Xxx Chartered Accountants

CHARTERED ACCOUNTANTS
TAX AUDIT
CHECK - LIST
Name of the assessee .............
Address ................
Permanent Account Number ..........
Status ..........
Previous year ended 31 st March ....
Assessment year......
Xxx Chartered Accountants
7.a! "f firm or Association of Persons#
indicate names of $artners% members and
their $rofit sharin& ratio.
b! "f there is any chan&e in the $artners %
members or their $rofit'sharin& ratios# the
$articu(ars of such chan&e.
Obtain a true copy of the partnership deed
signed by all the partners.[-!"
Obtain a true copy of the a#end#ent $
ad#ission $ retire#ent deed and get a
declaration stating that there has been no
change in the profit sharing ratios during the
year by all the partners.[-%"
). a! Nature business or $rofession
b! "f there is any chan&e in the nature of
business or $rofession# the $articu(ars of
such chan&e.
See the nature stated in partnership deed&
Sales Ta' (egistration Certificates& Shop )ct
Licence& *) + ))
,et a declaration stating that there has been
no change in the nature of business.
If there is any change in the nature& go
through the final accounts to find out any
disallo-ance.
See -hether the nature of business has affected
the nature of e'penses li.e re/enue or capital
*. a! +hether the boo,s of accounts are
$rescribed under section --AA# if yes# (ist
of boo,s so $rescribed.
b! .oo,s of accounts maintained.
"n case boo,s of accounts are maintained
in a com$uter system# mention the boo,s
of accounts &enerated by such com$uter
system!
c! /ist of boo,s of accounts examined.
,et a list of boo.s of accounts #aintained
by the assessee.[-0"
1hich accounting pac.age they are using
Xxx Chartered Accountants
for co#puterisation of accounts.
List the total page nu#bers of boo.s #aintained
for your reference
10.+hether the $rofit 1 (oss account inc(udes
any $rofits 1 &ains assessab(e on
$resum$tive basis# if yes# indicate the
amount and the re(evant section--A2#
--A3# --A4# --.#--..#--..A#--... or
any other re(evant section!
44AD:-Special Provision for Computing Profit &
Gains of business of Civil Construction etc. [8!
44A":- Special Provision for Computing Profit &
Gains of business of Pl#ing $%iring or leasing
goo&s carriages.
44A':- Special Provision for Computing Profit &
Gains of (etail )usiness[*!
44):- Special Provision for Computing Profit &
Gains of S+ipping )usiness in t+e case of non-
resi&ents.[,.*!
44)):- Special Provision for Computing Profit &
Gains in connection -it+ t+e business of
e.ploration etc of mineral oils [/0!
44))A:- Special Provision for Computing Profit &
Gains of business of operation of air craft in t+e
case of non-resi&ents [*!
44))):- Special Provision for Computing Profit &
Gains of 'oreign companies engage& in t+e
business of Civil Construction etc. in certain turn-
1e# pro2ects.[/0!
2or all of the abo/e ta.e a declaration that the
acti/ity is the sa#e + no other acti/ity is being
conducted.[-3"
11.a!Method of accountin& em$(oyed in the
$revious year.
b!+hether there has been any chan&e in
the method of accountin& em$(oyed vis'a'
vis the method em$(oyed in the
immediate(y $recedin& year.
c!"f ans5er to b! above is in the
affirmative# &ive detai(s of such chan&e#
and the effect thereof on the $rofit or (oss.
d!2etai(s of deviation# if any# in the
method of accountin& em$(oyed in the
$revious year from accountin& standards
$rescribed under section 1-6 and the effect
thereof on the $rofit or (oss.
4a5 )ccounting of e'penses and inco#e& should
be chec.ed. The inco#e ite#s should also be
confir#ed for their accounting treat#ent.
Xxx Chartered Accountants
E'penses and inco#e heads of the follo-ing
accounts should also be chec.ed for
co#paring -ith the pre/ious year accounting
#ethod.
