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Audit Procedure

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Audit Procedure

MP/OPS/PRC01

21 June 2021

AUDIT PROCEDURE

Purpose:
This document aims to indicate the procedure that needs to be followed by the Audit department to conduct and execute a successful Audit Project on time.

Application:
This document is applicable to the Audit Team.

Input:

Document Number:

Document Name:

MP/OPS/PRC01/01

Audit Procedure Manual

MP/FN/PRC03/01

Invoice Request Form

Introduction:

The Audit department forms part of the core service of the company. The Audit procedure is a twofold process consisting of your Monthly VAT201 submission on behalf of the client and conducting a VAT review and assessment of the previous financial periods. The procedure is split according to the following:

Core:

VAT201

VAT Reviews

Assessments

Objections and Appeals

Year-End Recons and Auditor General assistance Supporting functions:

Accounts Payable

Data

Reporting

Auditors will use the Audit Manual as a guideline and checklist that must be following for each Audit / Project. In all circumstance, the procedure detailed below must be read in line with the Audit Manual.

Client Engagement

The HOO's will receive a confirmation and Letter of Appointment once a new client is obtained. The HOO's will arrange a Kick-Off meeting with the client and will be accompanied by the Data Manager and other relevant parties as deemed necessary.

During the Kick-Off meeting, the following will be discussed and confirmed:

Scope Clarification

Project Start Date

Audit Procedure

MP/OPS/PRC01

21 June 2021

Data Requirements (As per the DATA Procedure)

Project Time Frames

Team allocated to the Project.

Contact details of the client and that of the Project Team.

Once the above is completed and confirmed, the Project Team can proceed with the Audit.

Audit Procedure

VAT - 201

Request Data from the Data Department as per point 3 in this procedure.

Once Data is received, the Auditor must Link the Data and prepare Audit Schedule as specified in the Audit Procedure Manual.

Ensure that you have all the relevant supporting documentation (Bank Statements / Tax Invoices and Income Reports) for the relevant period as per the Audit Procedure Manual.

Ensure that the final working papers include all the relevant Audit Notes, VAT numbers and Bank Dates.

Ensure that the Output VAT on all Taxable Supplies are correctly accounted for.

Ensure that all claims are compliant in terms of S20 of the VAT Act before final submission is made.

Retrieve and validate the valid invoices form the AP System and include in the final working papers.

Final Submission of the VAT201 must be done on or before the 25th of every month.

Auditor Manager to escalate any queries or late submissions to the HOO's by latest the 24th of the month to avoid non submission of a VAT201.

Submission to be done via e-filing and proof of submission to be sent to the client and include reviews@maxprof.co.za on the 25’h of every month as per Annexure A.

The proof of submission along with the relevant supporting documentation to be saved on the Server.

Extract the schedule for all the non-compliant Tax Invoices and send for upload to the

Data Department, Rika van Heerden by the 26 h of every month.

In the event that the period is selected for verification by SARS, the Auditor must upload all supporting documentation on e-Filling as per the request from SARS on the 26th of every month.

WIP report — last day of the month

Update Client Portal by the 26’h of the month.

Audit Manager to monitor refunds daily and submit the invoice request to the HOO's as soon as the refunds are released.

Audit Procedure

MP/OPS/PRC01

21 June 2021

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Review

After receiving an appointment letter, schedule a kick-off meeting with the client.

Before the review can start, ensure you have requested the following:

VAT201

SARS SoA

AFS

Monthly VAT workings

SARS Login details

VAT217 and all SARS correspondence

Request the following information from the Data department as per point 3:

GL extracts

Excel bank statements

Income reports

Once Data is received, the following steps need to be followed in terms of the audit

manual:

Reconciliation

Calculate VAT Apportionment Ratio

Perform VAT Link

Exceptions (Income & Expenditure)

Present to the Audit Committee for review and approval.

Once approved by Audit Committee, the onsite audit can commence

Arrange the onsite visit and schedule a meeting with the CFO to provide progress on

the audit.

Commence the on-site audit as per the Audit Manual.

Ensure that the final working papers include all the relevant Audit Notes, VAT numbers

and Bank Dates.

Ensure that all claims are compliant in terms of S20 of the VAT Act before final submission is made.

All invoices scanned must be clear and all information must be visible.

After on-site audit, prepare the findings report and supporting schedules.

Audit Findings and Findings Report to be presented to audit committee for review and

approval.

Extract the schedule for all the non-compliant Tax Invoices, and send for upload to the

Data Department.

Schedule a meeting with the client to present the Findings Report

Final finding reports to be sent to the client and include reviews@maxprof.co.za as per

Annexure A.

Follow up with the client to ensure that the claim is reviewed and submitted by the client in the next VAT201 period.

Obtain proof of submission from the client by means of the SARS SoA.

Provide assistance and support to the client in the event that SARS selected the period for verification.

The proof of submission along with the relevant supporting documentation to be saved

on the Server.

