1. Practical Approach to GST Audit
CA D.S.Agarwala &
CA Vikash Kumar Banka
Guwahati Branch-EIRC

2. Contents Legal Provisions- GST Audit Practical approach to GST Audit
GSTR 9 at a glance
Form Level Discussion-GSTR 9C

3. Legal Provisions Section 35(5) Rule 80(3) Every registered person
whose turnover during a financial year exceeds the prescribed limit
shall get his accounts audited by a chartered accountant or a cost accountant and
Every registered person* 
whose aggregate turnover during a financial year exceeds two crore rupees
shall get his accounts audited as specified under sub-section (5) of section 35 and
*Other than those referred to in the proviso to sub-section (5) of section 35

4. Legal Provisions Section 35(5) Rule 80(3) shall submit a copy of the:
audited annual accounts,
the reconciliation statement under sub-section (2) of section 44 and
such other documents in such form and manner as may be prescribed.
he shall furnish a copy of:
audited annual accounts and
a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

5. Section 44(2) Every registered person
who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35
shall furnish, electronically, the annual return under sub-section (1)
along with a copy of the audited annual accounts
and a reconciliation statement,
reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement,
and such other particulars as may be prescribed.

6. Practical approach to GST Audit?
Remarks
Obtain Appointment letter
Appendix 9,Page No. 487 of TG
Issue Acceptance letter
Appendix 9,Page No. 488 of TG
Obtain Management Representation (MR) Letter
Appendix 13,Page No. 514 of TG
Copy of Registration Certificate
REG 6
Copy of audited annual accounts
If multiple GSTIN: Alongwith above, obtain books of accounts for each GSTIN alongwith consolidated statement
Copy of GSTR 9

7. Practical approach to GST Audit?
Remarks
Invoice wise outward supply statement
Copy of GSTR 1 (alongwith working sheet)
% wise outward supply details
% wise outward supply, tax on which to be paid by recipient under reverse charge
ITC Details
Copy of GSTR 3B (alongwith working sheet)
Copy of GSTR 2A
Expenses head wise ITC details containing value, ITC and eligible ITC
Copies of:
E. Cash Ledger;
E-Credit Ledger and
E-Liability Ledger
Alongwith Monthly Summary sheet of discharge of liability
Audit Checklist
Appendix-10, Page No. 491 of TG

8. GSTR-9 at a glance Description Table No. of GSTR 9
Turnover as per Books =
Tax Paid as per Books
&
ITC as per Books
Refund 15
Informative details
1,2,3,8,16,17,18
Late Fee payment 19

9. GSTR 9C- Form Level Overview
Part A- Reconciliation Statement
Part B-
Certificate

10. Part A- Reconciliation Statement
Part I
Part II
Part III
Part IV
Part V
Basic Details
Reco of Turnover
Reco of Tax paid
Reco of ITC
Auditor’s recommendation on additional liability due to non-reconciliation
Sl. No. 1-4
Sl. No. 5-8
Sl. No. 9-11
Sl. No
REG 6
Audited accounts, GSTR 1, GSTR 3B, GSTR 9
% wise O/s details (also of RCM),E-cash, E-credit, E-Liability Ledger, Monthly Summary sheet of discharge of liability
3B, 2A, working sheet, Exp head wise ITC details

11. Part I-Basic Details Sl. No. Financial Year 1 GSTIN 2 Legal Name 3A
Trade Name (If any) 3B
Are you liable to audit under any Act (Please specify) 4

12. Reconciliation of Gross Turnover
Turnover (incl. exports) as per Audited accounts (5A)
Turnover as per Annual Return-GSTR9 (5Q) +
Report in -
Unbilled Revenue
Beginning of FY 5B
End of FY 5H
Unadjusted advances 5C 5I
Credit Notes
Accounted for in audited a/cs but not permissible under GST 5J
Issued after FY but reflected in AR 5E
Deemed Supply
Under Schedule I 5D
Trade Discounts 5F

13. Reconciliation of Gross Turnover
Turnover (incl. exports) as per Audited accounts [5A]
Turnover as per Annual Return-GSTR9 [5Q] +
Report in -
Q1 Turnover
April’17 to June’17 5G
SEZ supply
Adj. on a/c of supply of goods by SEZ units to DTA units 5K
Composition Turnover
Turnover for the period under composition scheme 5L
Section 15 adjustments
Adj. in turnover u/s 15 & rules thereunder 5M

14. Reconciliation of Gross Turnover
Turnover (incl. exports) as per Audited accounts [5A]
Turnover as per Annual Return-GSTR9 [5Q] +
Report in -
Foreign Exchange Fluctuation
Adj. in turnover due to FE Fluctuation 5N
Other Reasons
Adj. in turnover due to other reasons 5O

