Tax Audit under Section 44AB of The Income Tax Act, 1961 – ICAI Checklist

The Institute of Chartered Accountants of India (ICAI) published the First Edition of Tax Audit Checklist on October 27, 2020. This document is a joint effort of the Direct Taxes Committee and the Taxation Audit Quality Review Board of ICAI. This checklist is designed to assist the members in enhancing the quality of tax audit under section 44AB of the Income tax Act, 1961. This document is only recommendatory in nature.

This checklist has been broadly based on the text of the Guidance Note on Tax Audit under section 44AB of the Income tax Act, 1961/ Implementation Guide w.r.t. Notification No. 33/2018 dated 20.7.2018 effective from 20.8.2018/ Technical Guide on Income Computation and Disclosure Standards. The detailed guidance given in these publications of Direct Taxes Committee of ICAI should be duly referred while conducting the tax audit. This document is not to be considered as a replacement / gist of these publications but should be read along with them.

The above-mentioned publications may be revised from time to time depending on the changes in the Act/Tax Audit Report Format. In case, there is any conflict between the text of the above mentioned publications of ICAI and this document, the text mentioned in publications Guidance Note on Tax Audit under section 44AB of the Income tax Act, 1961/ Implementation Guide w.r.t. Notification No. 33/2 018 dated 20.7.2018 effective from 20.8.2018/ Technical Guide on Income Computation and Disclosure Standards shall prevail.

While giving the tax audit report the tax auditor will have to use his professional skill and expertise and apply such audit tests as the circumstances of the case may require, considering the contents of the audit report. The tax Auditor will have to conduct the audit by applying the generally accepted auditing procedures which are applicable for any other audit. He is advised to refer to the Standards on Auditing (SAs) as may be
relevant, issued by ICAI. In case, there is any conflict between the texts of the Standards on Auditing (SAs) issued by ICAI and this document, the text mentioned in SAs issued by ICAI shall prevail.

Where the auditor issues Form No. 3CB, as the audit of financial statements is being done under section 44AB of the Income tax Act, 1961, the auditor should in relation to audit of the financial statements ensure compliance of:

• Accounting Standards issued by ICAI
• Standards on Auditing
• Framework for presentation of Financial Statements issued by ICAI

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