Value Added Tax (VAT) Meaning of VAT Audit: VAT will replace replace the present present sales tax in India. Under the current single point system of tax levy, the manufacturer or importer of goods into a State is liable to sales tax. There is no sales tax on the further distribution channel. VAT, in simple terms, is a multi-point levy on each of the entities in the supply chain with the facility of set-off of input tax that is, the tax paid at the stage of purchase of goods by a trader and on purchase of raw materials by a manufacturer. Only the value addition in the hands of each of the entities is subject to tax. For instance, if a dealer purchases goods for Rs 100 from another dealer and a tax of Rs 10 has been charged in the bill, and he sells the goods for Rs 120 on which the dealer will charge a tax of Rs 12 at 10 per cent, the tax payable by the dealer will be only Rs 2, being the difference between the tax collected of Rs 12 and tax already paid on purchases of Rs 10. Thus, the dealer has paid tax at 10 per cent on Rs 20 being the value addition in his hands. Purchase price - Rs 100 Tax paid on purchase - Rs 10 (input tax) Sale price - Rs 120 Tax payable on sale price - Rs 12 (output tax) Input tax credit - Rs 10 VAT payable - Rs 2 VAT levy will be administered by the Value Added Tax Act and the rules made there-under. VAT can be computed by using any of the three methods detailed below: Thee Subt Subtra ract ctio ion n meth method od::- Th Thee tax tax rate rate is appl applie ied d to the the diff differ eren ence ce Th between the value of output and the cost of input. The Addition method: The value added is computed by adding all the pay payme ment ntss that that is paya payabl blee to the the fact factor orss of prod produc ucti tion on (viz (viz., ., wage wages, s, salaries, interest payments etc). Tax credit method: This entails set-off of the tax paid on inputs from tax collected on sales. India opted for tax credit method, which is similar to CENVAT.
VAT law introduces words and concepts which have a special meaning for VAT administration purposes. For business enterprises, and especially for those who must register for VAT purposes, it is important to understand and appreciate the meaning of these definitions and concepts. These are dealt with in Section 2 of the Act. Act. The following concepts are the most important. Many Many states states in India India have have starte started d asking asking the profes professio sional nalss (some (sometim times es Chartered Accountants only) to carry out a VAT audit similar to the Tax audit as envisaged under Income Tax. This is a move towards distancing the tax administration form the erstwhile hold of the Sale Tax officers also a move to trust the tax payers more. In central excise regime the self assessment schem schemee whic which h has has been been work workin ing g for for some some time time no now w has has resu result lt,, whic which h indicate that 97 % of the monies are collected on voluntary compliance by tax compliant assesses. A mere mere 3% is out of the audits/ investigation etc. The VAT audit assignment is an opportunity for providing extraordinary serv servic icee to the the clie client nt.. Th Thee stat statut utor ory y requ requir irem emen ents ts of the the audi auditt coul could d be covered and the compliance of the Act and rules confirmed or reported. While doing so the context of the verification can be expanded to examine and report any value addition which is possible for the client. In the audit program which is designed the areas where value addition is possible can be added as per the experience of the auditor. The areas where value addition normally could be possible as per the authors among many others are as under:
Ensuring that the goods are properly classified under proper schedule so that the tax rates are proper and correct. The cost of an incorrect tax rate is that hat the there is risk of a deman emand d from from the depa deparrtmen tmentt or bein eing uncomp uncompeti etitiv tivee in the market market.. Both Both the result resultss are are equall equally y disast disastrou rous. s. Educating the client to any error/ exposure in this area could be important i mportant as the impact of the same may not be appreciated by a business man where no such demand has been made till date.
Ensuring that the concern has a policy goods of procured only from registered dealers and avoid procuring from unregistered dealers. This would save on transaction cost of compliance in that area along with avoiding the additional risk denial of the credit/ deduction. Where the dealer is an exporter ensuring that the input setoff is claimed on inputs even if they are used in exempted goods which are exported or exported as such.
Ensuring that input setoff is properly claimed in case of Schedule V items especially especially on electroni electronicc or electrica electricall items. items. Confirm Confirm that where they are used in relation to manufacturing activity, activity, storing information, for issuing invoices, set off can be claimed.
There are a number of options under works contract, each with its own rest restri rict ctio ion/ n/ cond condit itio ions ns and and bene benefi fits ts.. Conf Confir irmi ming ng that that thes thesee were were consid considere ered d when when opting opting in every every year year. Possib Possibili ility ty of having having anothe another r concern for availing the alternative may also be a possible solution.
Ensuring that the deduction for labour charges is claimed for works contract either on actual basis is higher and on standard basis is not ascertainable.
Proper planning for the extent of consignment sales within the state. The sales mix between direct sales and those through the agent.
Review Reviewing ing the custom customer er profi profile le for method methodolo ology gy of sellin selling g by stock stock transfers to depot/ consignment agents outside the state rather than direct sale or vice versa.
Reviewing the supplier’s location for optimizing the tax credits. Conf Confir irm ming that that the refun efund d cla claims ims are are made from from time ime to time time approp appropria riatel tely y to avoid avoid unn unnece ecessa ssary ry lockin locking g up of funds funds for worki working ng capital.
Examining the option of supply of materials to job workers / contractors free of cost to optimise the tax cost.
Confirming that the job worker does not add the value of materials sent by the t he principal prin cipal for discharging dis charging VAT/CST.
As the audit is being done many more areas where value could be available would unfold. That maybe added to this list. The auditor could then be a pro profi fitt cent centre re inst instea ead d of a cost cost cent centre re and and coul could d also also be adeq adequa uate tely ly compensated for the same. If the value addition were established the clients would require the audit without any statutory requirement.
Advantages & Disadvantages of VAT
Advantages of VAT: In the advantages part we will first look after the broad coverage of VAT in the Indian market. Then we will consider the level of security the Indian VAT is having on our revenues. Obviously the selection of items to be covered by VAT in India will be given a bullet to think upon and at last we will check out the co-ordination VAT in India will be having with our existing direct tax system.
