QAR and API Manual, 2021

(For Departmental Circulation Only)
MANUAL
for
QUALITY ASSURANCE
REVIEW
&
AUDIT PERFORMANCE
INDEX, 2021
Directorate General of Audit

Central Board of Indirect Taxes and Customs
Department of Revenue
Ministry of Finance
Government of India
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes & Customs
Directorate General of Audit
FOREWORD
The system of Quality Assurance Review (QAR) was first
introduced in April 2004 to effectively monitor the compliance of
EA 2000 methodology by the audit formations at the field level. The
Manual for QAR was first introduced in 2007. Subsequently, the
same was revised in 2008 and 2016 based on certain amendments in the
Central Excise and Service Tax statutes and also after the formation of
exclusive Audit Commissionerates during the reorganization of formations
in the CBIC in the year 2014.
Presently, quality evaluation of Central Excise and Service Tax

audits is done as per the QAR Manual, 2016 by the Zonal units of this
Directorate annually.
Pursuant to introduction of Goods and Services Tax (GST), a major

tax reform in the country, w.e.f. 01.07.2017, GST Audit Manual, 2019
(GSTAM 2019) was released by this Directorate envisaging the audit process
to be followed for conduct of GST audits with certain changes in the norms
for selection of taxpayers for conduct of audits, approval of audit plans,
conduct of desk-based audits in case of small taxpayers etc.
In view of this sweeping reform, a need has arisen for a

comprehensive review of the QAR Manual, 2016 to align it with the
guidelines prescribed under GSTAM 2019 and to make it a more
transparent and effective tool for performance evaluation with the intended
objective of using the evaluation for improving audit efficiency and
outcomes.
A committee headed by Shri Sunil Jain, Additional Director General,

Hyderabad Zonal Unit constituted for the comprehensive revision of the
performance evaluation methodology of Audit Commissionerates has
come out with elaborate proposals, which have been approved by the CBIC
in its meeting held on 14.10.2020. These proposals are discussed in this
manual.
Some of the highlights of the Manual for Quality Assurance Review

& Audit Performance Index, 2021 are as under:
i
❖ Methodology for grading the Audit Commissionerates, on both,
qualitative performance in the form of QAR and quantitative
performance in the form of API, and a composite annual grading is
provided in this Manual.
❖ The existing system of assessment by way of marking “yes” or “no”

against each standard of the audit process is being replaced with a
numerical scoring system which will ensure that the evaluation is
based on an objective and rational methodology leaving little scope
for subjectivity. A new set of parameters are introduced for QAR
grading.
❖ Scoring based on additional parameters like training needs, timely

scheduling of audits, periodical reviews by senior officers etc. to
evaluate and improve the general performance of the Audit
Commissionerate is also being introduced, in the QAR.
All due care has been taken in drafting this manual. Suggestions
from the field formations and other Zonal units also have been suitably
incorporated.
I appreciate the personal efforts made by Shri Sunil Jain, Additional

Director General, Hyderabad Zonal Unit and his team of officers right from
the beginning of making proposals for revamping of the QAR process to
bringing out this Manual.
Feedback, inputs and suggestions pertaining to this manual may be

provided to the Office of Directorate General of Audit through the
jurisdictional Additional Director General (Audit).
Best Wishes,
(SUAKZATHANG NUNTHUK)
DIRECTOR GENERAL
New Delhi,
Dated: 11th March, 2021.
ii
INDEX
Page
Title No.
CHAPTER 1 DIRECTORATE GENERAL OF AUDIT AND 1

INTRODUCTION TO QUALITY ASSURANCE REVIEW
AND A UDIT PERFORMANCE I NDEX PROGRAMME
1.1 Introduction 1
1.2 Need for Revision/Revamping of QAR and Introduction of

1
API Process
1.3 Purpose of the Manual 3
1.3.1 Scope of the Manual 3
1.4 Intended Users 4
1.5 Amendments 4
CHAPTER 2 QUALITY ASSURANCE REVIEW 5
2.1 Introduction 5
2.2 QAR Objectives 5
2.3 QAR Team 6
2.3.1 Composition of QAR Team 6
2.3.2 Qualification of Team Members 6
2.4 Frequency of QAR 6
2.5 Duration of QAR 6
2.6 Overview of the QAR Process 7
2.7 Grading of the Performance of Audit Commissionerates 8
2.8 QAR Format 8
CHAPTER 3 AUDIT P ERFORMANCE INDEX (API) 9
3.1 Introduction to API Grading 9
3.2 Scope 9
iii
Page
Title No.
3.3 Importance of Each Parameter 10
3.4 Furnishing of Data Required for Determining API 12
3.5 Issue of Quarterly API by DG (Audit) 12
CHAPTER 4 CONDUCTING THE QAR 13
4.1 Scheduling the Review 13
4.1.1 Annual Planning 13
4.1.2 Scheduling 13
4.2 Gathering of Information 13
4.3 Preliminary Review of Available Information 13
4.4 Opening Meeting with the Audit Commissioner 14
4.5 Selection of Files for Review 14
4.6 Verification of Information Provided in MPR 14
4.7 Review of General Information Provided by the Audit

15
Commissionerate
4.8 Review of General Performance of the Audit Commissionerate 15
4.9 Review of Selected Files 15
4.10 Closing Meeting with the Commissioner 16
4.11 Finalization of the Review Report 16
4.12 Response from the Commissionerate 18
CHAPTER 5 METHODOLOGY FOR DETERMINING API 19
CHAPTER 6 COMPOSITE GRADING OF QAR & API 25
6.1 Route Map for Issue of Composite Grading 25
ANNEXURE-I Methodology for Verification and Awarding

26
scores for Part-B & Part -C of QAR
iv
Page
Title No.
ANNEXURE-II Format of QAR 46
Part A – General Information 46
Part B – Questionnaire for Evaluation of 52

General Performance of Audit
Commissionerate
Part C – Questionnaire for Evaluation of 54
Individual Audit File
Part D – QAR Grading 58
Part E – Comments/Suggestions & 59

Recommendations
ANNEXURE-III Format of Report required for determining API 60
ANNEXURE-IV Format of Award of API Grading 61
ANNEXURE-V Format of Award of Composite Grading of QAR 62

& API
v
CHAPTER 1
DIRECTORATE GENERAL OF AUDIT AND
INTRODUCTION TO QUALITY ASSURANCE REVIEW
& AUDIT PERFORMANCE INDEX PROGRAMME
1.1 INTRODUCTION
1.1.1 The Directorate General of Audit, Indirect Taxes and Customs, New
Delhi (headed by the Principal Director General/Director General) with its
seven Zonal units at Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad,
Kolkata and Mumbai (each headed by a Principal Additional Director
General/Additional Director General) is required to ensure the efficient and
effective implementation of the audit system and also to evolve and
improve audit techniques and procedures through a periodic review. With
the help of its Zonal units, the Directorate General of Audit regularly
monitors the audits conducted by the various Audit Commissionerates to
ensure that the coverage of the registered persons is adequate in number
and is reflective of their risk profile and to ensure that these audits are
conducted in accordance with the provisions of law.
1.1.2 As an advisor to the Central Board of Indirect Taxes and Customs

(CBIC), the Directorate General of Audit is required to suggest measures for
enhanced tax compliance, gauge the level of audit standards while
ensuring audit quality assurance and monitoring the performance and
pendency related to audit in the Audit Commissionerates. Quality
Assurance Review (QAR) is the periodical review to be carried out by
the Zonal units of the DG Audit to evaluate the performance of the
Audit Commissionerates in terms of their adherence to the process of
audit prescribed in the Audit Manual. Audit Performance Index (API)
is a method of evaluating the quantitative performance of the Audit
Commissionerates on a comparative basis. Development of
methodologies for the QAR programme and the determination of API are
the responsibilities of the DG (Audit), New Delhi.
1.1.3 Zonal Pr. ADGs/ADGs are responsible for the actual conduct of
QARs of the Audit Commissionerates in their respective jurisdiction.
1.2 NEED FOR REVISION/ REVAMPING OF QAR &

INTRODUCTION OF API PROCESS
1.2.1 Hitherto, the QAR was conducted as per the QAR manual 2016
which is based on Central Excise & Service Tax Audit Manual, 2015
1
(CESTAM, 2015). The CESTAM 2015 contained standards and elements of
audit meant for conduct of audit of Central Excise and Service Tax assessees.
On introduction of GST, the GST Audit Manual 2019 (GSTAM 2019) was
released on 05.07.2019, introducing the elements of audit standards and
procedure for conduct of audit under the GST Act, 2017. As the existing
QAR process cannot be made applicable to GST audits, a new manual is
required to align it with the GST audits and make it more transparent and
effective tool for quality evaluation in tune with GSTAM 2019.
1.2.2 The audit under GST regime is a very important tool for ensuring
compliance by the taxpayer. The methodology of selection of taxpayers for
conduct of audit is risk-based and, in some cases, random selection by the
system. To ensure that the evaluation of the audits conducted by our
auditors are reflective of the risks involved and commensurate with the
knowledge and skills of auditors and availability of other audit enablers, a
need has been felt for re-introduction of Audit Performance Index (API)
which is in the nature of the quantitative outcome of the audits conducted.
The API will prompt all auditors to achieve their best and encourage healthy
competition among the Audit Commissionerates.
1.2.3 The Directorate General of Audit is mandated with evaluation of the

performance of the Audit Commissionerates in terms of both qualitative
and quantitative parameters, by way of determination of QAR of individual
Audit Commissionerates and API on all India basis. With the introduction
of API as a separate performance evaluation index, there is a need to
integrate the evaluation of both qualitative and quantitative performances
and to issue a composite grading of QAR and API, which will be a complete
and comprehensive assessment of the Audit Commissionerates for the
entire audit year. This manual introduces the methodology for the same.
1.2.4 After thorough study of GST audit procedures as per GSTAM 2019,
a new methodology for the conduct of QAR, and API is detailed in this
manual.
This new system is introduced with the following objectives:
i. To provide a fair assessment of the performance of Audit
Commissionerates in a scientific manner and to guide them to take
necessary steps to improve the quality of audits by following the
procedure laid down in the audit manual.
ii. To evolve QAR and API Grading system, which is transparent, with
minimum subjectivity and based on quantifiable and measurable
quality parameters.
2
1.2.5 The QAR & API programme is being used by the DG (Audit) for the
following purposes:
i. To assess the quality of audits performed by Central Tax officers
working in Audit Commissionerates vis-a-vis the quality standards
established by the GSTAM 2019.
ii. To report to jurisdictional Principal Commissioner/ Commissioners
of audit, Principal Chief Commissioner/Chief Commissioners the
outcome of review, so that shortcomings receive immediate
attention at the highest level and remedial actions are taken.
iii. To report API Grading (on quarterly/annual basis) to Principal
Commissioner/Commissioners, Principal Chief Commissioner/
Chief Commissioners so that the comparative status of the Audit
Commissionerates’ quantitative performance on all-India basis can
be reviewed during the year and after the year and efforts can be
made for improvement.
1.3 PURPOSE OF THE MANUAL

After the introduction of GST from 1st July, 2017, GSTAM 2019 was
issued by this Directorate envisaging the audit process to be followed for
conduct of GST audits. This manual is prepared in order to evaluate the
qualitative and quantitative performance of the GST audits conducted by
the Audit Commissionerates through QAR and API respectively. Hence, the
evaluation of legacy audits related to Central Excise and Service Tax shall
not be part of QAR process detailed in this manual.
1.3.1 SCOPE OF THE MANUAL

i. The manual lays down instructions, policies and procedures related
to the QAR of GST Audits, carried out by the Audit
Commissionerates.
ii. Guidelines provided herein are intended to ensure that QARs of
GST audits are carried out in a uniform, comprehensive, transparent
and professional manner.
iii. The manual contains the methodology for conducting QARs. The
manual defines the composition, functions and responsibilities of
the review team and prescribes standard formats for the collection
of information and reporting of the outcome of such reviews. The
assessment report along with the major observations is presented to
the jurisdictional Chief Commissioner and Commissioner to bring
to their notice the existing level of audit quality for improvements,
if any.
iv. The manual provides guidance to the review officers (QAR team)
through a set of published audit quality parameters for uniform
assessment.
3
v. The manual seeks to promote an enhanced understanding, amongst
the Audit Commissionerates, of the audit quality framework and
standards, against which their performance will be measured. It also
promotes adoption of these quality standards for improvement in
their performance of the audit.
vi. The manual provides for grading the Commissionerates on the basis
of the audit results viz., audit detections, recoveries and productivity
per audit carried out on quarterly and annual basis in the form of
API.
vii. The manual provides for measuring the qualitative evaluation of
audits at the end of the audit year by way of QAR and quantitative
evaluation of audits at the end of each quarter through API. The
performance of the Audit Commissionerates is assessed on a
collective basis through composite grading of QAR and API for the
entire audit year.
viii. The manual enables to showcase the achievements of all Audit
Commissionerates on the whole, and their relative positions on all-
India basis for a particular audit year vis-à-vis other Audit
Commissionerates.
1.4 INTENDED USERS

