Page 252 - DCOM509_ADVANCED_AUDITING

Unit 13: Tax and Cost Audit

at the above conclusion. The auditor is also expected to give the summary of additional tax Notes
liability/additional refund arising on his verification of the returns together with the books of
account. While the auditor is giving a general opinion on the truth and fairness of books and
account he can make a qualified opinion or an unqualified opinion. He can also resort to disclaimer
where he finds that the accounting records were insufficient to enable him to frame either an
unqualified opinion or a qualified opinion.
So far as the comment on the variation of tax liability is concerned the auditor has to quantify
exactly the amount by which the liability increases or decreases. He has also to State the
transactions against which there is variation in tax liability. Therefore, either he has to State that
the tax liability shown in the return is correct or is incorrect and to what extent. Thus, an amount
of certification of tax liability is involved therein which casts greater responsibility on the
auditor.
Several State VAT Legislations have provided for audit of accounts by chartered accountants.
Such audit becomes necessary whenever the turnover of the assessee exceeds the prescribed
limit under the relevant State VAT Legislations. In this context the ICAI has developed a model
State VAT Audit report. Maharashtra VAT legislation has also prescribed a form of audit report
and also the details to be furnished along with the audit report. The audit report and the prescribed
details are largely similar to the Model VAT Audit report developed by the ICAI. The objective
of furnishing such details is to help the VAT authorities to determine the correct turnover and
also to satisfy themselves whether the VAT has been remitted properly to the credit of the State
Government. Wherever applicable such particulars have to be verified by the Chartered
Accountants. Such verification ensures that the input VAT credit has been claimed by the assessee
in a proper manner.

Self Assessment

Fill in the blanks:
1. A member in part-time practice is not entitled to perform ………….. functions including
tax audit.
2. While doing the audit the auditor is expected to follow general principles of auditing as
mentioned in Auditing and ………………… Standards.
3. While the auditor has to apply the basic principles of audit he has to keep in mind that the
requirements of ………… audit are different and accordingly he should design his audit
programme.
4. The results of the audit procedure adopted by the auditor should be such as will give him
a reasonable assurance regarding the ………….. of sales reported in the returns.

5. The auditor is also required to comment on the timely …………….. of the returns under
the VAT law.
6. The auditor has to take a judgement of his own regarding the ……………… and
………………….. of the audit checks to be applied.
7. While performing the audit under VAT law the auditor is expected to conduct the audit
presuming himself to be the tax ………………...
8. The auditor is also expected to give the ……………….. of additional tax liability/additional
refund arising on his verification of the returns together with the books of account.

LOVELY PROFESSIONAL UNIVERSITY 247