1) Coverage :
If the the tax tax is carr carrie ied d thro throug ugh h the the reta retail il leve level, l, it offe offers rs all all the the econ econom omic ic advantages of a tax that includes the entire retail price within its scope, at the same time the direct payment of the tax is spread out and over a large number of firms instead of being concentrated on particular groups, such as wholesalers or retailers. If retailers do evade, tax will be lost only on their margins because customers that are registered firms gain nothing if their suppliers fail to collect tax, except delay in payment; they will pay more to the government themselves. Under other forms of sales of sales tax, tax, both seller and customer gain by evading tax. One particular advantage is that of the widening of the tax base by bringing all transactions into the tax net. Specifically, VAT gives the new government the opportunity to bring back into the tax system all those persons and entities who were given tax exemptions in one form or another by the previous regime. 2) Revenue security:
VAT represents an important instrument against tax evasion and is superior to a business tax or a sales tax from the point of view of revenue security for three reasons. In the first place, under VAT it is only buyers at the final stage who have an interest in undervaluing their purchases, since the deduction system ensures that buyers at earlier stages will be refunded the taxes on their purchases. Therefore, tax losses due to undervaluation should be limited to the value added at the last stage. Under a retail sales tax, on the other hand, retailer
and consumer have a mutual interest in underdeclaring the actual purchase price. Secondly, under VAT, if payment of tax is successfully avoided at one stage nothing will be lost if it is picked up at a later stage; and even if it is not picked up subsequently, subsequently, the government will at least have collected the VA VAT paid at stages previous to that at which the tax was avoided; while if evasion takes place at the final stage the state will lose only the tax on the value added at that point. If evasion takes place under a sales tax, on the other hand, all the taxes due on the product are lost to the government. A significant advantage of the value added form in any country is the crossaudit feature. Tax charged by one firm is reported as a deduction by the firms buying from it. Only on the final sale to the consumer is there no possibility of cross audit. 3) Selectivity:
VAT may be selectively applied to specific goods or business entities. We have already addressed essential goods and small business. In addition the VAT does not burden burden capital capital goods goods because because the consumpti consumption-t on-type ype VAT provides a full credit for the tax included in purchases of capital goods. The credit does not subsidize the purchase of capital goods; it simply eliminates the tax that has been imposed on them. 4) Co-ordination of VAT with direct taxation:
Most taxpayers cheat on their sales not to evade VAT but to evade personal and corporate corporate income income taxes. The operation operation of a VAT resembles resembles that of the income tax more than that of other taxes, and an effective VAT greatly aids income tax administration and revenue collection.
Disadvantages of VAT:
1) VAT is regressive:
It is claimed that the tax is regressive, i.e its burden falls disproportionately on the poor since the poor are likely to spend more of their income than the relati relativel vely y rich rich person person.. There There is merit merit in this this argum argument ent,, partic particula ularly rly if it attemp attempts ts to repla replace ce direc directt or indire indirect ct taxes taxes with with steep, steep, progr progressi essive ve rates. rates. However, observation from around the world and even Guyana has shown that steep tax rates lead to evasion, and in the case of income tax act as a disincentive to effort. Furthe rtherr, the there is now a ten tendenc dency y in most ost cou countri ntries es to redu educe this this progressivity of taxes as has been done in Guyana where a flat rate of income tax has been introduced. In any case VAT recognises and makes room for progressivity by applying no or low rates of tax on essential items such as food, clothes and medicine. In addition it allows for steep rates of tax on luxury items, although this can create problems for administration and open open opp oppor ortun tuniti ities es for evasio evasion n by way way of delibe deliberat ratee miscla misclassi ssific ficati ation, on, a problem incidentally not peculiar to VAT, and which takes place extensively in the area of customs duties. 2) VAT is too difficult to operate from the position of both the administration and business:
(a) The administration: It is often argued that VAT places a special burden on tax administration. However, it is worth noting that wherever VAT was introduced one of its effects was the rationalization and simplification of the previous indirect tax system and its administration. Each of the previous indirect taxes such as customs duties, purchase tax and excise duties replaced by VAT had its own rate structure as well as a different tax base and separate administrative procedure. The consolidation and incorporation of numerous indirect taxes into the VAT would simplify the rate structure, tax base, and administration of the indirect tax system, thereby eliminating the overlapping auditing practices practices that had plagued those systems. In addition, the abolition of a number of alternative indirect taxes releases experienced personnel to focus on a single tax. It also means reduction in the number of forms used, legislation to be applied and returns and accounts with which the business person has to contend.
(b) Business: It is true that the VAT is collected from a larger number of firms firms than under any form form of income income tax or single single state sales tax; to the typical smaller firms the complexities of the tax and the need for more extensive extensive records (for example, example, to justify justify deductions deductions)) are likely to prove prove serious. Howeve Howeverr, it is often often overlo overlooke oked d that that busine businesse ssess alread already y functi function on with with considerable administrative administrative responsibility for a number of laws including the National Insurance Act and the Income Tax Act. Under the Income Tax (Accounts and Records) Regulations of 1980 every person, without exception is required to maintain detailed and extensive records of all its transactions. Compliance with this will certainly ensure compliance with VAT regulations, and since there is an actual benefit to be derived from accounting for VAT paid on input there is an incentive for proper record-keeping. As we have noted before, VAT also allows for the exemption of small businesses from the system. Under Under any form of sales sales taxati taxation, on, small small busine businesse ssess have have to be grante granted d special treatment because of their inability to cope with the requirements of keeping adequate records which larger enterprises enterprises can handle at a reasonable cost. The intent of the special treatment is to reduce the administrative burde burden n on small small enterp enterpris rises, es, but not the taxes taxes that that no norma rmall lly y would would be charged on the goods and services they supply. The revenue loss at the final link in the commercial cycle is limited only to the value added at that stage, whereas in the case of income tax or sales tax the entire tax is lost. To recover the loss from exemptions, a flat tax on turnover may be applied.
3. VAT is inflationary:
Some businessmen seize almost any opportunity to raise prices, and the intr introd oduc ucti tion on of VAT cert certai ainl nly y offe offers rs such such an op oppo port rtun unit ity y. Howe Howeve verr, tempor temporary ary price price contr controls ols,, a carefu carefull settin setting g of the rate rate of VAT and the significance of the taxes they replace should generally ensure that there is no increase if any in the cost of living. To the extent that they lead to a
reduction in income tax, any price increases may be offset by increases in take-home pay. In any case, any price consequence is one time only and prices should stabilise thereafter. 4. VAT favours the capital intensive firm:
It is also argued that VAT places a heavy direct impact of tax on the labourintensive firm compared to the capital- intensive competitor, since the ratio of value added to selling price is greater for the former. This is a real problem for labour-intensive economies and industries. Items Covered in Indian VAT 550 items covered
270 items of basic needs, Rest Rest 12.5% 12.5% VAT. Gold Gold & like medicine, drugs, agro & silver jewellery - 1% indust industria riall inputs inputs,, capital capital & declared goods 4% VAT
Tea-producing states options Petrol, diesel, liquor, lottery Suga Sugarr, texti extile le & toba tobacc cco o either percentage VAT not included * excluded for one year Traders with turnover of less than 500,000 rupees are exempt from the new tax.
