Pre-audit desk review - Model All India GST Audit Manual 2023 [CBIC] - GST

4.3 Pre-audit desk review This is the first phase of the audit programme done in the office by the audit officer. This process needs to be completed by the Audit Officer before the first date of appearance of the auditee as per FORM GST ADT-01 . The idea behind this process is that the Audit Officer would get accustomed with the nature of business of the auditee vis-a-vis information available with her/him. Upon studying this information, the audit team and its members should have clarity about the following: - Reason(s) for selection. Profile of the auditee with details of ownership, numbers of registered persons under the same PAN within the State, principal and additional places of business, migration status (if any), business trends and compliance level of the RTP in the pre-GST period as well as in the GST regime, business trend of the RTP vis- -vis trends of the industry etc. Broad types of supply involved (i.e., resale, manufacturing, export, import, service, works contract, job work, ISD, etc.). Business pattern of the auditee i.e. nature of goods and/or services dealt along with classification (e.g. importer of medicine, exporter of leather goods, reseller of iron steel, manufacturer of jute goods, restaurant service, manpower supply, travel agent, aviation, transport, etc.). Return filing tax compliance pattern of the auditee in GST for the period under audit. If any irregularity is found in submission of Return, the Audit Officer should calculate the Late Fees Interest payable at the desk-review stage itself. Furthermore, there may be chances of mismatch of Turnover and Tax as disclosed in Form GSTR-3B vis- -vis Form GSTR-1 . Similarly, there may be a mismatch between ITC claimed in Form GSTR-3B vis- -vis ITC auto-populated in Form GSTR-2A / GSTR-2B . Analysis of business operations as declared by the auditee in the GST Returns in the light of other data sources available in the GST portal itself. The Audit Officer should verify the turnover declared by the RTP in the GSTR Returns for the concerned period vis- -vis footprint of payments made to the RTP as per GSTR-7 or GSTR-8 filed by TDS deductors or TCS collectors, as the case may be. The Audit Officer should also consult the various exceptional reports made available. Analysis of business operations as declared by the auditee in the GST Returns in the light of secondary data sources , e.g. turnover declared by the RTP in the GSTR Returns for the concerned period vis -vis the turnover declared in the income tax return(s)/tax audit report or any other source, if available. An audit officer is required to study each case from a holistic point of view keeping in view applicability of statutory provisions and amendments thereof, notifications, circulars and orders relevant to the audit period. There have been various instances where a specific transaction, when looked at from a wider perspective, yielded interesting conclusions. Many of these instances are covered by various clarificatory Circulars issued both by the Central Government and the State Government. As a part of Desk review, an Audit Officer should: Read the entire original documents as available in various public domains, Understand the reasons and contexts of such clarifications, Cite any relevant portion of the clarification only from such original documents and not from any truncated reference. Ratio and trend analysis as also intra-industry comparisons to ascertain significant deviant behaviour and indicate areas requiring enquiry and deep examination The pre-audit desk review should enable Audit Officers to gather relevant information about the selected RTP before actual commencement of audit, enabling them to be fully prepared from the very first day of visiting the auditee s place or examining the books produced by the auditee for audit.