The manual is intended for the use of officers of the Headquarters
and the Zonal units of the Directorate General of Audit. It is also useful for
the officers of Audit Commissionerate and officers of Principal Chief
Commissioner/ Chief Commissioner looking after Audit.
1.5 AMENDMENTS
Changes in the administrative policies, procedures and
organizational structure may necessitate a revision of this manual from time
to time. Keeping the manual relevant and updated is an important priority
of the Directorate General of Audit. It is anticipated that the manual will be
reviewed periodically and updates issued, whenever necessary. Suggestions
for additions and improvements that can enhance the manual’s usefulness
may be forwarded by the users to the Directorate General of Audit through
the jurisdictional Pr. ADG/ADG (Audit).
4
CHAPTER 2
QUALITY ASSURANCE REVIEW
2.1 INTRODUCTION
2.1.1 Goods and Services Tax Audit Manual 2019 (GSTAM 2019) laid
down the principles and policies of audits conducted under CGST Act, 2017
and the Rules made thereunder. Guidelines provided therein are intended
to ensure that the audit of taxpayers is carried out in a uniform, efficient,
and comprehensive manner, adhering to stipulated principles and policies
and as per the best international practices. The system of audit adopted by
the department therein is process-oriented. Audit Commissionerates are
required to ensure that the audits of taxpayers are strictly being conducted
in adherence to guidelines and procedures prescribed in GSTAM 2019.
Quality of Audits can be measured by quantifying the level of adherence to
the audit process prescribed in the GSTAM 2019 by the auditors.
2.1.2 The GSTAM 2019 recognizes due importance of other factors such
as skill level and knowledge base of auditor, formation of audit teams with
an optimum balance of skills, the involvement of senior officers in
providing inputs and guiding the audit process particularly in complicated
audits etc., which are also crucial to achieve the desired results.
2.1.3 Quality Assurance Review (QAR) is carried out to evaluate the

performance of the Audit Commissionerates in terms of their adherence to
the process of audit prescribed in GSTAM 2019.
2.2 QAR OBJECTIVES

The objectives of the QAR programme are to assess whether:
i. The Audit Commissionerates have adequately followed the
procedures and guidelines stipulated in GSTAM 2019 in various
stages of conduct of audit e.g., selection of taxpayers, scheduling of
audits, formation of audit groups, conduct of MCMs, follow up of
audit objections raised etc.
ii. The audit process is being properly documented by the auditors;
iii. The legal provisions of GST are properly applied in arriving at the
audit objections and are adequately supported by analysis, research,
and approval of the senior officers;
iv. High standards of professional conduct are being practised by the
auditors;
5
v. The staff deployed is adequate and involvement of the senior
officers is commensurate with the prescribed norms;
vi. The audit officers are trained in GST law, audit procedures,
comprehending/evaluating financial records and computer skills.
2.3 QAR TEAM

2.3.1 COMPOSITION OF QAR TEAM
The QAR team should ideally consist of:
i. One senior officer of the rank of Deputy/Assistant Director.
However, wherever Additional/Joint Director is posted in a Zonal
unit, he/she is expected to closely monitor the proceedings of the
QAR;
ii. two to three officers of the rank of Additional Assistant Director
(Superintendent);
iii. two to three officers of the rank of Inspectors, subject to availability;
iv. The Pr. ADG/ ADG of the Zonal unit or the Additional Director/Joint
Director (in case regular Pr. ADG/ADG is not posted to the Zonal
unit) shall be present along with the team during the ‘opening
meeting’ with the Commissioner of the respective Audit
Commissionerate.
2.3.2 QUALIFICATIONS OF TEAM MEMBERS

Apart from a thorough knowledge of all aspects of GST Law and
procedures, the desirable competencies of the QAR team should include:
i. Background and/or experience in Accounting;
ii. Work experience in conducting GST audits;
2.4 FREQUENCY OF QAR

The ideal frequency of QAR is determined by the quality of audits
of the Audit Commissionerates, availability of staff for the conduct of the
review, and other factors. Review of the Audit Commissionerates shall be
carried out once every year with a minimum gap of six months between two
consecutive reviews of the same Commissionerate. It shall be ensured that
the review of all Audit Commissionerates falling under the jurisdiction of a
Zonal Pr. ADG/ADG, for the previous Audit Year, shall be completed by 30th
September of the current year.
2.5 DURATION OF QAR

Under normal conditions, a review may be completed within five
working days. In exceptional circumstances, it may be extended for a
6
further suitable period with the approval of Pr. ADG/ADG. A break during
the review, unless due to unavoidable circumstances, is disruptive and
undesirable.
2.6 OVERVIEW OF THE QAR PROCESS

The QAR process starts with obtaining general information about
the Audit Commissionerate in Part-A of the QAR format (Annexure-II) and
retrieving information from the relevant Monthly Performance Reports
(MPRs) pertaining to the Audit Commissionerate. The QAR team conducts
a preliminary review of the said data before proceeding for the review. After
proceeding to the Audit Commissionerate, the review begins with an
opening meeting of QAR team with the Principal Commissioner/
Commissioner of the Audit Commissionerate. The information contained
in the MPR is validated on a selective basis from the records maintained in
the Commissionerate. The selected files are reviewed based on the
identified elements and standards. The team also reviews the organizational,
functional and infrastructure facilities of the Audit Commissionerate. The
findings are summarized and presented before the Principal
Commissioner/ Commissioner of the Audit Commissionerate at the closing
meeting. These are then drafted in the form of QAR report prescribed and
forwarded to the Pr. Commissioner/Commissioner of audit concerned,
jurisdictional Pr. Chief Commissioner/Chief Commissioner, and the Pr.DG/
DG (Audit). The Pr. Commissioner/Commissioner of audit is required to
communicate his/her response, within a month of receipt of the QAR
report.
The review process can also be diagrammatically represented as

follows:
Obtaining data of the Audit Commissionerate
Preliminary review of the data collected
QAR team’s opening meeting with the Commissioner
Review of the files and the infrastructure of the Audit Commissionerate by the
QAR team
Summary by the QAR team at the closing meeting
7
2.7 GRADING OF THE PERFORMANCE OF THE AUDIT
COMMISSIONERATES
2.7.1 In the QAR Manual, 2016, the QAR grading of the Audit
Commissionerates was done on the basis of evaluation of 59 parameters in
9 categories. Certain questions contained in the questionnaire adopted for
review were subjective in nature.
2.7.2 In this new QAR process, the subjective evaluation is dispensed with
and marks are being awarded with different weightages for the standards
contained in the questionnaires for QAR grading. Further, in earlier QAR,
process enablers, viz. manpower, participation of senior officers in audit
process, etc., were not evaluated for the purpose of grading. The revamped
QAR also considers these enablers for the evaluation of grading. A total of
73 standards are being evaluated, carrying a maximum of 100 marks. The
methodology for verification of the standards and awarding of score is
detailed in Annexure-I of this manual.
2.8 QAR FORMAT

The new QAR format contains Part-A to Part-E as detailed in
Annexure-II of this Manual.
Part-A - General Information: Information about the Audit
Commissionerate relating to the period under review including staff
position, trainings conducted, infrastructural facilities, rewards sanctioned
etc. Information obtained in this part will not be considered for award of
grading. However, the information contained in some of the tables will be
used for evaluation of quality enablers in Part B.
Part-B - Questionnaire for evaluating General Performance of Audit
Commissionerate: This part contains queries of general nature like staffing,
groups’ formation, selection of taxpayers, DAR, MCM, FAR, follow-up
action etc. The questionnaire of this part contains 26 Questions carrying 30
Marks.
Part C - Questionnaire for collection of information from individual files:

This part contains a questionnaire for individual files on various procedures
followed by audit teams as stipulated in GSTAM 2019 viz., maintenance of
RPMF, financial documents, desk review, preparation and approval of audit
plan, verification of issues, working papers, preparation of DAR, issue of
FAR, follow up of audit objections etc. This part contains 47 questions
carrying a total of 70 Marks.
Part D - QAR Grading.
Part E - Comments/Suggestions & Recommendations.
8
CHAPTER 3
AUDIT PERFORMANCE INDEX (API)
3.1 INTRODUCTION TO API GRADING

3.1.1 The Quality Assurance Review of the Audit Commissionerates is
conducted with a view to ensure that the prescribed processes of the audit
are being observed and documented properly. While QARs would focus on
the qualitative aspects of audit performance, there is a need to provide some
means of evaluating the quantitative performance of a Commissionerate on
a comparative basis as well. With this objective in mind, the Audit
Performance Index (API) has been developed. The Audit Performance
Index (API) is a means of evaluating the quantitative performance of the
Audit Commissionerates on a comparative basis. The publication of API on
quarterly basis will encourage all Commissionerates to compare their
performance outcome vis-à-vis other Commissionerates and encourage
them to fill up the gaps and improve the performance in subsequent
quarters.
3.1.2 API grading will be determined and issued on quarterly basis.

Ranking of all the Audit Commissionerates will be issued in descending
order on quarterly basis, based on a set of parameters. While publication of
API would foster healthy competition among the Commissionerates to
improve their audit performance quantitatively, it may be emphasized that
these rankings are not to convey the message that the final test regarding
audit performance is the volume of detection and recovery. In order to give
a comprehensive picture of both quality and quantity, a composite grading
of QAR and annual API will be issued every year, which would indicate the
relative positions of Audit Commissionerates on all-India basis and will be
a complete reflection of the performance of the Audit Commissionerates.
3.2. SCOPE
3.2.1 API will be evaluated on seven parameters with different weightages,
viz.
i. number of taxpayers scheduled for audit vs number of
taxpayers audited,
ii. man-days available vs man-days utilized,
iii. detection per audit,
iv. recovery per audit,
v. detection vs recovery,
vi. output per auditor based on detection, and
vii. paras closed vs paras available for closure.
9
3.2.2 Out of the above performance parameters, i), ii), v) and vii) are ratios,
which indicate the relative size of two values and will be expressed as
percentage. The other three performance indicators viz., iii), iv) and vi) will
be amounts shown in Rupees. API being a relative performance index,
percentile score in respect of all these parameters will be calculated.
A percentile is a measure, indicating the value below which a
given percentage of observations in a group of observations fall. Since, it is
only a comparison with the highest value of a particular performance
indicator, that highest value will be considered as 100 percentile and all the
remaining values will be shown in respective relative percentile which will
be less than 100. In view of this, while determining API, i.e., to compare the
relative performance amongst various Audit Commissionerates, different
performance indicators in ratios and amounts are being shown as percentile.
3.3 IMPORTANCE OF EACH PARAMETER

3.3.1 Importance of each parameter considered for API is discussed
hereunder:
I. Ratio of taxpayers audited to taxpayers scheduled for audit (weightage

– 10):
The taxpayers scheduled for audit should be audited as per schedule to
ensure optimum output and performance. This parameter indicates
the extent of coverage of all the taxpayers scheduled. When all the
taxpayers scheduled are audited by an Audit Commissionerate it shall
be considered as reached the goals set. This parameter is considered
with a weightage of 10. This parameter will be ratio shown as
percentage. It may be noted that the number of taxpayers audited
should be taken only from those taxpayers which are scheduled in that
particular quarter. Audits of backlog taxpayers will not be counted
towards the performance.
II. Ratio of man-days utilized to man-days available (weightage - 10):
This parameter indicates as to whether man-days available in Audit
Commissionerate for conduct of audits are fully being utilized.
Evaluation of this parameter is important because it reflects the
efficiency of scheduling audits vis-a-vis availability of manpower and
is also a reflection on proper follow up at senior level on whether
manpower available is fully utilized. This parameter will be ratio
shown as percentage.
10
III. Detection per audit (weightage – 20):
This parameter evaluates as to how much amount was detected per
audit. This is an obvious outcome of the audit process and also a
reflection of the quality of the audits done. It also reflects on the
knowledge & skills of the auditors. This being an important outcome
of the audit, this parameter is assigned weightage of 20 marks. This
parameter will be shown as amount in Rupees.
In order to ensure that “detection per audit” is a true reflection of the
Audit Commissionerate’s broad-based performance and is not skewed
with some outlier performance,
i) 20% weightage will be given to ‘detection per audit’ of 5 taxpayers
having highest detections during a quarter (weightage 4) and
ii) 80% weightage will be given to the detection per audit of remaining
tax payers (weightage 16)
IV. Recovery per audit (weightage – 20):
This parameter evaluates how much amount was recovered per audit.
When recoveries are more in an Audit Commissionerate, it reflects on
the quality of audit objections coupled with the fact that auditors are
able to persuade the taxpayer with regard to the objections raised. To
evaluate the extent of recoveries this parameter is considered with
weightage of 20. This parameter will be shown as amount in Rupees.
In order to ensure that recovery per audit is indeed a true reflection of
the Audit Commissionerate’s broad based performance and is not
skewed with some outlier performance,
i) 20% weightage will be given to ‘recovery per audit’ of 5 taxpayers
yielding highest recovery during a quarter (weightage 4)
ii) 80% weightage will be given to the recovery per audit of remaining
tax payers (weightage 16)
V. Ratio of total recovery to total detection (weightage - 10):
It indicates the quality of audit objections raised and also the level of
Audit Commissionerate’s effort to make the taxpayer understand the
non-compliance on their part and also to make them understand the
benefits they get by making voluntary payments before issue of SCN.
To evaluate this, ratio of total recovery to total detection is considered
with weightage of 10. This parameter will be ratio shown as percentage.
VI. Output per auditor (weightage - 20):
This parameter links the detection amount with the number of officers
engaged in conduct of audits to evaluate the productivity in the Audit
Commissionerate. This parameter is considered with a weightage of
20. This parameter will be amount in Rupees.
11
VII. Ratio of total number of paras closed during the quarter to total paras
pending for closure at the beginning of the quarter plus total paras
raised during the quarter (weightage - 10):
This parameter is important because it evaluates the extent of
monitoring and active follow up of pending audit paras by taking
effective steps. This parameter will be in ratio shown as percentage.
3.3.2 As per GSTAM 2019, findings of audit get finalized when they are
approved in the Monthly Monitoring Committee Meeting. Hence, while
calculating detection per audit and recovery per audit, only those audits,
where DARs are approved in the Monthly Monitoring Committee Meeting
during that particular quarter will be considered.
3.4 FURNISHING OF DATA REQUIRED FOR DETERMINING

API
3.4.1 The feasibility of capturing the data, required for API, online is being
examined. It is also proposed to amend the proforma of MPR to include
data required for the calculation of API. Till such time, it is decided to
include a format specifically containing the information required for
determining API in the format as detailed in Annexure-III of this manual.
3.4.2 The Audit Commissionerates are required to submit the data as per
Annexure – III by the 15th of the following month of each quarter i.e., by 15th
July for quarter ending June, 15th October for quarter ending September, 15th
January for quarter ending December and 15th April for quarter ending
March. The data is required to be sent in Excel format to DG (Audit) through
email with a copy marked to the respective Zonal unit. The Zonal units of
DG (Audit) are required to ensure that the data from the Audit
Commissionerates reaches DG (Audit), New Delhi by the dates prescribed
above.
3.5 ISSUE OF QUARTERLY API BY DG (AUDIT)

