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TMI BlogAudit VerificationX X X X Extracts X X X X X X X X Extracts X X X X ..... ch material would likely to come to the same conclusion. It also means that the auditor must demonstrate, in writing, the research and reasoning used to base his/her application of legislation, policies and jurisprudence. 5.7.2 Audit verification involves verification of data and actual verification of documents submitted at the time of desk review, verification of points mentioned in the audit plan. 5.7.3 Gathering of information of the registered person - This may be carried out as per the activity of the taxpayer as found out during the Desk Review. The task mentioned herein below may not be relevant in case of all taxpayers. The auditor should evaluate the necessity of carrying out these tasks and mention the relevance in the Working ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e them as good, acceptable and poor (refer Part D of working papers). 5.7.4.1 In this regard, an auditor should normally examine the following: i. Characteristics of the company's business and its activities. ii. System of maintenance of records and accounts. iii. Identifying the persons handling records for accounting purposes. iv. Allocation of responsibilities at different levels. v. System of internal checks. vi. System of movement of documents having relation to duty/tax assessment. vii. Inter-departmental linkages of documents and information. viii. System of own internal audit. 5.7.5 Techniques for evaluation of the Internal Controls. (a) Walk-through: This is a process by which the auditor selects any transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, as given below: * A-category is the class of data that is the most important from the point of view of managing and controlling the same. * B-category is the class of data, which should invariably be controlled, but the degree of control is not as intense as for A-category. * C-category is the class of data, which has far less revenue- implications and can be controlled by suitable test-checks. The auditor can apply ABC Analysis especially where the quantum of data/ information to be analysed is voluminous. In such a case, the auditor can classify them according to their tendency towards potential risk into A, B and C categories. To give an example, transactions with top five customers/clients of a registered person may alone be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Medium Category of taxpayers, the premises based audit has to be conducted. The auditor should conduct the verification in a systematic manner, following the sequence of steps envisaged in the working papers. While conducting audit verification, special care should be taken to examine all those issues pointed out in the audit plan. The auditor should try to determine whether the apparent weaknesses in the internal control system of the manufacturer/service provider have led to any loss of revenue. He should also identify the procedural infractions on part of the registered person, which are recurrent in nature and which may obscure a significant fact. During the process, he must cross check the entries made by the registered person in va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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