15. Un-reconciled Annual Gross Turnover (AT1)
Annual Turnover (5A)- after adjustments (from 5B to 5O) 5P
Turnover as declared in AR (GSTR 9)* 5Q
Un-reconciled Turnover (5Q-5P)
5R (AT1)
*This figure will come from 5N of GSTR-9 which is equal to 4N+5M-4G
Reason for Un-reconciled difference in Annual Gross Turnover (Sl. 6)

16. Reconciliation of Taxable Turnover (Sl. No. 7)
Annual Turnover after adjustments (from 5P) 7A
Less :
Exempted, Nil-rated, Non-GST, No-Supply Turnover 7B
Zero-rated supplies without payment of tax 7C
Outward Supplies under reverse charge (tax payable by recipient) 7D
Taxable Turnover [7A-(7B to 7D)] 7E
Turnover in 7B, 7C and 7D are to be reported net of credit notes, debit notes and amendments, if any

17. Un-reconciled Taxable Turnover (AT2)
Taxable Turnover after adjustments 7E
Taxable Turnover as per liability declared in AR
-Table (4N-4G)* + (10-11)** of GSTR 9 7F
Un-reconciled Taxable Turnover (7F-7E)
7G (AT2)
*4N of GSTR 9: Supplies & Advances on which tax is to be paid
*4G of GSTR 9: Inward supplies on which tax is to be paid under reverse charge
**10 of GSTR 9: Supplies/Tax declared through amendments (net of debit notes)
**11 of GSTR 9: Supplies/Tax reduced through amendments (net of credit notes)
Reason for Un-reconciled difference in Taxable Turnover (Sl. 8)

18. Pt. III- Reconciliation of Tax Paid

19. Reconciliation of rate wise liability and amount payable thereon- Table 9
Tax Payable
Description
Table
T. Value
CGST
SGST/UTGST
IGST
Cess, if Applicable
Liability under all rates including RCM (e.g. 5%, 12% & so on)
9A-9K
Interest 9L
Late Fee 9M
Penalty 9N
Others 9O
Total amount to be paid 9P

20. Un-reconciled payment of amount-Table 10
Tax Payable
Description
Table
T. Value
CGST
SGST/UTGST
IGST
Cess, if Applicable
Total amount to be paid 9P
Total amount paid as declared in AR 9Q
Un-reconciled amount 9R
Reasons for Un-reconciled payment of amount (Sl. 10)

21. Additional Amount Payable-Table 11
To be paid through cash
Description
Taxable Value
CGST
SGST/UTGST
IGST
Cess, if Applicable
Liability under all rates including RCM (e.g. 5%, 12% & so on)
Interest
Late Fee
Penalty
Others

22. Reconciliation of ITC- Pt. IV
ITC availed as per Audited accounts (12A)
ITC claimed in Annual Return-GSTR9 (12D) +
Report in -
ITC
Booked in earlier FY, claimed in current FY
12B
Booked in current FY, to be claimed in subsequent FY
12C

23. Un-reconciled ITC (ITC 1)
ITC availed as per audited accounts
12D
ITC claimed in AR (GSTR 9)*
12E
Un-reconciled ITC (12E-12D)
12F (ITC 1)
*This figure will come from Table 7J of GSTR-9 which is equal to total ITC availed (6O) minus total ITC reversed (7I) upto in GSTR 3B.
Reason for Un-reconciled difference in ITC (Sl. 13)

24. Reconciliation of ITC as per AR with ITC availed on expenses as per audited accounts-Table 14
Description
Table
Value
Amt of Total ITC
Amt of eligible ITC availed
Purchases
14A
Freight/Carriage
14B
Imported goods (Inc. from SEZ)
14D
Goods lost, Stolen, destroyed, w/off or disposed of by way of gift/free samples
14F
Others
14C,14E,14G-14N
Capital Goods
14O
Any Other Expense
14P & 14Q
Total amount of eligible ITC availed
14R

25. Un-reconciled ITC (ITC 2)
Total amount of eligible ITC availed
14R
ITC claimed in AR (GSTR 9)
14S
Un-reconciled ITC (14S-14R)
14T (ITC 2)
Reasons for Un-reconciled difference in ITC (Sl. 15)

26. Tax Payable on un-reconciled difference in ITC- Sl. No. 16
Amount Payable
Description
CGST
SGST/UTGST
IGST
Cess
Interest
Penalty

27. Auditor’s recommendation on additional liability- Pt. V
To be paid through cash
Description
Taxable Value
CGST
SGST/UTGST
IGST
Cess, if Applicable
Liability under all rates including RCM (e.g. 5%, 12% & so on)
ITC
Interest
Late Fee
Penalty
Any other amount paid for supplies not included in AR
Erroneous refund to be paid back
Outstanding demands to be settled
Others (Pl. specify)

