Procedure of high sea purchase, import purchase.

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Querist : Anonymous

Querist : Anonymous (Querist)

30 May 2015 Please give your opinion on conducting Audit of High sea sale and Purchase and whats document'are required to check and examine at the time of Conducting Audit and as well as suggest me on the audit of Import purchase( Steps To Vouch The Import Purchase.)

Querist : Anonymous

Querist : Anonymous (Querist)

30 May 2015 Please Give Your Opinion As soon as Possible on the aforementioned Query.

Querist : Anonymous

Querist : Anonymous (Querist)

05 June 2015 Please if possible then give your answer as soon as possible.

Querist : Anonymous

Querist : Anonymous (Querist)

19 August 2015 Dear all

I am waiting for your's replies.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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10 August 2024 Conducting an audit for high sea sales and purchases, as well as for import purchases, involves understanding the specific nature of these transactions and ensuring compliance with applicable regulations. Here’s a detailed procedure and the required documentation for auditing these types of transactions:

### **High Sea Sales and Purchases**

**1. ** **Understanding High Sea Sales:**
- **Definition:** High sea sales refer to transactions where goods are sold while they are still on the high seas, i.e., before the goods have reached the destination port. The buyer takes ownership of the goods at sea and is responsible for import duties.
- **Documentation Requirements:**
- **High Sea Sale Agreement:** Verify the agreement between the seller and the buyer for the high sea sale.
- **Bill of Lading:** Check the bill of lading to confirm that the goods were sold while still in transit.
- **Invoice:** Ensure that the invoice reflects the high sea sale nature and includes details like the sale price, date, and parties involved.
- **Shipping Documents:** Review documents such as the shipping bill and customs declaration related to the import of goods.

**2. ** **Audit Procedure:**
- **Verify Sale Transactions:** Ensure that the high sea sale transaction is properly recorded in the books of accounts and that it complies with GST provisions.
- **Check Documentation:** Confirm that all relevant documents, including the high sea sale agreement, bill of lading, and invoice, are in order.
- **Examine Import Records:** Verify that the buyer has correctly accounted for the high sea sale in their import records and has complied with applicable duties and taxes.
- **Review Customs Compliance:** Ensure that customs clearance procedures were followed and that appropriate duties and taxes were paid upon arrival of the goods.

### **Import Purchases**

**1. ** **Understanding Import Purchases:**
- **Definition:** Import purchases involve acquiring goods from outside the country. These transactions are subject to customs regulations, duties, and taxes.
- **Documentation Requirements:**
- **Purchase Order:** Verify the purchase order issued to the overseas supplier.
- **Commercial Invoice:** Check the commercial invoice from the supplier for details about the goods, value, and terms of sale.
- **Bill of Lading/Airway Bill:** Ensure that the shipping document reflects the import transaction and the correct details about the shipment.
- **Customs Declaration:** Review the customs declaration and clearance documents to verify that duties and taxes were correctly paid.
- **Import Duty Payment Receipt:** Confirm the receipt of payment for import duties and taxes.

**2. ** **Audit Procedure:**
- **Verify Purchase Orders:** Check that the purchase orders match the invoices received and that they are properly recorded in the accounts.
- **Cross-check Invoices:** Ensure that the invoices are accurate and match the details on the bill of lading or airway bill.
- **Examine Customs Documentation:** Review customs declaration documents to confirm that import duties and taxes are properly accounted for and that the goods were cleared through customs.
- **Check Payment Records:** Verify that payments for import duties and taxes are properly recorded and reconciled with the corresponding invoices.
- **Confirm Compliance with Regulations:** Ensure that all import regulations and compliance requirements are met, including adherence to GST and customs rules.

### **Key Documents to Examine During Audit:**

- **For High Sea Sales:**
- High Sea Sale Agreement
- Bill of Lading
- Invoice
- Shipping Bill
- Customs Declaration

- **For Import Purchases:**
- Purchase Order
- Commercial Invoice
- Bill of Lading/Airway Bill
- Customs Declaration
- Import Duty Payment Receipt

### **Steps to Vouch High Sea Sale and Purchase:**

1. **Verify the Agreement:** Ensure that the high sea sale agreement is in place and correctly documented.
2. **Cross-check Shipping Documents:** Confirm that the bill of lading and other shipping documents reflect the transaction.
3. **Validate Invoices:** Ensure that invoices are accurate and match the documentation provided.
4. **Review Customs Clearance:** Verify that customs clearance was appropriately handled and that duties and taxes were paid.
5. **Audit Financial Records:** Ensure that all transactions are accurately recorded in the financial statements and books of accounts.

Following these procedures and reviewing the relevant documents will help ensure that high sea sales, import purchases, and related transactions are properly audited and compliant with regulatory requirements.

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