Note: Some states like Delhi have imposed VAT on diesel at 20%, which is higher than the 12% sales tax charg charged ed earli earlier er.. Simi Simila larl rly y, Delh Delhii impo impose sed d VAT on LP LPG G at 12.5%, which is also higher than the previous sales tax rate of 8 percent. "More than 550 items would be covered under the new Indian VAT regime of which 46 natural and unprocessed local products would be exempt from VAT", a PTI report quoted West Bengal Finance Minister and VAT panel chairman Asim Dasgupta as saying. About 270 items including drugs and medicines, all agricultural and industrial inputs, capital goods and declared goods would attract four per cent VAT in India. The remaining items would attract 12.5 per cent VAT. Precious metals like gold and bullion would be taxed at one per cent.
Considering the difficulties difficulties faced by the tea industry, industry, it was decided that tea producing states would be given an option to levy 12.5 per cent or four per cent subject to review in 2006. Petrol and diesel would be kept out of VAT regime in India, which covers only marketable items. Dasgupta was quoted as saying that the panel was yet to take a view on CNG. Following opposition from some of the states, it was decided that states would have option to either levy four per cent or totally exempt food grains but it would be reviewed after one year. Three items - sugar, textile and tobacco - covered under Additional Excise Duties, will not be under VAT regi regime me for for on onee year year bu butt the the exis existi ting ng arra arrang ngem emen entt woul would d cont contin inue ue.. The Indian VAT panel relaxed the threshold limit for traders coming under VAT regime from Rs 5-50 lakh of turnover from the previous stance of Rs 540 lakh. Traders within this limit can pay a composite VAT rate of one per cent but would not be entitled to input tax credit.
The Impact of VAT in India
VAT is most certainly a more transparent and accurate system of taxation. The existing sales tax structure allows for double taxation thereby cascading the tax burden. burden. For example, example, before a commodit commodity y is produced produced,, inputs inputs are first taxed, the produced commodity is then taxed and finally at the time of sale, the entire commodity is taxed once again. By taxing the commodity multiple times, it has in effect increased the cost of the goods and therefore the price the end consumer will pay for it. The transaction chain under VAT assuming that a profit of Rs 10 is retained during each sale.
SALE @ »»
'A' OF CHENNAI 'B' OF SALE Rs. 100/BANGALORE @ Rs. Rs. 114/14/»» »»
SALE @ »»
' D' OF SALE BANGALORE @ Rs. Rs. 134/ 134/-»» »»
Rs.
124/-
'C' OF BANGALORE »» CONSUMER IN BANGALORE
Tax implication under Value Added Tax Act Seller
Buyer
Selling Price (Excludi ng Tax)
Tax Rate ate
Invoice value (Incl Tax)
Tax Payable
Tax Credit
A
B
1 00
4% CST
104
4
0
4.00
B
C
114
12.5% VAT
128.25
14.25
0* 0*
14.25
C
D
1 24
12.5% VAT
139.50
15.50
14.25
1.25
D
Consume 134 r
12.5% VAT
150.75
16.75
15.50
1. 1.25
Total to Govt.
VAT CST
16.75 4.00
Net TaxOutfl ow
Necessity of VAT in India India, particularly the trading community, has believed in accepting and adopting loopholes in any system administered by the state or the Centre. If a well-administered system comes in, it will close avenues for traders and businessmen to evade paying taxes. They will also be compelled to keep proper records of their sales and purchases. Many sections sections hold the view that the trading trading community community has been amongst the biggest offenders when it comes to evading taxes. Under the VAT system, no exemptions will be given and a tax will be levied at each stage of manufacture of a product. At each stage of value-addition, the tax levied on the inputs can be claimed back from the tax authorities. At a macro level, there are two issues, which make the introduction of VAT critical for India. Industry watchers say that the VAT system, if enforced properly, forms part of the fiscal consolidation strategy for the country. It could, in fact, help address the fiscal deficit problem and the revenues estimated to be collected could actually mean lowering of the fiscal deficit burden for the government. The International Monetary Fund (IMF), in its semi-annual World World Economic Outlook released on April 9, expressed its concern over India's large fiscal deficit - at 10 per cent of the GDP. Further any globally accepted tax administrative system will only help India integrate better in the World Trade Organisation regime. Fraud detected by auditor:
Fraud in the North Woods - how an internal auditor detected fraud in the Northwe Northwest st - Fraud Fraud Findings Findings Internal Internal Auditor Auditor , June, 1994 by Richar Richard d A. Morley. The construction site was in the woods on the shore of a large bay. The project to build a huge structure of concrete and steel had just begun. A young engineer on the project called his father, a senior vice president at the home office of the large construction firm, to convey some misgivings he had about some of the transactions he had observed at the project site.
