The objectives of audit are Accuracy, Completeness and Validity. Through interviews obtain understanding of the process applied in accounting for VAT. Ensure that the following Audit Procedures are observed; clearance guidance is available to all staff processing accounts payable, VAT returns have been completed and submitted in time, regular independent checking and reconciliation of tax summaries and tax analyses back to total tax values are processed through source systems, review the reconciliation performance when accounting for the input and output VAT.
Obtain a download from JDE and verify the sales order processing system which automatically generates correct tax values by reference to the particular customer or type of goods or service. Correctly calculate VAT based on the rate applicable. Select a sample of the accounts payable and verify the payment based on an original invoice clearly marked, see that the supplier is registered for VAT; the goods/services qualify as taxable supply. VAT is correctly calculated, invoices supporting expenditure all checked and are in a valid format and that the company is reclaiming input tax.
The Computer system validates integrity of VAT numbers. Download the customer master file and investigate whether all are set up for VAT for the correct rate as per country. Perform system integrity checks on VAT indicators on the system menus. Audit acquisition and disposal of capital assets and/or improvement transactions processed during the period under review. Re-perform VAT calculations for fringe benefits and entertainment and other such transactions processed which should be non-vatable etc.