Sales Tax Instructions

Sales Tax Instructions, 2009
2. The principles set out in the handbook should be borne in the mind. The
following guidelines can be used by all auditors.
(a) A visit should be with the prior approval of taxpayer and where agreement
in not possible, an invitation should be extended to the taxpayer to discuss
any problem/ objection with a senior member of staff.
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Prior to an actual visit all available information within the Collectorate
must be collated and reviewed by the Auditor. Additionally, at the time of
making an appointment a request should be made for the latest financial
accounts to be forwarded to the office for perusal; experience has shown
that this is rarely complied although effort must continue.
On arrival to a taxpayer the Auditor should initially conduct an interview
with a senior member of the taxpayer‘s staff to determine the activities of
the business.
Only once the preliminaries are complete should the Auditor commence an
examination of the accounts and the first task in each case is for all
submitted returns to be reconciled to the books of account, going back to
the last audit conducted by the STW.
Taking account of the returns a representative period of the taxpayers
trading should now be examined in some detail. This need be no more than
say three consecutive periods (three months) but may well cover to such
three month periods.
Purchases should be examined to ensure invoices are genuine, as far as
possible, and are ‗tax‘ invoices purchases must also be for the purposes of
the business and have been properly entered into the accounts. Selection
based on experience, size of claim etc. should be employed. A random
element should also be sampled.
Sales should be examined to determine sequential completeness and
accuracy in terms of the tax liabilities etc., and additionally, that the time of
supply rules are complied with.
Both sales and purchases should be checked for arithmetical accuracy,
sufficient to give satisfaction to the Auditor that they are accurately
maintained.
Some sort of audit trail should new be established. For example in the case
of sales it should be possible to check some transit notes/gate passes to the
sales invoices and vice versa. In the case of purchases a check could be
made to the stock records and from the stock records to the purchases.
Orders for stock purchases could be examined and reconciled to purchases
etc. These are simply examples of what can be done and are not exhaustive.
Wherever, possible a relationship exercise should be conducted, e.g.
motorcycle engines purchased, delivery according to stock stored, the
number of motorcycles sold. This forms a very important part of an audit in
that it is a good indicator of the veracity of the accounts being examined.