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RECEIPTS: DA 260.02

1.2.1 Objective: Ensure that all receipts of spirits are
accounted for in the correct accounting period.
a) Obtain a list from client of all quantities receive
indicating volumes and supplier. Compare list with
Structured Query Language (SQL) excise movement
report.
i) Verify all receipts declared on DA 260.02 are
correctly recorded on EXD01.
ii) Check all SAD 500 declarations re-warehousing
bill of entry (ZRW) Customs Product Code (CPC)
E45-46 declared on DA 260 account using the
SQL report.

b) Obtain client creditors file for spirits purchases and
select sample of invoices for the period under review
i) Compare delivery notes and invoices of spirits
received from suppliers with SAD 500 ZRW and
the SAD 505 and goods received notes.
ii) Agree litres received per client list to general
ledger and the excise account.
iii) Investigate any discrepancies in quantities
between invoices, delivery notes and SAD 500
ZRW.
iv) Ensure 0.25% loss allowance is correctly
calculated on SAD 500 ZRW declaration in terms
of Sec 75(18)(b)(i).

c) Enquire whether client imports spirits under rebate
460.24. Draw all data on SQL report of all General
rebate (GR/XGR) entries processed.
d) Check whether spirits was acquitted with SAD 500
declaration ZRW CPC E46.45 and entered on the DA
260.02 receipts column.
1.3 REBATES: DA 260.04
1.3.1 Objective: To ensure all rebates claims deducted
are valid and whether they meet the requirements of
the specific rebate item.
a) Ensure all rebates listed and applied for on the DA
260.04 summary pages are valid and correct.
b) Verify all rebates applied for on the DA 260.04 are
correctly entered on the EXD 260.
1.3.2 Rebate items:
a) Rebate item 624.30 – Working Loss:
i) Ensure losses claimed are within the
requirements of the rebate item. Unavoidably
lost, through pumping, handling and other natural
causes.
ii) The application for loss allowance in terms of
rebate item 624.30 must be done on a form
approved by the Commissioner (P2.09) and the
auditor must verify the validity of loss application.

Effective Date: 31 March 2025

SE-AU-01-A38 – Spirits Manufacturing Warehouse Audit
Programme - Internal Annexure Revision: 0 Page 3 of 10
AUDIT PROCEDURES COMMENTS WP Ref
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iii) Request client’s internal records (financial
records) of losses occurred and compare with
losses claimed on excise account.
iv) Ensure that only actual losses that are claimed
occurred during the manufacturing process.

b) Viz Major Losses:
i) Losses of a product that occurs on a single
occasion through goods being lost, destroyed or
damaged in circumstances of viz major (forces of
nature) in circumstances that the Commissioner
may regard as exceptional, this excludes robbery
or theft.
ii) Ensure that all conditions of said rebate item is
adhered to i.e. Note 4 of Section G of Schedule
6.
iii) Determine whether excise duty is covered under
the insurance policy of the client, if so duty must
be paid over to SARS.
iv) The duty amount must be less than R2500.00 to
qualify for rebate item.
c) Spirits for industrial or non-liquor use:
i) Obtain list of all rebated removals to registered
registrants.
ii) Ensure all DA 33A certificates been completed.
iii) Ensure all rebate items listed and applied for on
the DA 260.04 summary pages is valid and
correct.
iv) Verify all rebates applied for on the DA 260.04 is
correctly entered on the EXD 01.

d) Destructions:
i) Verify if client made application for destruction of
goods. Compare quantities on application with
what was destroyed on P2.08 and whether it
corresponds with DA 260 excise account.
ii) Verify whether the goods have lost all commercial
value or if the sale of the goods will be harmful to
the industry.
e) Withdrawal from market:
i) Determine whether the goods applied for under
said rebate item meets the requirements in terms
of Note 5(a) to (e) of the rebate item.
ii) The extent of the rebate is a full refund, establish
and verify whether the duty has been paid on the
goods before any refund of excise duty is
approved.

Effective Date: 31 March 2025

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1.4 REMOVALS IN BOND: DA 260.04
1.4.1 Objective: Ensure all removal in bond movements
are valid and to licensed bonded warehouses.
a) Obtain a list of all in bond transactions from the client.
b) Compare transactions with DA 260.04 schedule and
EXD01 summary.
c) Verify client’s records i.e. invoices to SAD 500
declarations.
d) Obtain list of all transactions from SQL excise
movement report of all transactions processed and
compare to client’s records and excise accounts.
e) Request a list of all acquittal documents to prove the
liability of duty has ceased. See Section 18(3) (a) and
(b).
f) All unacquitted SAD 500 In-bond removal bill of entry
(ZIB’s) CPC code E45:00 must be followed up and duty
to be brought to account where no valid acquittal is
presented after 30 days.
g) In bond removals to Botswana, Eswatini, Lesotho and
Namibia (BELN) countries must be acquitted. Verify the
validity of the BELN warehouse.
1.5 EXPORTS: DA 260.04
1.5.1 Objective: Ensure spirits exported complies with
Section 18A and rebate item 621.03
a) Obtain a list of all export declarations CPC H68:00 for
the audit period.
i) Ensure all exports declared on the excise
account EXD01 and DA 260 have valid export
SAD 500 declarations.
ii) Compare list of declarations with the excise
account schedule transactions.
iii) Verify litres declared on excise account with
quantities Litres Absolute Alcohol (LAA) declared
on SAD 500 declaration.
iv) Ensure that exports claimed under rebate is
within the 2 year period as stipulated in Section
77(a).
v) Request acquittal documents for all exports
claimed ensuring acquittals are done within 30
days after export.
vi) The following source and/ or acquittal documents
should be requested to confirm whether the
goods were exported:
A) Invoices;
B) Sales orders;
C) Bank statements;
D) Bill of lading;
E) Air waybill; and
F) Road manifest.

