J. B. NAGAR CPE Study Circle of WIRC TAX AUDIT: Practical issues

9GENERAL ISSUESAssessee vis a vis auditors dutyInformation to be complied and authenticated by the assessee. Auditors duty to check thedetails applying the auditing standards and techniques. In case of conflicting views with theassessee, the auditor may state both the views. In case of conflicting judicial precedents,auditor should state the judgment relied upon.Working papersNo one will believe you did something on an audit if there is nothing in your working papers fileto show for it.They are aid in the planning and performance of auditsThey are aid in supervision and review of audit workThey provide evidence of the audit performed to support the auditor’s opinion.Documentation for tax auditDocumentation refers to the working papers prepared or obtained by the auditor and retainedby him in connection with performance of his audit.SA - 210 : Appointment letter defining scope of auditSA - 580 : Management representation letterSA - 310 : Notes on the nature of businessSA - 500 : Sample Purchase and Sales bills, Proof of assets purchased and revenue expenditurecapitalised, Trial balance and Financial statements duly signed b the assesseeSA - 505 : Bank loan statement, Bank balance confirmation, Major sundry debtors and creditorsbalance confirmation,SA – 520 : analytical ratio analysisSA - 550 : List of related parties and transactionAS -1 Notes on accounts and disclosure of accounting policiesAS -2 Valuation of inventories with quantitative inflow and outflow statementAS – 5 Extraordinary Items nature & disclosureAS – 6 : Depreciation calculation statementAS – 29 : Estimation of liabilities including contingent liabilities3CD check list, documentations, 3CD specific certificates, statutory compliances etc.Abatement? BEWAREA person other than tax payer who willfully makes or causes to tax payer to make any falseentry in the books of accounts or any statement to evade any tax liability would be madeliable to imprisonment range from 3 months to 3 years with fine. (Abatement u/s. 277A)To sum up, one must keep in mind: Concept of Prudence, Substance over form, Materiality & Matching Concept.