On Monday morning, an internal auditor was on a plane to the Northwest to conduct a "routine audit." After the usual friendly, cooperative greeting, the auditor told the office manager he would like to start by looking at the petty cash fund. The first snake to crawl out from under the rocks was a gasoline charge card receipt copy in the current batch of items for reimbursement -- the original of which was in the last month's batch, already reimbursed. Next, there was a receipt for a cash payment to a trucker for hauling logs. The auditor asked where the logs went and whether they were sold. He then listened to a rather bizarre story about the logs being from the shore and too full of salt to be useful. The office manager said that they were hauled away for burning. Then the auditor came upon a gasoline card receipt for three expensive automobile batteries purchased from the local service station. A company policy required that all batteries and tires be purchased from one major manu manufa fact ctur urer er that that prov provid ided ed a subs substa tant ntia iall vo volu lume me disc discou ount nt.. Th Thee offi office ce mana manage gerr expl explai aine ned d that that ther theree was was no deal dealer er avai availa labl blee loca locall lly y for for the the preferred brand. The auditor was not satisfied s atisfied with this explanation, knowing there was a major city nearby, and he asked to see the batteries. The office manager was unable to recall just where the batteries were. He directed the auditor to one pickup truck after another and eventually told the auditor that the batteries were on a barge out in the bay. The auditor rowed a boat out to the barge and determined that the batteries were not there either. either. When confronted, the office manager explained that the store that sold the batteries also sold sporting goods and that the batteries were really fishing equipment for workers to use on breaks. He further explained that the fishing equipment was invoiced as batteries to avoid challenge in the home office. The auditor's request to see the fishing equipment yielded the response that it was around somewhere office manager or lose the contract to a competitor. Next, the auditor looked through the accounts payable files. A file for the vendor supplying ready-mixed concrete for the project held seven truckload receipts and the paid invoice copies to cover seven loads. Six of the seven receipts were wrinkled, a bit dirty from handling, and were signed by the yard yard fore forema man. n. Th Thee seve sevent nth h was was fres fresh, h, clea clean, n, and and sign signed ed by the the offi office ce manager. The conc The concre rete te rece receiv ived ed up to that that po poin intt had had been been used used to lay lay pads pads for for construction buildings and sheds. None of the thousands and thousands of
cubic yards to be used in the major structure had been received. When the auditor asked the engineer to estimate the volume of concrete already used on the site, the estimate indicated that the concrete used was one load short of what was billed and paid for. The auditor was by now suspicious of everything. He toured the area and climbed up to look in the trash dumpster, where he saw cut pieces of sheetrock. It struck him that he had not seen a single piece of sheetrock used on the project. That afternoon he drove by the project manager's home and saw a pile of sheetrock that appeared to be part of some home remodeling. The accounts payable files held documentation for several hundred dollars' worth of sheetrock. The auditor flew home and presented his evidence to the vice president of finance, and the two went immediately to the office of the firm's president. The following day, day, the auditor and the vice president in charge of the project were on a plane back to the project site. They visited the concrete vendor, who advised that he had been pressured by the contractor's project manager and office manager to submit invoices for loads not shipped. The vendor was to kick back the total overpayment to the project manager and Faced with the vendor's confession of collusion and other evidence gathered by the auditor, the project manager and the office manager confessed to defrau defraudin ding g the compa company ny.. They They admitt admitted ed receiv receiving ing the kickba kickback ck on the concrete. They also admitted that the receipt for hauling logs was for trees cleared from the project site. The trees had been sold to a local lumber company for cash, which they pocketed. They admitted the batteries were in the personal vehicles of the office manager and his family, and that the sheetrock was used at the home of the project manager. manager. The sheetrock scraps were brought back to the construction site dumpster to save the crooks the cost of disposing of them themselves. The employees were fired and made restitution of over $3,000. The concrete vendor was reprimanded, but he was allowed to retain the contract because manag anagem emen entt beli believ eved ed that that he had had acte acted d relu reluct ctan antl tly y afte afterr thei theirr own own employees had corrupted him.
Auditing Pronouncement
1) Proun Prounoun ouncem cement ent::
Proposed Proposed auditing auditing pronounce pronouncement ment,, ISA 200 (revised (revised and redrafte redrafted), d), has overall objective of the independent auditor, and the conduct of an audit in accordance with International Standards on auditing. The Exposure Draft reflects reflects the applicatio application n of the IAASB's clarity drafting drafting conventions to extant ISA 200, Objective and General Principles Governing an Audi Auditt of Fina Financ ncia iall Stat Statem emen ents ts.. Th Thee Supp Supple leme ment nt to Ex Expo posu sure re Draf Draftt demonstrates how the material of the Preface to the International Standards on Quality Control, Auditing, Auditing, Review, Other Assurance and Related Services (issued January 2007) has been reflected in the proposed ISA, and includes a draft draft summary summary of the objectives objectives for all of the ISAs as of April April 2007. These documents have been prepared by IAASB staff and are for information purposes only. It does not form part of the Exposure Draft. The IAASB has not approved, disapproved, or otherwise acted upon the Supplement. This expo This exposu sure re draf draftt of the the prop propos osed ed stan standa dard rd,, Obje Object ctiv ivee and and Gene Genera rall Principles Governing an Audit Audit of Financial Statements, issued by the IAASB of the International Federation of Accountants (IFAC), is released for public comment in South Africa by the Committee for Auditing Standards (CFAS) of the Independent Regulatory Board for Auditors (IRBA). Comments received on the proposed standard will be considered by the CFAS in drafting its comment letter to the IAASB. Comment preferably by e-mail, or on a computer disk or in writing should be addressed
2) Pronouncement:
Proposed Proposed auditing auditing pronounc pronouncement ement,, ISA 500 (redrafte (redrafted), d), consideri considering ng the Relevance and reliability of audit evidence May 2007. The Exposure Draft reflects reflects the applicatio application n of the IAASB's clarity drafting drafting conv conven enti tion onss to exta extant nt ISA ISA 50 500, 0, Audi Auditt Ev Evid iden ence ce.. Th Thee Supp Supple lem ment ent to Exposure Draft demonstrates how the material in extant ISA 500 has been reflected in the proposed redrafted ISA. It has been prepared by IAASB staff and is for information purposes only. It does not form part of the Exposure
Draft. The IAASB has not approved, disapproved, or otherwise acted upon the Supplement. This exposure draft of the proposed standard, Audit Evidence, issued by the IAASB of the International Federation of Accountants (IFAC), is released for for pu publ blic ic comm commen entt in Sout South h Afri Africa ca by the the Comm Commit itte teee for for Audi Auditi ting ng Stan Standa dard rdss (CF (CFAS) AS) of the the Inde Indepe pend nden entt Regu Regula lato tory ry Boar Board d for for Audi Audito tors rs (IRBA). Comments received on the proposed standard will be considered by the CFAS in drafting its comment letter to the IAASB. CFAS, please indicate accordingly in your written comment. 3) Prono Pronoun uncem cement ent::
Propo Proposed sed auditi auditing ng pronou pronounce nceme ment, nt, ISA 501 (redr (redraft afted) ed),, audit audit eviden evidence ce additional considerations for specific Items January 2008. The Exposure Draft reflects the application of the IAASB's clarity drafting conventions to extant ISA 501, Audit Evidence-Additional Considerations for Specific Items. The Supplement to Exposure Draft demonstrates how the material in extant ISA 501has been reflected in the proposed redrafted ISA. It has been prepared by IAASB staff and is for information purposes only. It does not form part of the Exposure Draft. The IAASB has not approved, disapproved, or otherwise acted upon the Supplement. This exposure draft of the proposed standard, Audit Evidence-Additional Considerations for Specific Items, issued by the IAASB of the International Federation of Accountants (IFAC), is released for public comment in South Africa by the Committee for Auditing Stan Standa dard rdss (CF (CFAS) AS) of the the Inde Indepe pend nden entt Regu Regula lato tory ry Boar Board d for for Audi Audito tors rs (IRBA). Comments received on the proposed standard will be considered by the CFAS in drafting its comment letter to the IAASB.
