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Tax Audit:2013-14

Tax Audit:2013-14. Visakhapatnam Branch of SIRC CPE seminar on Tax Audit- Accounting Standards for Non Corporate Entities 19 th July, 2013. Tax Audit:2013-14. electronically filing is not a big task or dangerous "E" return filing & Audit report filing are not akin. Tax Audit:2013-14.

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Tax Audit:2013-14

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  1. Tax Audit:2013-14 • Visakhapatnam Branch of SIRC • CPE seminar on • Tax Audit- • Accounting Standards for Non Corporate Entities • 19th July, 2013 bharati & co

  2. Tax Audit:2013-14 • electronically filing is not a big task or dangerous • "E" return filing & Audit report filing are not akin bharati & co

  3. Tax Audit:2013-14 • Filing of Return by electronically for 44AB cases • Audit Reports are not required. Only information about date/ Name of auditor Etc. • Fake Audit reports by Unscrupulous people • To curb this ICAI Pursued for remedy • The result is E filing of Audit reports bharati & co

  4. Tax Audit:2013-14 • Return : claiming Either Taxable or Exempted. • Furnishing information Vs Expressing Opinion • Audit Report : Giving an opinion. • Cannot be cut down to" Digital“ • All columns either “Yes” or ‘No” • Sanctity or Proprietary of the opinion is watered bharati & co

  5. Tax Audit:2013-14 • It is programmed as No= NIL • There is no place for Not Applicable. • Any Personal Expenditure debited to P & L a/c • Past Practice of auditee • Past Scrutiny Assessments • Past Appellate orders of same auditee bharati & co

  6. Tax Audit:2013-14 • Criminal Cases Judgment is digitalized • Accused is Guilty---------- Yes or No • The accused sentenced prison--- Yes or No • --------------------------------- • If yes whether simple or rigours • If Yes 10 Years ./ 5 Years !!!!!! bharati & co

  7. Tax Audit:2013-14 • Fill forms manually first • Then enter in the system • Maximum extent avoid Cut/ Copy/Paste filling • Compare manual & system printout. • Append Digital Signature & upload. • Client will upload this Report along with his ITR to the Department bharati & co

  8. Tax Audit:2013-14 • No scope for Disclaimer • No scope for Negative opinion • 3CB it is a Audit Report . It should be as per Standards of Auditing. • SA-700 elements?? • SA- 700 is postponed to April, 2014! relax bharati & co

  9. Tax Audit:2013-14 • Audit meaning • Responsibility of auditee • How the audit is conducted • Precise in 2000 words! • Mandatory points • Safeguarding Points bharati & co

  10. Tax Audit:2013-14 • The maintenance of Books of Accounts, recording of all receipts and expenditure in the Financial Statements & compliance of all laws is the responsibility of the Management. • Our responsibility is to express an opinion on these financial statements based on our audit bharati & co

  11. Tax Audit:2013-14 • We conducted our Audit in accordance with Auditing Standards generally accepted in India. • Those Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement bharati & co

  12. Tax Audit:2013-14 • An Audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. • An Audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. bharati & co

  13. Tax Audit:2013-14 • We believe that our audit provides a reasonable basis for our opinion together with the details stated in Form No.3CD • Safe guarding points!! • It is not possible to verify whether the payment in excess of Rs. 20,000/- have been made otherwise than by crossed cheque or a bank draft as the necessary evidence is not in the possession of the assessee" bharati & co

  14. Tax Audit:2013-14 • Safe guarding points!!- Contd… • With regards o EMDs& Security Deposits due to numerous accounts only test cheque is carried out ( 269 SS & T) • We have verified the compliance with the provisions of chapter XVII-B regarding the deduction of tax at source and the payment thereof to the credit of central government in accordance with the auditing standards generally accepted in India which includes test checks and the concept of materiality. Such audit procedures did not reveal any material non-compliance bharati & co

  15. Tax Audit:2013-14 • Safe guarding points!!- Contd… • Quantitative details indicating day to day movement of stock are not maintained. In the absence of such data and due to inadequacy of the existing data these particulars could not be given". would be examined bharati & co

  16. Tax Audit:2013-14 • Form 3 CD: • Names of Partners % Sharing Ratio • Change of business: ( + ) New business • Change of business: ( - ) Continuing business Not allowed Modification is needed bharati & co

