purpose of performance management has been enumerated. The approaches to performance management have been discussed in details.

A Plan to Invest in Real Estate Despite the Recession Essay -- Real Es

The Great Recession has shuffled the deck of playing cards. Seasoned investors and first-time home buyers alike have been hit – and hit hard. The challenging and volatile real estate market has created a flood of distressed asset sales all across the nation. However, the flipside to the coin of disaster and distress is almost always opportunity. Now that I have acquired $150,000 in cash to purchase distressed real estate, my detailed strategy below outlines exactly how I will personally benefit, and perhaps more importantly, how the community I invest in will benefit. First I will outline the basics: what I would buy with the cash (distressed apartments), where I would buy (San Jose, CA), how I would buy (my investment strategy) and why I would buy (a personal profit analysis). Then, I will outline my plan to pay it forward – to translate my newfound experience to help other first-time investors safely and knowledgably purchase their own distressed assets. I will add value to the community through a three-pronged approach of live seminars, online outreach, and a mentorship program. PERSONAL BENEFIT What to Buy: Distressed Apartments To properly understand how I would invest the $150,000 for personal profit and community benefit, we must first understand what I would buy. While there are a plethora of distressed real estate assets on the market, from single family homes to multi-tenant retail centers, I believe the most feasible and simplest starting place for a first-time investor is residential apartments, one to four units. For most people, buying a home and renting it out, or buying a fourplex and renting it out is not as farfetched as buying the local distressed strip mall. One to four unit rentals are not only easy... ... of 20.34%. However, the community will be the real winner as I implement my three-pronged community contribution campaign of Live Seminars, Online Outreach, and a Mentorship Program. My plan will create a strong momentum of first time investors purchasing distressed assets and repairing the deferred maintenance. This grassroots movement will focus on repairing distressed assets and safe investment practices. It will create new demand for distressed assets, reversing the downward spiral of prices for such assets. It will also prevent future distressed asset meltdowns by teaching safe investing practices. Works Cited Nadji, Hessam. "2011 Apartment Research Market Report for San Jose Metro Area." Diss. Marcus and Millichap, 2011. Print. Nadji, Hessam. "2011 Real Estate Investment Research National Apartment Report." Diss. Marcus and Millichap, 2011. Print.

Great-Man Theory Essay

Introduction As I have read about it, a particular interest in my has been raising about the wonderful way many people has utilized their natural abilities as a medium of reunion and leadership. I found a string link between this gifts or skills these men had and their particular behavior in the time they lived. I would like to talk about the special characteristics that had to be present; more specific the building process of a divine individual, a prophet capable of guiding its people and the importance they have represented to humanity, whether realistic or not, since the theory has been around ever since. Great-Man Theory In order to get to know more about the theory of the great man, we should not ignore that this is a theory based on leadership. So, what is leadership? Scholars have defined leadership as â€Å" the process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task†. To my personal beliefs, leadership is: a medium to an end, it is a very particular tool with which gifted individuals in the interpersonal field can either alone or together command, guide, and lead another group of people towards completing an established goal by cheering, supporting and setting a relation with the subordinates based on a strong dose of trustworthiness. Now, the Great-Man theory of leadership according to Winston & Patterson (2006) refers â€Å"to the idea that leaders possess innately superior qualities that distinguish them from other people, including the ability to capture the imagination and loyalty of the masses.† In other few words, that leaders are born, not made. Winston & Patterson (2006) also quote that â€Å"a leader achieves influence by humbly conveying a prophetic vision of the future† meaning that he resonates with the follower beliefs and values in such a way that the follower can understand and interpret the future into present-time action steps. According to Leadership Central (2012) Dr. Thomas Carlyle a true believer of this theory would say that â€Å"effective leaders were a package of Godly motivation and the right personality.