Written back of creditors

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 March 2013 Sir,

Management says the auditor to written back the creditors under Section 41 of IT Act, 1961 and take that amount in P&L A/c in that case is it responsibility of CA to take written representation of the same from the management?

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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16 March 2013 First of all; an auditor is not in a position of an accountant that he should follow the instructions of the management.
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While conducting the audit; if the auditor verifies that a liability is long outstanding; it means it is no more payable.
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In such situation; the management is right to write back the amount and credit the same to the profit and loss account.
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No written explanations are required for such transactions.

Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2013 thank you sir

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C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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17 July 2013 To write back the creditor you have to take a resolution and account for by writing back the creditors u/s 41 of the IT Act. The auditor will not raise any objection but he can simply put a note that creditors and debtors balance are not confirmed by the parties.

You can do so and transfer the amount of creditors to P & L A/c under the head liabilities written back

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2013 thank you sir..