b) As an additional measure, export declarations may be
checked with the client’s VAT returns to verify export
claims.

Effective Date: 31 March 2025

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Programme - Internal Annexure Revision: 0 Page 5 of 10
AUDIT PROCEDURES COMMENTS WP Ref
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1.6 DUTY PAID REMOVALS: DA 260
1.6.1 Objective: To ensure all duty paid sales are
accounted for on the EXD01 and DA 260 excise
account and paid on published due dates
a) Verify duty paid quantities on DA 260 and EXD01, and
correctness of Rate of Duty on DA 260.00.
b) Obtain a list of all duty paid transactions for the audit
period.
i) Review list of all duty paid clients.
ii) Check sales order with sales invoices and
compare to sales summary report.
iii) Compare sales summary report with dutiable
quantities declared on DA 260 and EXD01.
iv) Check all deductions for overpayments, request
approval letter for any deductions made for
overpayments.
v) Verify all underpayments of duty and request
reasons for deductions.
vi) Check if all payments were done in time and
whether there are any outstanding payments.
vii) Ensure sales to SACU (BELN) is not recorded as
exports but as dutiable sales (unless removed in
bond to valid licensed warehouses in BELN).
On the document above the VMP warehouse, may you suggest what can be added, recommended or suggested for the review commity

1 answer

When reviewing the Spirits Manufacturing Warehouse Audit Programme, aimed at auditing compliance with excise regulations concerning spirits, several recommendations and suggestions can be made to improve overall effectiveness and enhance compliance monitoring. Here are some key recommendations for the review committee:

Recommendations for Review Committee:

  1. Regular Training and Updates:

    • Establish a continuous training program for staff on regulatory changes, updates in excise duty laws, and best practices in audit compliance. Keeping the audit team updated on the latest developments ensures they are well-equipped to perform their duties effectively.

  2. Enhanced Data Analytics:

    • Utilize data analytics tools to automate and streamline data comparisons between various reports (e.g., DA 260, SQL reports, and inventory management systems). This would improve the accuracy and speed of auditing processes.

  3. Implementation of Internal Controls:

    • Recommend the establishment of stronger internal controls within the client’s accounting systems to prevent discrepancies in inventory recording, receipt of spirits, and duty payments. This includes regular reconciliations and internal audits.

  4. Documentation and Record Retention:

    • Review and enhance documentation requirements for each audit procedure, ensuring that all necessary records (e.g., invoices, delivery notes, SAD documentation) are retained for verification purposes. This could include a structured checklist of required documents for each audit cycle.

  5. Validation of Third-Party Data:

    • Where appropriate, consider validating the data provided by clients against third-party sources or regulatory databases to reduce the risk of errors or misreporting.

  6. Risk-Based Audit Approach:

    • Adopt a risk-based approach to audits by identifying high-risk areas (such as high-value transactions or unusual patterns) and focusing more resources on those sections. This would improve efficiency and allow for more targeted audits.

  7. Internal Audit Feedback Mechanism:

    • Create a feedback mechanism between the audit team and the operational side of the business to share insights and findings. This could lead to improvements in processes and compliance measures based on audit results.

  8. Rebate Item Review Process:

    • Develop a formal review process for claiming rebates, ensuring that all requests are thoroughly vetted before submission. This could include a sign-off process to confirm that claims meet established rebate item conditions.

  9. Engagement with Authority Representatives:

    • Foster communication with representatives from the relevant customs and excise authorities to stay informed about best practices and compliance expectations. Regular engagement can also help clarify what documentation and procedures are required.

  10. Review of Acquittals:

    • Create a standardized process for tracking acquittals of duty and ensuring that all related documentation is submitted within stipulated timeframes, minimizing the risk of penalties or delays.

  11. Assessment of Loss Allowances:

    • Implement a procedure to assess and document all loss allowances claimed thoroughly to confirm they qualify under the prescribed legal framework. This documentation should include a rationale for any claims and supporting evidence.

  12. Post-Audit Reviews:

    • Conduct post-audit reviews to analyze audit findings and recommendations. Documenting this process allows for continual learning and improvement in each subsequent audit cycle.

Conclusion:

By implementing these recommendations, the review committee can enhance the auditing process, improve compliance with regulations, and ultimately bolster the integrity of the excise accounting framework for spirits manufacturing. Continuous improvement and vigilance are key to ensuring compliance and minimizing risks in the industry.