30 August 2013
SIR, IN OUR FIRM THERE ARE 5 PARTNERS. I AM SENIOR MOST PARTNER. CAN I SIGN ALL 225 REPORTS USING MY DIGITAL SIGNATURE? ALSO GUIDE ME FOR THE PURPOSE OF COUNTING 45 AUDITS SECTION 44AD AUDIT WILL BE CONSIDERED OR NOT?
Greetings of the day. As you all are kindly aware that Chapter VI of the Council General Guidelines, 2008, deals with Tax Audit Assignments under Section 44AB of the Income Tax Act, 1961. Off late we have received a number of queries from members regarding the maximum number of tax audit assignments which a chartered accountant in practice may undertake. In this regard, the Ethical Standards Board of the Institute has issued a clarification in the form of an FAQ which is reproduced below for your kind information:
FAQ ON TAX AUDIT ASSIGNMENTS
Question: If there are 10 partners in a firm of Chartered Accountants, then how many tax audits reports can each partner sign in a financial year?
Answer: As per Chapter VI of Council General Guidelines, 2008 (Tax Audit Assignments under Section 44AB of the Income Tax Act, 1961), a member of the Institute in practice shall not accept, in a financial year, more than the specified number of tax audit assignments as prescribed under Section 44AB of the Income Tax Act, 1961. The specified number of tax audit assignments under Section 44AB of the Income Tax Act, 1961 is 45.
It is further provided in Chapter VI of Council General Guidelines, 2008 that in case of firm of Chartered Accountants in practice, specified number of tax audit assignments means 45 tax audit assignments per partner of the firm, in a financial year.
Therefore, if there are 10 partners in a firm of Chartered Accountants in practice, then all the partners of the firm can collectively sign 450 tax audit reports. This maximum limit of 450 tax audit assignments may be distributed between the partners in any manner whatsoever. For instance, 1 partner can individually sign 450 tax audit reports in case remaining 9 partners are not signing any tax audit report.
It is needless to say that the tax audit assignment should be in accordance with the Standard on Quality Control (SQC) 1: Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.
Thanks & Regards,
CA. Nihar N. Jambusaria, FCA, Vice- Chairman Ethical Standards Board Email: nihar.jambusaria@ril.com; nihar.jambusaria@gmail.com
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