Sales Tax Instructions

Sales Tax Instructions, 2009
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.
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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.
Where possible conduct a Bank reconciliation, although within a limited
time frame this may not always be possible. Close questioning at the outset
regarding the treatment of payments cash and other and the procedures
followed may be more fruitful.
Taking into account the type of business to establish the value
addition/mark-up. Do not forget that expenses are not confined to those
purchases with sales tax, e.g. salaries, rent etc. Consider whether this is
reasonable.
If the financial accounts were not available prior to the visits obtain a copy
and conduct basic checks-reconciliation of returns to revenue etc. not
forgetting the ‗other income‘ heading check also that where assets have
been sold off tax has been accounted for.
3. Report writing is as an important a feature of an audit as the audit itself.
It not only assists the next auditor but also acts as a safeguard for the auditor. If errors
are subsequently discovered the report protects the auditor against any accusations of
wrongdoings.
It is necessary in the body of the report to state what areas have been examined, what
invoices checked, relationship exercise conducted etc.
It is not necessary to list those not checked since they will be indefinable by omission. Not
all of the checks recommended in these Guidelines may be possible in the time allocated which
makes a comprehensive report all the more necessary.
4. It must be recognized that a sales tax audit is not a complete audit along with
say the lines normally conducted by an external auditor inevitably there will be areas not covered
on such a brief audit.
Should an Auditor discover some area of concern he should develop the audit in that
area until he is satisfied that the error / concern has been properly explained or quantified. This
should be the exception rather than the rule.
It is also not unreasonable to request assistance of the taxpayer in quantifying the error.
5. The completion of the relevant computer input forms by the Auditor is
mandatory. These signify the commencements and completion of an audit.
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