Internal Financial Control

Internal Financial Controls-

Audit Check Point

‘Internal Financial Controls’ means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including

  • Adherence to company’s policies
  • Safeguarding of its assets,
  • Prevention and detection of frauds and errors,
  • Accuracy and completeness of the accounting records, and
  • Timely preparation of reliable financial information.

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Auditing has three main phases:

  • Planning
  • Execution
  • Wrapping up

Initial Phase of Audit will include as below

  1. Scope Agreement with the client for the Audit
  2.  Business Process, Modus Operandi & Time Line  to be finalized with clients
  3. Key Business Owners identified with respective Processes.
  4. Document of the current business processes in a  narrative or a flowchart form
  5. Determination of relevant risks w.r.t to the functioning of the business.
  6. Tests for the controls to be covered under given Audit

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GST Notice

GST Notice & Scrutiny

State GST Department of Karnataka has started issuing notices under Rule 99(1) in Form ASMT 10 (Scrutiny Notice) to the taxpayers informing about the difference between the credits availed by such taxpayers in Form GSTR 3B when compared to the credits appearing in Form GSTR 2A (auto-populated based on the details uploaded by vendors with the GSTIN of the taxpayer).

gst, audit, incometax, ca

What the officers missed is:

  • Credits need not be taken in the same month
  • RCM credits shown with the regular credits. RCM credits obviously don’t reflect in GSTR 2A
  • Matching was for GSTR 2 of the taxpayer with GSTR 1 of vendor and not 3B of the taxpayer with auto-populated details in GSTR 2A
  • Where is a requirement in law to match credits disclosed in 3B (which is a temporary return which is to be filed when the due date of GSTR 1 and 2 gets extended) with the 2A?
  • What can recovery actions be taken for a matching which is not provided for under the law?
  • In the recent council meeting it was decided that tax not paid will not be recovered from the taxpayer but from the vendor and the entire matching exercise will not be operational at least for a year These notices will only add to the never-ending data entry TODO list of the taxpayers and professionals

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GST AUDIT FLOW

GST AUDIT FLOW AS PER REQUISITES / IMP POINTS

  • TURNOVER
  • WHO CAN PERFORM OR INITIATE
  • TIME PERIOD FOR COMPLETION
  • ACTIONABLE /FORMS

Professionals as part of GST Audit need to electronically file:

  1. An annual return as per Form GSTR 9B  appended with the reconciliation statement by 31st December – following Financial Year
  2. Audited Financial Statements
  3. Reconciliation statement stating the value of supplies as per the GST Return with the Financial statements like Balance Sheet & Profit & Loss Accounts
  4. Any other particulars as sought

CA, AUDIT, GST, INCOME TAX

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