28. GSTR 9C- Form Level Overview
Part B- Certification
BI: Reconciliation statement drawn by the Auditor who has conducted the audit
BII: Reconciliation statement drawn by the Auditor who has not conducted the audit

29. B1. Hierarchy of clauses for certification (Statutory & GST auditor same person)
Step
Particulars
Remarks 1
Examination of financials
[BS, PL, Notes, CFS (if applicable)
Multiple GSTIN: Trial balance of the Legal Entity split “registration-wise 2
Based on our ‘audit’, report that books of accounts, records, documents under the GST law have or have not been maintained
3(a)
Report observations/ comments / discrepancies / inconsistencies

30. B1. Hierarchy of clauses for certification
Step
Particulars
3(b)
Further report that:
Information and explanations has / has not been obtained which were necessary for the purpose of audit
Proper books of accounts have / have not been kept
C. Financials are / are not in agreement with the books

31. B1. Hierarchy of clauses for certification
Step
Particulars 4
State whether GSTR 9C and other relevant documents are annexed 5
Particulars in GSTR 9C are ‘true and correct’ subject to observations/
Qualifications 6
Signature, Stamp and Seal of the Auditor duly disclosing the date, place and full address

32. Meaning of Audit- Sec 2(13)
‘Audit’ means
the examination of records, returns and other documents
maintained or furnished by the registered person
under this Act or the rules made thereunder or under any other law for the time being in force
Records: Section 35(1) read with Rule 80
Section 2(97): “return” means any return prescribed or otherwise required to be furnished by or under this Act or the rules made thereunder;

33. Meaning of Audit- Sec 2(13)
to verify the correctness of
turnover declared,
taxes paid,
refund claimed and
input tax credit availed
and to assess
his compliance with the provisions of this Act or the rules made thereunder

34. SA 200 [Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing]
Para 11:
In conducting an audit of financial statements, the overall objectives of the auditor are:
To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework; and
To report on the financial statements, and communicate as required by the SAs, in accordance with the auditor’s findings

35. Guidance Note on Reports or Certificates for Special Purposes (Revised 2016)
Para 3: Sometimes, the applicable law and regulation or a contractual arrangement that an entity might have entered into, prescribe the wording of report or certificates.
The wording often requires the use of word or phrase like “certify” or “true and correct” to indicate absolute level of assurance expected to be provided by the practitioner on the subject matter.
Absolute assurance indicates that a practitioner has performed procedures as considered appropriate to reduce the engagement risk to zero.

36. Guidance Note on Reports or Certificates for Special Purposes (Revised 2016)
Para 4: A practitioner is expected to provide either a:
Reasonable assurance(about whether the subject matter of examination is materially misstated); or
Limited assurance (stating that nothing has come to the practitioner’s attention that causes the practitioner to believe that the subject matter is materially misstated).
A practitioner is not expected to reduce the engagement risk to zero. This is because there are inherent limitations attached to the procedures which a practitioner may perform in relation to issuance of a report or certificate, as the case may be.

37. Guidance Note on Reports or Certificates for Special Purposes (Revised 2016)
Para 4 contd…
The inherent limitations arise from:
the nature of financial reporting;
the use of selective testing;
the inherent limitations of internal controls;
the fact that much of the evidence available to the practitioner is persuasive rather than conclusive;
the nature of procedures to be performed in a specific situation;

38. Guidance Note on Reports or Certificates for Special Purposes (Revised 2016)
f) the use of professional judgment in gathering and evaluating evidence and forming conclusions based on that evidence;
g) in some cases, the characteristics of the underlying subject matter when evaluated or measured against the criteria; and
h) the need for the engagement to be conducted within a reasonable period of time and at a reasonable cost.

39. Guidance Note on Reports or Certificates for Special Purposes (Revised 2016)
Para 5: In view of the above, depending upon the nature, timing and extent of procedures that can be performed based upon the facts and circumstances of the case, a report or certificate issued by a practitioner can provide either reasonable or limited level of assurance. Therefore, whenever a practitioner is required to give a “certificate” or a “report” for special purpose, the practitioner needs to undertake a careful evaluation of the scope of the engagement.

40. Guidance Note on Reports or Certificates for Special Purposes (Revised 2016)
Para 6: The word ‘certificate’ as described in the laws and regulations or even in the contracts that an entity might have entered into can normally be associated with reasonable assurance.
However, depending upon the circumstances and based upon the nature, timing and extent of the procedures which a practitioner can perform, the practitioner can conclude that a reasonable assurance cannot be expressed on the subject matter of the “certificate” and only limited assurance conclusion can be given.
The practitioner’s procedures in case where reasonable assurance is to be expressed would be substantially different (and more extensive) from circumstances where limited assurance is to be expressed.

41. Any Question ?

42. CA D.S.Agarwala CA Vikash Kumar Banka
(M)
CA Vikash Kumar Banka
(M)