INTERNAL AUDIT - VERIFICATION OF TAX AND REGULATORY PROCEDURES

Issues, Suggestions and Solutions A.C.GANGAIAH CHARTERED ACCOUNTANT

INTERNAL AUDIT - Features

RECORDS

INTERNAL PROCEDURES

Manuals

Internal Controls

Statutory Regulatory Compliance

REPORT Analyzing

Steps taken and

further follow up

Periodical Performance

Provisions of Information Technology Act, 2000 – Overriding provisions Section 2(1) (r) "electronic form", with reference to information, means

any information generated, sent, received or stored in media, magnetic, optical, computer memory, micro film, computer generated micro fiche or similar device;

v) "information" includes data, text, images, sound, voice, codes, computer programmes, software and data bases or micro film or computer generated micro fiche;

4. Legal recognition of electronic records .- Where any law provides that information or any other mailer shall be in writing or in the typewritten or printed form, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied if such information or matter is—(a) rendered or made available in an electronic form; and(b) accessible so as to be usable for a subsequent reference.

Soft copies of the provisions – Regulatory or Taxation

Have soft copy of related provisions – forms – appropriate procedure to comply in accessible way - get up to date amendments – professional opinion if required - take steps as per up to date provisions

In built system of Time frame work to get appropriate approvals of payment in advance to date of payment

Have soft copy of the appeal forms or other copies

In built system of gathering facts or evidences of disputed issues taken already

Payment schedules of dues or otherwise as per regulatory acts.

In adverse situation – steps to be taken to get extension of time or otherwise

Time bound payments – chart specifying proper follow up

Have a activity flow chart of the company – to explain the activities either for manufacturing or for marketing

Statutory or other legal compulsions The prominent materials or services

used – the place of use Necessary chart in deciding the

expenditure Authority to take decision – method

of approach Decision taken for a particular period

or particular situations. Periodic appraisal of issue –

necessary further follow up. Affirmation from a lawyer about

legislations applicable be obtained

Statutory Compliances

Periodic compliances - inbuilt system specifying the date of compliances – procedure to get the information and payment to be made – to submit to appropriate system – submission of information or forms to concerned persons.

Adverse situation – method of getting appropriate information or approvals in order tide over the situation.

Inbuilt system of informing to appropriate authority for approvals - retrospective law or reversing judgments by SC

Particulars of disputes – action taken Procedure for getting approvals in

new cases Filing the information – regulatory

acts with necessary payments

Inbuilt system of getting information at appropriate places once the transaction place – accessible to get information

Get converted to suit the compliance with any other data required

Procedure to know new procedures as and when introduced and finding way to comply

Lapses in compliances – methods to rectify – periodical follow up

Anticipated lapse – no chance to follow – take steps to over come adverse situation with necessary precautions

Submitting periodical information with follow up made

and further follow – up Place of keeping the hard

copies or site of access to soft copies

Information or evidence required – gathered at the time of appeal or other proceeding internally or externally

Necessary information to be gathered – efforts made – efforts to be made – steps to close the issue if no further information or otherwise possible

Any other situation to the notice of appropriate authority

Up to date position of the issues – steps to get the issue closed at the earliest if required or post phone if needed

Alternative ways if required – follow up – further follow up basing upon the situation.

Procedure to comply the orders in time – steps to be taken if not possible

Get the information to suit the CARO requirements

All applicable legislations have to be listed

CARO is omnibus order no scope to ignore

Statue bound payments and repayments

Advance tax payments or TDS or Assessed tax or VAT or Central Excise or Service tax – required date to pay – get necessary approvals – fix up the persons to authorize to make payments and file forms – not able to pay the procedure to get extension or to get installments.

Refunds to be received – either to adjust to the liabilities or to get in cash – appropriate follow up to get the refund at the earliest.

