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Ten reasons why you must ensure your company's creditors list is watertight

by , 07 August 2014
When SARS audits your company, the auditor will examine your creditors list. He'll do this by following a ten step process. Every step is a reason for you to ensure your creditors list is watertight. If he finds errors at any steps of that process, he'll include it in his findings and that'll mean penalties.

If that isn't reason enough to double and triple check your creditors list, then I don't know what is.

But to really ensure your creditors list is watertight you must know what the SARS auditor is going to look at...

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These are the ten steps the SARS auditor will use to examine your creditors list

Step #1: The auditor will ask for your creditors list, accrual list and list of provisions.
Step #2: He'll examine your debit balance to check if you need to recoup anything.
Step #3: He'll investigate and validate the calculations and reasons for each of your provisions and accruals.
Step #4: He'll look at your year-end cut off.
Step #5: He'll validate your sundry creditors.
Step #6: He'll check you correctly dealt with the non-deductable provisions in your computation.
Step #7: He'll look at your year-end bonuses to see if the bonus provisions are contractually liable.
Step #8: He'll check your credit tax balance to see if you owe SARS any money on any of the taxes.
Step #9: If he thinks it's necessary, he can contact your suppliers directly to ask them for more information.
Step #10: Lastly, he'll do an analytical review of your creditors to ensure they're reasonable. For example, he'll look at your creditors vs. your cost of sales or your days payable vs. your suppliers credit policy.
If you want to make your creditors list is water tight, you should follow these steps yourself to see if it'll pass the SARS scrutiny. 
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