After receipt of the information from the Audit Commissionerates,
the DG (Audit) will analyse the data and issue quarterly API on all-India basis
in the format Annexure-IV of this Manual by 25th of the following month of
each quarter i.e., by 25th July for quarter ending June, 25th October for
quarter ending September, 25th January for quarter ending December and
25th April for quarter ending March.. This may be possible only when the
information in Annexure-III is received from all the Audit
Commissionerates before due date as stipulated in para 3.4.
12
CHAPTER 4
CONDUCTING THE QAR
QAR is conducted once in a year and is a comprehensive review. The

steps involved in conducting a QAR are discussed in this chapter.
4.1 SCHEDULING THE REVIEW

This is the first stage in the conduct of a QAR. This involves planning
and scheduling the reviews of the Audit Commissionerates, keeping in view,
the norms on the frequency of QAR.
4.1.1 ANNUAL PLANNING

The Zonal units of DG (Audit) shall draw the annual plan for the
conduct of QARs. The plan shall contain the details of the Audit
Commissionerates that are to be taken up for review during the year. The
annual plan of conducting QARs is to be done by the Zonal units in such a
manner that the process of conduct of QAR in respect of all the Audit
Commissionerates is completed by 30th September. After completion of all
the QARs by 30th September, a list containing Commissionerate-wise QAR
gradings should be sent to the DG (Audit) by the Zonal ADGs, by 15th
October for the purpose of calculation of composite grading which will be
issued by the DG (Audit) by 31st October.
4.1.2 SCHEDULING
Once the annual plan for conduct of QARs is drawn by the Zonal
units, the month-wise schedule of the reviews to be conducted should be
finalized. This should take into consideration the minimum gap of six
months between two consecutive reviews of the same Audit
Commissionerate. On finalization of the schedule, the same should be
intimated to the DG (Audit), and the Audit Commissionerates.
4.2 GATHERING OF INFORMATION

The information on audits conducted by the Audit
Commissionerate, which is scheduled for review, should be taken from the
Monthly Performance Reports (MPR). The Audit Commissionerate should
be requested to provide the data in the proforma of Part-A (General
Information) of the QAR format given in Annexure-II of this Manual and
also category-wise list of the taxpayers audited during the review period, at
least one month before the QAR is scheduled.
13
4.3 PRELIMINARY REVIEW OF AVAILABLE INFORMATION
This is basically a desk review that involves a general review of the
data gathered as discussed in Para 4.2. It gives an idea of the working of the
Audit Commissionerate such as manpower, infrastructure and delivery of
audit programme. The completed preliminary review report should find a
place in the QAR file available with the Zonal unit.
4.4 OPENING MEETING WITH THE AUDIT COMMISSIONER

The review of the Audit Commissionerate begins with the opening
meeting of the QAR team with the Audit Commissioner so that the Audit
Commissioner is aware of the QAR team’s arrival, the scope of the review,
and the expected timeframe. It is essential that the Zonal ADG or the
Additional Director/Joint Director (in case regular ADG is not posted to the
Zonal unit) should also attend this opening meeting with the jurisdictional
Audit Commissioner.
4.5 SELECTION OF FILES FOR REVIEW

This is one of the most important steps that determines the efficacy
of the review. The review team should select at least 60 files consisting of 20
files of each category i.e., large, medium and small taxpayers. The files
should be selected in such a way that the following parameters are fulfilled.
S. No. Parameter
(i) Different sectors/commodities/services.
(ii) Different types of business compositions e.g., Public Limited
companies, Private Limited companies, Partnership firms, LLPs,
PSUs, JVs, Sole proprietorship, NGOs, Clubs etc.,
(iii) High/Low/Nil detections & recovery.
4.6 VERIFICATION OF INFORMATION PROVIDED IN MPR

The veracity of the information provided in MPR needs to be
ascertained and verified with the records and registers maintained by the
Audit Commissionerate. Proper maintenance of the prescribed registers is
an essential part of good audit management and aids in providing accurate
information at every stage of audit and thereafter. In order to examine the
maintenance and updating of registers, a few files should be randomly
selected and relevant entries be cross-checked with the corresponding
registers.
14
4.7 REVIEW OF GENERAL INFORMATION PROVIDED BY
THE AUDIT COMMISSIONERATE
A review of the general information provided by the Audit
Commissionerate in Part-A of the QAR format (Annexure-II) provides an
insight into the working conditions prevailing in the Audit
Commissionerate, such as:
i. Adequate strength of officers;
ii. Vacancy positions and training details;
iii. Details of the Monthly Monitoring Committee Meetings.
iv. Availability of sufficient infrastructure.
v. Posting of officers with required skills like Commerce/Accounts
background/Audit experience and review of the performance of
Audit Commissionerates by the Chief Commissioner.
vi. The practice of review of approved audit plans by the
Commissioner/Additional or Joint Commissioner, as applicable.
vii. Optimum utilization of services of Deputy/Assistant Director (Cost),
wherever available.
viii. Mechanism for feedback from major taxpayers/trade organizations
about the audit process
ix. Theme based audits conducted.
4.8 REVIEW OF THE GENERAL PERFORMANCE OF THE

AUDIT COMMISSIONERATE
A review of the general performance of the Audit Commissionerate
is to be conducted on the basis of parameters enumerated in Part-B of the
QAR format given in Annexure-II of this manual, which focuses on key
functional enablers such as training to the officers freshly posted and
refresher courses to other officers, planning and scheduling of the audits
within the stipulated time period, selection of taxpayers, regular conduct of
MCMs, review/approval of audit plans by higher officers etc. Information
in respect of this part shall be obtained and reviewed by the QAR team on
visiting the Commissionerate.
4.9 REVIEW OF SELECTED FILES

The review of individual audit files should cover the following
quality elements (discussed in Chapter 4) and should be conducted in the
proforma as prescribed in Part-C of QAR format given in Annexure-II of
this manual.
1. Preliminary desk review;
2. Audit plan;
3. Audit verification (consisting of Evaluation of Internal
15
controls, Audit verification & Technical issues)
4. Working papers;
5. Professional conduct;
6. Timeliness.
4.10 CLOSING MEETING WITH THE COMMISSIONER

The review team should hold a closing meeting with the Audit
Commissioner at the end of the review. During this meeting, the team
should discuss the major observations made during the review and any
other observation which may need immediate attention of the Audit
Commissioner. Specific recommendations should be discussed taking into
account the feasibility factor.
4.11 FINALIZATION OF THE REVIEW REPORT

On return to their office, the review team shall analyse the data
collected in Part-B and Part-C of the QAR format during the review.
4.11.1 Part-B contains total of 26 questions which carry 30 marks. Out of
these 26 questions, 2 questions i.e., Q. No. 8 & Q. No. 16 having score of 1
mark each have a possibility of being 'not applicable'.
For example, (i) in a Commissionerate Q. No. 8 is not applicable
since no tweaking took place. In such a case, scoring from Part-B for QAR
Grading will be determined based on actual score awarded for 25 questions
which will have a maximum of 29 marks. If actual score awarded for these
25 questions is 19, then scoring from Part-B for the purpose of QAR Grading
= (30) * (19 (i.e., marks secured) /29 (maximum marks for 25 questions) =
19.65.
(ii) If in another Commissionerate tweaking of taxpayers took place
and the reasons for tweaking were not recorded, then all the 30 questions
shall be considered as applicable and scoring for that question will be 0. If
the Commissionerate scored 19 marks, then scoring from Part-B will be 19
only since all are applicable cases.
4.11.2 Part-C contains total of 47 questions carrying 70 marks. The

information in Part-C will be collected in respect of each individual audit
file selected for review. The information so collected in respect of all the
audit files will be tabulated in a single worksheet as illustrated in the table in
para 4.11.3. The sum of scores obtained for each question in respect of all the
files reviewed will be determined and the average marks will be calculated
for each question. The aggregate of all such average marks will be ‘Total
marks obtained by Audit Commissionerate from individual audits files’ as
indicated in the table in para 4.11.3.
16
4.11.3 Out of 47 questions contained in Part C, 15 questions having total
score of 19 marks have a possibility of being 'not applicable'. Since, the
evaluation of score for each query is to be analysed for 60 sample files
selected for review, ‘not applicable’ instances identified during the review in
respect of each question shall neither be considered under denominator nor
numerator. Accordingly, Scoring shall be finalised. For example, Question
No. 38 in Part – C (max. score of 1 mark) has possibility of being ‘Not
applicable’ in case of NIL audit report files. If this parameter is not
applicable in respect of 10 files and the score from the remaining 50 files is
45, the total score for that question will be 45/50 = 0.9. A few illustrations of
calculating average marks in different situations are also explained in the
table below.
Scores from each file Total Average
S. Mark (file no.) marks Marks for
Parameter
No. s* for 60 each
1 2 3 57 58 60
files question
Whether Registered Person's Master
File (RPMF) in format Annexure
GSTAM-1 along with all other 5/3/ =204/60
1 3 5 0 5 3 3 204
relevant documents is maintained 0 = 3.4
and whether such documents are
updated regularly?
Whether the RPMF was reviewed by =84/60
2 2/0 0 2 2 0 2 2 84
Auditor at the time of Desk review? = 1.4
Whether the information furnished
100
in GSTR-9 returns is reconciled 2/0/ =100/55
3 2 0 2 0 2 NA (5 NA
with financial records and other NA = 1.82
cases)
statutory returns?
45
Whether the follow up action was 1/0/ (10 =45/50
38 1 0 1 1 0 NA
carried out wherever applicable? NA NA = 0.9
cases)
Whether FAR was uploaded using =57/60

46 1/0 1 0 1 0 1 0 57
Audit Report Utility? = 0.95
Whether the audit was completed
within 3 months from the date of
= 60/60
47 commencement or within such 1/0 1 1 1 1 1 1 60
=1
period as extended by the
Commissioner?
Sum of
Total Marks/ score obtained (sum of scores for all 47 questions) the
column
*The methodology for awarding score on each parameter is detailed in Annexure-I.
4.11.4 The scores arrived at Part-B and Part-C as detailed in the above paras
will be consolidated for arriving at the overall QAR score and grading of the
Audit Commissionerate, in Part-D of QAR format.
17
4.11.5 The Zonal ADG shall communicate the QAR report to the Principal
Commissioner/ Commissioner of Audit, jurisdictional Principal Chief
Commissioner/ Chief Commissioner and the Director General (Audit)
within a month of conduct of the review.
4.11.6 The QAR report shall contain the following:

i. A D.O. letter from the Zonal ADG addressed to the Principal
Commissioner/ Commissioner of Audit.
ii. Information in Part-A of Annexure-II.
iii. Evaluation of General performance of the Audit
Commissionerate in Part-B of Annexure-II.
iv. Evaluation of information from individual audit files in Part-
C of Annexure-II containing average score of each parameter.
v. Overall score and QAR grading in Part-D of Annexure-II.
vi. Comments/Suggestions and Recommendations in Part-E of
Annexure-II.
4.11.7 This QAR report is presented to the jurisdictional Chief

Commissioner and Commissioner in order to apprise them of the existing
level of audit quality and to help them to take up remedial measures, if any,
on a priority basis.
4.12 RESPONSE FROM THE COMMISSIONERATE

4.12.1 On receipt of the QAR report from the Zonal unit, the Audit
Commissioner should send a written response to the ADG of the Zonal unit
with a copy to the Director General (Audit). The Audit Commissioner may
state the remedial actions that have been initiated. The Audit
Commissionerate may ensure that response on this reach the Zonal ADG of
DG (Audit) within one month of receipt of the said report positively. On
receipt of the response from the Audit Commissionerate, the QAR team
conducting the next QAR may review the status of remedial actions initiated
by the Audit Commissionerate.
4.12.2 If any Audit Commissionerate obtains ‘very poor’ grading (i.e.,

below 60) in an audit year, measures should be taken to rectify the
deficiencies/shortcomings pointed out in the QAR report. The Zonal Chief
Commissioner of the Audit Commissionerate concerned is required to
submit a report, within one month of receipt of the said report, with respect
to the action taken to rectify the deficiencies/shortcomings pointed out in
QAR report to the Pr. DG/DG, Headquarters with a copy to the ADG of the
Zonal unit concerned.
18
CHAPTER 5
METHODOLOGY FOR DETERMINING API
5.1 Audit Commissionerates are required to furnish data in the Format

Annexure-III of this manual till such time Monthly Performance Report
(MPR) is revised to include this data required. Based on the data furnished
by the Commissionerates, Quarterly/Annual Grading of API will be
calculated by the office of the Director General of Audit and will be issued
in the Format Annexure-IV of this manual.
5.2 The methodology for determination of grading is described in the