  17. Tax Audit:2013-14 • Books prescribed 44AA “ Y / N “ • Engineers ,Architects - nil- • For Doctors: • (i) Daily Case register form no 3C • (ii) Inventory of medicines, drugs, consumables as on First & Last day of years • The difference can be booked as expenditure • Books Maintained Vs Examined bharati & co

  18. Tax Audit:2013-14 • Whether computer or manual • What are the books that system can generate? • Did you examine all the same? • Under Tally, any ERP only data is available. Books generation a need based! • Prescribed-maintained-examined = equal !! ( variation ) bharati & co

  19. Tax Audit:2013-14 • Any Income u/s 44AB, 44AD,& 44AE • Cinema Halls, Lodges, guest houses 44AD is applicable? • Proprietors Payment to • Contractor for residential house construction • Interest on loans for above house • Professional fees to Doctor / engineer . bharati & co

  20. Tax Audit:2013-14 • Method of Accounting • Cash or Mercantile. Hybrid is not allowed • Deviation from Method as per Sec 145 • Income as per IRAC norms is exception bharati & co

  21. Tax Audit:2013-14 • Method of Valuation of closing stock • Deviation from145A method • But it prescribes method of Valuation of (1). Purchases (2) Sales (3) Inventory • It prescribes that Tax , Duty, cess also to be included in all the bharati & co

  22. Tax Audit:2013-14 • Expenditure of Capital nature: • Policy of > Rs. 25000 • Expenditure of Personal nature: • Past practice & assessments • Any penalty or fine: • Penal interest is not penalty & compensatory nature. • SAFEGUARDING NOTE for all above bharati & co

  23. Tax Audit:2013-14 • Any Income not credited to Profit & Loss Account • Relevant to Proprietary Units. • ---- Interest or salary from Firm • ----- Gifts which are taxable u/s 56 • ----- Commission etc to cover cushion !! Can we say refer Statement…? bharati & co

  24. Tax Audit:2013-14 • Delay in remittance of PF, ESI • Genuine reason in delay ; • PF number not allotted • Consideration of grace period ? • Last day happens to be public holiday • Paid after audit but before 139 due date ( employer’s share ) • No place for reasons. Use your judgment & decide delay period bharati & co

  25. Tax Audit:2013-14 • Any scope for NO or Not Applicable ? • Only “NIL” • If we do not mention what is the result:?? • The 3 CD is incomplete or even can be presumed as not true and correct bharati & co

  26. Tax Audit:2013-14 • Expenditure disallowable u/s 14A • Most common point for proprietary entities. • Dividends from companies • Share of Profit from Partnership firms • Any Exempted income earned by incurring expenditure. If so mention in Rupees ! bharati & co

  27. Tax Audit:2013-14 • Any Interest payable u/s 15 & 16 of MSMED Act may be ascertained • This interest is relating to suppliers credit • This will be disallowed u/s 23 of MSMED Act not under the IT Act !! • Safe guarding point: If details not available make a note bharati & co

  28. Tax Audit:2013-14 • Quantitative details • Grams, Kgs, Kilos, Sq. meters • If data is not available or partially available make a suitable note • Steel, cement dealers, cloth merchants Departmental stores etc. bharati & co

  29. Tax Audit:2013-14 • Documentation for our sake. SA-230 • Engagement letter. SA -210: any fraud detection or only statutory ritual? • “This appointment is valid until it is cancelled” • SA 550 for related parties payments bharati & co

  30. Tax Audit:2013-14 • Working papers very much essential for— • The latest guidance note has given format of working notes > Personal nature of expenses. bharati & co

  31. Tax Audit:2013-14 • The number of Tax Audit assignments 45 • Audits 44AD,44AE& 44AF are excluded • Both Branch & HO are one unit • All Branches of a bank is one unit • Maintain register of Tax Audit assignments as prescribed by the Council bharati & co

  32. Tax Audit:2013-14 • FORM OF TAX AUDIT PARTICULARS TO BE FURNISHED BY MEMBERS/FIRM • Record of Tax Audit Assignments • Name of the Member accepting the assignment • Membership No. • Financial year of audit acceptance •  --------------------------------- • Name and Registration No. of the firm/ firms of which the member is a proprietor or partner bharati & co

  33. bharati & co

  34. Thank you bharati & co

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