† Under this definition, the same Dr. Thomas Carlyle, this time quoted by Lapham’s Quarterly (2012) included as great-man leaders historical characters such as â€Å"Muhammad, Shakespeare, Luther, Rousseau, and Napoleon† undoubtedly amazing leaders that shaped their time. But, other many scholars – and I think I am going to take their side – refute this theory. Although Cherry (2012) gives a different definition, and I quote â€Å"the great man theory is a conjecture aimed at explaining the history of the effect of the great born men or heroes: people of great authority, thanks to their charisma, intelligence and wisdom have used their power in such a way as to leave a decisive historical impact† there is a powerful contradictory hypothesis quoted by Leadership Central (2012) in which they say â€Å"Herbert Spencer one the most forceful critics of the theory explains that the great-man theory is a nativist hypothesis of leadership† and in this approach, leaders cannot be made, but just born. Of course, the leader nativism is highly refutable, cultural skills are by definition highly refutable and acquirable only through human interaction and an environment conducive to the transmission of knowledge. Leadership Central (2012) focuses in that â€Å"many factors in life shape the individual’s skills to lead† and I believe their in the right position, since leaders are a product of society, which means leaders are shaped by the time they live in and not the way around. Let’s take another example of a another so called â€Å"great-man’ leader. This time we have John Fitzgerald Kennedy, a famous character not only in his home country, but around the globe. His incredible abilities as a leader are not put in doubt, though the fact that he was this good just because he was born that way for sure are. Although factors such as â€Å"your up-bringing, education, experiences are only modeling your leadership abilities† says Lapham’s Quarterly (2012), a person’s background and circumstances may have influenced what they are, it is only in their hands the responsibility of what they want to be. Other examples to refute this nativism theory are Stephen R. Covey’s paradigms shifts and rescripting. Since a paradigm is the way an individual perceives, understands, and interprets the surrounding world, â€Å"a paradigm shift is a change in thinking when we gain additional insight and understandings† (Covey, 1989). Anything could influence the way a individual thinks, and this individual could perform a rescripting process, proving that a person does not have to be born with superior skills to acquire a leader scheme, but he can obtain them throughout lived experiences. Cherry (2012) explains that the term â€Å"Great Man† was used â€Å"because, at the time, leadership was thought of primarily as a male quality, especially in terms of military leadership†. To make it clear, this leadership theory leaves behind women despite they could have innate abilities (I’m not saying this is the only ability they have) which is the basis of the â€Å"great-man† theory. For example, we have had great women capable of leading people, on the one hand the ex-prime minister of Britain, Margaret Thatcher also known as the â€Å"Iron Lady† which is the longest-serving British prime minister of the last century. We also find Oprah Winfrey, who not only is one of the most richest women in the world, but named also as the most influential women in it. So, was Dr. Carlyle in the right position, or is it the time he lived that did not allow women to arise as great leaders? Earlier when I gave my own definition of leadership and said that leadership is a matter of persons who can either alone or together exercise their leadership skills, I knew it was not only me, it results that Winston & Patterson (2006) think similar to me, since they say that â€Å"leadership may be provided by a group of persons†. Having said that, we can now refute another focus of this great-man theory concentrated in that leadership â€Å"can only be exercised by one person, the great man† (Cawthon, 1996). While some might say this is true, because most of companies, countries, or firms have one person as it’s head leader, well this is true. But, let’s face it there can not be more than one president in a nation, there can not be more than one president in a firm o company. Although there is the board of directors, which is the group in charge of every decision the company should take. All in all, yes, according to Cherry (2012) â€Å"you can find more individuals as leaders than groups as leaders†, but that does not mean, groups don’t exist, to the contrary, they exist more than ever, and a good example of that is the music group â€Å"The Beatles† which you can say was the most influential band of the last century leading into a simple cause millions of people. You can find also groups leading millions of people to manifest against the violation of human rights, more recently the group called Invisible Children Inc. who â€Å"only employs 43 people but with its movement has encouraged thousands more† to spread the word about Joseph Kony’s crimes (ICU, 2012). â€Å"Never doubt that a small group of thoughtful, concerned citizens can change world. Indeed it is the only thing that ever has† (Mead, 1970). I completely agree with Cawthon (1996) when he says that many people, of course â€Å"scoff at the theory, because it is anecdotal and unscientific†. At the end, the great-man theory does not have any credibility, because even though the ability to lead is directly linked to one’s personality, the belief that leaders are born and not made finds no veracity. In our times, it is meaningless to think of it as a viable explanation for a person’s skills in guiding, since it’s been proved that the this theory popularized in the 1840’s but suggested much earlier, only took into consideration men born in a social status that would allow them to lead regardless of their abilities, from there the hypothesis of the innate leader. Nowadays that particular matter has been changed, since a person’s