Draft disclosures in GST audit report

Disclosures in GST audit report:

Draft disclosures in GST audit report for use of all professional. A list of 15 possible disclosures in GST audit report. These disclosures will be quite useful for you. Certificate under Form GSTR-9C is to be read in conjunction with the Disclosures as mentioned herein, which forms an integral part of our certificate.

Disclosure 1:- Management Responsibility: –

Management is responsible for compliances with GST laws comprising CGST Act, 2017/RGST Act, 2017 and IGST Act, 2017 and respective rules framed thereunder, and maintenance of adequate records including but not limited to books of accounts, bills of supply, credit notes, debits notes, stock register, vouchers, etc. in accordance with applicable provisions of the CGST Act / RGST Act or any other State GST Act / IGST Act and rules made thereunder.

Disclosure 2:- Auditors Responsibility:-

Our responsibility is to audit the particulars included in the GSTR 9C to provide reasonable assurance that they are free of any material mis-statement.

We have taken into account provisions of CGST Act, 2017/RGST Act, 2017 and IGST Act, 2017 and respective rules framed there under, auditing standards and matters which are required to be included in GSTR-9C under the provisions of the Act and the Rules made thereunder.

The procedures selected is dependent upon auditor’s judgment, including assessment of risks of material misstatement, whether due to fraud or error. In making those risk assessments, we have considered internal financial control
relevant to the registered person assessment with respect to compliance with the Act(s) and Rules made thereunder that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.

We have conducted our audit in accordance with auditing standards generally accepted in India and in line with the requirements under the GST laws. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether relevant GSTR 9C is free of material mis statements. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted by us identifies all non-compliances of the registered person while discharging its responsibilities under the GST Act. Written representations, Letter received from management in response to inquiries, reasonable and prudent estimates and results of our audit tests comprise the evidential matter relied upon by us in reporting in GSTR 9C.

An audit includes examination on a test basis, using concept of materiality, evidence supporting the amounts and disclosures in GSTR 9C. Having regard to the test nature of an audit, persuasive rather than conclusive nature of audit evidence, together with inherent limitations of any accounting and internal control system, there is an unavoidable risk that even some material misstatements, resulting from fraud and to a lesser extent error, if either exists, may remain undetected. However, as part of an audit in accordance with applicable provisions of the GST Act and rules
/ regulations / press –release issued in this regard from time to time, we exercise professional judgment and maintain professional skepticism throughout the audit.

We believe that our audit provides a reasonable basis for our reporting on Reconciliation Statements in Form 9C.

Related Topic:
Draft Disclosures for GST Audit Report

Disclosure 3 :-

Due to the nature of business, types of supply, complexities of transactions and size of operations, we are unable to identify or comment upon each and every outward and inward supplies for classification, valuation, place of supply and time of supply of goods or services or both. Recipient of the outward supply made by registered person has been verified solely based upon invoices, documents and supporting evidences produced before us and explanation given to us. We have carried out test checks as per the accepted principles of auditing and observations made pursuant to such test checks have been duly considered while reporting GSTR- 9C and is subject to the information and declaration or management representation as provided by the registered person.

Disclosure 4:-

As per information and explanation given to us and on the basis of examination of records of registered person, an amount of Rs ………….. pertaining to credit notes has been reduced from taxable value of outward supplies. Since, no facility till date has been provided to the registered person or to the auditor to verify reversal of ITC by recipient, we are unable to comment on fulfilment/non-fulfilment of the given condition.

Disclosure 5:-

Reporting in GSTR-9C requires verification of the eligibility of Input Tax Credit in accordance with the provisions of CGST Act, 2017/RGST Act, 2017 and relevant rules made thereunder. Further provision of Section 16(2)(b) requires that tax payer should have received goods or services or both for being eligible to claim input tax credit of the tax charged by the suppliers. Since audit includes test checks of invoices, documents and supporting evidences produced by the registered person before us, therefore reporting under GSTR-9C for eligibility of Input Tax Credit is solely based upon invoices, documents and supporting evidences produced before us and explanation given to us. Observations made pursuant to such test checks have been duly considered while reporting GSTR-9C and is subject to the information and
declaration or management representation as provided by the registered person.

Disclosure 6:-

Provision of Section 16(2)(c) requires that tax charged in respect of supply received by the registered person has been actually paid to the Government, either in cash or through utilisationof input tax credit admissible in respect of the said supply. Since, no facility till date has been provided either to the registered person or to the auditor to verify compliance of the given condition, we are unable to comment on fulfilment/non-fulfilment of the given condition.

Disclosure 7:-

Classification of Inward Supplies as Supplies intended to be used exclusively for purposes other than business, for effecting exempt supplies, for effecting supplies other than exempted but including zero rated supplies and
common credit has been carried out on test check basis as per the accepted auditing practices and observations made pursuant to such test checks have been duly considered while reporting GSTR-9C and is subject to the information and
declaration or management representation as provided by the registered person.

Disclosure 8:-

Classification of expenses for the purpose of reporting in Table 14 of GSTR9C has been taken from the audited financial statement. We have carried out test check as per accepted auditing practices in respect of information received for reporting of reconciliation of Input Tax Credit in Table 12 of GSTR-9C and reporting of head-wise expenses and ITC availed along with taxable value in Table 14 of GSTR- 9C with books of accounts and invoices, documents and supporting evidences produced by the registered person before us and observations made pursuant to such test checks have been duly considered while reporting GSTR-9C and is subject to the information and declaration or management representation as provided by the registered person.

Disclosure 9:-

Section 25 of CGST Act, 2017 read with Rule 10 of CGST Rules require that details of every additional place of business should be included in Registration Certificate. The details of following additional place of business have not
been included in the Registration Certificate-:
a) _______________;
b) ______________

It is however reported that the turnover of outward supplies and details of inward supplies and due taxes there on are included in the GST Returns filed for the period under audit.

Disclosure 10:-

Interest for delay in payment of tax liability has been calculated and paid on net tax liability and is subject to interpretation of Section 50 of CGST Act, 2017. Payment of interest according to net tax liability is based on prudent
interpretation of amendment in Section 50 of CST Act, 2017 vide Finance Act, 2019.

Disclosure 11:-

As part of Management Representation Letter, it has been communicated to us that registered person has not received any penalty notices and therefore our disclosure towards penalty is based upon management representation letter.

Disclosure 12:-

We have verified claim of refund on test check basis of invoices, documents and supporting evidences produced before us and explanation given to us. Observations made pursuant to such test checks have been duly considered while reporting GSTR-9C and is subject to the information and declaration or management representation as provided by the taxpayer.

Disclosure 13:-

As per information and explanation given by the registered person vide the management representation letter,it is not possible for the registered person to maintain stock register on day to day basis due to the peculiar nature of business. A similar disclosure of the fact has also been made under the Audit of the registered person conducted under the provisions of Income Tax Act, 1961.

Disclosure 14:-

Goods and Services Tax is a new levy and is subject to a lot of interpretation and legal reviews. Instances wherein difference of opinion arose over correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, such differences have been handled on the basis of prudent interpretation of law.

Disclosure 15:-

That registered person is not required to prepare cash flow statement as per AS-3 – Cash Flow Statement issued by The Institute of Chartered Accountants of India, hence cash flow statement as required to be annexed with
certificate to be issued under Form GSTR-9C, could not be annexed.