What is an Audit?
An audit involves reviewing the income generating activities (financial and non-financial) of taxpayers to ensure that the information contained in a tax return is accurate. Audits are conducted through an examination of accounting books, records and financial affairs to verify that returns submitted are in compliance with tax laws thereby assisting the likelihood of risks.
Objectives:
- To ensure compliance with tax laws and policies;
- To determine accuracy and completeness of taxpayer submissions;
- Assess and improve efficiency and effectiveness in the administration of taxes through taxpayer education and intelligence gathering;
- Detect non-compliant behaviors by reviewing returns filed or utilizing other sources of information to assess the level of taxpayer’s conformity to their legal tax obligations;
- Promote and encourage compliance with the various acts and other legislation by exercising vigilance in monitoring and assessment activities.
Record Keeping
Records used in the preparation of financial statements must be kept in St. Vincent and the Grenadines; in English. S. 20 (1) & (8) of the Tax Administration Act (TAA) refers.
- Records must be kept at the place of business of the taxpayer, unless the Comptroller gives approval in writing for a change of location. S. 20 (4) of the TAA refers.
- Records must be kept in a manner that facilitates efficient audits and have direct links and /or traceability to GL etc.
- Records must be kept for 7 years from the date the transaction took place. S. 20 (6) of the TAA refers.
Importance of keeping proper books and records
It is important to maintained proper books and records for the conduct of audits to verify information reported on financial statement
Timeframe for the maintenance of books and records
- Books and records must be maintained for seven (7) years.
Responsibilities / Obligations of the Taxpayer
- To provide adequate accommodation for officers.
- To comply with requests for books and records in a timely manner.
- To be available for discussions during the conduct of audit.
- To attend close out meetings and to provide any other helpful information to conclude audit.
- To comply with notices requesting information for third parties.
If you fail to maintain books of accounts provide facilities and comply with notice to give information, you may be charged penalties as followings:
- Section 28 & 29 TAA – Access to information
- Section 29 – Notice to obtain information
- Section 79 TAA – Penalty for failure to maintain documents.
- Section 81 TAA – Penalty for failure to provide facilities.
- Section 82 TAA – Penalty for failure to comply with notice to give information.