background is not judged but instead their ability to be a leader is highly paid. As Cawthon (1996) says â€Å"Individuals in every society posses different degrees of energy, moral force and intelligence, and in whatever direction the masses might be influenced to go, they are always led by the superior few†. In the managerial world, Winston & Patterson (2006) say â€Å"a growing number of leaders from different parts of the world are being formed† so do not let people fool you when they say someone was born to be a leader, because given today’s uncertainty many so called traditional leaders are being superseded by those with best abilities to manage people. So, you better base your leadership skills in what you have learned, most importantly in what you truly are and let other people influence you before you can exercise a bigger influence on them, because leadership is doing the right things. Do not ever live upon other’s expectations, you are what you choose to be, for that, being a leader is not being born a leader living what others have scripted, but rescripting your life and forging yourself through stimulating yourself from experiences and knowledge acquired in life. After all If your actions inspire others to learn more, dream more, become more and do more, you are a leader. REFERENCES Cawthon, D.L (1996). Leadership: The great man theory revisited. Business Horizons, 39(3), 1-4. Retrieved April 7, 2012, from Academic Search Premiere. Cherry, K. (2012). The great man theory of leadership. Journal of Effective Management, 3(2), 10-17. Retrieved April 7, 2012, from Academic Search Premiere. Covey, S.R. (1989). The 7 habits of highly effective people. Provo: Free Press. Invisible Children (2012). More about us. Retrieved April 14, 2012, from www.invisiblechildren.com Lapham’s Quarterly. (2012). Great man theory. Retrieved April 7, 2012, from http://www.laphamsquarterly.org/voices-in-time/great-man-theory.php Leadership Central. (2012). Great man theory. Retrieved April 7, 2012, from www.leadership-central.com Mead, M. (1970). Culture and commitment. San Francisco: Natural History Press. Winston, B. & Patterson, K. (2006). An integrative definition of leadership. International Journal of Leadership Studies, 1(2), 7-14. Retrieved April 7, 2012, from Academic Search Premiere.

Study Of The Vat System In Ethiopia Finance Essay - Free Essay Example

Sample details Pages: 13 Words: 3825 Downloads: 8 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? Government collects revenue from different types of sources to invest for public services like education, health, road and infrastructure distributes equally to the public. This revenue will be the one in which it levies from different income is called a tax. A tax is a blood vessel of a country for development, most of developed countries their tax harmonies are very attractive and strong, the people are well known about the tax what and why you are pay, if you are not pay you accept like you didnt accomplished your duty even your right. Don’t waste time! Our writers will create an original "Study Of The Vat System In Ethiopia Finance Essay" essay for you Create order How ever in most Sahara counties like Ethiopia the people do not well understand about the necessity of the tax what and why you are pay, thats why the fraudulent and smugglers would be many and high developing country. Hence the problem of tax collection and assessment in Ethiopia is the gap between the taxpayers willingness to pay tax is as a major with different implementation and other problems by the tax collectors. In general in Ethiopia, where the awareness of taxpayers, the culture of paying taxes and the capacity of tax administrators appear poor. The tax system should be balance the economic activity and expected the people on the ability to pay a tax in proportion to their level of income. From the broad concepts of taxation the tax should be divided in to two major groups. These are direct and indirect tax, from these indirect tax the one in which highly Comprehensive that includes producers, wholesalers and retailers is the value added Tax (VAT). The value added tax (VAT) is a new tax system introduced in Ethiopia since 2003 as a Replacement to sales tax.This tax collects from domestic transaction and importation of goods. Where this tax is replaced the sales tax the assumption was the sales tax does not collect on added value, the value added tax minimizes the damage that may be caused by attempts to avoid and evade the tax and helps to ascertain the profit obtained by the tax payers and the tax initiates saving and investment because the tax is levied on consumable goods and services and does not tax capital and enhance economic growth and improves the ratio relationship between gross domestic product and government revenue. And has a proclamation, cites as a proclamation No. 285/2002. This paper will state the current main issues of VAT administration like organizational structure, staffing and training, Tax Payers Identification and Automation, invoicing and book keeping Requirements, controlling of filing and paym ent, Audit of VAT, Refunds management, penalties and cost of administration and compliances with its strength and weakness in Ethiopias as follows 2. OBJECTIVE OF THE STUDY How it works the Administration and compliance of VAT system in Ethiopia with its positive and negative during implementation of the current system and explains what compliance risks there are and why and how the risks occur over all those problems will be discussed and further the solutions shall be recommended in the report of study. 