Necessity for a Forensic VAT Review

Billions of rands are lost annually by businesses in South Africa due to VAT overpayment. This is the result of very onerous and complex tax legislation and the methodology generally used by accountants and auditors in finalising financial statements. By conducting a forensic audit with the assistance of specially developed software, each financial transaction can be scrutinised individually. The relevant sections of legislation can then be applied to each transaction to identify overpayment, etc.

This process has been applied to financial transactions for the past five years. Extraction of these individual transactions will reveal substantial amounts in overpayment, which can be reclaimed and recovered in a short space of time. These amounts can run into millions of rands for medium-sized businesses. In retrieving these overpaid amounts legally, the business’s revenue, profit and cash flow are immediately enhanced.

Common factors resulting in vat overpayments

  • Onerous and complex VAT legislation;
  • Continuous and frequent amendments to legislation;
  • Uncertainty about the application of legislation to a specific business or nature of business;
  • Switching of accounting systems and software;
  • High volumes of financial transactions;
  • Incorrect capturing of financial transactions on accounting systems;
  • Staff turnover and loss of skilled employees in accounting and financial divisions.

Why use revenue forensics?

  • Combination of competent and highly qualified auditors, accountants, forensic analysts and legal expertise in one team;
  • Ad hoc use of outside auditing and legal practitioners;
  • Using of a unique methodology and software program “Forensic Analyse and Identifying System (FAIS)” developed and maintained by Revenue Forensics;
  • Each review is undertaken by a team of experts to avoid individual oversight;
  • Superior software program (FAIS) resulting in speedy recovery of lost revenue for businesses;
  • The fee for services rendered by Revenue Forensics is structured on a no-risk-to-client basis.

Methodology and Process

Phase 1 Data acquisition

Data acquisition from IT or financial department in electronic format

Phase 2 Data interpretation

Data interpretation and application thereof using FAIS program

Phase 3 Document retrieval

Document retrieval inspection and capturing to verify claims

Phase 4 Consultation

Consultation with management to verify claim and signing off on result of forensic review

Phase 5 Invoicing

Invoicing by Revenue Forensics once all parties have agreed on the outcome of the review process

Fee Structure

  • The fee is structured on a contingency basis;
  • The client pays a percentage of the amount to be claimed and recovered;
  • Fees due to Revenue Forensics are not an additional expense and form part of the saving created by the forensic review.

Issues raised by clients in general

We have our own accountants and auditors

The forensic review process that we conduct does not impact negatively on the abilities of any accountant / auditor. Accounting and auditing practices allow for a method of balancing, cross checks and sampling. The forensic review process makes use of sophisticated software specially developed for a line-by-line review of all transactions on an individual basis and strengthens the internal accounting process of the business.

Would our information be safe and confidential?

Revenue Forensics enters into a non-disclosure agreement with all its clients and we have the necessary software programs and procedures in place to protect all information in electronic format or hard copy. All our systems are fully information compliant and have a Information Security Management Policy in place required by legislation.

We do not have the staff or time to get involved in this review process

As the forensic review is not done on the premises of the client, minimal involvement of the clients’ staff and/or resources are required.

Would such a review not compromise my position with SARS?

No, as all processes followed to review and claim overpayments are legal. Your business is legally entitled to all payments claimed and recovered.

Is it not risky for revenue forensics to work on a contingency basis only?

As we are convinced that our methodology and results save the client money, we are only entitled to payment once we have created a saving for the client. We have also learned from experience that all business reviews will result in a saving for the said business.

Expertise of some Directors

Brandon Topham

B Compt (Honours) in Accounting and Auditing; B Proc.

Member of the South Africa Institute for Chartered Accountants, the Charted Institute of Management Accounts, Institute of Chartered Accountants in England and Wales, the Association of Certified Fraud Examiners, Roll of Solicitors of England and Wales, and the High Court of South Africa. Presently a member of Parliament reviewing new tax legislation

082 414 3926

Gideon Gerber

B Juris; BProc Advanced Commercial and Tax Law.

Experience in commercial and labour law, admitted to High Court of SA. Served as CEO and Director of various entities involved in BEE, Training, Skills Development and Business and Information Compliance in South Africa, the UK and Namibia. Presently a columnist for the Business Day and part of an International Research group on information compliance.

082 576 6914

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