4) Pron Pronou ounc ncem emen entt
The IAASB follows a rigorous due process in developing its pronouncements. Input is obtained from the IAASB's Consultative Advisory Group, national auditing standard setters, IFAC member bodies and their memb embers, and the general public. Exposure drafts of proposed pronouncements are placed on the website and widely distributed for public comment. To access electronic copies of the IAASB pronouncements free-of-charge or to purchase printed documents, go to the IFAC online bookstore. Matters relati relating ng to copyri copyright ght and trans translat lation ion are addres addressed sed in the releva relevant nt IFAC IFAC policy statements.
Standards
International Standards on Auditing (ISAs) are to be applied in the audit of historical financial information.
International Standards on Review Engagements (ISREs) are to be applied in the review of historical financial information. information.
International Standards on Assurance Engagements (ISAEs) are to be applied in assurance engagements dealing with subject matters other than historical financial information.
International Standards on Related Services (ISRSs) are to be applied to compil compilati ation on engage engageme ments, nts, engage engageme ments nts to apply apply agreed agreed upo upon n procedures to information and other related services engagement as specified by the IAASB. International Standards on Quality Control (ISQCs) are to be applied for all services falling under the ISAs, ISAEs and ISRSs.
Practice Statements
The IAASB issues International Auditing Practice Statements (IAPSs) that provi provide de interp interpret retive ive guidan guidance ce and pract practica icall assista assistance nce to profes professio sional nal acco accoun unta tant ntss in impl implem emen enti ting ng ISAs ISAs and and to prom promot otee go good od prac practi tice ce.. Inte Intern rnat atio iona nall Revi Review ew En Enga gage geme ment nt Prac Practi tice ce Stat Statem emen ents ts (IRE (IREPS PSs) s),, Internat Internationa ionall Assurance Assurance Engagement Engagement Practice Practice Statement Statementss (IAEPSs), (IAEPSs), and International Related Services Practice Statements (IRSPSs) are issued to serve the same purpose for implementation of ISREs, ISAEs, and ISRSs respectively.
Authority
The authority of the IAASB pronouncements is set out in the Preface to the Inter Internat nation ional al Standa Standarrds on Qualit Qualityy Contr Control, ol, Auditi Auditing, ng, Review Review,, Other Other Assurance and Related Services (Approved (Approved December 2005) . The IAASB approved amendments to the Preface in December 2006. The amended Preface establishes the conventions to be used by the IAASB in draft drafting ing future future ISAs ISAs and the obliga obligatio tions ns of audito auditors rs who follow follow those those Standards. The amended Preface contains important statements about the authority of the IAASB pronouncements.
Types Of Assessment In Which Audit Are Applicable: Applicable: Different Types of Assessment Notices
Assessment notices are usually sent by the IRS to inform you that you made a math error, were not given credit for all the tax payments you claim you made, used the wrong tax table or form, did not pay the taxes you owe or owe a penalty. The CP series of forms (general assessment notices) is used by the IRS to inform you that your refund is being reduced or eliminated. The IRS can intercept your tax refund and apply it to other taxes you owe, defaults on student loans or nonpayment of child support, to name a few. You may also receive a CP series form general assessment notice to inform you of a penalty for filing or paying late, failing to report all income, overstating credits or deductions on your return or for your failure to make estimated tax payments on a timely basis.
Form CP-2501 - Income Verification Notice
Income verification notices are generally received when there is a dispute between how much you claimed in income and deductions on your return and the income and deductions reported to the IRS by your employer, banks and brokerage firms. The IRS most often automatically assumes that the W2s and Form 1099s they have received from the businesses contain the correct information and that you are the one that made a mistake on your return. If the notice you receive is wrong or unclear, you need to contact the IRS. Don't ignore these notices! If you do you will receive another notice billing you for additional tax, interest and penalties.
CP-515 and CP-518
CP-515 is the first, and CP-518 the last, notices received by non-filers informing that a return is overdue. Over 1.8 million of these noticed went out asking why these people didn't file. There are a few lessons to be learned here. First and most importantly, always file your tax returns within the deadlines. If you need more time, request an extension. But never opt to not file at all. That's just asking for trouble. Take the initiative to file late returns before the IRS nabs you. You'll be better off in the long run.
CP-2000 Notice of Underpayment/Overpayment
Proposed
Adjustment
for
This notice informs you that the IRS is proposing changes be made to your tax return. It assumes that the information that they received regarding your
income is correct and that the information you provided on your return is wrong. No questions are asked and you are billed for additional tax and interest. If you fail to report all of your income, you can expect to receive either a CP-2501 or CP2000 within 12 to 18 months after you filed your return.
Backup Withholding Notice
If you failed to furnish a payer of taxable income with your social security number you may be subject to the backup withholding system. Likewise, if you failed to report interest and dividend income on your tax return, backup with withho hold ldin ing g can can also also be star starte ted. d. If the the IRS IRS dete determ rmin ines es that that back backup up withholding is in order, the payer is instructed to withhold taxes at a rate of 31%. Backup withholding usually targets interests and dividends, stocks and bonds and annual royalties. Other payments are subject to withholding if you do not provide a payer with your social security number. If you get hit with backu backup p withho withholdi lding, ng, file file all delinq delinquen uentt retur returns, ns, start start repor reportin ting g all you your r income or pay what you owe. If you do, the IRS will automatically stop the withholding on January 1 as long as everything is in order by October 15 of the prior year. There are a few circumstances under which you may be able to stop backup withholding : 1. You did did not underrep underreport ort your your income income 2. You did und underr errepo eport, rt, but have have since since paid paid additi additiona onall tax, tax, intere interest st and penalties 3. Th Thee with withho hold ldin ing g will will caus causee yo you u un unne nece cess ssar ary y hard hardsh ship ip,, and and it is probable that the underreporting will never happen again.
Form 6355 - Worksheet to Determine Withholding Allowances
If you claimed more than 10 withholding exemptions on your W-4, or if you earn earned ed more more than than $2 $200 00 per per week week and and clai claime med d an exem exempt ptio ion n from from all all withholding, your employer must submit your W-4 to the IRS. If the IRS then then determ determine iness that that you overst overstate ated d the amount amount of exemp exemptio tions ns you are entitled to take or are not eligible to be exempt from tax withholding, then you yo u will will rece receiv ivee a Form Form 63 6355 55 Works orkshe heet et to Dete Determ rmin inee Withh ithhol oldi ding ng Allowances. This form asks you to explain why you believe you are eligible
for the extra exemptions you claimed. The IRS then reviews this form. If they determine that you are not entitled to the number of exemptions you have previously been taking, they will notify your employer to disregard your W-4 and to start withholding tax based on the number of exemptions the IRS has determined is correct for you. If you do not have a reasonable basis for the number of exemptions you had claimed, the IRS can slap you with a $500 penalty. However, if there it was a simple error or honest mistake which caused the discrepancy, the penalty will not be enforced.