3. METHODOLOGY OF THE STUDY The study is gathered from different secondary data of annual reports and from assessment of different researches of administration of VAT system In Ethiopia by different Authors. 4. SCOPE OF THE STUDY The study is limited on the current of VAT administration in Ethiopian and compliance risks With its strength and weakness in which applies will be generalized. 5. DEFINITIONS A value added tax is a modern tax system and broad based .It replaces the sales tax, have two rates 15% and 0% with exemptions of the tax. The threshold is based on the annual sales of goods and services above 500,000 Ethiopia birr. Have two types of registration that is obligatory and voluntary registration, the voluntary registrants are registered when 75% their sales are supplied for VAT registered. The reports are monthly which provides in the declaration format whether it credit or nil. Any taxpayers who are not registered for VAT automatically payable to turn over tax (TOT). The exemption in VAT also applies in TOT. 6 .ANALYSIS (MAIN BODY) Value added tax in Ethiopia introduce in the year 2003 cited as proclamation No. 285/2002 which replaces the sales tax with the assumptions mentioned in the introduction part. The current Ethiopia Revenue and Customs Authority (ERCA) was Federal Inland Revenue Authority (FIRA) before 2008. During the period of FIRA the VAT would introduced and implemented in our country and still exercises after merging of FIRA and Customs Authority. The administration of VAT includes organizational structure, staffing and training, Tax Payers Identification and Automation, invoicing and book keeping Requirements, controlling of filing and payment, Audit of VAT, Refunds management, penalties and cost of administration all these activities are pertain to how applies and affects the government revenue and strategy properly will be describe as follows: 6.1 Organizational structure, staffing and training Ethiopia Revenue Authority should be taken an organizational structure for VAT to be implemented through the branches of the Authority and the staff recruited and trained during the preparation of the VAT introduced. Hence due the complication of the system in the Ethiopia case a special VAT unit in FIRA was setting up. Along this line, there were efforts to design the organization structure and to determine the number of staff to be trained and deployed. Some have been taken from the ex-sales tax unit, some have gone from the tax reform program and the Ministry of Revenue and some have been newly recruited. At present, the newly introduced Value Added Tax is administered by a newly established department located at the Mexico square and some branches in the country and by the Ethiopian Revenue and customs Authority. The new department in ERCA is answerable to the General Manager. The staffs are graduates of accounting, economics and the management profession. The organo-g ram and staff assignment is depicted in the following diagram. General Manager ERCA Tax Payers registration and Education Division (7) VAT DEPARTMENT Head (5) VAT Administration (2) Revenue Collection and Enforcement Assessment and Audit Division Revenue Accounts and Consolidation Diagram 1:- Organo- gram of the VAT Department By: Arega Hailu Teffera June/2004 Even though, the VAT is computerized, considering the current and future challenges, the VAT department requires additional personnel in all areas- taxpayer education and service, accounting and collection, enforcement and audit. Efforts currently underway within the Ministry and ERCA to strengthen the VAT administration, to improve service delivery, training of staff should continue to address the shortfall encountered. Specially, the administration should focus in strengthening its audit and enforcement wings. 6.2 Tax Payers Identification and Automation Taxpayer Identification Number (TIN) and VAT SIGTAS were implemented during 2000-2003. These systems have been operational by the FIRA and regional states and city administrations revenue authorities through country-wide network As earlier described the system introduced during Federal In land Revenue Authority where it is Ethiopian Revenue and Customs Authority (ERCA). The system is an important for efficient and effective tax and customs administration. Any taxpayer has only one identification number; this will be used for VAT purpose, for with holding tax, for property tax e.t.c. In our country case taxpayers couldnt used different identification number. Except The trade license number issued by Ministry of Trade and Industry Automation of VAT administration commenced with a simple software developed by a local IT firm. In an attempt to deploy better software that integrates the different functions and processes of VAT administration, the government entered an agreement with a Canadian firm known as CRC-SOGEMA in April 2003. The software development project, VAT SIGTAS, was finalized and made operational at the VAT Department during February 2004. Later on, the new software rolled out to the regional branches of the ERCA. It was also made operational in four regional states and two city administration revenue authorities following the delegation of VAT administration. Large taxpayers, started applying VAT SIGTAS in October 2005 upon the decision of the tax authority to administer all