GENERAL

Supply the following when returning the checklist: YES NO

copies of all VAT201-returns;

copies of Annual Financial Statements/ Annual Reports;

copy of SARS Statement of Account (“SoA”) for the period under review indicating:

VAT 201-returns submission dates

VAT charges and collections

VAT payments

VAT refunds

SARS Letters of Assessments and all SARS correspondence for past 5 years

PART A – INPUT VAT

RECONCILIATION

Reconcile input and output VAT account as per financial system with SARS VAT201 and returns

Reconcile 100%

Investigate reasons for not reconciling

Print summary of reconciliation

AUDIT

Perform audit

Obtain copies of ALL tax invoices to substantiate your claim

Notional input tax credit on second-hand goods: auditors must be aware that a notional input on second-hand goods can be claimed from non-vendors. When pertaining to fixed-property, this notional input tax credit is no longer limited to the transfer duty paid as from 11 January 2012, but it will be the tax-fraction of the amount paid for the second-hand good property.

Section 16(3)(h) adjustments: auditors should be aware that when client has a ratio, and fixed assets are sold in mixed departments, the client must declare full output tax on the sale of the goods, but the vendor can claim a section 16(3)(h) input deduction.

[Applicable when dealing with ratios]

The above principle is also applicable with the sale of mixed going concerns, in other words where there is a going concern sale which has mixed used supplies (both VAT-able components and non- VAT-able components), there could be a possible section 16(3)(h) deduction that the seller may claim back. [Draft Note 57-examples]

Any specific areas of concern that the client might have

Petty Cash – Check all slips for VAT or registration number. Parking, flowers, toll fees, postage, repairs and maintenance, stationery, cleaning etc

Parking/ Toll fees – Airport parking, petrol cards, payroll

Postage, Franking and courier services – stamps, courier services, customs VAT on Imports

Flowers – Florist, office plants

Travel/ Entertainment – Air ticket stub, travel agency, payroll

Bank charges – Usually marked with # on bank statements

Debit Orders – Monthly payments. See contract or obtain invoices

Rentals – Property, forklifts lease, use agreements if no invoice. Check for escalations

Insurance – Short term. Vehicle, self insurance, excesses

Direct payments – Internet payments, electronic payments, bank statements

Conference/Seminars – Invoices

Fleet management/Petrol Cards – Oil, R& M, Toll fees

Diners/Credit card purchases – Accommodation, meals away, parking, toll fees

Vehicles – Claim non-passenger purchased, no output declared when passenger vehicle sold, repairs and maintenance

Lease Hire Vehicles – Non-passenger, repairs and maintenance

Building Repairs & Maintenance – Registered suppliers, Invoices

Diesel Refunds/Rebates – E.g. Mining, farming sector – must register, check formula, 201

Club-Cash/Prizes – Competition expenses where members pay a joining fee, non-staff

Bad Debts – Fraud – Ruling 318, claim input

Subscriptions – Professional bodies, magazines in relation to business

Imports and Exports – Claim as per import documents, exports zero-rated, no output declared

Debtors Stock – Damages, returns, pricing. Credit notes issued?

Journals – Adjustments and corrections, debit orders, manually done, check calculations, discounts, direct payments, provisions, deposits, pull all journals

Duplicate Payments – AP, monthly payments, yearend payments

Negative VAT-Creditors – Reversals, <14% claimed

Negative VAT-Debtors – Reversals, >14% declared

Settlement Discounts – Terms stipulated on invoices?

Employment Agencies – Claim inputs

Inter-company expenses – check split payments, where is payment made

Royalties – Establish is applicable

Fringe benefits – Income tax deduction

Goods / services for which VAT cannot be claimed (Exposures):

Entertainment

In respect of any fees or subscriptions paid by the vendor in respect of membership of any club association or society of a sporting social or recreational nature;

In respect of any motor car supplied to or imported by the vendor;

Petrol and diesel purchases;

Non-taxable suppliers – exempt Section12;

Staff refreshments;

Any type of passenger transport, or rental passenger vehicles;

Interest paid on loans.

REPORT

Create claim sheets specifying claim numbers and indicating audit findings

Write the Reconciliation and Reducing of the Value Added Tax Liability Report

Reference numbers on the report MUST refer back to the claim schedules

Send report to Anne for proof reading and formatting

Sign off report

Arrange meeting with contact person to discuss findings

Confirm that claim has been submitted by Client – must include copy of VAT201-return

ADDITIONAL COMMENTS

Team leader Signature Date

Audit Analyst Signature Date