Provision for cost audit fee

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Manish (Querist)
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15 April 2009 Should we make provision for cost audit fee in 2008-09 accounts, deduct TDS and issue TDS certificate when neither the audit will be conducted before the finalization of balance sheet nor any bills will be received from the cost auditors.

If we create povision and issue TDS certificate, will not it create problems for the cost auditor who might not have taken the income for 08-09 in his IT return for which we will issue him a TDS.

Any advice.

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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15 April 2009 Provision is to be made in view of the fact that Cost Auditor is having the appointment for a Cost Audit and a certain amount of fee must have been pre decided. Any liability which is certain and which is measurable with certainty is to be booked in accounts on Mercantile Basis.

Manish

Manish (Querist)
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15 April 2009 Thanks Mr Ahuja. But the following points too merit consideration:

1. Physical conduct of the audit has not taken place.
2. What if the auditor fails to conduct the audit. We would have already given him the TDS certificate.
3. Since the cost auditor maintains his books on cash basis, he would face problem in filing his IT return for FY 08-09. I how would he adjust the TDS certificate, since he is not showing any income for 2008-09.

>> I personally feel that physical conduct of audit should hold significance in making the provision. Any views?
Thanks in advnace.

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CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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15 April 2009 Cost Audit as prescribed u/s 233B is mandatory and will be conducted and a consideration will paid for that job. Now, the expense is certain and quantifiable. Third point is irrelevant as the auditee is not cocerned with that.