Form 668(F) - Federal tax lien notice
When you neglect or refuse to pay the taxes the IRS demands is owed, a statutory lien automatically goes into affect. A federal federal tax lien covers all of a taxpayer's property, including automobiles, real estate, bank accounts and personal property. Upon payment of the taxes owed, you should receive Form Form 669 669-B, -B, Certif Certifica icate te of Discha Discharg rgee of Proper Property ty for Federa Federall Tax Lien Lien Under Section 6325 of the IRC. The IRS is required to release the lien within 30 days after payment. Keep in mind - once a lien has been filed against you, credit agencies pick up on it. Your credit is then marked as lousy and the lien, even if paid, will remain on your credit history for seven years.
Form 668-A (c) - Property levy notice
This notice is sent to inform you that the IRS is coming to seize your property and gives you 30 days to prepare for the eventuality. This notice of levy is usually a last ditch effort by the IRS and they only use it after they have exhausted exhausted all other collectio collection n possibiliti possibilities. es. There are some assets assets that are exempt from being levied: Your principal residence - unless ordered in writing by a US district court judge. Property used in your business - unless approved by a district director or an assistant district director, or if the collection of taxes is in jeopardy. 85% of unemployment benefits Tools and books valued at up to $3,125 if related to taxpayer's trade or business. Schoolbooks Clothing Court-ordered Court-ordered child support payments •
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Furniture and personal affects totaling $6,250. 85% of worker's compensation and welfare payments Military service disability payments
Form 668-W (c) - Notice of Levy on Wages, Salary and Other Income
This notice is to inform you that your wages are going to be seized. It is a continuing levy, meaning it applies to all wages, salaries and commissions owed, as well as all future wages, commissions and salaries. However, part of every taxpayer's wages is exempt from levy. This exemption is calculated based on the taxpayer's standard deduction plus the number of exemptions the taxpayer is entitled to, divided by the number of weeks in a year. For example, a married taxpayer with four deductions (husband, wife and two children) would compute the exempted wages as follows: Standard Deduction Exemptions (4 * $2,750)
$7,200 $11,000 $18,200
$18,200 / 52 = $350 per week
Assessment of Fair, Mela, etc. 1. While While assessing a non-resi non-resident dent dealer dealer doing business business tempora temporarily rily by way of a fair or mela under the provisions of section 30 the authority specified in rule 62 shall take into account: a. The valu valuee of goods goods kept kept in in stock, stock, or or
b. c. d. e. f. g.
The estimate estimate of daily daily sales effecte effected d by such dealer dealer,, or The place place of of such such busi busines ness, s, or or The number number of of people people visiting visiting such such fair fair or mela, mela, or The cash cash in hand hand at any point in time during during such such fair or or mela, mela, or Any combin combinati ation on of the the above, above, or Any Any othe otherr infor nform mati ation that hat, in the op opin inio ion n of the the spec speciified fied authority, authority, is relevant in arriving at an estimate of the tax payable by such dealer. Provided that no such assessment shall be made unless the dealer has been given an opportunity of being heard. 2. The The spec specif ifie ied d auth author orit ity y shal shall, l, for for the the pu purp rpos osee of this this rule rule,, asses assesss any any dealer doing business in such fair or mela every week in respect his transactions for the week. Hearing under Section 32 and 33
1. The notice notice of hearing hearing in the matter matter of proceedi proceedings ngs under under 32 and 33 shall be in Form N-VI and From N-VII respectively. 2. On the date fixed fixed for hearing hearing the person person procee proceeded ded against against shall shall be allowed to rebut the accusations leveled against him, but shall not ordinarily be allowed an adjournment. If an adjournment becomes necessary, the authority specified in rule 62 shall record reasons there for. 3. After After giving giving a hearin hearing, g, the authorit authority y referr referred ed to in sub-rule sub-rule (2) shall shall reco ecord an orde rder con contai taining ning prec preciisely sely and and clea clearrly the gist ist of accusations, the manner in which the person proceeded against was made aware of that, the reply, if any, furnished, and the decision thereon. 4. A true true copy copy of order order shall shall be made made over over to the perso person n proc procee eede ded d against Assessment on Audit Objections
1. If any any irre irregu gula lari rity ty rela relati ting ng eith either er to fact fact or law law comm commit itte ted d in the the course of any proceedings is pointed out by the Comptroller and Auditor General, the authority specified in rule 62 shall, upon being satisfied about the lawfulness of such objection and after giving the dealer dealer an opportuni opportunity ty of being heard, heard, proceed to reassess reassess the tax due from the dealer.
2. If the specifie specified d authorit authority y is not satisfied satisfied about about the lawfulne lawfulness ss of the objection, he shall communicate his views to the Commissioner with a copy of the original order and the audit objection, a copy of which shall also be forwarded to the Comptroller and Auditor-General. Auditor-General. 3. The Commission Commissioner er or any other office officerr especially especially empowered empowered by him in this behalf, after the receipt of the communication mentioned in sub-rule (2) and after applying his mind to the questions involved shall pass appropriate order in this regard: Provided that no such order shall be passed without serving upon the dealer concerned a notice requiring him to file, within one month of the date of the service of notice, a reply to the objection raised by the Comptroller and Auditor General. Intra-State Stock Transfer 1. Where any dealer claims that he is not liable to pay tax under the Act in
respect of any goods, on the ground that the movement of such goods from one place to another within Bihar was occasioned by reason of transfer of such goods other than by way of sale, the burden of proving the claim shall be on that dealer and for this purpose he shall furnish to the authority specified in rule 62 authority along with the statement required to be furnished by him hi m under sub-section (2) of section 24: a. A true true and comple complete te declara declaratio tion n in Form D-V obtai obtained ned from from the consignee. b. b. Corr Correc ectt and and comp comple lete te reco record rd of the the Name Name,, Addr Addres ess, s, Taxpa axpaye yer r Identification Number, if any, of the Person to whom the goods were transferred incorporating therein the quantity of the goods and the value thereof. c. Copy of Accounts Accounts render rendered ed by the agent agent or the the office office to whom whom the the goods were transferred, and d. Copy of the Railway Railway or the the Lorry Receipts Receipts relatin relating g to such transfer transfer.. 2. The transferor shall issue to the transferee a challan in Form D-VI.
