Inventory and stock audit importance in the Goods and Service Tax:
Inventory and stock audit in GST process:
Inventory and stock audit is the base one for the GST registration purpose. Inventories are one of the business assets. They are the obligatory assets and helpful one for the tax filing. It is the ordinary course of business held for the sales process. The form of material and supply relating cost and quantity are relating to this inventory and stock audit purpose. Inventories are commonly using for the finished goods, raw materials, semi- finished goods, and supply products. Stock audit is the common process for all the good section undertaking process. GST filing relating HSN codes are closely relating to this stock and inventory.
Inventory and stock audit process:
Stock or inventory goods are normally storing in the godowns, which are generally located near the factory or manufacturing unit. Audit is an independent check on the functions of the management, which has some value in the eyes of law, GST filing taxation authority. It is the process refers to the thorough check of the entire system. Inventory and stock audit facilitates prevention and early detection of frauds. Stock and receivable audit is one of the most important aspects of the overall GST registration proceedings, and entire audit of any organization like quantity, quality, composition, value of the stock.
The purpose of the inventory audit:
Main purpose of conducting the inventory audit is to get an assurance that the security against which the loan is sanctioning represents the quality it claims to possess. With this assurance GST registration require the keen details require by the banks. Examination of the securities against which the loan has been sanctioned consists of physical verification and ownership verification process. Auditor’s role assumes great significance this regarding the GST filing report or other report as veritable and neutral. Unbiased inventory is crucial one for the GST registration purpose in the business market.
Need of inventory Audit:
Like other professional audits like ISO certification audit this process also vital one. Obviously, it is the regular process. Inventory and stock audit not just only for the GST return filing but also prevention and early deduction of the business errors. Inventory and stock audit acts as a safeguard against occurrence of both the internal and external frauds. Periodic inventory statements are with the regular checking is very essential one. The extension of investigation these are acting as the central proof. To find out reasons when there are too many qualifying remarks about inventories and receivables in the auditor’s report on the balance sheet of the borrower.
Inventory and stock audit scope:
Scope of the audit covers all the aspects that have a direct impact on the working capital and GST registration of the working unit as well as the aspects relating to inventory that have a bearing on the bank finance. In other words, it deals with the matters that have an effect on the security and liquidity. Physical verification, storage verification condition, variances of the stock, non-moving inventory, age-wise category list on inventories, inventory management evaluation are the responsibilities governing through the audit process. Auditing process is common one for all types of company whether it is One Person Company registration or private limited company the auditing is essential one.
Reconciliation of inventory:
Reconciliation of inventory statement submitted with the accounting records maintained by borrowers particularly, relating to quantity, rate, value of inventories, marketability etc. GST registration and its filing process full and full need the correct and apt records from both the supplier and receiver. Verification and evaluation of sundry creditors are indicating separately. These records are very helpful one at the time of obtaining the GST return filing and other tax reduction proceedings. Commenting upon the sources of raw materials cash payments are clear out with this inventory and stock management process. Now a softwares are using for the review processing of inventory valuation system.
Inventory and stock applicability:
Inventory and stock can follow the annual audit or the quarterly audit as per the GST return filing. Over dues in the filing process, loan processing and banks’ stake is high. There is no grounds place the idea of suspension and any other position charging for the security relating issues. Qualifying inventories are approving one from the Company chartered accountant. It is one of the basic secretarial services allowing for the diversification of the business boundaries. Suspect dealing, lending procedures are mostly avoiding in the business with this simple GST registration. State revenue calculation and central government take over easily predicting through the CBIC. Stocks are getting its important attention among the auditors.
Verification of stock:
There are several guiding as well as mandatory principles prescribed through the various pronouncements such as standard auditing practices. Various international bodies also prescribe such as standards. However, the frame work of all such guiding principles, the verification of stocks boils down to certain criteria of the GST registration. Stock verification is interlinking to the quantities of the stocks using in the trade. Auditing objectives are always neutral and the same procedure following for the variety of business to business as same country to country. Standard checklist follow up is good one for the resolve the individual case and getting easy GST return filing.
Stock and inventory valuation:
According to the section 145 A of the income tax act inventories are the standard and essential proof. The valuation rules are important one for the trade and GST filing process. Except things among certain conditions are work in progress arising under construction contracts, including directly related service contracts moreover the accounting for construction contracts. Ordinary course of business service and shares and debentures are relating to the inventories and stocks. They are forcible one on the financial statements. Inventories of livestock, agriculture forest products and mineral oil measuring with the industries accordance with the well establishing GST filing.
Method of valuation:
Clear cost price of the inventory, actual market value of the inventory, different methods of valuation, non-moving and scarp inventories are taking into the account of the GST registration. Term of cost price is elusive since it is not well defined anywhere. Auditor can use the inventories for the ascertain cost price as per the well suitable requirement of the business administration. Mandatory valuation of inventories is essential one from the Institute of chartered accountants. Specific identification method, first in first out method, weighted average method is processing one apart from the GST return filing. Compliance processes are regularly maintaining one.
GST registration is the crucial process in the developing country of India. Economic growth and the right way of taxation is the crucial responsibility of India. Tax implementation is using for the development for a country’s self-construction process. It should not be partial. Tax collection method in the unifying way will be greatly helpful one. However, in order to arrive at the market price, the purpose which the inventory is held to found out. If it is held for use then the market value is the value arrived at net of selling expenses. GST return filing is effective one when it is perfectly implementing one with the right invoice submission.
Solubilis is one of the leading GST consultants in Coimbatore. The team of GST practitioners are waiting to resolve your business complexity in the arena of Goods and service tax. As by the path of the business each type of inventory entails different methods of valuation depending on their nature of business. Stores, spare parts, raw materials, Finishes and semi-finished goods, goods on consignments are getting its essentiality in the business world. All the GST proceedings are forms are processing without any complexities. For more details for the gst registration and filing just click here.