Table below.
5.3 Annual grading will be calculated as per the methodology given in

the Table below by combining the data of all quarters available in respect of
each parameter.
S. No. in the
API format API Parameter Methodology
(Annexure-IV)
The ratio (shown in percentage)
of number of taxpayers audited in
a quarter to the number of
taxpayers scheduled for audit in
that quarter is calculated.
Comparative performance of all
the Audit Commissionerates will
be determined on percentile
system for score from 0-10.
Ratio of number of For example, if one of the Audit
taxpayers audited to Commissionerates attained the
number of taxpayers highest percentage, say 95%,
2
scheduled for audit (Marks during a quarter, that Audit
in percentile on a scale of Commissionerate will be awarded
0-10) the highest percentile of 100 and
score of 10; and if another Audit
Commissionerate attained the
lowest percentage, say 65%,
during that quarter, it will be
awarded score of 6.84 (i.e.,
65*10/95).
Scores of all other Audit
Commissionerates will be
awarded between 10 and 6.84.
Ratio of man-days utilized The ratio (shown in percentage)
3
to man-days available of man-days utilized in a
19
S. No. in the
(Annexure-IV)
(Marks in percentile on a quarter/year to the man-days
scale of 0-10) available during that quarter is
calculated.
For arriving at the man-days
utilized, if the audit period
covered is more than one year,
the required man-days
considered for that audit is
increased by 25% for each year.
system score from 0-10.
For example, if one of the Audit
Commissionerates attained the
highest percentage, say 95%,
during a quarter, that Audit
Commissionerate will be awarded
highest percentile of 100 and
score of 10 and if another Audit
Commissionerate attained the
lowest percentage, say 65%,
65*10/95).
awarded in between 10 and 6.84.
Detection per audit of the 5
taxpayers having highest
detections during a quarter is
calculated.
20%
weightage
Detection per to the five
audit (Marks taxpayers
4A For example, if the above
in scale of having
parameter ranges between 153
0-20) highest
lakhs and 45 lakhs for all the Audit
detections
Commissionerates, the Audit
(i.e., 0-4)
Commissionerate with detection
per audit of 153 lakhs is awarded
highest percentile of 100 with a
score of 4 and the Audit
Commissionerate with
20
S. No. in the
(Annexure-IV)
detection per audit of 45 lakhs is
4*45/153).
Detection per audit for the
remaining taxpayers is calculated
for a quarter.
For example, if the above
80%
weightage
lakhs and 2.5 lakhs for all the
to
Audit Commissionerates, the
4B remaining
Audit Commissionerate with
taxpayers
detection per audit of 30 lakhs is
(i.e.,
awarded highest percentile of 100
0-16)
and score of 16 and the Audit
Commissionerate with detection
per audit of 2.5 lakhs is awarded
score of 1.33 (i.e., 16*2.5/30).
Recovery per audit of 5 tax-

payers yielding highest recoveries
is calculated for a quarter.
20%
weightage
Recovery per to the five
audit (Marks taxpayers
5A For example, if the above
in scale of yielding
0-20) highest
lakhs and 45 lakhs for all the Audit
recoveries
Commissionerates, the Audit
(i.e., 0-4)
Commissionerate with recovery
per audit of 153 lakhs is awarded
highest percentile of 100 with a
score of 4 and the Audit
Commissionerate with
21
S. No. in the
(Annexure-IV)
recovery per audit of 45 lakhs is
4*45/153).
Recovery per audit for the
remaining taxpayers is calculated
for a quarter.
system from 0-16.
80% For example, if the above
weightage parameter ranges between 30
to lakhs and 2.5 lakhs for all the
5B remaining Audit Commissionerates, the
taxpayers Audit Commissionerate with
(i.e., recovery per audit of 30 lakhs is
0-16) awarded highest percentile of 100
and score of 16 and the Audit
Commissionerate with recovery
per audit of 2.5 lakhs is awarded
score of 1.33 (i.e., 16*2.5/30).
The ratio (shown in percentage)
of total recovery in a quarter to
the total detections in that quarter
is calculated.
Ratio of total recovery to
total detection (Marks in
6 For example, if the highest
percentile on a scale of
percentage during a quarter, say
0-10)
65%, is attained by one of the
Audit Commissionerates, that
Audit Commissionerate will be
awarded highest percentile of 100
and score of 10 and if another
Audit Commissionerate attained
the least percentage, say 15%, it
22
S. No. in the
(Annexure-IV)
will be awarded score of 2.31 (i.e.,
15*10/65).
Scores of remaining all other
Audit Commissionerates will be
The Output per auditor based on
detection i.e., Total detections
during a quarter divided by
number of auditors working in
audit groups (Superintendents +
Inspectors) during the quarter is
calculated.
Output per auditor based
on detection, i.e., Total
For example, if the highest output
amount detected/Number
during a quarter, say 25 lakhs per
7 of auditors during the
auditor, is attained by one of the
period. (Marks in
Audit Commissionerates, that
percentile on a scale of
Audit Commissionerate will be
0-20)
awarded the highest percentile of
100 and score of 20 and if another
Audit Commissionerate attained
the lowest output per auditor, say
3.5 lakhs, during that quarter, it
will be awarded score of 2.80 (i.e.,
3.5*20/25).
After finding the ratio, the
comparative performance of all
Ratio of total no. of paras the Audit Commissionerates will
closed during the be determined on percentile
quarter/year to (total no. system for score from 0-10.
of paras pending for For example, if one of the Audit
closure at the beginning of Commissionerates attained the
8
the quarter/year + total no. highest percentage, say 60%, that
of paras raised during the Audit Commissionerate will be
quarter/year) (Marks in awarded highest percentile of 100
percentile on a scale of and score of 10 and if another
0-10) Audit Commissionerate attained
the lowest percentage, say 35%,
23
S. No. in the
(Annexure-IV)
35*10/60).
awarded accordingly in between
10 and 5.83.
Final marks/score will be the
aggregate of scores obtained by
9 Final Marks each Audit Commissionerate
against Col. Nos 2 to 8 of
Annexure-IV.
The Audit Commissionerate with
highest score in Col. No. 9 of
Annexure-IV will be given 1st
rank. In a situation where two or
more Audit Commissionerates
10 Rank attain equal score against Col. No.
9, then the ranking is to be
awarded based on higher score in
Col. Nos. 4B, 5B, 2,3,6,7 & 8 of
Annexure-IV, in that order of
preference.
24
CHAPTER 6
COMPOSITE GRADING OF QAR & API
In order to give a comprehensive picture of the performance of an

Audit Commissionerate in terms of both quality and quantity for the same
period of evaluation, it is decided to issue a composite Grading of QAR and
API, which indicates the relative position of Audit Commissionerates on all-
India basis.
6.1 ROUTE MAP FOR ISSUE OF COMPOSITE GRADING

For the issue of composite grading, the following procedure is to be
followed:
i. QUANTITATIVE PARAMETERS: Annual grading of API for the last

audit year is to be determined as described in Chapter 5 of this manual.
ii. QUALITATIVE PARAMETERS: The Zonal units may complete the

process of conduct of QAR in respect of each audit Commissionerate
for the last audit year by 30th September, and communicate the results
of such QAR to D.G. Audit by 15th October.
iii. Based on the annual API grading and QAR grading for the same audit
year, DG (Audit) will analyze the all-India data of all the Audit
Commissionerates and issue a composite grading by 31st October of the
current year. While determining the composite grading 60% weightage
to QAR grading and 40% weightage to API grading will be adopted.
Composite grading will be issued in the format Annexure-V of this
manual.
25
ANNEXURE–I
METHODOLOGY FOR VERIFICATION AND AWARDING SCORES FOR
PART-B & PART-C OF QAR
(para 2.7.2 of Chapter 2 of the Manual)
Methodology for Max. Methodology for
S. No. Audit Standard
verification Score awarding score
1. STANDARDS FOR GENERAL PERFORMNACE OF THE AUDIT
COMMISSIONERATE
This aspect is to be
verified by QAR One mark shall be
Maintenance of
team on awarded if database of
database of officers’
scrutinizing the all the officers is
profiles1.
1 concerned 1 maintained. No mark
GSTAM Ref: Para 3.7
auditors' profile shall be awarded if no
file in Planning & such database is
Coordination maintained.
section
verified by QAR
team on
One mark shall be
scrutinizing
awarded if the
concerned file in
Formation of audit respective
Planning &
groups by equally files/records indicate
Coordination
distributing officers of that the groups’
2 section in which 1
skill and experience formation is done as
the allotment of
amongst the groups. per GSTAM
officers to groups
GSTAM Ref: Para 3.7.2 provisions. Otherwise,
was done, as to
no mark shall be
whether their skill
awarded.
and experience
were taken into
account.
verified by
scrutinizing the
file in which the Two marks shall be
Training of officers
officers were awarded if 100% of the
posted to the Audit
nominated to the officers posted for
Commissionerate for
3 GST Audit 2 first time are trained
the first time in GST
trainings. In the in GST audit.
audit process2.
first year of GST Otherwise, no marks
GSTAM Ref: Para 3.7.3
audit all the shall be awarded.
officers shall be
trained. In
subsequent years
1Availability of the database of profiles of auditors facilitates allotment of taxpayers to auditors