6 2i'ed deposit interest& 6 Insurance
e'penses + Clai#s& 6 Sales-ta' refund. 6
Inco#e-ta' refund. 6E'cise uty 7ay#ents
and *O8)T 6 Cash incenti/es 6
4b5 Chec. the a#ount accounted for bad debts&
and a#ounts reco/ered out of pre/ious bad
debts.
4c5 Chec. the year end entries in 9ournal for the
e'penses pro/ided and see the #ethod of
pro/iding e'penses is as sa#e as of earlier
year. Si#ilarly pay#ent entries in the
beginning of the year should also be chec.ed
for chec.ing the -ay of dealing -ith
e'penses and pro/isions.
4d5 In case of any change in the #ethod of
accounting& -or. out the a#ount of
difference caused due to such change. ,et a
declaration fro# the party confir#ing the
change in accounting #ethod. )lso #ention
in the report for the effect of the change.
4e5 Significant accounting policies as are
referred to in the final accounts as re:uired
by )ccounting Standard ! 4)S!5 ;isclosure
of )ccounting 7olicies; of the Institute of
Chartered )ccounts of India 4IC)I5 should
also be considered. The policy #ay different
in respect of the follo-ing.
6*ethods of epreciation& 6epletion and
a#orti<ation& Treat#ent of e'penditure during
construction& con/ersion of translation of
foreign currency ite#s&6 /aluation of
Xxx Chartered Accountants
in/entories&6 treat#ent of good-ill& 6/aluation
of in/est#ents &6treat#ent of retire#ent
benefits& 6(ecognition of profit on long-ter#
contracts& 68aluation of fi'ed assets &
6Treat#ent of contingent liabilities.
4g5 )lso refer )S-= ;7rior period and E'tra
ordinary ite#s and changes in )ccounting
7olicies; of the IC)I.
The C>T?s Circular @o.AA3A t.%=-!-
!AAB has stated the )ccounting Standards
7he Accountin& Standard " re(atin& to
disc(osure of accountin& $o(icies
isclose the significant accounting policies
4!5
adopted by the concern.
)ny change in the accounting policy #ust
be stated in the report.
I#pact of such a change #ay be #inor on
the pre/ious year& but significant on further
years #ust be also stated.
)ny de/iation -hile applying the
)ccounting 7olicy adopted by the concern
in respect of 7rudence& Substance o/er
2or#& or *ateriality #ust also be reported.
)ny de/iation fro# the funda#ental
accounting assu#ptions [li1e. Going
Concern$ Consistenc#$ & Accrual" #ust
also be reported.
7he Accountin& Standard "" re(atin& to
disc(osure of Prior $eriod
4%5
and 3xtra
ordinary items
405
and chan&es in
accountin& $o(icies.
Chec. -hether all prior period ite#s
[if an#" are separately stated in final
accounts.
Xxx Chartered Accountants
Chec. any E'tra-ordinary Ite#
reflected in Inco#e or E'penditure
side.
)ny change in the accounting
policy due to [!" re#o/ing the
-rong accounting treat#ent
follo-ed for last years or [%" #a.e
proper presentation of final
accounts #ay be accepted.
The #aterial effect of change in the
accounting policy should be
disclosed. If the effect is not
ascertainable& such fact should be
stated.
The effect of any change in the
accounting esti#ates
435
#ust also
be stated.
The :uestion of -hether the
change is due to change in
accounting policy or esti#ates&
such a :uestion #ust be referred to
>oard for decision.
4!5
)ccounting 7olicies C-Specific )ccounting
7rinciples + the #ethods of applying those principles
adopted by the assessee in preparation of financial
state#ents.