Repayment of deposits or debentures or conversion of debentures – date of repayments – necessary approvals – keep the amount ready for discharge

if not possible - necessary anticipated steps to be taken – its follow up

Alerting system in the SAP/ERP may be programmed

Assessments/Appeals / Revision /Review Petitions filed

Question of facts Lack of information or evidence

or circumstantial evidences Information provided – information to

be gathered – information gathered – steps taken for gathering information – periodical analysis

External – steps taken to get – part information – analysis – if enough to drop further steps – required further steps

To file in time – steps to be taken – necessary follow up

Petitions for relief – necessary follow up S.119 CBDT

Question of law Necessary steps taken to get

any legal aid or logical conclusions – expert opinion – judgment of identical issue or action of other units in identical industry or trade

Waiver petition filed – necessary follow up to get the waiver of tax demands or dispensing the requirements

Revision / Review petitions – necessary follow up

Clubbing cross appeals – necessary steps taken

Disputed amounts or relief sought

Periodical analysis – particular issue – chances of getting relief – pay the amount if relief anticipated not possible

To gather information or to get the reliefs – to take efforts

Issues having good chances – take steps for early disposal

Provide information in respect of time bound disposal of Appeals – SGC or other appeals to be disposed time bound

Alternative remedies – follow up Disputed amounts payable or relief

anticipated – position periodically Steps to improve to gather information to

avoid future litigations. Appropriate follow up in the case of

Revenue appeals Confirmation from HOD’s about compliance

of laws.

Soft copies to be maintained

Appeal orders – period wise – issue wise – necessary position of further appeals – steps taken to avoid litigation

Required statutory provisions, rules, forms and other notifications with appropriate amendments

Periodic chart of payment of dues or taxes – any relief sought – relief obtained – reasons for giving reliefs

Analysis of appeal orders – issue wise – steps taken – further steps to be taken to avoid future litigation

Appeal papers filed – Cross objections if any – Appeals filed against by revenue – cross objections filed if any – copies of written submissions filed if any

Restoration petitions – necessary follow up

Time Bound appeals – necessary follow up – Revenue appeals – necessary steps taken

Time bound appeals such as SGC or others – chart to get the information or other to provide to counsel for better representation.

Revenue appeals – take steps to object either by filing cross objections – by filing submissions with in time.

Steps taken for cross appeals – date of appeals – necessary data in respect of cross appeals – not clubbed – steps taken for both appeals

Steps taken if installments granted to honor – steps taken for further redressal - steps taken for relief

Submission of information to appropriate authority

Submission of information – issue wise – period wise – any other parameter wise – position of issue – information gathered – steps taken from earlier report

External information required – steps taken to co-ordinate with other departments – request to instruct other departments to provide or steps from management to co-ordinate other external persons to get the information.

Periodical compliance audit by respective agencies-CA,CS,Pollution,Weights & Measures,Chemical hazards, MOEF, PMLA provisions etc

Preparation of reports

Periodical analysis – steps taken from earlier period – issues arisen after earlier report – steps taken for getting reliefs

Hardship to the industry or trade – suggestions for getting appropriate reliefs

Placing of the orders, notifications for easy access – steps to be taken in the system

Periodical presentation of information to appropriate authority for analysis and to note the steps taken and steps to be taken

Placement of orders received , its analysis or notifications its effect – further steps taken or to be taken

Compliance Report to Board

Appeals / Revision / Reviewpetition filed

Disputing levy of tax or any other grievances Basic – filed to get anticipatory relief Relief may not be possible Due lack of information or other efforts – have a

plan to get the information or make other efforts in getting information – to file further appeals or take decision in respect of future appeals

Not possible – stop further appeals – not to repeat in future appeals

Analysis of appeal orders – keeping own appeal orders in soft copies to make them available for future use.

Keep the particulars in issue wise – period wise – subject wise – any other method if required

Keep the soft copies of any legal or other wise pertaining to the industry or trade for ready reference and for copy and past at required places.

Actions required from Government authorities

Waiver petition / petitions to Central Board either for clarifications or for waiving the taxes for appropriate directions

Hardships to be brought to the notice of authorities for appropriate provisions or rules or forms or other wise

Prayer to relieve past transactions if SC reverses judgment of jurisdictional HC or for implementation of retrospective amendment

Check-list from lawyer handling these issues.

Guidance required from the Institute

Periodical appraisal of notifications or provisions or other statutory procedures or judicial pronouncements in softcopies

Internal or external or other wise procedures to strengthen the system of internal control

Necessary appraisal for taking the hardships to appropriate authorities for appropriate provisions or rules or forms

Expected from professionals Verify internal procedures – give report for

necessary future action in respect of arranging the amount s – gather the information – appropriate follow up to get the issues disposed

Steps to be taken to avoid litigation in respect of issues disputed in succeeding periods

Steps to be taken for retrospective amendments or reversal of Jurisdictional HC judgment by Supreme Court – against the company – necessary information to be gathered – steps for getting external information – appropriate prayers

Public Relations Dept of the business to keep watch on legislations and circulate the same to the concerned in the hierarchy.