based on their skill levels, training, educational background etc.
2This is essential to familiarize the auditors with the audit process and to impart basic skills to
handle audit work.
26
this aspect may be
checked only in
respect of officers
newly posted.
Organizing training
programmes/refresher Two marks shall be
verified by
courses on latest awarded if such
scrutinizing the
techniques for the training
relevant file in
benefit of officers programmes/refreshe
4 which 2
posted after the annual r courses are
correspondence
transfers (other than conducted. Otherwise,
on conduct of in-
officers posted for the no marks shall be
house trainings
first time) awarded.
was dealt with.
verified on
scrutinizing the
concerned file of
the Planning & One mark shall be
Calibration of annual
Coordination awarded if such
scheduling of audits
section in which calibration was done.
5 based on the available 1
the annual plan No mark shall be
working strength.
was prepared and awarded if no such
examining calibration done.
whether the plan
was calibrated
based on working
strength.
verified from the
concerned file
maintained or
data in electronic
One mark shall be
Maintenance of form maintained
awarded if such
database of registered by the RMQA
database is
6 persons to be audited3. (Risk Management 1
maintained.
GSTAM Ref: Para 3.3 and Quality
Otherwise, no mark
(iv) Assurance) Section
shall be awarded.
of the Audit
Commissionerate,
which contains the
list of taxpayers in
their jurisdiction.
Selection of 70% of This aspect is to be One mark shall be
taxpayers to be audited verified from the awarded if the
based on risk scores concerned file of selection and
7 1
communicated by DG the Planning & uploading/forwarding
(Audit) and uploaded in Coordination of 70% of the
Audit section. Examine taxpayers is
3 This is essential for the selection of taxpayers for audit on local risk parameters.
27
Module/forwarded to whether the 70% of completed by 15th
Circles before 15th the taxpayers were March. Otherwise, no
March. selected from the mark shall be
GSTAM Ref: Paras 4.2.1 list sent by DG awarded.
& 4.3.1 (Audit), and
uploaded/
forwarded before
15th March.
verified from the
concerned file of
Recording of the Planning & One mark shall be
reasons/justification for Coordination awarded if reasons are
tweaking the lists section. Examine recorded in respect of
received from whether there are all tweaking cases.
DGARM/DG (Audit) any instances of Otherwise, no mark
8 1
while carrying out tweaking of shall be awarded. If no
selection of taxpayers taxpayers selected such tweaking takes
(70%) for audit. from list received place, the parameter
GSTAM Ref: Para 3.4.2 from DG (Audit) shall be considered as
(viii) and if so whether ‘not applicable’.
reasons for such
tweaking were
recorded.
verified from the
concerned file of
One mark shall be
Selection of 20% of the the Risk
awarded if 20% of the
taxpayers to be audited Management &
taxpayers were
based on local risk Quality Assurance
selected based on
parameters and section. Examine
local risk parameters
9 uploaded in Audit whether 20% of 1
and
Module/forwarded to the taxpayers are
uploaded/forwarded
Circles before 15th selected for audit
before 15th March.
March. based on local risk
Otherwise, no mark
GSTAM Ref: Para 4.3.1 parameters and
shall be awarded.
uploaded/
forwarded before
15th March.
verified from the
concerned file of
Obtaining the approval Risk Management
of the Chief & Quality One mark shall be
Commissioner in Assurance section. awarded if the
respect of 20% Examine whether approval of Chief
10 taxpayers selected Chief 1 Commissioner was
based on local risk Commissioner's obtained. Otherwise,
parameters. approval was no mark shall be
GSTAM Ref: Para 3.4.1 obtained for the awarded.
(i) 20% taxpayers
selected based on
local risk
parameters.
28
verified from the
Selection of 10% of the One mark shall be
concerned file of
remaining taxpayers awarded when 10% of
the Audit
randomly and the taxpayers were
Commissionerate.
uploaded in Audit selected at random
Examine whether
11 Module/forwarded to 1 and
10% of the
Circles before 15th uploaded/forwarded
taxpayers were
March. before 15th March.
selected randomly
GSTAM Ref: Para 4.2.3 Otherwise, no mark
and uploaded/
& 4.3.1 shall be awarded.
forwarded before
15th March.
This aspect is to be One mark shall be
Issuing of quarterly
verified by awarded if all the
schedules by Circle
scrutinising circles issued
AC/DC after release of
concerned file of quarterly schedules.
annual schedule by
12 each circle as to 1 No mark shall be
Audit
whether quarterly awarded if any one of
Commissionerate4.
schedules were the Circle did not
released. issue quarterly
(i)
schedule.
verified by Two marks shall be
scrutinising at awarded if such
Approval of the desk
least two audit randomly selected
reviews and audit plans
files of each circle audit plans of top five
of top 5 taxpayers of
selected at taxpayers of each
13 each audit circle by the 2
random out of the circle are found to be
Audit Commissioner5.
list of top 5 approved by
GSTAM Ref: Paras 3.4.1
taxpayers Commissioner.
(ii) & 5.6.6
furnished under Otherwise, no marks
Sl. No. 13 of Part-A shall be awarded.
QAR Format.
verified by
scrutinising files One mark shall be
Review of a few audit
of such reviews awarded after scrutiny
plans approved by
taken up by of such files reviewed
ADC/JC by
Commissioner by Commissioner. If
14 Commissioner to 1
selected at details of such files
ensure quality of audit.
random from the are furnished as NIL
GSTAM Ref: Para
information in Part-A, no mark
3.4.1(ii)
furnished under shall be awarded.
Sl. No. 14 of Part-A
QAR Format.
This aspect is to be One mark shall be
Review of audit plans
15 verified by 1 awarded if all the
of small taxpayers
randomly randomly selected
4This is useful for constant monitoring of audits conducted and for ensuring completion of
audits of all taxpayers allotted to the Circle by the end of the year.
5This will ensure the quality of the audit plan in identifying issues for detailed verification during
the conduct of the audit.
29
approved by DC/AC by scrutinising two or files were reviewed by
ADC. three audit files of ADC/JC. Otherwise,
GSTAM Ref: Paras small taxpayers no mark shall be
3.4.2, 3.4.4 & 5.6.7 from each circle. awarded.
Examine whether
ADC/JC reviewed
the audit plans.
One mark shall be
This aspect is to be awarded if ADC/JC
verified by reviewed the NIL
randomly DAR in the randomly
scrutinising two or selected files.
Review of the NIL
three audit files of Otherwise, no mark
DARs by concerned
16 taxpayers with 1 shall be awarded. If
ADC/JC.
NIL DARs from there are no NIL
each circle as DARs during the
furnished under Audit Year, this
Sl. No. 16 of Part-A parameter shall
QAR Format. become ‘not
applicable’.
verified by
scrutinising the One mark shall be
concerned file in awarded if such
Communication of
the Planning & communication was
DARs to the Executive
Coordination made seven days in
Commissioners seven
17 section containing 1 advance in respect of
days in advance of
the all MCMs conducted
MCM.
correspondence during the Audit Year.
GSTAM Ref: Para 3.3
relating to conduct Otherwise, no mark
of MCMs during shall be awarded.
the period under
review.
This aspect is to be Two marks shall be
verified by awarded if MCMs of
Conduct of MCMs at scrutinising the all Circles were
18 monthly intervals. MCM file in the 2 conducted every
GSTAM Ref: Para 6.2.4 Planning & month. Otherwise, no
Coordination mark shall be
section. awarded.
Communication of the
One mark shall be
minutes of MCM to the
awarded if the
Executive
minutes of MCM
Commissionerates This aspect is to be
were communicated
immediately for verified by
in each case to the
conveying their scrutinising the
jurisdictional
19 agreement/ MCM file in the 1
Executive
disagreement within 15 Planning &
Commissionerates
days from the date of Coordination
immediately after
receipt of MCM section.
completion of MCM.
minutes.
Otherwise, no mark
shall be awarded.
30
verified on
scrutiny of 10 files
selected at One mark shall be
Obtaining GSTAM
random, where awarded if Annexure-
Annexure-X from the
MCM takes a X was obtained in all
taxpayers wherever the
20 decision to waive 1 the cases selected for
issue of SCN was
the SCN i.e., on review, otherwise no
proposed to be waived.
payment of mark shall be
amounts as per awarded.
Section 73 (5) or 74
(5) of CGST Act, as
the case may be.
verified from the
Communication of the
concerned file of
list containing details of
the Audit One mark shall be
SCNs issued by the
Commissionerate. awarded if SCN
Audit Commissionerate
Examine whether details are forwarded
21 to the Executive 1
the details of SCNs on monthly basis.
Commissionerates on
issued were Otherwise, no mark
monthly basis.
communicated to shall be awarded.
GSTAM Ref: Paras 3.4.1
the Executive
& 6.4.1
Commissionerates
on monthly basis.
System for obtaining verified on One mark shall be
feedback on audit scrutiny of the awarded on scrutiny
process from the major relevant files of the relevant
22
taxpayers/trade pertaining to the 1 information. No mark
associations. data furnished shall be awarded if
GSTAM Ref: Para under Sl. No. 17 of such feedback was not
3.4.1(x) Part-A QAR obtained.
Format.
Review of audit verified by
One mark shall be
performance by Audit scrutinising the
awarded if any such
Commissioner for relevant files
review(s) were
23 taking suitable steps for relating to 1
conducted. Otherwise,
improvement. information
no mark shall be
GSTAM Ref: Para furnished under
awarded.
3.4.1(vii) Sl. No. 18 of Part-A
QAR Format
One mark shall be
verified by
Maintenance and awarded on observing
scrutinising the
updation of audit that both Planning &
audit planning and
planning and follow-up follow-up registers at
follow-up registers
registers both at both Headquarters
24 maintained in 1
Headquarters and and Circle level are
Planning and
Circle level. maintained and
Coordination
GSTAM Ref: Paras 3.3 updated. Otherwise,
section and each
& 6.2.5 no mark shall be
Circle as to
awarded.
whether the same
31
are maintained
and updated.
verified by One mark shall be
Completion of audit of scrutinising the awarded on observing
all the taxpayers annual plan and that all the taxpayers
25 allocated by 31st March. the details of 1 scheduled were
GSTAM Ref: Para 4.3.1 audits conducted audited. Otherwise,
(i) of GSTAM 2019 by the Audit no mark shall be
Commissionerate awarded.
before 31st March.
verified by
comparing/correla
ting sample data
contained in one
of the monthly One mark shall be
Preparation of monthly reports uploaded awarded on observing
returns based on the with the that the data
records/registers records/registers furnished in returns
maintained in MIS maintained in the tally with records
26 1
section/Circles. Audit maintained in Audit
GSTAM Ref: Para 6.2.5 Commissionerate Commissionerate/
& 3.3 (i) of GSTAM and one of the Circle. Otherwise, no
2019 Circles. For this mark shall be
QAR team has to awarded.
take up sample
check of at least 5
fields furnished in
one of the
monthly returns.
2. STANDARDS FOR INDIVIDUAL AUDIT FILE – PRELIMINARY DESK REVIEW
Verify whether I. Three marks shall
RPMF is available be awarded if the
(in the format documents viz., i)
Annexure Taxpayers profile in
Maintenance and GSTAM-I) in the GSTAM-I, ii) Annual
updating of Registered file. Also verify Report including
Person's Master File whether Balance Sheet, P & L
(RPMF) (in format important Account and notes to
Annexure GSTAM-1) documents like financial accounts, iii)
along with all other Annual Report Income Tax Return &
1 relevant documents. including Balance 5 Tax Audit Report, iv)
Sheet, P & L Cost audit report,
GSTAM Ref: 3.3; 5.2.2, Account and notes wherever applicable
5.2.3, 5.5.3, 6.4.4 & to fin. accounts, and v) FARs & CAG
GSTAM-I; Sl. No. Income Tax Audit report are
III(1)-Part A of Working Return & Tax available for Audited
papers Audit Report, Cost period.
audit report, II. Another two marks
wherever shall be awarded if, in
applicable, FARs, addition to the above
CAG Audit report, documents, all the
32
working papers, working papers,
MCM copies for copies of minutes of
audited period are MCMs and any other
placed in file and documents relevant
whether such for conducting audit
documents are are placed in file. In
updated as case documents
mentioned in Sl. mentioned at point I.
No. III (1)-Part A above are not
of Working papers available, no marks
shall be awarded.
Two marks shall be
awarded on scrutiny
of relevant remarks
Verify whether made at Sl. No. III (1)
Review of RPMF by observations were of Annexure GSTAM
auditor at the time of recorded under Sl. - VIII, i.e., Working
Desk review. No. III (1) of papers as to whether
2 2
GSTAM Ref: 5.2.1, 5.5.3; Working papers information in RPMF
Sl. No. III (1)-Part A of based on review of was also scrutinized
Working papers information during desk review
available in RPMF. and the results
recorded. Otherwise,
no marks shall be
awarded.
Two marks shall be
awarded, if
reconciliation is done
as per GSTAM-V in
respect of all
Verify whether applicable documents
information and same is available
Reconciliation of
furnished in in file. Otherwise, no
information furnished
GSTR-9 return is mark shall be
in GSTR-9 returns with
reconciled with awarded.
financial records and
3 the financial 2 This parameter will
other statutory returns.
records/ be ‘not applicable’ in
documents as in cases of audits of ISD,
GSTAM Ref: 5.5.7 and
Annexure a person paying tax
Annexure GSTAM-V
GSTAM-V and under Sec. 51 or 52 of
available in file CGST Act, a casual
taxable person, a non-
resident taxable
person, and taxpayers
under composition
scheme
Verify whether the Two marks shall be
Revenue Risk Analysis
results of Revenue awarded on observing
4 and summarization of 2
risk analysis were that the revenue risk
results6.
summarized analysis was
6 Revenue risk analysis is a method of identifying potential revenue risk areas by carrying out
reconciliation of various specific financial data, comparing with different business
accounts/documents.
33
GSTAM Ref: 5.5.8 and under Sl. No. III conducted and
Sl. No. III (7)-Part A of (7) of Part-A of conclusions were
WPs for goods and Sl. Working papers arrived at after
No. XII- Part B for for goods and Sl. analysing the data and
services No. XII of Part-B same is recorded in Sl.
for services No. III (7) of Part-A of
indicating possible Working papers for
problem areas to goods and Sl. No. XII
be included in the of Part-B for services.
Audit Plan Otherwise, no mark
shall be awarded.
Verify whether the
results of Trend
Two marks shall be
Analysis were
awarded on observing
Trend Analysis and summarized
that any conclusions
summarization of under Sl. No. III
were arrived at after
results7. (8)- Part-A of
analysing the data and
GSTAM Ref: 5.5.9; Sl. Working papers
5 2 recorded in Sl. No. III
No. III (8)-Part-A of for goods and Sl.
(8) of working papers
Working Papers for No. III Part-B for
for Goods and Sl. No.
Goods, Sl. No. III Part- services indicating
III for services.
B for services possible problem
Otherwise, no mark
areas to be
shall be awarded.
included in the
Audit Plan
Two marks shall be
Verify whether the awarded on observing
findings of Ratio that Ratio Analysis
Analysis were was performed as
Ratio Analysis and
recorded at Sl. No. illustrated in GSTAM
summarization of
III (3) for Goods - IV and results
results8.
and Sl. No. II for recorded at Sl. No. III
GSTAM Ref: 5.5.6;
6 services of 2 (3) of Part-A for goods
Annexure GSTAM-IV;
Working papers and Sl. No. II of Part-
Sl. No. III (3)-Part A of
after performing B of GSTAM-VIII for
WPs for Goods, Sl. No.
Ratio Analysis as services and specific
II of Part B for services
illustrated in mention was made
Annexure GSTAM w.r.t. adverse ratios.
IV. Otherwise, no mark
shall be awarded.
Verify whether the Two marks shall be
Scrutiny of documents findings of awarded if all the
mentioned in scrutiny of the applicable documents
Annexure GSTAM-III, documents as mentioned in
7 2
as applicable, for the (mentioned in GSTAM-III have been
audit period during Annexure scrutinized and
desk review and also GSTAM-III) are findings were
recorded under Sl. recorded at Sl. No. III
7Trend analysis reveals abnormal trends/patterns/relations, if any, that may have bearing on the
tax paid
8Ratio analysis helps in identifying significant variations, if any, in any areas for detailed audit
verification by inclusion in the audit plan.
34
reconciliation with GST No. III (2) & (9) - (2) & III (9) of Part-A
returns9. Part-A of working of Working Papers for
papers for goods goods and Sl. No. I, V,
GSTAM Ref: 5.5.3; and Sl. No. I, V, VI VI & VII of Part-B for
GSTAM Annexure-III, & VII of Part-B services in GSTAM-
Sl. No. III (2) & III (9) of for services. VIII. Otherwise, no
Part-A of Working mark shall be
Papers for goods and awarded.
Sl. No. I, V, VI&VII of
Part-B for services
Two marks shall be
awarded, if all the
applicable areas are
considered during
desk review and
The following areas relevant Sl. No. of
have to be considered Verify whether the Working Papers
during desk review10: areas are analysed (GSTAM-VIII) (i.e., Sl.
(i) rate of tax applicable in Sl. No. III (4) & No. III (4) & III (6) in
(ii) exemption III (6) Part-A of Part-A for Goods and
8 notifications availed, if Working papers 2 Sl. No. VIII & XI of
any (GSTAM-VIII) for Part-B for Services)
(iii) zero-rated/ goods and Sl. No are filled; otherwise,
exempted/non-taxable VIII & XI of Part-B no mark shall be
supplies, if any. for services awarded.
GSTAM Ref: Para 5.5.4 If a field is not
applicable to the
taxpayer, the same
shall be mentioned in
the relevant Sl. No. of
Working Papers.
Two marks shall be
awarded if ITC
availment is
considered during
desk review and
ITC availment corresponding Sl. No.
(including ISD, if any) Verify whether the of Working Papers
considered during desk areas are analysed (GSTAM-VIII) (i.e., Sl.
review in Sl. No. III (6) No. III (6) in Part-A
9 GSTAM Ref: Sl. No. III Part-A of Working 2 for Goods and Sl. No.