4%5
7rior 7eriod Ite#sC-*aterial Charges or credits
-hich arises in the pre/ious year as a result of errors
or o#issions in the preparation of the financial
state#ents of one or #ore pre/ious years. [7ro/ided
that charge or credit arising on the outco#e of a
contingency& -hich at the ti#e of occurrence could not
be esti#ated accurately shall not constitute the
correction of an error but a charge in esti#ates and
such an ite# shall not be treated as prior period ite#. "
405
E'tra Ordinary Ite#C- ,ains or Losses -hich arise
fro# e/ents or transactions -hich are distinct fro# the
ordinary acti/ity of the business and -hich are both
#aterial and e'pected not to recur fre:uently or
regularly. E'tra ordinary ite#s includes #aterial
ad9ust#ents necessitated by circu#stances -hich
though related to years preceding to the pre/ious years
Xxx Chartered Accountants
are deter#ined in the pre/ious year. [7ro/ided that
inco#e or e'penses arising fro# the ordinary acti/ities
of the business or profession or /ocation of an assessee
though abnor#al in a#ount or infre:uent in
occurrence shall not :ualify as e'tra ordinary ite#."
435
)ccounting Esti#atesC-)n esti#ate #ade for the
purpose of preparation of financial state#ents -hich is
based on the circu#stances e'isting at the ti#e -hen
the financial state#ents are prepared
18.a!Method of va(uation of c(osin& stoc,
em$(oyed in the $revious year.
b!2etai(s of deviation# if any# from the
method of va(uation $rescribed under
section 1-6A# and the effect thereof on the
$rofit or (oss
4a5 The #ethod of /aluation for opening
stoc. is also rele/ant& as the #ention of
change in #ethod has also to be reported.
If -e are not sure of #ethod& -e ha/e to
get a declaration fro# the assessee about
the #ethod of /aluation.
4b5 If no stoc. records are #aintained&
confir# as to -hat boo.s are declared by
the assessee& also -e ha/e to state the fact
that& DAs no stock records are maintained
by the assessee we have to rely on the
declaration given by the assessee, and
the details as mentioned in point no.28
of this form are presented, as they are
received from the assessee.? )lso get a
declaration fro# the assessee to this
effect.
4c5 Chec. the instructions issued by the
concern to the personnel regarding
/erification and /aluation of stoc.-in-
trade and 1. I. 7. co#pare the sa#e -ith
last year for -or.ing out the change in
#ethod.
4d5 as per the re:uire#ents of )S-%
2isc(osure re:uired
Xxx Chartered Accountants
7oint-%B. The financial state#ents should
discloseC
4a5the accounting policies adopted in
#easuring in/entories& including the cost
for#ula usedE and
4b5 the total carrying a#ount of in/entories
and its classification appropriate to the
enterprise.
7oint-%F. Infor#ation about the carrying
a#ounts held in different classifications of
in/entories and the e'tent of the changes
in these assets is useful to financial
state#ent users. Co##on classifications
of in/entories are ra- #aterials and
co#ponents& -or. in progress& finished
goods& stores and spares& and loose tools.
4e5 In case of change in the #ethod& the
effect on profit or loss should be stated.
4e5 Try to attend the stoc. ta.ing and study
the -ay assessee ta.es stoc. and test chec.
the /aluation procedure.
4f5 Obtain stoc. certificate in the for#at as
reco##ended in the InstituteGs 7ublication&
i.e. State#ent on )uditing 7ractices -hich
is reproduced in Chapter F.
4g5 The follo-ing guidelines gi/en in S)7 H
!!& for this ite# are also should be .ept in
#ind -hile finalising any notes.
STATEMET ! STA"A#" A$"%T%& '#A(T%(ES
)) *#epresentations by Management+
!I. In/entories at the year-end consisted of the follo-ingC
(a- *aterials 4including co#ponents5
(s .........
1or.-in-7rocess
(s .........
2inished ,oods 4including by-products5
(s .........
*aintenance supplies and Stores and Spare 7arts
(s .........
Loose Tools
Xxx Chartered Accountants
(s .........
Others 4specify each #a9or head separately5
(s .........

-------------
Total
(s .........

