GENERAL

Supply the following when returning the checklist: YES NO

copies of all VAT201-returns;

copies of Annual Financial Statements;

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

VAT201-returns submission dates

VAT charges and collections

VAT payments

VAT refunds

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

Client to confirm in writing that he used the financial system for compiling the VAT201-returns obtain the vote numbers used by Client for input and output VAT

PART A – INPUT VAT

RECONCILIATION

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

Reconcile 100%

Investigate reasons for not reconciling

Print summary of reconciliation

VAT LINK
Link the vote numbers that Client is using to the income and expenditure votes

Reconcile VAT link with system VAT account and VAT201-returns

AUDIT

Perform audit

Obtain copies of bank statements for periods of review (COMPULSORY)

Bank statements MUST form part of audits

Use only Audit Category numbers as per “Annexure A”

Obtain copies of ALL tax invoices to substantiate your claim

Final schedule of MaxProf input VAT claim MUST include the ACTUAL payment date as per bank statement

Create a reference indicating your final schedule of MaxProf input VAT claim to the actual payment on the bank statement and the valid tax invoice

When confirming on the bank statements that “payments have gone through the bank”, write the cheque number from the data on the bank statement next to the payment amount

Create a reference indicating your final schedule of MaxProf input VAT claim on bank charges and debit orders to the actual transactions on the bank statements and the Debit Order Contracts and / or valid tax invoices

On claim sheet have a column with supplier VAT numbers (confirm VAT registration, that the number starts with 4 and that the number has 10 digits

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 the municipality has a ratio, and fixed assets are sold in mixed departments, the municipality must declare full output tax on the sale of the goods, but the vendor can claim a section 16(3)(h) input deduction.

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.

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

In respect of goods or services acquired by such vendor to the extent that such goods or services are acquired for the purposes of entertainment; If the entertainment relates to entertainment provided by the municipality for sporting, recreational facilities or public amenities, the VAT can be claimed by the municipality without there being a charge that covers the cost of such entertainment (Section 17(2)(v)). Entertainment for own consumption like coffee, tea, milk, can never be claimed;

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 Sec12;

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 Deidre for proof reading and formatting

Sign off report

Arrange meeting with Chief Financial Officer to discuss findings

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

Obtain SoA to determine if captured on SARS system

ADDITIONAL COMMENTS

Team leader

Signature

Date

Audit Analyst

Signature

Date