Though the format of GST Annual Audit is under discussion stage, the following would be the basic concepts of GST audit irrespective of the outcome of the format.
GST Audit is like any other audit of independent examination of financial information with reference to GST provisions of any entity based on the turnover as notified under GST.
The primary objective of the audit is reporting the results of the GST audit in the prescribed format as notified under GST rules.
The secondary objective may be if there is any non-compliance, irrespective of the materiality, to be reported by the auditor. It is for the department to decide the materiality and the degree of non-compliance.
The basic provisions governing the GST Audit would be
The GST Audit process is no different from the regular audit
Eight steps of General Audit Process:
1. Engagement of Auditor
2. Obtaining knowledge of the client’s business
3. Audit planning
4. Performance compliance procedure
5. Performance of substantiate procedure
6. Audit documentation
7. Forming of opinion
The GST audit process covers some of contents of the above process which would help an auditor to form the basis to prepare a GST audit guidance note.
It is due to the objective of the GST audit certification is only limited to the compliance of the provisions of GST law by a taxable person. This would help as one of the documents and evidences to be relied up on by the Government to issue notice to a taxable person, in case of short fall in the revenue or non-compliance. In few cases would help the government to order for a special audit under the GST provisions.
Since it is an evolving law, there are many grey areas where interpretation over rides the plain reading of law. Hence the GST Audit report is likely to have voluminous notes annexed. However, to an extent this could be eliminated in few instances where it can be referred to notes accompanying the financial statements, like AS18-related party disclosures, as GST audit report follows the financials.