Audit Procedure

MP/OPS/PRC01

21 June 2021

Maximum Pi“ofit Fiecov ry

WIP report — last day of the month

Update client portal continuously

Audit Manager to monitor refunds on a regular basis and submit the invoice request to the HOO's as soon as the refunds are released.

Assessment / Objections and Appeals
Once an Assessment is raised by SARS, The Audit Manager must inform the HOD's of the Assessment.

The Audit Manager must investigate the reason for the Assessment and collect all supporting documentation / information to prepare an Objection as per the Audit Manual.

Audit Manager to present the Objection to the Audit committee for approval before submitting to SARS.

Audit Manager to follow up and monitor the status of the Objection and provide feedback to the Audit Committee.

If the Objection is disallowed, the Audit Manager will commence with the Appeal Process as per the Audit Manual.

The Audit Manager to present the Appeal to the Audit Committee for approval before submitting to SARS.

The Audit Manager must follow up on a regular basis on the status of the Appeal and report back to the Audit Committee.

Audit General Queries
All AG queries will be reviewed by the Audit Committee before a response is drafted.

Audit Manager / Audit Team to ensure that they are in regular contact with the client and request all AG queries to be forwarded to MaxProf.

Once a query is raised, the Auditor to ensure that they have the contact details of the AG Auditor to effective and timely communication.

Any AG queries must be treated as High Priority and will draft a response as soon as a query is received.

The Audit Manager will immediately request a meeting with the Audit Committee and Andiswa Matutu to present the draft response.

Once all parties reviewed and approved the response, the Audit Manager will submit to the AG.

Procedure Acceptance

Director

Date

Signatqre

Audit Procedure

MP/OPS/PRC01

21 June 2021

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Annexure A: Email template for sendinq out Findings Report to clients (Review) Hi Hettie,
As discussed teJephonically/in our meeting/in our Teams meeting, please find attached Findings Report 3, with below summary of attachments:

Findings Report 3 — R2,528,396.56

Annexure A — Reconciliation

Annexure B — Apportionment Ratio

Annexure C —2019/2020 Input VAT Claim Schedules

Annexure D —2019/2020 Output VAT Claim Schedules

Annexure E —2019/08 Assessment Claim Schedules

Please also find below link to all supporting invoices scanned electronically: https://www.maxshare.com/Metsimaholo Lu/2o1e2oz0 Review

After verifying the claim, will you please include the savings of R2,528,.396.56 under Field 18 in the 2020/09 VAT201 return.

Thereafter, it would be appreciated if you could forward us a copy of the VAT201, VAT workings and SARS Statement of Account as proof of submission.

Should SARS select the period for verification, MaxProf will assist with the information to be uploaded and any further SARS queries.

Please do not hesitate to contact us, should you have any queries. Regards.

Email template for Refundable Submissions:

Hi Busi,

The attached information for tax period 2020/01 refers:

Input VAT Schedules

Output VAT Schedules

Clearing Journals for the Month (Input VAT & Output VAT clearing to the VAT Control Account)

T-Account

VAT201 Return Submitted

SARS Statement of Account

The refund for tax period 2020/01 amounts to R123,456.78.

Option 1 — Please be advised that this tax period has been selected for verification. We are in the process of furnishing SARS with the relevant burden of proof. Further communication regarding the refund will follow.

Option 2 — please be advised that this tax period has not been selected for verification. Further communication regarding the refund will follow.

Should you have any queries please do not hesitate to contact us. Regards

Audit Procedure

MP/OPS/PRC01

21 June 2021

Email template for Payable Submissions:

Hi Busi,

The attached information for tax period 2020/01 refers:

Input VAT Schedules

Output VAT Schedules

Clearing Journals for the Month (Input VAT & Output VAT clearing to the VAT Control Account)

T-Account

VAT201 Return Submitted

SARS Statement of Account

Will you please arrange for the payment of R698,765.49 to be made with reference: 4000142473VC202017. The payment has been loaded onto FNB Banking, awaiting for Authorisation.

Please note that Friday (28.02.2020) is the last day to make a payment in respect of the 2020/01 VAT201 return. Failing which you are advised that Penalties and Interest will be levied automatically by SARS.

Should you have any queries please do not hesitate to contact us. Regards.

Annexure B: Authority Matrix

Audit

Director

HOD

Audit Team Planning / Resource

Allocation

Sign Off / Audit Committee

Plan & Submit for Approval

Audit Findings Report / Audit

Workings

Sign Off / Audit Committee

Compile and generate report /

Confirm all workings

Assist / Prepare

Submission of Audit Finding

Reports / VAT201

Submit to client

Assist / Pre are

Assist / Prepare

SARS Objections & AG Queries

Sign Off / Audit

Committee

Prepare Objections / AG Response for Sign off

Assist

Authority to initiate an Audit Project

Kick of Meeting

/ SoW Identification

Authority to stop/pause/cease and

Audit Project