What is the difference between an audit and a VAT Recovery Review?
The purpose of a VAT Recovery Review is to recover monies from the SARS in instances where clients have either made excess Output Tax payments or under claimed Input Taxes. Our reviews encompass an analysis of a client’s transactional data, on a line-by-line basis, for the preceding five year period, assessing both clerical accuracy and the appropriateness of the VAT act interpretations applied.
The objective of an audit of financial statements is to enable 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. Due to time and cost constraints, testing is done on a sample basis using materiality as a guideline.
In other words an audit is done on a sample basis using the risk of material misstatement of financial statements as a guideline while a VAT Recovery Review encompasses an analysis of a client’s transactional data, on a line-by-line basis with the express goal of identifying VAT savings.
What transactions are reviewed?
Typically all general ledger level accounts are reviewed on a transactional basis. Sophisticated CAAT’s (computer assisted audit techniques) are utilised to identify the inappropriate treatment of the VAT component of individual transactions. We also review the company structure and apportionment calculations (if any) to identify additional savings and future savings opportunities.
What about confidentiality?
Our engagement is subject to a corporate confidentiality agreement. This means that no client information will be communicated with 3rd parties (including SARS) without the client’s express approval. After the completion of our Review all client information is deleted from our hard drives.
Where is the Review conducted?
In virtually all cases the vast majority of the Review is performed at our premises. The client’s transactional accounting data, for the preceding five year period, is extracted from their accounting software or ERP database to a Catalyst VAT Recovery portable hard drive to facilitate off-site analysis.