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Internal/stat/tax/vat audit by different persons?

yashsr (CA) (2285 Points)

08 March 2012

It is commonly known that Internal Auditor and Stat Auditor can never be the same. However, what about Tax/VAT Audit? Can the Tax/VAT auditor be the same one who is the Internal Auditor or Stat Auditor?

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9 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 08 March 2012

Yes. The person conducting the Tax Audit also can conduct VAT Audit.

Regards,

Devendra Kulkarni

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yashsr (CA) (2285 Points)
Replied 08 March 2012

Originally posted by : Devendra
	Yes. The person conducting the Tax Audit also can conduct VAT Audit. Regards, Devendra Kulkarni

Thanks although I already knew that! My question is whether the tax/vat auditor can be the same as the internal auditor or the statutory auditor or all 3 have to be different?

Deepak Gupta (CA Student) (15922 Points)
Replied 08 March 2012

The Council in its 281st meeting held from 3rd to 5th October, 2008 decided that an internal auditor of an assessee, whether working with the organization or an independently practicing Chartered Accountant being an individual chartered accountants or a firm of chartered accountants, could not be appointed as his tax auditor.
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The said decision came into effect from December 12, 2008. As per the decision an internal auditor cannot carryout tax audit on or after December 12, 2008. Subsequently representations have been received pointing out the hardship being caused by the abovesaid decision in respect of those internal auditors who have been appointed as tax auditors for the financial 2008-09 on or before December 12, 2008. The Council considering this hardship has decided that the decision taken by the Council at its meeting between 3rd to 5th October, 2008 shall be applicable to all appointments as tax auditor made on or after December 12, 2008 and accordingly those internal auditors whose appointment have been made as tax auditors before December 12, 2008, can carry out the tax audit of the financial year ending on March 31, 2009, i.e., Assessment Year 2009-2010 only.
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https://www.icai.org/post.html?post_id=4157

Attached File : 555789 944542 internal auditor cannot be tax auditor.pdf downloaded: 305 times

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yashsr (CA) (2285 Points)
Replied 08 March 2012

Thanks for the detailed and perfect reply!

What about Stat Auditor? Can he be appointed as the Tax Auditor or Vat Auditor? For eg. if a an Auditor is doing Company Audit i.e. Stat Audit for a Company and that Company's turnover is >60 lacs which means its also liable for Tax Audit and Vat Audit. Now, the person doing Company Audit can also Tax and Vat Audit, isn't this correct?

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Deepak Gupta (CA Student) (15922 Points)
Replied 08 March 2012

Section 44AB stipulates that only Chartered Accountants should perform the tax audit. This section does not stipulate that only the statutory auditor appointed under the Companies Act or other similar Statute should perform the tax audit. As such the tax audit can be conducted either by the statutory auditor or by any other chartered accountant in full time practice.
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Refer Para 9.3 of The Guidance Note on Tax Audit u/s 44AB of the IT Act, 1961 (Revised 2005 Edition) issued by the The Institute of Chartered Accountants of India.

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Anooj (Chartered Accountant) (2130 Points)
Replied 11 March 2012

Originally posted by : Deep @ k Gupt/\
	Section 44AB stipulates that only Chartered Accountants should perform the tax audit. This section does not stipulate that only the statutory auditor appointed under the Companies Act or other similar Statute should perform the tax audit. As such the tax audit can be conducted either by the statutory auditor or by any other chartered accountant in full time practice. . Refer Para 9.3 of The Guidance Note on Tax Audit u/s 44AB of the IT Act, 1961 (Revised 2005 Edition) issued by the The Institute of Chartered Accountants of India.

Chintan Gosalia (CA Chintan Gosalia) (51 Points)
Replied 18 December 2012

Please could anyone help me with teh below query.

Whether a qualified Chartered Accountant in service (not a practising chartered accountant) undertake an internal audit of a manufacturinig company? Also if possible please give references to the answer.