Page 465 - CA Final PARAM Digital Book.

of chartered accountants, cannot be appointed as his Tax auditor (under the Income Tax
Act,1961). Upon consideration, the Council decided that based on the conflict in roles as
statutory and internal auditor simultaneously, the bar on internal auditor of an entity to accept
tax audit (under Income Tax Act, 1961) will also be applicable to GST Audit (under the Central
Goods and Service Act, 2017). Accordingly, an Internal Auditor of an entity cannot undertake GST
Audit of the same entity.

➢ In the instant case, WCP & Co LLP are the internal auditors of DEF Ltd. and it also agreed to
undertake Goods and Service Tax (GST) Audit of DEF Ltd simultaneously & Co LLP will be held guilty
for misconduct.
Author’s Note
Restrictions on Internal Auditor
• Internal auditor cannot be appointed as statutory auditor, tax auditor, GST auditor, cost auditor &
bookkeeper of company. So internal auditor cannot do 5 things.
• Statutory auditor cannot do 3 things, but they can do other 2 things
o Statutory auditor cannot become internal auditor, cost auditor & bookkeeper
o Statutory auditor can become tax auditor, GST auditor
• In short to remember, internal auditor cannot do anything, statutory auditors and tax auditors can
be same

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