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Advanced Auditing

Notes 17. Tax Audit under the Income tax Act.
18. Unqualified Auditor’s Report.

Self Assessment

State whether the following statements are ‘True’ or ‘False’:
1. The Institute of Chartered Accountants of India was set up in 1962 to regulate the profession
of chartered accountancy in India.
2. A review provides a negative assurance report giving only a moderate level of assurance
on the reliability of the financial information.
3. The concept of audit has undergone a change with the thrust on providing an assurance to
the reader of financial statements by expressing an opinion.

4. In audit, the Chartered Accountant’s objective is to provide a high (but not absolute) level
of assurance on the reliability of financial statements.
5. The aim of Auditing standards is to ensure that the members comply with the technical
standards for maintaining the quality of the attestation works they perform.



Caselet Audit the Pentagon

he Chief Financial Officers Act of 1990 and other laws require almost every major
and minor federal agency to produce financial statements that can pass an
Tindependent external audit each year. The US Department of Defense (DOD) is the
only agency that cannot be audited or predict realistically when it will pass an audit.
Meanwhile, nearly sixty cents of every federal discretionary dollar now goes toward
defense spending, and by the Pentagon’s own admission, it cannot properly account for
how the money is spent. There is no doubt that these circumstances have contributed to
instances of waste, fraud, and abuse at the Pentagon.

Budget penalties for lack of transparency
Reduce by 5 percent the discretionary budget authority of any Federal agency for a fiscal
year if the financial statement of the agency for the previous fiscal year cannot be audited
by an external independent auditor. The bill would exempt military personnel accounts
and the Defense Health Program. It also contains a waiver for any potential harm to
national security or combat forces. The savings generated from H.R. 6528 would be retained
in the general fund for deficit reduction.

This bill embodies a simple principle: If an agency is chronically unable to properly
account for taxpayer dollars, there should be consequences for that agency’s budget. In the
last dozen years, DOD has broken every promise about when it would pass an audit. This
problem is not newly discovered, and further delay is unacceptable, especially given our
fiscal constraints, and the enormous and increasing proportion of federal dollars going
toward the defense budget.
The financial reforms necessary to abide by basic accounting standards, laws, and
regulations at DOD cannot wait. It is time for DOD to comply with current law and to
finally do away with a culture of unlimited spending and no accountability at the Pentagon.

Source: http://www.dailykos.com/story/2012/10/25/1150275/-Audit-the-Pentagon

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