(6) Part-A of Working papers for goods IV of Part-B for
papers (GSTAM-VIII) and Sl. No IV of Services) are filled:
for goods and Sl. No IV Part-B for services otherwise, no marks
of Part-B for services shall be awarded.
The standard is ‘not
applicable’ in case the
taxpayer has not
availed any ITC.
However, the same
9 This will throw up certain issues for detailed verification by inclusion in the audit plan.
10This analysis helps in identifying certain specific vulnerable areas for inclusion in the audit
plan.
35
shall be mentioned in
the corresponding Sl.
No. of the Working
Papers.
One mark shall be
awarded if
reconciliation is done
and the details
recorded in file/
Reconciliation of ITC
Verify whether the Working papers;
availed in GSTR 3B and
results of such otherwise, no mark
GSTR 2A to identify
10 reconciliation 1 shall be awarded.
gaps in the ITC
were recorded in This parameter is ‘not
availment.
the file. applicable’ in cases of
GSTAM Ref: 5.5.4
Composition scheme,
casual taxable
persons, non-resident
taxable persons, Sec.
51/52 CGST Act, 2017
3. STANDARDS FOR INDIVIDUAL AUDIT FILE - AUDIT PLAN
verified by QAR
team on scrutiny
of Working papers
portion up to desk
Preparation of audit Three marks shall be
review stage. And
plan and submission to awarded if audit plan
to examine
AC/DC/JC/ADC/ is prepared basing on
whether audit plan
Commissioner as the scrutiny of such
is prepared basing
11 case may be, for 3 important documents.
on scrutiny of
approval. Otherwise, 1 mark
important
shall be awarded if
documents, viz.,
GSTAM Ref: 5.6.3, audit plan contains
Annual reports,
5.6.4, 5.6.6 only routine issues.
ITRs, Trial
Balances
pertaining to
relevant audit
period.
One mark shall be
awarded if clear
In case of unit selected notings are made in
verified by QAR
for audit on the basis of the file to the effect
team on scrutiny
risk methodology/local that risk indicators/
of audit file as to
risk parameters, the local risk parameters
whether the
same shall be taken as the case may be are
important risk
12 into account while 1 taken into account
indicators/risk
finalizing the audit while preparing/
parameters were
plan, wherever finalising the audit
actually
applicable. plan. No mark shall
considered while
GSTAM Ref: 4.2.1 & be awarded in the
preparing the
4.2.2 absence of such
audit plan.
notings. This
parameter is ‘not
36
applicable’ in case of
randomly selected
taxpayers.
examined basing
on observations
made in
Annexure-VIII of
GSTAM - i) in case
of supply of goods
- under III, Part-A
- Supply of goods,
under S.No.8 - One mark shall be
Identification of Trend analysis awarded if such issues,
abnormal trends and and ii) in case of so identified, are
unusual occurrences, if Services in Part-B: included in audit plan.
any, at the time of desk Supply of services Otherwise, no mark
13 1
review and considering under S. No. III- shall be awarded. This
for preparation of audit Trend Analysis. In aspect will be ‘not
plan. the relevant applicable’ when there
GSTAM Ref: 5.6.2 portions of are no such abnormal
Working papers, if trends.
any specific
observations are
made based on
such abnormal
trends, it will be
verified whether
such issues were
included in audit
plan.
This aspect will be
One mark shall be
checked on
Approval of audit plan awarded if the audit
perusing the note
by appropriate plan is approved by
14 sheet portion of 1
authority. the proper officer.
the audit file as
GSTAM Ref: 5.6.5 Otherwise, no mark
well as the audit
shall be awarded.
plan.
Modifications/
Two marks shall be
additions by senior
awarded if audit plan
officers in the draft This aspect will be
is considered for any
audit plan either at the checked on
modification or
15 time of approval or perusing the note 2
addition by any of the
during review of audit sheet portion of
senior officers.
plan11. the audit file.
Otherwise, no mark
GSTAM Ref: 3.4.1(ii) or
shall be awarded.
3.4.2 (iii), 5.6.6
4. STANDARDS FOR INDIVIDUAL AUDIT FILE - AUDIT VERIFICATION
11
Suggestions for modifications to the audit plan by senior officers, while approving the draft
audit plan or while reviewing the audit plans approved by officers of lower rank improves the
quality of audit.
37
In case of Large and
Medium taxpayers,
one mark shall be
This aspect will be
awarded if the tour of
Conduct of tour of the verified by the
the premises was
premises for QAR team on
carried out.
Large/Medium going through the
16 1 Otherwise, no mark
taxpayers. relevant entries
shall be awarded.
made in Working
In case the audit file
GSTAM Ref: Para 5.7.5. papers (Annexure
selected relates to
-GSTAM-VIII).
small taxpayer, this
parameter will be ‘not
applicable’.
This aspect will be
verified by the
QAR team on
One mark shall be
examining
Interview of the awarded if the results
whether the
registered person or his of interviews carried
relevant portions
authorised out are properly filled
of Working papers
17 representative. 1 in Annexure GSTAM-
(Annexure
VIII. No mark shall be
GSTAM-VIII)
GSTAM Ref: awarded if such
were properly
Annexure-VIII information/data was
filled (against
not filled.
S.No. i) to vi)
under gathering of
information)
This aspect will be
verified by the
QAR team on
examining
Filling of the whether relevant Two marks shall be
questionnaire in portions of awarded if the
Annexure GSTAM - VI Annexure relevant portions are
18 2
meant for evaluation of GSTAM-VI and properly filled.
internal controls. Working papers Otherwise, no mark
GSTAM Ref: Para 5.7.4 (Annexure shall be awarded.
GSTAM-VIII)
relating to internal
controls are
properly filled.
Performance of
Walkthrough for the
following areas
and Questionnaire at
Annexure-VI &
Annexure-VIII.
This aspect will be One mark shall be
verified by the awarded for each area
Account adjustment
QAR team on where walkthrough
19 systems 1
examining has been carried out
whether relevant as per entries made in
portion of Annexure GSTAM-VI
38
Annexures and Annexure
GSTAM-VI and GSTAM-VIII.
GSTAM-VIII was Otherwise, no mark
properly filled. shall be awarded.
Outward Supplies whether relevant as per entries made in
20 1
Purchases /Stores whether relevant as per entries made in
21 1
This aspect will be
One mark shall be
verified by the
awarded where
QAR team on
walkthrough has been
examining
Classification of Goods/ carried out as per
whether relevant
22 Services 1 procedure laid out in
portion of
Annexure GSTAM-VI
Annexure
and documented.
GSTAM-VI was
Otherwise, no mark
properly followed
shall be awarded.
and documented.
This aspect will be
One mark shall be
verified by the
awarded where
QAR team on
examining
Price determination carried out as per
whether relevant
23 (Transaction Value) 1 procedure laid out in
portion of
Annexure GSTAM-VI
Annexure
and documented.
GSTAM-VI was
Otherwise, no mark
properly followed
shall be awarded.
and documented.
Process of compiling examining has been carried out
24 1
GST returns whether relevant as per entries made in
39
One mark shall be
awarded where
This aspect will be
verified by the
carried out as per
QAR team on
entries made in
examining
Annexure GSTAM-VI
whether relevant
25 ITC 1 and Annexure
portion of
GSTAM-VIII.
Annexures
Otherwise, no mark
GSTAM-VI and
shall be awarded. ‘Not
GSTAM-VIII was
applicable’ in cases of
properly filled.
taxpayers not availing
ITC.
One mark shall be
awarded where
This aspect will be walkthrough has been
verified by the carried out as per
QAR team on procedure laid out in
examining Annexure GSTAM-VI.
Non-Taxable
26 whether relevant 1 Otherwise, no mark
Item/Service
portion of shall be awarded. ‘Not
Annexure applicable’ in case no
GSTAM-VI was non-taxable
properly followed. items/services were
produced/supplied in
the period of audit.
Grading of soundness
of internal control
The file will be
levels as good/
examined to see If all the areas in the
acceptable/poor
whether the Table are graded
(application of ABC
auditor graded the along with backup
analysis in case of
internal controls documents one mark
quantum of data to be
in the relevant 1 will be awarded (i.e.,
27 analysed is
table along with Table in Point No.9 of
voluminous) and
supporting GSTAM Annexure-
placement of relevant
documents (Table VIII), otherwise no
documents in the file.
in Point No.9 of mark shall be
GSTAM Ref: Para 5.7.5.
GSTAM awarded.
(b). Table in Point No.9
Annexure-VIII).
of GSTAM Annexure-
VIII
This will be
One mark shall be
Identification of any verified by the
awarded for
fresh issue which was QAR team on
identifying a new
not included in audit examining the
issue and verifying it
plan by the auditor and Audit file as to
after obtaining
28 obtaining approval of whether any fresh 2
approval of AC/DC.
DC/AC's for issues i.e., other
Another mark shall be
verification, wherever than those
awarded for recovery
applicable. mentioned in
from the said point.
GSTAM Ref: 5.7.9 Audit plan, were
If no such issues are
identified during
40
the actual identified, no mark
verification and shall be awarded.
also as to whether
AC/DC’s approval
was obtained to
verify such issue.
Two marks shall be
The QAR team
awarded if all issues
will check the file
Verification of all were verified. If any
for availability of
points mentioned in issue was left without
29 verification 2
the audit plan. any reason/further
reports for all the
GSTAM Ref: 5.7.7 course of action, no
issues mentioned
mark shall be
in the audit plan.
awarded.
This will be
examined by the
Recording of the
QAR team as to
findings /observations Two marks shall be
whether the
in Working papers awarded if all the
auditor's
after verification of verification reports
30 observations/ 2
issues by the auditor. are properly filled.
findings in all the
GSTAM Ref: Para 2.7- Otherwise, no mark
verification
vii; Para V of Working shall be awarded.
reports are
Papers & GSTAM-VIII
properly and
clearly filled.
One mark shall be
awarded if such
taxpayer's reply
The QAR team (replies) is taken on
Taking on the record of will examine record and considered
the explanation whether the file while finalising the
furnished by the contains the audit para. Otherwise,
31 registered person (if taxpayer’s reply 1 no mark shall be
party furnished reply) (replies), if any, in awarded. If no reply is
response to the received from the
GSTAM Ref: Para 5.14 spot memos taxpayer it is treated
issued. as accepted and one
mark shall be given.
‘Not applicable’ in
case of Nil detection.
The file will be
checked to see One mark shall be
Verification of Sales
whether the awarded if A, B and C
information as
auditor mentioned proformas of Point IV
prescribed at Point IV
his observations in - GSTAM Annexure
32 of GSTAM VIII 1
the proformas A, VIII are properly
B and C of Point filled. Otherwise, no
GSTAM Ref: Point IV
IV-GSTAM mark shall be
of GSTAM VIII
Annexure-VIII of awarded.
GSTAM.
Intimation of extension The file will be If such
33 of time granted for verified whether 1 communication
conduct of audit by communication to exists, one mark shall
41
Commissioner to the the taxpayer in be awarded;
taxpayer this regard was otherwise, no mark
GSTAM Ref: 5.12 sent to the shall be awarded.
taxpayer or not. This parameter is ‘not
applicable’ in case no
such extension was
required.
Obtaining of Approval
of circle DC/AC for If approval of DC/AC
The file will be
revising preliminary is available in the file
examined to see
findings in spot memo/ one mark shall be
whether approval
Audit Enquiry, which awarded. Otherwise,
of DC/AC for
34 ultimately culminates 1 no mark shall be
revision of
in to DAR (wherever awarded.
preliminary
applicable) and This parameter is ‘not
findings is
intimation to the applicable’ if no such
available.
taxpayer. revision was made
GSTAM Ref: 5.14
If the audit objections
raised contain
Citing of the details like QAR team will relevant Acts & rules
relevant acts, rules, examine whether three marks shall be
circulars, case laws etc. relevant awarded. Otherwise,
35 3
in all the audit paras provisions of Act, no mark shall be
raised. rules are quoted in awarded.
GSTAM Ref: 6.1.4 each objection. This parameter is ‘not
applicable’ in case of
Nil detection.
File will be
checked for the One mark shall be
availability of awarded if all the
Scrutiny & finalisation
MCM minutes for paras were discussed.
of Draft Audit Reports
all the Paras in Otherwise, no mark
36 by the Monitoring 1
DAR and whether shall be awarded. This
Committee
all the objections parameter is ‘not
raised were applicable’ in case of
discussed and Nil detection.
finalised in MCM
FAR is to be
checked whether
it contains
Two marks shall be
i. taxpayer’s
awarded if the audit
Disclosure of all information, i.e.,
report contains the
material and relevant business, location
entire information as
information in the and type of
37 2 detailed in
Audit report. business;
methodology for
ii. outcome of the
verification.
GSTAM Ref: Para 5.10 audit, compliance
Otherwise, no mark
problems, i.e.,
shall be awarded.
short/non-
payments
identified;
42
iii. Indications on
whether the
taxpayer is in
agreement with
the objections or
not and spot
recoveries if any.
If the taxpayer
disagrees, whether
the taxpayer has
provided any
reasons for
disagreement.
One mark shall be
The file will be awarded if follow up
verified whether action was taken by
Carrying out of follow
any follow-up way of recovery or
up action for the audit
action for issue of notice.
38 objections wherever 1
recovery/issue of Otherwise, no mark
applicable
SCN was initiated shall be awarded.
GSTAM Ref: Para 6.4
in respect of all In case of NIL reports
paras. this parameter will be
‘not applicable’.
It will be verified
as to whether
working papers
Indexing & Cross- One mark shall be
are indexed &
referencing of Working awarded if such cross-
cross- referenced
papers with relevant referencing and
39 with each point of 1
entries in audit plan. indexing done.
audit plan and
GSTAM Ref: Para 5.9 & Otherwise, no mark
whether any
5.10 shall be awarded.
objections are
identified during
verification.
6. STANDARDS FOR INDIVIDUAL AUDIT FILE - PROFESSIONAL CONDUCT
This parameter
can be verified on
scrutiny of the
One mark shall be
following in the
awarded only if all of
relevant audit file:
the points mentioned
(I) ADT -01
in the methodology
(intimation letter
Information to for verification are
to the taxpayer).
taxpayer about the available in the file.
(II) Spot memos
40 audit process. 1 Otherwise, no mark
explaining about
GSTAM Ref: 6.1.1, 6.1.2, shall be awarded. In
the short levies
5.13, 5.14, 5.16.1 case of a NIL Audit
identified if any.
report only ADT-01 to
iii) Whether the
be checked since
auditor explained
other two parameters
the benefit
are not relevant.
available under
Section 73(6)/74(6)
of CGST Act, 2017
43
as a measure of
recovery of dues
to the registered
person as per para
6.1.2 of GSTAM.
Two marks shall be
awarded if the time
gap between ADT-01
issued date and actual
date(s) of audit is
more than 20 days.
Intimation to This parameter is This is to incentivize
Registered person to be examined the audit group for
about actual audit dates from the date of providing sufficient
41 well in advance as issue of ADT-01 2 time to the taxpayer
stipulated in para 5.4 of and actual date(s) over and above the
GSTAM. of conduct of minimum time (15
GSTAM Ref: 5.4 audit. days). If ADT-01
issued date is between
15-20 days, one mark
shall be awarded. If
the time gap is less
than 15 days, no mark
shall be awarded.
This parameter
will be verified on
One mark shall be
examining
Informing the awarded if the spot
whether the spot
discrepancies/non- memos are issued as
memos issued
payment and explained in the
contain all the
procedural infractions methodology for
details of
42 noticed during Audit to 1 verification.
discrepancies
the registered person in Otherwise, no mark
relating to non-
writing, as applicable. shall be awarded.
payments and
This parameter will
procedural
GSTAM Ref: 5.14, 6.1.1 be ‘not applicable’ in
infractions noticed
case of Nil detection.
and the same are
clearly explained.
7. STANDARDS FOR INDIVIDUAL AUDIT FILE – TIMELINESS
Para 2.6.1 of
GSTAM-2019
prescribes
duration/number One mark shall be
of working days awarded if prescribed
The time taken for the
based on the size time stipulation is
audit is commensurate
of the unit (Large/ followed based on the
43 with the complexity of 1
Medium/Small) size and complexity of
the audit
for proper the taxpayer;
GSTAM Ref: 2.6.1
conduct of audit. otherwise, no mark
Depending on the shall be awarded.
type of taxpayer
i.e., L/M/S, check
the number of
44
days taken to
complete audit.
Finalization of the draft One mark shall be
audit report within 10- awarded if DAR is
15 days of Verify the date of finalised within
44 1
commencement of issue of DAR stipulated time;
audit otherwise, no mark
GSTAM Ref: 6.1.5 shall be awarded.
Issuance of the final
audit report and
sending a copy to One mark shall be
registered person Verify the date of awarded if FAR sent
within 30 days from MCM and the date to registered person
45 the date of MCM. on which FAR was 1 within 30 days of
Ref: Para 6.3 of sent to the MCM. Otherwise, no
GSTAM, 2019 read registered person. mark shall be
with Sec 65(6) of CGST awarded.
Act and Rule 101(5) of
CGST Rules
One mark shall be
Uploading FAR using This aspect is to be awarded if the FAR
46 Audit Report Utility. verified from the 1 was uploaded.
GSTAM Ref: 6.3 audit file. Otherwise, no mark
shall be awarded.
Audit team to
examine the
Completion of audit
difference One mark shall be
within 3 months from
between awarded if the audit is
the date of
commencement & completed within
commencement or
completion dates stipulated time of
47 within such period as 1
(Audit report three months or such
extended by
finalization in extended period.
Commissioner.
MCM) and Otherwise, no mark
Ref: Sec 65 (4) of CGST
whether it is shall be awarded. .
Act, 2017
within the
stipulated time.
45
ANNEXURE–II
PROFORMA FOR QAR OF GST AUDIT COMMISSIONERATE
(para 2.8 of Chapter 2 of the Manual)
VISIT NOTE No. / QAR GST/AZ or BZ or CZ or DZ or KZ or MZ or HZ
PART A - GENERAL INFORMATION
1. Name of the Audit Commissionerate:

