For a manufacturer with a December year-end, most audit adjustments trace back to a handful of controls that slipped during the year. Running the five checks below in October or November gives the finance team time to fix gaps before the stock count, the audit fieldwork and the corporate income tax return.
1. Inventory: count, cost and slow-moving stock
Inventory is usually the largest current asset on a factory balance sheet, and TAS 2 Inventories requires it to be measured at the lower of cost and net realisable value. Check that count instructions are written and issued in advance, that the people who count are not the people who keep the stock records, and that slow-moving and obsolete items are identified with an agreed ageing rule rather than case by case.
2. Cut-off on sales and purchases
Under TFRS 15, revenue is recognised when control of the goods passes to the customer, which depends on the delivery terms rather than the invoice date. Review the last and first delivery notes around the year-end, match them to invoices and Incoterms, and make sure goods received but not yet invoiced are accrued.
3. Related-party transactions and transfer pricing
Sales to and purchases from the parent, management fees and intercompany loans need a written agreement, a pricing basis and a reconciliation of balances with the counterparties. Companies with annual revenue of 200 million baht or more must also file the transfer pricing disclosure form with the corporate income tax return under section 71 ter of the Revenue Code, so the figures need to agree to the ledger.
4. BOI-promoted and non-promoted activities
A BOI-promoted company that also earns income outside its promoted activity must separate the revenue and costs of each activity to support its tax exemption. Confirm that the chart of accounts or cost centres split the two, and that shared costs are allocated on a documented basis applied consistently through the year.
5. System access and approvals
In an ERP, segregation of duties is only as good as the user roles behind it. Export the list of active users and their access rights, close the accounts of people who have left, and check that no single user can create a supplier, post an invoice and release a payment without a second approval.
What to do with the findings
Record each gap with an owner and a date, fix what can be fixed before the year-end, and share the list with your auditor at the planning meeting. Issues that management finds and corrects are much easier to deal with than issues found during fieldwork.
If you would like to discuss how these checks apply to your company, contact us to schedule a consultation.