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Tax audit ceiling

15 August 2012

Hello everyone..

Kindly resolve the following..

In case of a partnership firm of C.A.s(say XYZ & Co) having 4 partners, can it happen that firm accepts 45*4= 180 tax audit assignments thereby abiding by the ceiling limit provided but all the reports are being signed by any one of the partner,auditors being XYZ & Co.

In other words,is it so that limit of 45 is only for the purposes of determining the total number of assignments a firm can accept and does not in any way signifies that reports also needs to be signed in such a manner.

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1 Replies

Deepak Gupta (CA Student) (15922 Points)
Replied 15 August 2012

Originally posted by : Rashmi Rajgarhia
	Hello everyone.. Kindly resolve the following.. In case of a partnership firm of C.A.s(say XYZ & Co) having 4 partners, can it happen that firm accepts 45*4= 180 tax audit assignments thereby abiding by the ceiling limit provided but all the reports are being signed by any one of the partner,auditors being XYZ & Co. In other words,is it so that limit of 45 is only for the purposes of determining the total number of assignments a firm can accept and does not in any way signifies that reports also needs to be signed in such a manner.

Limitation on No of Tax Audits
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In order to ensure quality and equitable distribution of audit work done by Chartered Accountants, ICAI has fixed a maximum limit for the Tax audit assignments that can be taken by a CA or a firm of CAs. This limit is set at 45 assignments per person. For if a firm of CAs has 3 partners, the maximum number of Tax audits that can be taken up by the firm will be 45*3 i.e. 135. If the firm takes all the 135, partners cannot take any audit in their personal capacity. If a person is found to have accepted more than 45 assignments in a year, he would be deemed to have been involved in professional misconduct. Any one partner can sign all the audit reports. But it should specially be mentioned that he is signing on behalf of the firm. This right arises out of the partnership act since any partner can act on behalf of other partners, subject agreement between partners.