Consideration of As-22

This query is : Resolved

CA Ysil Karunai (Querist)
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02 September 2010 During finalisation of Accounts and Audit, the Auditor finds that the term loan interest of last six months not paid during the previous year, but management assures that the company will paid the entire interest within the due date u/s 139(1) and not to consider the deffered tax arising to that. Auditor depends on management representation, and complete the Audit and sign the report on 30th june with out creating deferred tax, since because of assurance given by the management. The accounts were adopted in AGM on 30th august. However, because of uncertainties the company not able to pay the interest on due date u/s 139(1). Consequently, some of the share holders question of creating deferred tax relating to the previous adopted Accounts.
Query:
1. Whether the accounts can be revised for the purpose of creating deferred tax which is material to the Financial statement?
2. Whether this constitute subsequent events relating to As-4?
3. Whether the Auditor is liable to revise the Audit report?
4. Whether the Auditor is liable for negligence of mere acceptance of management representation?
5. In case the Accounts were not adopted in AGM, what is the procedure in this regard?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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02 September 2010 1.If AGM approved the accounts, then it cannot be revised.
2. No.
3.Is not liable as a corollary to (1) above.
4. Yes. Accounts are not true and fair in view of section 211(3C) of the Companies Act,1956 read along with AS 22.
5. As a corollary to (1) audit report and accounts can be revised.