2. Name(s) of the visiting officers:
3. Date(s) of Visit:
4. Period under review
5. Date(s) of Last review
(1 to 5 to be filled by zonal unit)
6. Details of audit officers/groups in Audit Commissionerate (As on 1 st July of
previous year or date of AGT whichever is later):
No. of
No. of
No. of Sanctioned officers Total
No. of officers
audit strength posted in working Vacancy
Circles posted in
Parties Circles/ strength
Hqrs. Office
Groups
1 2 3 4 5 6 7
ADC/JC
AC/DC
DD/AD (Cost)
Superintendents
Inspectors
7. (i) Details of training
No. of officers No. of officers

No. of officers trained
Total working trained in GST Audit posted to GST Audit
in GST audit
strength (out of Col. 6 of Commissionerate for
(out of col. 3)
Table 6 above) the first time
1 2 3 4
ADC/JC
DC/AC
Superintendents
Inspectors
46
7. (ii) Details of trainings conducted by NACIN to officers and in-house trainings
conducted by Audit Commissionerate during the period under review:
Trainings by NACIN/ In- No. of officers

S. No. Name of the Course
house Trainings (specify) trained
8. Details of Rewards sanctioned to Auditors:
No. of audit No. of files Criteria / Rewards sanctioned

Total no. of
files examined found fit for ground for
audits Amount
for grant of grant of grant of No. of officers
conducted sanctioned
rewards rewards rewards
1 2 3 4 5 6
9. Details of Monitoring Committee Meetings held during the year of review (Circle-
wise/Commissionerate-wise as the case may be):
i) Total No. of MCMs conducted during the year under review

ii) Dates of MCMs conducted:
MCM for the Date of MCM
Month Circle 1 Circle 2 Circle 3
April
May
June
July
August
September
October
November
December
January
February
March
10. Details of Infrastructural facilities:
(a) No. of vehicles: Sanctioned -

Hired/available -
(b) No. of AIOs installed: Sanctioned -
Installed -
(c) No. of computers (Desktops) available:
(d) Laptops provided to Audit Teams: No. of laptops / Year of procurement
(e) Office space: As per HRD guidelines -
Actual availability -
47
(f) Other facilities available
Facilities Yes/No Remarks
a Table for each auditor
b Library facility
c Audit manuals
Case Law Journals

d
(electronic or otherwise)
e Internet facilities
11. Manpower availability and extent of utilization for Audit work:
a) Man-days available in Audit Commissionerate:
Working
Sanctioned Working
No. of officers strength in
strength strength
Groups
Superintendent
Inspector
Total X Y Z
b) Man-days calculations (Para 3.6 of GSTAM, 2019):
Total man-days available

(Y *249) A
(Total working strength to be considered)
Man-days available for Large taxpayers 40% of A B
Man-days available for Medium taxpayers 30% of A C
Man-days available for Small taxpayers 20% of A D
Man-days for planning, follow up etc. 10% of A E
c) Man-days required per each Audit (Category-wise)

(As per GSTAM, 2019 (On average basis))
Average no. of days

Average no. of officers Average Man-
Category of required for audit
required as per GSTAM, days required
taxpayer as per GSTAM,
2019 (Para 3.6) per Audit
2019 (Para 2.6)
1 2 3 4
Large 7 7 49
Medium 4 5 20
Small 2 3 6
48
d) Man-days required for audits originally scheduled vis-à-vis man-days utilised
for completion of audits actually taken up in the year:
No. of taxpayers scheduled for
% of total man-days utilised to

actual audits conducted (Col 2
Man-days required for audits
Man-days required per audit
Man-days available for audit
% of man-days scheduled to
Total man-days utilised for
based on working strength
man-days available (Col.5)

No. of taxpayers actually
(B+C+D in Table 11(b))
(B+C+D in Table 11(b))

scheduled (Col 2 x 4)
as per GSTAM, 2019
man-days available
(Col.7) *100/
Category
audited
*100/
audit
x 6)
1 2 3 4 5 6 7 8 9
Large 49 B
Medium 20 C
Small 6 D
TOTAL
12. Other general information relating to activities to be taken up by Zonal Chief

Commissioner’s Office:
a. Whether postings/allocation of officers to Audit Commissionerates was based on

requisite experience and expertise in conduct of audits/analysing of financial
statements? (Para 3.2.1 of GSTAM, 2019)?
No. of officers with
Commerce/Accounts
Sanctioned Working
Designation background/Audit experience Vacancy
strength strength
(based on auditors’ profile and
HOPs)
DC/AC
Superintendents
Inspectors
b. Whether trainings in techniques of GST audit and accountancy to auditors were
monitored by CCO? (Para 3.2.1 of GSTAM,2019)
c. Whether periodical review of performance of the GST Audit Commissionerate
was taken up by the Chief Commissioner? (Para 3.2.1 of GSTAM,2019)
No. of review meetings conducted by PCC/CC (indicate dates of meeting) -
d. Whether the CCO disseminated the information pertaining to audit to Audit
Commissionerates? (Para 3.2.1(iii) of GSTAM, 2019)
e. Details of issues resolved by CCO, (i) in implementation of audit system at local
level and (ii) any issues (other than finalization of audit objection) where there is
difference of opinion between Audit Commissionerate and Executive
Commissionerate. (Note: Observations of Zonal Unit to be given on all points)
49
13. Details of the Audit Plans of Top 5 taxpayers of each audit circle based on turnover,
approved by the Commissioner as per Paras 3.4.1 (ii) & 5.6.6 of GSTAM, 2019:
Name
Name of Name of the
S. No. of the GSTIN Turnover
the group Registered Person
Circle
14. Details of cases where the audit plans approved by ADC/JC were reviewed by
Commissioner in terms of Para 3.4.1 (ii) of GSTAM, 2019:
Name of the Name of the Name of the

S. No. GSTIN
Circle group Registered Person
15. Details of cases where the services of Deputy/Assistant Director (Cost) were
utilised effectively as per Para 5.5.2 of GSTAM, 2019.

S. No. GSTIN
16. Details of Nil DARs pertaining to audits conducted during the audit period.

S. No. GSTIN
17. Details of interactions made with major taxpayers/trade associations for obtaining
feedback on the audit system as per Para 3.4.1(x) of GSTAM, 2019.
Date of interaction with major Details of feedback

S. No.
taxpayers/ trade associations obtained
18. Details of audit performance reviews conducted by the Commissioner to take

steps for improvement (as per Para 3.4.1 (vii) of GSTAM, 2019).
S. No. Date of review Details of steps suggested for improvement
19. Details of Theme audits conducted based on themes selected at National/ Zonal
level (Para 4.4.1 & 4.4.2 of GSTAM, 2019).
i) Themes selected at all-India level
No. of Registered
Theme received Detection Recovery
persons covered in
from DG (Audit) (in Lakhs) (in Lakhs)
the audit
50
ii) Themes selected at Zonal level
No. of Registered
Theme received Detection Recovery
persons covered in
from PCC/CC (in Lakhs) (in Lakhs)
the audit
20. Whether any persons registered under Section 51 (TDS) & 52 (TCS) of CGST Act
were selected for audit in terms of Para 4.2.3 of GSTAM, 2019 during the audit
period under review? If so, please furnish details.
Name of the
Name of the Name of the Registered person
S. No. GSTIN
Circle Group under Section 51/52
of CGST Act.
51
PART – B
QUESTIONNAIRE FOR EVALUATION OF GENERAL PERFORMANCE
OF THE AUDIT COMMISSIONERATE
<Delhi/Mumbai/Ahmedabad/
i) Name of the ADG Audit Zone Hyderabad/Chennai/
Bangalore/Kolkata>
ii) Name of CC Zone
iii) Name of the Audit Commissionerate
iv) Audit Year
v) QAR Year
Marks
S. No. Audit Parameter Max. Marks
Awarded
Whether Database of officers’ profile was
1 1
maintained?
Whether audit groups are formed by equally
2 distributing officers of skill and experience 1
amongst the groups?
Whether officers posted to the GST Audit
3 Commissionerate for the first time, were sent for 2
training in GST Audit process?
Whether training programme/refresher course on
latest techniques were organized for the benefit of
4 2
officers posted after the annual transfers (other
than officers posted for the first time)?
Whether annual scheduling of audits was calibrated
5 1
based on the available working strength?
Whether database of registered persons to be
6 1
audited is maintained in Audit Commissionerate?
Whether selection of 70% of taxpayers to be audited
was carried out, based on risk scores communicated
7 1
by DG (Audit) and uploaded in audit module or
forwarded to audit circles before 15th March?
Whether reasons/justification for tweaking the lists
received from DGARM/DG (Audit) are recorded
8 1
while carrying out selection of 70% taxpayers for
audit?
Whether 20% of the taxpayers were selected based
9 on local risk factors and uploaded in audit module 1
or forwarded to audit circles before 15th March?
Whether the Chief Commissioner's approval was
10 obtained in respect of 20% taxpayers selected based 1
on local risk parameters?
Whether selection of 10% of the remaining
taxpayers was made randomly and uploaded in
11 1
audit module or forwarded to audit circles before
15th March?
Whether quarterly schedules were issued by Circle
12 AC/DC after release of annual schedule by Audit 1
Commissionerate?
52
Marks
Awarded
Whether the Desk Reviews and Audit Plans of the
13 top 5 taxpayers of each audit circle were approved 2
by the Commissioner?
Whether a few audit plans approved by ADC/JC
14 were reviewed by Commissioner to ensure quality 1
of audit?
Whether audit plans of small taxpayers approved
by DC/AC were reviewed by Additional
15 1
Commissioner? (Test check of about two to three
files from each circle)
Whether the NIL DARs were brought to the notice
16 1
of ADC/JC concerned for review?
Whether the DARs were communicated to the
17 Executive Commissioners seven days in advance of 1
MCM?
18 Whether MCMs are held at monthly intervals? 2
Whether the minutes of MCM were communicated

to the Executive Commissionerates immediately
19 1
for conveying their agreement/disagreement
within 15 days from the date of MCM?
Whether GSTAM Annexure-X was obtained from
20 the taxpayer wherever the waiver of issue of SCN 1
was proposed?
Whether a list of SCNs issued by the Audit
21 Commissionerate was communicated to the 1
Executive Commissionerates, on monthly basis?
Whether effective system of obtaining feedback on
22 audit process from the major taxpayers/trade 1
associations is in place?
Whether audit performance was reviewed by
23 Commissioner for taking suitable steps for 1
improvement?
Whether Audit Planning and Follow-up Registers
24 are maintained and updated, both at Headquarters 1
and Circle level?
Whether audit of all the taxpayers allocated was
25 1
completed by 31st March?
Whether Monthly returns are being prepared
26 basing on the records/registers maintained in MIS 1
section/Circles?
Total Marks 30
53
PART-C
QUESTIONNAIRE FOR EVALUATION OF INDIVIDUAL AUDIT FILE
<Delhi/Mumbai/Ahmedabad/Hyderabad/
Name of the ADG Audit Zone
Chennai/Bangalore/Kolkata>
Name of CC Zone
Name of the Audit Commissionerate
Audit Year
QAR Year
GSTIN
Name of the Registered person
Audit Case No.
Category of the registered person <Large/Medium/Small>
Date of audit
No. of Revenue paras raised
Amount Detected (in Rs.)
Recovery if any (in Rs.)
1. Preliminary Desk Review
Marks
Awarded
Whether Registered Person's Master File (RPMF) in
format Annexure GSTAM-1 along with all other
1 5
relevant documents is maintained and whether such
documents are updated regularly?
Whether the RPMF was reviewed by Auditor at the
2 2
time of desk review?
Whether the information furnished in GSTR-9
3 returns is reconciled with financial records and 2
other statutory returns?
Whether Revenue Risk Analysis was carried out and
4 2
results summarised?
Whether Trend Analysis was carried out and results
5 2
were summarised?
Whether Ratio Analysis was carried out during Desk
6 2
Review and results summarised?
Whether the documents mentioned in Annexure
GSTAM-III, as applicable, were obtained and
7 2
scrutinized for the audit period during desk review
and also reconciled with GST returns?
Whether the following areas were considered
during desk review
(i) rate of tax applicable
8 2
(ii) exemption notifications availed, if any
(iii) zero-rated/exempted/non-taxable supplies, if
any
54
Marks
Awarded
Whether ITC availment (including ISD, if any) was
9 2
analysed during desk review?
Whether the ITC shown in GSTR-3B return was

