PRINCIPLES OF AUDIT

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..... mal course of business. iii. Audit efforts should be based on materiality i.e. degree of scrutiny will depend on the nature of risk factors identified. iv. Recording of all checks and findings. v. Audit should normally be distinct from anti-evasion operation in as much as it can detect irregularities only to the extent of their reflection in the books of accounts. 4.2 Standards for conduct of audit: 4.2.1 In keeping with the principles of audit outlined above, audit has to be conducted in a transparent and systematic manner with focus on business records of the assessee and taxpayer and according to the audit plan for each assessee and taxpayer. The assessee and taxpayer participation in the course of audit is also envi .....

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..... d of individual audit for each tax separately, operation of which is detailed in subsequent paras/chapters. For carrying out integrated audits in exclusive Service Tax Commissionerates, necessary legal enablement has been made in the jurisdictional Notifications No. 20/2014-ST and 21/2014-ST, both dated 16.09.2014. 4.2.4 Period to be covered during audit Every audit should invariably cover the retrospective period up to the previous audit by the departmental audit group or of the last 5 years, whichever is less and should extend up to the last completed Financial Year preceding the date of commencement of the audit. 4.3 Duration of audit 4.3.1 Efforts should be made to complete each audit within the following general .....

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..... Further, in accordance with the requirements of the audit of a particular assessee and taxpayer such duration can suitably be reduced with the express, prior concurrence of the Deputy/Assistant Commissioner (Audit), provided the verification as per the audit plan has been completed in the prescribed manner. 4.4 Stage wise action for audit i. Preparation/updating of assessee master file containing comprehensive assessee/taxpayer profile. ii. Selection of assessees/taxpayers for audit. iii. Collection of all relevant documents, data reconciliation statement and reply to questionnaire. iv. Desk review on the basis of relevant documents and interview of the assessee/taxpayer. v. Formulation and approval of audit plan base .....

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