Payment of Tax, Interest and Penalty 1.
A notice notice of demand demand under under sub-sectio sub-section n (2) of section section 39 and sub-section sub-section (3) of section 25 shall be in Form N-VIII and notice under sub-section (3) of section 43 shall be in Form N-IX. N-IX.
2.
Every dealer or any other person required to pay any tax or interest or penalty under the Act shall pay the amount of tax or interest or penalty into Government Treasury, or any Bank authorized by the Commissioner in this behalf, by Challan in Form CHI:
Provided that if the Circle In-charge is satisfied that a dealer has been and is maintaining adequate funds in his bank account he may permit him to pay the amount of tax or interest or penalty, if any, through a crossed cheque drawn on a bank functioning at the place where the Government Treasury is situ situat ated ed or to any any Bank Bank to be spec specif ifie ied d by the the Com Commiss missio ione nerr. Such Such permission may, may, at any time, be revoked without assigning any reason. Provided further that where a dealer is permitted to pay the amount of tax or interest or penalty, as the case may be, by a crossed cheque or crossed bank draft such cheque or draft, shall be drawn by the dealer in favour of the Deputy Commissioner or the Assistant Commissioner or the Commercial Taxes Officer in charge of the circle, as the case may be, to which the payment relates. Explanation: For the purposes of calculating penalty, if any, under the Act and the rules, the date of receipt of cheque or draft, as the case may be, by Bank or the treasury or the Circle concerned, as the case may be, shall ordinarily be deemed to be the date of payment by the dealer, save in the case of a cheque, which is dishonored.
3. If the authority specified in rule 62 is satisfied that owing to circumstances beyond the control of a dealer, he is not in a position to pay the full amount due under sub section (2) of section 39, he may, on application from the dealer and for reasons to be recorded in writing, permit the dealer to pay the amount due in installments, if the dealer agrees to pay an amount which is not less than one-third of the amount payable on the date of the application. Provi Provided ded that, that, such such instal installme lments nts shall shall not ordin ordinari arily ly extend extend beyond beyond the expi expiry ry of a peri period od of twel twelve ve mont months hs from from the the date date of rece receip iptt of the the application. 4.
(a) The Bank authorized to receive payments under sub rule (2) shall forward, to the Circle Incharge, a list of all payments received along with such other documents directed by the Commissioner in this behalf each day by the end of the next following day.
(b) The list referred to in clause (a) shall also be posted by the bank on the website of the department when so required.
5. Not withstand withstanding ing anything anything contained contained in sub-rule sub-rule (1), (1), the Commissioner Commissioner may may, by a notifi notificat cation ion issued issued in this this behalf behalf empowe empowerr any author authority ity appointed under section 10 for the purpose of receiving payment of tax or interest or penalty in cash. Such order shall be subject to such conditions and restriction as may be imposed by the notification. 6.
The challan in Form CH-I shall be filled up in five copies. The portion of the challan marked Original shall be sent by the Treasury Officer to the concerned Circle In-charge. The portion of the challan marked Duplicate shall be retained by the treasury and the portion marked Triplicate and Quadrupli Quadruplicate cate shall be returned to the dealer or the taxpayer after being duly receipted. The dealer or the taxpayer shall retain the portion marked Triplicate and shall furnish the portion marked Quadruplicate along with his return to the authority specified in rule 62.
Issuance of Tax Clearance Certificate The application for the tax clearance certificate under section 42 shall be submitted in duplicate before the Circle In-charge in Form A-IV. A-IV. The Circle In-charge, after making such inquiry as is deemed fit, shall either reject or accept the application within seven days of the receipt of the application. 2. An applicati application on referred referred to in sub-rul sub-rulee (1) shall be rejected rejected if the the dealer: dealer: 1.
i. ii. ii. iii. iii.
Has Has not not furn furnis ishe hed d a retu return rn for for any any peri period od,, or or Is in arre arrear arss of of adm admit itte ted d tax tax or inte intere rest st,, or or Is in arr arrea ears rs of uns unsta taye yed d amoun amountt of any any penal penalty ty or tax tax asse assess ssed ed or reassessed.
a. Provided Provided that that no such such applicati application on shall be rejec rejected ted on the the ground ground of arrears arrears of such unstayed unstayed amount of any penalty or tax assessed assessed or reassessed in relation to which no stay order has been passed within a period of four months from the date of passing the order levying penalty or tax, as the case may be, by any superior court. b. Where an application is rejected, the Circle In-charge shall specify the amount of arrears outstanding against the dealer or the period for which the return has not been filed. If the arrears are paid or the retu return rn is furn furnis ishe hed, d, as the the case case may may be, be, the the Tax Clea Cleara ranc ncee Certificate shall be granted to the dealer, which shall be in Form CIV. IV. c. The tax clearance clearance certific certificate ate granted granted under under this rule shall shall ordinarily ordinarily be valid for a period of one year from the date of its issue or for such lesser period as may be specified in the certificate. 3.
The copy of the tax clearance certificate marked Original shall be handed over to the applicant, and the copy marked Duplicate shall be retained in the concerned circle.
4.
A register in Form VR-VI shall be maintained in each circle and the details of each application referred to in sub-rule (1) shall be entered in the said register.
5. If any contra contract ct is awar awarde ded d to the cont contra ract ctor or on the the basi basiss of such Tax Tax Clearance Clearance Certific Certificate, ate, the applicant applicant shall inform inform the Circle Circle In-char In-charge ge within seven days of award of the contract.
Purpose of vat India, particularly the trading community, community, has believed in accepting and adopting loopholes in any system administered by the state or the Centre. If a well-administered system comes in, it will close avenues for traders and businessmen to evade paying taxes. They will also be compelled to keep
proper records of their sales and purchases. Many sections hold the view that the trading community has been amongst the biggest offenders when it comes to evading taxes. Under the VAT system, no exemptions will be given and a tax will be levied at each stage of manufacture of a product. At each stage of value-addition, value-addition, the tax levied on the inputs can be claimed back from the tax authorities. At a macro level, there are two issues, which make the introduction of VAT critical for India. Industry watchers say that the VAT system, if enforced properly, forms part of the fiscal consolidation strategy for the country. country. It could, in fact, help address the fiscal deficit problem and the revenues estimated to be collected could actually mean lowering of the fiscal deficit burden for the government. The International Monetary Fund (IMF), in its semi-annual World World Economic Outlook released on April 9, expressed its concern over India's large fiscal deficit - at 10 per cent of the GDP. Further any globally accepted tax administrative system, will only help India integrate better in the World Trade Organisation regime.
