MONTHLY / YEAR END AND VAT RECONCILAITION / JOURNALS

Auditor General – When auditing a municipality, the Auditor General often queries the following:

Overstating / understating expenditure and income;

Fruitless expenditure not accounted for / disclosed;

Closing balance as per Trial Balance not in correspondence with SARS balance at year end (“SoA”);

Monthly VAT reconciliation;

Apportionment ratio – figures from the preceding year’s financial statements / Trial Balance can be used to compute the ration.

In order to prevent the above queries it is important to perform the relevant reconciliations and calculations as follows:

The main purpose of preparing monthly / year end VAT reconciliations and journals, is to ensure that the VAT control account as per GL / TB corresponds with information on SARS system / Statement of Account

VAT Control Account has to balance with SARS information (input + output + refunds + payments = VAT Control Account)

VAT201-returns (“monthlies”) / VAT review - do journals

PREPARING MONTHLY / YEAR END AND VAT RECONCILIATIONS

Obtain Input and Output tax figures from the General Ledger per tax period

Obtain copies of the VAT201-returns submitted to SARS

Obtain SARS Statement of Account

Compare the input and output figures from the General Ledger with the input and output figures reflected on the VAT201-returns to identify any variances

Analyze and journalise variances

Reconcile input and output figures from the General Ledger with figures reflected on the VAT201-return submitted to nil (journal)

Take the difference / balance between output and input figures on the VAT201-return submitted to the VAT Control Account

Credit VAT Control Account with VAT refunds / debit VAT Control Account with amounts payable

Prepare interest received / paid journals (if any)

Prepare assessment journals (if any)

Determine the closing balance at year end

Include prepared journals on file

ADDITIONAL COMMENTS

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Audit Analyst

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