An auditor may use digital information from external sources across various phases of the audit. Standards on Auditing (SAs) require an auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion. With the emergence of new technology has enabled auditors to access a wider range of external information than before.
Digital information can be incorporated into the audit process, and sometimes it can be compared and matched with internal evidence. An auditor may use digital information from external sources across various phases of the audit. In many cases, the auditor is also able to use internal evidence and reconcile/ map them to the external data. Certain examples of cases of how electronic/digital information from external sources can be used in audits for processes related to the Balance Sheet are discussed in this story.
I. Procure to pay – GST Input tax credit:
a. Background: GST Input Tax Credit is the process of claiming the credit of the GST paid on the purchase of goods and services which are used for the furtherance of business. To extract details corresponding to a GSTIN from any publicly available websites and to check for inaccuracies with regards to incorrect HSN codes, fictitious GSTINs, incorrect credits, etc.
b. Data Source: The following data sets are required
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- GSTIN details from GST portal (External evidence – Government authorised site)
- Vendor master having the GST details and GSTIN (Internal evidence books of accounts)
c. Use Case: Auditor can identify fictitious GSTINs in the vendor master wherein no details of such GSTINs are available on the GST portal. Similarly, Auditor can also identify cancelled and suspended GSTINs from the portal. We can tie back the transactions for fictitious GSTINs, cancelled & suspended GSTINs and input credit for those transactions will be disallowed.
d. Stage in audit: Execution – Overall comfort with the GST Input tax credit
e. Accounts & Assertions: GST Input tax credit – Existence, Valuation, Rights & Obligation
f. Links: https://services.gst.gov.in/services/login
This story discusses in tabular manner detail including Background, Data source, Use-case, Stage in audit, Accounts and assertions, and links for the following also.
II. Ownership and License Details of MEIS/ SEIS/ RoSCTL
III. Wilful Defaulter Testing
IV. Conversion of foreign exchange into INR
V. Procure to pay – identifying struck-off companies and other company details
VI. Sales process recoverability of debts
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