BASICS of GST Audit

BASICS of GST Audit

There are several points which should be kept in mind before undertaking any GST audit. These points are not incorporated in State GST Act but are observed by us over a period of time. While reading this, please bear in mind that this is only an advice i.e. what to do in GST audit and how and when to initiate GST audit?

• Acceptance of GST audit assignment by GST auditor.

1.1         Whether GST auditor, eligible to conduct audit?

Before accepting any GST audit assignment, a GST auditor is expected to ensure that whether he is eligible to conduct the audit i.e. it must be checked that either there should be no ceilings in respect of number of audit assignment that an auditor can accept or if it is any ceiling, then he should be well within limits even after accepting such audit.

1.2         Communication of GST auditor with the member who conducted GST audit.

It is very important for a member accepting a GST audit assignment to communicate with a member who conducted the GST audit in the prior years.

The reason for such communication is to find out whether there are any professional or any other reasons as to why the member shouldn’t accept the appointment.

NOTE: A GST auditor is not required to communicate about his appointment or acceptance of an audit to the departmental authorities.

1.3         Letter of appointment

1. Letter of appointment must be in terms of ‘SA 210 – Terms of Audit engagement’ indicating the terms of the engagement, the scope and the extent of the coverage.
2. In case, joint auditors are appointed by the dealer, then the name and address of such joint auditor must be specified in the letter of appointment.
3. The letter of appointment may stipulate the fee or remuneration for the audit.
4. Letter of Appointment must be duly acknowledged by the GST auditor and accordingly a Letter of Acceptance of audit should be issued to the dealer.

Audit fees for GST audit

2.1         Basis for charging Audit Fee

The minimum recommended scales of fees for professional services issued by the ICAI from time to time may be adhered to. Normally, a GST auditor is expected to charge his audit fees based on:

• Quantum of work
• Scope of the engagement
• Personnel deployed.

2.2         Options which shall not be taken into account while deciding the criteria for audit fees.

Following options shall not be considered while deciding the criteria for audit fees:

• Turnover of Dealer
• Quantum of Tax paid
• Refunds envisaged
• % age of Trading Profits

Follow Us on