- Crosscheck with other statutory data:- Where details are maintained under Central Excise, Customs or State excise, the auditor is to correlate those details and report material differences. This avoids data inconsistency and serves as a fraud check if done the right way.
- Uniformity in activity codes: Unlike the income tax return which has limited set of activities, Form 704 asks for the activity code based on SIC/NIC classification. This would help analysis and statistics.
- Radio buttons in several areas(tax officer jurisdiction, signatory) ensure that the data quality is good and that the form filler is reminded of the law.
- Emphasis on certification:- The auditor needs to give 16(!) certificates and there is a space provided in the excel sheet if he has reservations for any point. This is much more easier for the Dept and allows aggregate level analysis on systemic non compliance
- Asking Bank account numbers:- This is probably to cross check receipts with the return in case there is need for scrutiny.
- Reconciliation of gross turnover with books of account:- This step would ensure that the Dept knows which area to cross check and it won;t need to ask that same explanation each time
- Fraud check:- To guard against carousel fraud/ghost dealer, the auditor is explicitly asked to certify
- Due professional care was exercised while auditing(really this is expected from any CA)
- Based on the observations of business processes, practices, inventory stock and A/c books, the dealer is dealing in the commodities under audit AND sales tax related records fairly represents the business. These checks are a signal for CA to apply some forensic accounting.
Wednesday, December 22, 2010
Maharashtra VAT(MVAT) tax audit report_interesting features
While going through form 704(electronic version) available at www.mahavat.gov.in, I noticed the following