Page 410 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

Chapter VI Tax Audit assignments under Section 44 AB of the Income-tax Act, 1961
Specified number of Audits (SNA): A member of the Institute in practice can't accept more than the “specified
number of tax audit assignments” in a financial year, as per Section 44AB of the Income-tax Act, 1961. A
Chartered Accountant in practice or a proprietary firm of Chartered Accountant can accept 60 tax audit
assignments in a financial year, for both corporate and non-corporate assesses.
Firm Limit: In a firm of Chartered Accountants in practice, the “specified number of tax audit assignments”
would mean SNA for each partner. So firm limit will be Number of Partners x 60. If a partner is also part of
other Chartered Accountants firms, the total number of tax audit assignments across all firms related to that
partner can't exceed the “specified number of tax audit assignments”. If a partner accepts tax audit assignments
in their individual capacity, the total number of such assignments can't exceed the “specified number of tax audit
assignments”.
Exclusions: Audits conducted under Sections 44AD, 44ADA, and 44AE of the Income Tax Act are not considered
in the calculation of the “specified number of tax audit assignments”.
Limit Usage by other Partners: If a firm has 10 partners, they can collectively sign 600 tax audit reports. This
limit can be distributed among the partners in any manner. For example, one partner can sign all 600 reports if
the other 9 partners do not sign any.
Multiple Years & Joint Audit: Each year's audit is considered a separate assignment. The number of assignments
accepted by a Chartered Accountant or any partner of their firm, whether singly or in Jointly with another
Chartered Accountant or firm, is taken into account.
HO & Branch: The audit of the head office and branch offices of a concern is regarded as one tax audit
assignment.
Multiple branch: The audit of one or more branches of the same concern by a single Chartered Accountant in
practice is considered as one tax audit assignment.
Part-Time Practice: A Chartered Accountant who is a part-time practicing partner of a firm is not counted for
the purpose of reckoning the tax audit assignments of the firm.
Record Keeping: A Chartered Accountant in practice must maintain a record of the tax audit assignments
accepted by them each year, in a format prescribed by the Council.
Assignment Distribution: The limit on the number of tax audit assignments per partner in a CA Firm can be
distributed among the partners in any manner, provided it complies with the Standard on Quality Control (SQC)
1: Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other
Assurance and Related Services Engagements.
Chapter VII: Appointment of an Auditor in case of non-payment of undisputed fees
Non-payment of undisputed audit fees: A member of the Institute in practice should not accept the auditor
appointment of an entity if the undisputed audit fee of another Chartered Accountant for carrying out the
statutory audit under the Companies Act, 2013 or other statutes has not been paid.
Sick Unit Exception: The prohibition of acceptance does not apply in the case of a sick unit. A "sick unit" is a
unit registered for not less than five years, which has at the end of any financial year accumulated losses equal to
or exceeding its entire net worth.
Undisputed Audit Fees: The undisputed audit fee refers to the provision for audit fee in accounts signed by
both the auditee and the auditor, along with any other expenses incurred by the auditor in connection with the
audit.
Chapter VIII: Company audit assignments.
Specified number of Audits (SNA) A member of the Institute in practice can't hold more than the “specified
number of audit assignments” of Companies at any time, as per Section 141 of the Companies Act 2013. A
Chartered Accountant in practice or a proprietary firm of Chartered Accountant can accept 30 audit assignments,
whether for private Companies or other Companies, excluding one-person Companies and dormant companies.

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