10 1
reconciled with GSTR-2A to identify gaps?
2. Preparation of Audit Plan
Max. Marks
S. No. Audit Parameter
Marks Awarded
Whether the audit plan was prepared based on
summary results of desk review and submitted for
11 3
approval to AC/DC/JC/ADC/Commissioner as the
case may be, along with completed working papers?
Whether the risk indicators or local risk parameters

12 were taken into account while finalising the audit 1
plan, wherever applicable?
Whether the audit plan considered abnormal trends

13 and unusual occurrences that were identified during 1
desk review if any?
Whether the audit plan is approved by appropriate

14 authority, viz., Commissioner/ADC/JC/DC/AC as the 1
case may be?
Whether any modifications/ additions were suggested

15 by senior officers in the draft Audit plan either at the 2
time of approval or during review of audit plan?
3. Audit Verification
Max. Marks
Marks Awarded
16 Whether tour of the premises has been carried out, 1
wherever necessary (Large/Medium taxpayers)?
17 Whether registered person/auditee or his authorised
1
representative was interviewed?
18 Whether the questionnaire in Annexure GSTAM -
VI meant for evaluation of internal controls was 2
completely filled?
Whether walkthrough was performed in the
following areas:
19 Account adjustment systems 1
20 Outward Supplies 1
55
Max. Marks
Marks Awarded
21 Purchases /Stores 1
22 Classification of Goods/ Services 1
23 Price determination (Transaction Value) 1
24 Process of compiling GST returns 1
25 ITC 1
26 Non-Taxable Item/Service 1
Whether soundness of internal control levels has

27 1
been graded as good/acceptable/poor and relevant
documents placed in file, wherever applicable?
Whether any fresh issue was identified during audit

28 and DC/AC's approval was obtained for verification 2
in such cases?
Whether verification of all points mentioned in the
29 2
audit plan has been carried out?
Whether auditor has properly and clearly recorded
30 the findings/observations in Working papers after 2
verification of issues?
Whether the explanation furnished by the Registered
31 1
person is taken on record. (if party furnished reply)?
Whether sales information as prescribed at Point IV
32 1
of GSTAM Annexure-VIII has been verified?
Whether extension of time granted by the Audit
33 Commissioner for conduct of audit, was informed to 1
the taxpayer?
Whether approval of circle AC/DC was obtained for
revising preliminary findings in spot memo/ Audit
34 1
Enquiry, which ultimately culminates into DAR
(wherever applicable) and informed to the taxpayer?
Whether the details like relevant acts, rules, circulars,
35 case laws etc., are properly quoted in all the audit 3
paras raised?
4. Working Papers
Max. Marks
Marks Awarded
Whether DAR was scrutinized and finalized by the
36 1
Monitoring Committee?
Whether the Audit report discloses all material and
37 2
relevant information?
Whether the follow up action was carried out
38 1
wherever applicable?
Whether Working papers are indexed & cross-
39 1
referenced to relevant entry in Audit plan?
56
5. Professional Conduct
Max. Marks
Marks Awarded
Whether the taxpayer was fully informed about the
40 1
audit process?
Whether the Registered person was informed about
41 actual audit dates well in advance, than time 2
stipulated in para 5.4 of GSTAM, 2019?
Whether discrepancies relating to Audit observations,
non-payment and procedural infractions noticed
42 1
were informed to the registered person in writing in
applicable cases?
6. Timeliness
Max. Marks
Marks Awarded
Whether the time taken for the audit was
43 1
commensurate with the complexity of the audit?
Whether the DAR was finalized within 10- 15 days of
44 1
commencement of audit?
Whether the FAR was issued and copy sent to
45 Registered person by email within 30 days from the 1
date of MCM?
Whether FAR was uploaded using Audit Report
46 1
Utility?
Whether the audit was completed within 3 months
47 from the date of commencement or within such 1
period as extended by the Commissioner?
Total Marks 70
57
PART - D
QAR GRADING
<Delhi/Mumbai/Ahmedabad/Hyderabad
/Chennai/Bangalore/Kolkata>
Name of CC Zone
Audit Year
QAR Year
OVERALL SCORING AND GRADING OF QAR
S. No. Subject Maximum Score Score awarded

Scoring from Part B (in
1 percentage) (contains 26 30
parameters with 30 marks)
Scoring percentage from Part

2 C (contains 47 parameters 70
with 70 marks)
OVERALL SCORING (1+2) 100
QAR GRADING FOR THE

AUDIT YEAR
P.S.: (i) Scores will be given up to two nearest decimals.
(ii) Key to grading based on overall scoring: A = EXCELLENT (>90), B=

VERY GOOD (80.01-90), C = GOOD (70.01-80), D= AVERAGE (60.01-70),
E = VERY POOR (<=60)
(iii) While adopting scoring percentage in Part B and Part C, wherever certain
queries are not applicable, e.g., in case of Nil audit reports, no follow-up
action is required, sum of scores for applicable cases only will be
considered as denominator value and score will be determined
accordingly.
58
PART – E
COMMENTS/SUGGESTIONS AND RECOMMENDATIONS
<Delhi/Mumbai/Ahmedabad/Hyderabad
/Chennai/Bangalore/Kolkata>
Name of CC Zone
Audit Year
QAR Year
(I) General
(i) General level of quality and sustainability

of audit objections raised (objection dropped
in MCM vis-à-vis objections raised)
(ii) Pendency of audit paras
(iii) Others
(II) Compliance to previous QAR
(III) Performance of the Audit

Commissionerate with reference to present
QAR
59
1
Name of Audit
Commissionerate
2
Name of CC Zone
3
4
Audit Year
API for Quarter (1st quarter/
5
2nd quarter/3rd quarter/ 4th
quarter)
No. of taxpayers scheduled
6
during the period
No. of Officers working

during the period
7
(Superintendents + Inspectors)
in all Groups
8
1 Year, i.e.
2017-18
2 years, i.e., 2017-
9
18 & 2018-19
of coverage)
Large (period
10
Total
1 Year, i.e.
11
2017-18
2 years, i.e., 2017-
12
18 & 2018-19
Medium
coverage)
(period of
13
Total
60
1 Year, i.e., 2017-
14
18
2 years, i.e., 2017-
15
Small
18 & 2018-19
ANNEXURE–III
coverage)
(period of
No. of taxpayers actually audited during the quarter
16
Total
Amount from the five

17
(para 3.4.1 of Chapter 3 of the Manual)
taxpayers having highest

detections
Detections from
18
remaining taxpayers
quarter
Total detections from all

19
FORMAT OF REPORT REQUIRED FOR DETERMINING API
taxpayers (Col.17+
Detections during the
Col. 18)
Amounts from the five

20
taxpayers yielding
highest recoveries
Amounts from
21
remaining taxpayers
the quarter
Total Recoveries from all

22
Recoveries during
taxpayers (Col. 20 +
Col. 21)
Total no of paras pending at
23
the beginning of the quarter
Total no. of paras raised

24
during the quarter
Total no. of paras closed

25
during the quarter

1
Name of Audit Commissionerate
1A
Name of CC Zone
1B
(Delhi/Mumbai/Ahmedabad/
Hyderabad/Chennai/Bangalore/Kolkata)
1C
Audit Year
API for quarter

(1st quarter/ 2nd quarter/
1D
3rd quarter/ 4th quarter)
Ratio of taxpayers Audited to taxpayers scheduled
2
for audit (Marks in percentile on a scale of 0-10)
Ratio of Man-days utilized to Man-days available
3
(Marks in percentile on a scale of 0-10)
20% weightage to the five taxpayers
61
4A
having highest detections (i.e., 0-4)
80% weightage to remaining taxpayers'

ANNEXURE-IV
4B
figures (Marks in percentile on a scale

scale of 0-20)
(total marks in
percentile on a
Detection/Audit
of 0-16)
20% weightage to the five taxpayers

5A
yielding highest recoveries (i.e., 0-4)

(para 3.5 of Chapter 3 of the Manual)
0-20)
80% weightage to remaining taxpayers'

scale of
figures (Marks in percentile on a scale

5B
(total marks in
percentile on a
of 0-16)
Recovery/Audit
Ratio of total recovery to total detection

6
AUDIT PERFORMANCE INDEX: AWARD OF API GRADING
Output per Auditor, i.e., Total amount

7
detected/No. of Auditors during the period.

Ratio of {(Total no. of paras closed during the

period) to (Total no. of paras pending for closure at
8
the beginning + Total no. of paras raised during the

quarter)}
9
Total Marks
API Rank
10
ANNEXURE–V
AWARD OF COMPOSITE GRADING OF QAR & API

(para 6.2 (iii) of Chapter 6 of the Manual)
Weightage for QAR scoring for
Overall scoring for Composite

Weightage for API scoring for
Composite Grading Score of

(Delhi/Mumbai/Ahmedabad/
Scoring/Marks from QAR
Scoring/Marks from API
Grading (Col. 7 + Col. 8)

Hyderabad/Chennai/
Composite Grading
Composite Grading
Bangalore/Kolkata)
Name of CC Zone
Commissionerate
(in percentage)
Name of Audit
QAR and API

(40% * Col.6)
(60% * Col.5)
Audit Year
1 2 3 4 5 6 7 8 9 10
ILLUSTRATION:
If an Audit Commissionerate gets a scoring of 85 in the QAR for the Audit Year, then scoring for composite grading is calculated as
60/100*85 = 51. Similarly, if an Audit Commissionerate gets scoring of 90 in the API for the Audit Year, scoring for composite grading is
calculated as 40/100*90 = 36. The composite grading in this case will be 51+36 = 87. The above data may be arranged in the descending
order of composite grading score mentioned in column 10.
62

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(For Departmental Circulation Only)

Directorate General of Audit

Presently, quality evaluation of Central Excise and Service Tax

Pursuant to introduction of Goods and Services Tax (GST), a major

In view of this sweeping reform, a need has arisen for a

A committee headed by Shri Sunil Jain, Additional Director General,

Some of the highlights of the Manual for Quality Assurance Review

❖ The existing system of assessment by way of marking “yes” or “no”

❖ Scoring based on additional parameters like training needs, timely

I appreciate the personal efforts made by Shri Sunil Jain, Additional

Feedback, inputs and suggestions pertaining to this manual may be

CHAPTER 1 DIRECTORATE GENERAL OF AUDIT AND 1

1.2 Need for Revision/Revamping of QAR and Introduction of

1.3 Purpose of the Manual 3

1.3.1 Scope of the Manual 3

1.4 Intended Users 4

CHAPTER 2 QUALITY ASSURANCE REVIEW 5

2.2 QAR Objectives 5

2.3 QAR Team 6

2.3.1 Composition of QAR Team 6

2.3.2 Qualification of Team Members 6

2.4 Frequency of QAR 6

2.5 Duration of QAR 6

2.6 Overview of the QAR Process 7

2.7 Grading of the Performance of Audit Commissionerates 8

2.8 QAR Format 8

CHAPTER 3 AUDIT P ERFORMANCE INDEX (API) 9

3.1 Introduction to API Grading 9

3.3 Importance of Each Parameter 10

3.4 Furnishing of Data Required for Determining API 12

3.5 Issue of Quarterly API by DG (Audit) 12

CHAPTER 4 CONDUCTING THE QAR 13

4.1 Scheduling the Review 13

4.1.1 Annual Planning 13

4.2 Gathering of Information 13

4.3 Preliminary Review of Available Information 13

4.4 Opening Meeting with the Audit Commissioner 14

4.5 Selection of Files for Review 14

4.6 Verification of Information Provided in MPR 14

4.7 Review of General Information Provided by the Audit

4.8 Review of General Performance of the Audit Commissionerate 15

4.9 Review of Selected Files 15

4.10 Closing Meeting with the Commissioner 16

4.11 Finalization of the Review Report 16

4.12 Response from the Commissionerate 18

CHAPTER 5 METHODOLOGY FOR DETERMINING API 19

CHAPTER 6 COMPOSITE GRADING OF QAR & API 25

6.1 Route Map for Issue of Composite Grading 25

ANNEXURE-I Methodology for Verification and Awarding

ANNEXURE-II Format of QAR 46

Part A – General Information 46

Part B – Questionnaire for Evaluation of 52

Part E – Comments/Suggestions & 59

ANNEXURE-IV Format of Award of API Grading 61

ANNEXURE-V Format of Award of Composite Grading of QAR 62

1.1.2 As an advisor to the Central Board of Indirect Taxes and Customs

1.2 NEED FOR REVISION/ REVAMPING OF QAR &

1.2.3 The Directorate General of Audit is mandated with evaluation of the

1.3 PURPOSE OF THE MANUAL