The Administration of Norfolk Island AUDIT PROCESS Goods & Services Tax Act 2007

1. The Administration of Norfolk IslandAUDIT PROCESSGoods & Services Tax Act 2007 Shelly Le Cren Chief Revenue Officer 17 October 2007

2. Meeting focus: GST AUDIT Questions relating to specific GST matters taken on notice and a formal response will follow

3. Presentation overview • Purpose of the audit • Auditor, timing and place of audit • Method of selection • Audit scope • Methodology • NBN holder obligations • Audit report • Questions

4. Purpose of the audit • Provide guidance to NBN holders regarding record keeping and report on compliance to the Chief Revenue Officer / Administration of Norfolk Island • Areas of focus – 2 selected monthly returns, all associated documentation (NBN holders and suppliers) as well as input tax credit substantiation • May result in amended returns being required • Primary focus is proactive to assist both the NBN holder and the Chief Revenue Officer / Administration of Norfolk Island. This is not an adversarial audit

5. TheGSTAuditor • is independent, • is a highly experienced government auditor with GST implementation experience in Australia, and • has signed a confidentiality agreement with the Administration

6. Timing and workplace • Audits will occur over a two week period • NBN holders will be given a minimum of 5 days notice of the audit commencing • The Auditor must be provided with an appropriate area within your workplace to undertake the audit • if you do not have space, you will be given the option of utilising the GST office area

7. Method of selection • NBN holders will be randomly selected from industry groups – 2 months returns will be audited • NBN holders are also given the option of volunteering to assist both the management and staff of your businesses • Voluntary audits will encompass only one return selected by the Auditor

8. Audit scope • The auditor: • will require an understanding of your business so the onus is on the NBN holder to provide this briefing at the commencement of the audit. If you operate more than one business under that NBN, you will need to explain that to the auditor • will select 2 monthly returns lodged with the GST office between 2 April and 30 September 2007 forming the basis of the audit • will inspect all records relating to those returns which may be sourced prior to 2 April 2007 given that GST operates on a cash basis ie. date payments are made and cash is received

9. Methodology The auditor: • will review all documents that form the basis of your selected returns eg. Bank statements, reports generated by computerised systems, sales records (cash & credit), receipts, invoices (NBN holder and providers of goods/services), etc • will compare your records with your returns • will consult with your accounting service provider where appropriate • will identify any differences and corrective action that may be required

10. Obligations of the NBN holder • To work co-operatively with the Auditor • To provide a comprehensive briefing to the auditor on your business operations at the commencement of the Audit. This is a very important step in the audit process • To have your accounting service provider (where appropriate) available if required • To provide an appropriate workspace for the Auditor or request alternate arrangements through the GST office staff • To provide all documentation promptly for audit review including any hard copy reports from any computerised systems you maintain relating to the management of GST

11. Audit report A written report on the findings will be provided to the Chief Revenue Officer which will be discussed privately with the NBN holder with a view to improving the quality of future returns as well as identify any amended returns that may be required.

12. Questions