taxes of large taxpayers under one office. Previously the large taxpayers used to settle their VAT obligations at the VAT Department. The proper implementation of SIGTAS all taxes would help realize the following anticipated benefits of the project: increased revenues and enhanced control, better service to taxpayers, standardize practices throughout operational departments, reduction of non-value adding activities, real-time management (reminders , remittances, etc.), and Integrated management of all taxes (especially for audit). The regional and city administration tax offices are also using the new system for their VAT operations with the previous VAT functionalities provided unchanged. Efforts are underway to deploy SIGTAS all taxes, with certain modifications, in all regional states and city administrations. The CRC-SOGEMA has already conducted requirements study. 6.3 invoicing and book keeping Requirements Is a very important for issuance of invoices during transaction of VAT system these invoices are printed by registered printing press after getting approval from ERCA. The invoices are separately printed for taxable and exempted transactions. In addition to the printing of invoice recording are mandatory for every VAT registered and required separate of taxable invoice and exempted. The VAT proclamation stipulates that VAT registrants should keep records of account for at least 10 years. However, due to lack of tax administrators follow-up and control, lack of awareness among the society and the prevalence of poverty.these rules are not applied perfectly as to the law required many problems faced with getting invoices, using duplicated invoices, lack of consistency in using invoice, most business holds two books ;one for tax Authority and for Banks . usually the understated income holds book for tax Authority and the over stated book would be for Banks, Do not use invoices ap proved by the Authority, dealing with buyer to issue the lower price in the invoice , also issue fraudulent invoices using invented VAT numbers of their own and collect VAT for their own e.t.c. These will be paralyzing the function of revenue as a whole. In order to solve this problem of invoicing the ERCA gets the expiriance from Latine America to be used the electronical cash registered at retailer on a net work with the SIGTAS. 6.4 controlling of filing and payment According to proclamation No. 285, Article 26/1, every registerd person is required to file VAT return with ERCA for each accounting period and to pay the tax for accounting period by the deadline for filling the VAT return. Article 26/2 , the VAT return for every accounting period shall be filled no later than the last day of the calendar month following the accounting period, where as VAT on taxable imports is collected at Customs and made by C.P.O automatically. The VAT liability is computed based on the invoice credit method in that the registered person will remit the difference between VAT received and VAT paid during transactions conducted during the accounting period. ERCA made a controlling and filing of VAT using computerized system to administer VAT properly authorities use computer programs, namely: Standard Integrated Government Tax Administration System (SIGTAS) and Automated System for Customs Data Management (ASYCUDA). The computer programs are used to maintain t axpayer register and process VAT returns. Detection of non-filers seems to be carried out mainly manually. The authority tries to identify non-filers in collaboration with the Ministry of Trade and Industry. In Ethiopia every trader is required to renew business license annually with the pertinent offices under the Ministry of Trade and Industry or regional governments. To renew business licenses, traders are required to produce evidence from tax authorities that all taxes have been Paid. The tax authorities on their part, before providing the evidence to taxpayers, 6.5, Audit of VAT Auditing is a basic measuring of for effective tax collection, Audit of VAT in our country was very complicated before the introduction of computerized the tax system, due to different fraudulent of using invoice as mentioned in the above invoicing and book keeping requirements. However, the audit case by the audit selection committee. The selection criteria include; credit declaration, nil VAT declaration, non filers, unusual VAT filing and information obtained from third parties and customs decleracion. Based on the above selected criteria would be subject to audit. Most of VAT registrant provides monthly report as credit or nil. This is the effect of tax evasion by the taxpayers. All these problems affect the potential of revenue this would be due to lack of taxpayers awareness, human resources auditor in particular, the number of VAT registrant compare to auditors or the employees in tax authority is very low they cannot cover by the actual current employees in the ERCA. 6.6 Refunds Management The VAT proclamation No. 285/2002 Article 27/1 stated that at least 25% of the value of a a registered persons taxable transaction for the accounting period is taxed at zero rate, the ERCA shall refund the amount of the VAT applied as a credit in excess of the amount of VAT charged for the accounting period within two months after the registered person files an application for refund, accompanied by documentary proof of payment of the excess amount. The second Article 27/2 relates to unused excess credit. For non-zero