Qualification Required for an Auditor Most accountants and auditors need at least a bachelor's degree in business, accounting, or a related field. Many accountants and auditors choose to obtain certification to help advance their careers, such as becoming a Certified Public Accountant (CPA). Education and training. Most accountant and auditor positions require at least a bachelor's degree in accounting or a related field. Beginning accounting and auditing positions in the Federal Government, for example, usually require 4 years of college (including 24 semester hours in accounting or auditing) or an equivalent combination of education and experience. Some employers prefer applicants with a master's degree in accounting, or with a master's degree in business administration with a concentration in accounting. Some universities and colleges are now offeri o ffering ng programs to prepare students to work in growing specialty professions such as internal auditing. Many professional associations offer continuing professional education courses, conferences, and seminars.
Some graduates of junior colleges or business or correspondence schools, as well as bookkeepers and accounting clerks who meet the education and experience requirements set by their employers, can obtain junior accounting positions and advance to accountant positions by demonstrating their accounting skills on the job. Most beginning accountants and auditors may work under supervision s upervision or closely with an experienced accountant or auditor before gaining more independence and responsibility. Licensure Licensure and certification. Any accountant filing a report with the Securities and Exchange Commission (SEC) is required by law to be a Certified Public Accountant (CPA). This may include senior level accountants working for or on behalf of public companies that are registered with the SEC. CPAs are licensed by their State Board of Accountancy. Any accountant who passes a national exam and meets the other requirements of the State where they practice can become a CPA. The vast majority of States require CPA candidates to be college graduates, but a few States will
substitute a number of years of public accounting experience for a college degree. Certification and advancement. Professional recognition through certification, certification, or a designation other than the CPA, provides a distinct advantage in the job market. Certification can attest to professional competence in a specialized field of accounting and auditing. Accountants and auditors can seek credentials from a wide variety of professional societies.
The Institute of Management Accountants Accountants confers the Certified Management Accountant (CMA) designation upon applicants who complete a bachelor's degree or who attain a minimum score or higher on specified graduate school entrance exams. Applicants Applicants must have worked at least 2 years in management accounting, pass a four-part examination, agree to meet continuing education requirements, requirements, and comply with standards of professional conduct. The exam covers areas such as financial statement analysis, working-capital policy, policy, capital structure, valuation issues, is sues, and risk management. The Institute of Internal Auditors Auditors offers the Certified Internal Auditor (CIA) designation to graduates from accredited colleges and universities who have worked for 2 years as internal auditors and have passed a four-part four-part examination. The IIA also offers the designations of Certified in Control Self-Assessment (CCSA), Certified Government Auditing Auditing Professional (CGAP), and Certified Financial Services Auditor (CFSA) to those who pass the exams and meet educational and experience requirements.
Forms Which Auditor Has To Fill Up: FORM NO. 3CB Audit report under section 44AB of the Income Tax Act, 1961 in the case of a person carrying on business *I / We have have exam examin ined ed the the bal balanc ancee shee sheett of _____ ___ _____ _____ _____ _____ _____ ______ _____ _____ _____ ____ __ [ name and address of the assessee ] [Per [Perma mane nent nt A/C. A/C. No._ No.___ ____ ____ ____ ____ ___ _ as at ____ ______ ____ ____ ____ ___ _ and and the the prof profit it and and loss loss account for the year ended on that date which are in agreement with the books of account maintained at the head office at____________________________and branches at_________________________ *I/We have obtained all the information and explanations which to the best of *my/our knowledge and belief were necessary for the purposes of the audit. In *my/our opinion, proper books of account have been kept by the head office and the branches of the assessee so far as appears from *my/our examination of books, subject to the comments given below: In *my/our opinion and to the best of *my / our opinion and to the best of * my / our information and according to explanations given to *me / us, the said accounts give a true and fair view(i) in the case of the balance sheet, of the state of the above named assessee’s affairs as at_____________________ and, (ii) in the case of the profit and loss account, of the profit or loss of the abovenamed assessee for the accounting year ending on__________________________
The prescribed particulars are furnished in Form No. 3CD annexed hereto. In *my / our opinion and to the best of *my / our information and according to explanations given to *me / us, these are true and correct. Place : Date : ______________ Signed
Form No. 3 CC Audit report under section 44AB of the Income-tax, Act, 1961, in the case of a person carring on profession I / We have examined the balance sheet of __________________________________ as at __________________________ and the profit and loss account / the income income and expenditure statement For the year ended on that date which are in agreement with the books of account maintained at the haed office at _______________________and branches at _________________________
I / We have obtained all the information and explanations which to the best of my / our knowledge knowledge and belief were necessary necessary for the purposes of the audit. In my / our opinion, proper books of account have been kept by the head office and the branches of the assessee so far as appears from my / our examination of books, subject to the comments given below: In my / our opinion and to the best of my / our information and according to explanations given to me / us the said accounts give a true and fair view ---(i) in the case of the balance sheet of the state of the abovenamed aboven amed assessee’s assessee’s affairs as at (ii) in the case of the profit and loss account / the income and expenditure statement of the profit or the income or loss of the abovenamed assessee for the accounting year ending on The prescribed particulars are furnished in Form No. 3CE annexed hereto. In my / our opinion and to the best of my/ our information and according to explanations given to me/ us these are true and correct.
Place Date Signed
FORM NO. 3CA [ See rule 6G(1)(a) ] Audi udit repor eportt unde underr secti ection on 44AB 44AB of the Incom ncomee Tax Act Act, 1961 1961,, In a cas case Where the accounts of the business of a person have been audited under [any other law ] *I / We We have to report that the statutory audit of [Permanent A/C. No was conducted by *my / us / M/S. in pursuance of the provisions of the Act, and *I / we annex hereto a copy of *my / our au audit re report da dated / / along wi with a copy ea each of audited profit & loss account for ended on and a copyof the audited balance sheet as at along with the documents declared by the relevant Act to be part of, or annexed to,the profit and loss account and balance sheet.
A further report as required under the proviso to section 44AB is furnished in Form No. 3CD annexed hereto. In *my / our opinion and to the best of *my / our information and according to explanations given to *me / us, the particulars given in Form No. 3CD, are true and correct. Place : Date :
