Cement units audit to verify mega projects

Islamabad: The audit of cement manufacturers would verify the supplies made to the mega construction projects, whereas actual production would be confirmed after going through production data.

Sources told that the audit of the cement factories has been started to ascertain the causes of decrease in sales tax collection in 2007-08. The FBR would apply different methods for checking production of cement. For this purpose, declared production would be reconciled with the daily production data/report and laboratory production reports.

The laboratory production environment would help in recording production, strength/quality/quantity of cement and other relevant data on mixing ingredients used in the production of finished product. The production would also be reconciled with material consumed, finished goods produced and transferred to godowns. Primarily, sales tax audit would focus on suppression of purchases, consumption of packing bags and production/supply of cement.

The auditors would check the documents to verify the expansion of cement plants and subsequent increase in production.

Bank statements would be checked to compare financing and stocks with the production and supply of the commodity. The audit would also verify the data of cement factories available with the 'computerised tax profiles' and third-party information.

The auditors would also analyse the yield ratio, standard mix (gypsum etc) and wastage involved during the production process.

The supply and sales of cement would be verified with the supply registers, supply invoices, inventory record, gate outpasses, weighing record and party ledgers. The supply would also be reconciled with bank statements, bank ledgers and financial statements of the unit. The verification of supplies to mega projects would be done to check whether the declared supply of cement was actually consumed in the mega projects.

Sources said that the physical verifications of stocks of packing bags would be done to check the stocks of cement. The reconciliation of the declared stocks of cement would be done with the purchases, production and supply.

Sources said that the board would also verify inadmissible input tax claimed and abnormal input (for example input tax claimed against building materials for expansion of plant).

They said that the cement manufacturers have received letters from the tax offices for carrying out audit of tax records. The All Pakistan Cement Manufacturers Association (APCMA) and the board had reached consensus on full cooperation by the cement manufacturers during scrutiny of tax records by the sales tax auditors.