rated transactions, the amount of VAT applied as a credit in excess of the amount charged for the accounting period is to be carried forward to the next five accounting periods and credit against payments for these periods. The registered person can claim refund if it has still unused excess credit at the end of the five month period. Refund claims are subject to checks and audit by the tax authority. In view of promoting export supplies, the tax authority effects VAT refund for exporters in 15 days after checking and verifying the documents presented to it. 6.7. Penalties Taxpayers that are not compliant to the VAT law are subject to administrative criminal penalties. According to the VAT proclamation, articles 45-47 administrative penalties are imposed while persons are not registered for VAT where registration is required, when any registered person issued incorrect tax invoices, where invoices are issued without being registered, where there is underpayment and late filing of returns. Administrative fines range from a fine 100 percent of the amount of tax payable and a fine of up to 50,000 Birr. According to articles 48-59 criminal offences are liable to prosecution. A tax offence is a violation of the criminal law of the country and thus is subject to criminal charge and prosecution. Tax evasion, obstruction of tax administration, failure to notify changes in business address and business line, unauthorized VAT collection, improper tax debit and credit notes, aiding or abetting, offence by entities, offence by tax officers, offence by receive rs are liable on convection to monetary fine of Birr 1000- 200,000 and imprisonment of not less than 1 year to not more than 15 years depending on the gravity of the offence. 6.8. Cost of Administration In the case of Ethiopia the cost of VAT administration must be proportional with professional standards of like developing countries. The researches indicate in most developing countries cost of administration estimates the range between 1 2% of collection. Actually low collection may not reflect efficiency but rather indicate unused of resources may occurred. In our country the administration costs are: salaries and wages and top-ups to staff deployed to VAT department, the cost of fixed assets and consumables including telephones, faxes, internet, electricity and power, fuel and lubricants etc. Since customs collects duties and taxes in a single administrative document, i.e. the customs declaration, it is very difficult to apportion the cost of administration for VAT all these costs are the total consumable of ERCAs administration cost for VAT (the above costs are only for VAT actually expend ). Therefore when take 2003 2004 FIRA Customs report the total cost of administ ration for VAT was 9,718,848 birr and total collection of VAT during the year would be 5,234,730,000 birr, so total administration cost was 0.00186 this is under the standard from the point of professional standards sited. ( I think this information is too late, but it can see or indicate the current performance, how ever now a day there are a lot changes to use resources effectively like the deployment of automation, recruitment of employees by allocate more budget how ever, it is not researched, but still it has a limitation) (Source: FIRA and Customs- Administration and Finance, Budget for 2003/2004 fiscal year.) Tax Payers Compliance From any taxpayer that expected they must comply with the laws and regulations of tax and customs duty. How ever as an employee of tax and customs authority the real situation of the taxpayers behavior is not what we are expected them. They are not complying with the tax and customs law. For instance with the fulfillment of the VAT registration requirement, timely reporting with the actual transaction they did, using authorized VAT collection, making true financial statement for tax purpose, providing the correct VAT invoice for any client e.t.c. consider the above issues; most of our taxpayers are not compliance. This would be faced in daily activity during tax and customs assessment and collection. Even there is a positive improvement to comply with law in changing the taxpayers attitude through different way of awareness creation. Strength on VAT administration When ever the VAT administration in Ethiopia has a problem, but there are positive actions are taken off by the Authority to facilitate the tax and customs servies with strong enforcement for non compliance taxpayers. Basically the Authority pursued the reform program in order to achieve the main objectives that are tax policy and administration reform, and customs reform and modernization. From the reforms the tax policy and administration reform have a result during the implementation would be : income tax law that was in force for more than 40 years was replaced in July 2002; VAT was introduced on January 1, 2003 to replace sales tax. Turnover tax was introduced on January 1, 2003 to apply to those taxpayers whose annual turnover is below VAT threshold. Excise tax was rationalized to more accurately reflect the current market situation. National implementation of the TIN network through the installation of communication equipment at FIRA, and City and Regional administrations sites. And taxpayers were registered for TIN. The replacement of the estimated assessment method with the more standard assessment method in order to achieve equity and administrative efficiency in connection with presumptive taxation. Tax collection and audit manuals prepared and put in use. Large Taxpayers Office and VAT Department established. Operational departments are automated as part of the modernization of the FIRA. TIN system interface with the Ethiopian Customs Authority is operational.(before merging the two Authority) Using this in mind the strength way of FIRA, currently ERCA would be perform many activities to improve services delivery and the potential of revenue on VAT administration. Thus are; The reform introduced during FIRA would take as a base to perform effectively and introduced BPR. Make extensive consultation with stake holders, comprehensive taxpayers education program and aggressive advertisement campaign. strongly used of computerized tax and customs system ( SIGTAS, TIN, ASYCUDA ++) Create positive attitude for the tax collector with good payments. Conducted comprehensive trainings on the VAT law, regulation, directives and administration techniques for tax officers drawn from different area of the country. Create strong enforcement unit on VAT 7. Measures were taken to enforce registration: for non compliant 8 Administrative and criminal cases are strongly followed-up 9. Strongly applied deterrent provisions: penalties and prosecution e.t.c, thus would be Taken to improve performance of VAT administration. 9. Basic Weakness 1. Lack of strong and follow up for non complaints 2. Lack of human resources specially VAT auditors 3. Lack of taxpayers awareness. 4. In some lack of ethics . Although VAT was successfully introduced in Ethiopia due to adequate preparations, different challenges have been faced in implementation as I have stated in VAT administration. In general ERCA faced the following challenges in VAT administration still- Resistance against VAT registration, Failure to register due to the prevalence of large informal sector, Low level of tax awareness, Suppression of taxable sales, Failure to issue invoices during transaction, Negotiate with customers during transaction to account VAT or not, Print and use of identical invoices, one registered by the FIRA and the other not, Issuance of fictitious invoices among related persons without actual transaction to overstate input VAT and claim refund, Prevalence of significant number of constant credit filers, n il-filers and non-filers, Non-remittance of VAT collected, Prevalence of missing traders, poor audit and enforcement capacity of the tax authority, and Mal-practices in the administration aspect. Recommendations From the above study I recommended as following: Recruit quality and quantity of human resource to be deployed and Training and development for staffs who will join and who have already joined. All liable businesses registered for VAT in all sectors of the economy must be registered and it needs strong and practical monitoring and controlling system. that fall within the threshold should be identified and an action to be compliant.. Must be apply frequent audit system ,donot delay the auditing. Due to lack of auditor, the auditors must selective based on the size of the business with return of tax from these. Make consistent tax educations for taxpayers in each tax Authority to create awareness. Create ethical tax servants e.t.c All the basic challenges that mentioned must be change and improve with substantial monitoring and controlling effort. Conclusions Ethiopian Government committed to improve the tax harmony in each stage of the tax authority by allocating resources with the efforts of ERCA. The effort which applied is the introduction of tax reform in Ethiopia. The Government introduced the VAT since 2003, mainly to broaden the tax base, and to compensate for revenue loss as a result of duty reduction at customs, to reduce distortions by other indirect taxes, and to encourage trade and investment. With the challenges that already stated, the performance of tax from VAT would be increase. For the increasing of VAT collection the introduction of IT has great role. The implementation of SIGTAS increases revenue collection, Real-time Management of Non-compliers, Facilitation of Assessments and Reassessments, Prompt Calculation of Penalty and Interest, Provision of Better Service to Taxpayers, these are facilitated the collection of VAT progressively. Appreciating the role of IT in VAT administration, during FIRA decided to au tomate the administration of all taxes in an integrated manner. Thus, the functionalities of VAT SIGTAS were extended to embrace the other taxes and ERCA would be catch-up the system and implemented successfully. SIGTAS all taxes was tested at the Large Taxpayers Office in August 2006. Currently, all tax centers of the FIRA are using SIGTAS all taxes software. The application of SIGTAS has been instrumental in improving the efficiency and effectiveness of the tax administration. And Extensive consultation with stakeholders, comprehensive taxpayer education programmed, aggressive advertisement campaign and an intense registration drive did help the tax authority. Over all the experience of Ethiopia in automating tax administration, including VAT, shows that success in IT implementation is mainly dependent upon: aggressive implementation as per schedule, strict control over procedural issues, active action in case of peculiarities, monitoring and feedback, continuous manpower de velopment, timely provision of hardware and supporting services, and proactive and genuine participation of every member of the tax authority.