-------------
!!. )ll :uantities -ere deter#ined by actual physical
count or -eight or #easure#ent that -as ta.en under our
super/ision and in accordance -ith -ritten instructions&
on ............ 4date$dates of physical /erification5& e'cept as
follo-sC
! ...............
...............
! 1here physical /erification of in/entories is carried
out at a date other than the closing date& this paragraph
#ay be #odified as belo-C
In/entories recorded in the boo.s as at ...........4date of
balance sheet5 aggregating to (s. ......... are based upon
the physical in/entories ta.en as at .......... 4date of
physical /erification5 by actual count& -eight or
#easure#ent. The #aterial discrepancies noticed on
physical /erification of stoc.s as co#pared to boo.
records ha/e been properly dealt -ith in the boo.s of
account and subse:uent transactions recorded in the
accounts fairly reflect the changes in the in/entories up to
........... 4balance sheet date5.
!%. )ll goods included in the in/entory are the property of
the entity& none of the goods are held as consignee for
others or as bailee& and& e'cept as set out belo-& none of
the goods are sub9ect to any charge.
!0. )ll in/entories o-ned by the entity& -here/er located&
ha/e been recorded& including goods sent on consign#ent.
!3. In/entories do not include goods sold to custo#ers for
-hich deli/ery is yet to be #ade.
!=. In/entories ha/e been /alued on the follo-ing
basis$basesC
(a- *aterials 4including co#ponents5
1or.-in-7rocess
2inished ,oods 4including by-products5
*aintenance supplies and Stores and Spare 7arts
Loose Tools
Others 4specify each #a9or head separately5
4In describing the basis$bases of /aluation& the #ethod of
ascertaining the cost 4e.g. 2I2O& )/erage Cost or LI2O5
should also be stated.
Si#ilarly& the e'tent to -hich o/erheads ha/e been
included in the cost should also be stated.5
!B. The follo-ing pro/isions ha/e been #ade in respect of
e'cess& slo--#o/ing& da#aged& or obsolete in/entories
and these& in our /ie-& are ade:uate.
!F. @o ite# of in/entories has a net realisable /alue in the
ordinary course of business& -hich is less than the a#ount
at -hich it is included in in/entories.
!J. The basis$bases of /aluation is$are the sa#e as that$those
used in the pre/ious year& e'cept as set out belo-C
Class of in/entory >asis of 8aluation Effect of change in
>asis of 8aluation
13.Amounts not credited to $rofit and (oss
account# bein&'
a!the items fa((in& 5ithin the sco$e of
section 8)
b!the Performa credits #dra5bac,s
#refunds of duty of customs or excise# or
refunds of sa(es tax #5here such credits#
Xxx Chartered Accountants
dra5bac,s or refunds are admitted as due
by the authorities concerned9
c!esca(ation c(aims acce$ted durin& the
$revious years9
d!any other item of income
e!ca$ita( recei$t# if any
The Ite#s ad#itted by the authorities -ill
#ean the ite#s ad#itted before the
closing up of the accounts.
Ta.e a declaration fro# the client the
details as in declaration [-="
Though the receipts are declared as not
co#ing under this point& go through the
records.
Obtain a copy of order passed regarding
the declarations gi/en.
If cash syste# is follo-ed& such fact
should be stated in report.
2ollo-ing ite#s should be chec.ed for
netting up of e'pense and inco#e
!. iscounts gi/en to debtors + sales.
%. Set off for sales ta' -ith sales or
purchases.[Confirm t+e Accounting
Polic#"
0. iscounts recei/ed fro# creditors +
purchases.
3. >an. charges& Transportation charges
to be rei#bursed fro# debtors + Sales.
=. Interest recei/ed on 2. . s in ban. and
loan interest charged by ban..
B. (epairs and insurance clai#s recei/ed.
F. iscounts gi/en and recei/ed.
1-.Particu(ars of de$reciation a((o5ab(e as
$er the "ncome'tax Act# 1*:1 in res$ect of
each asset or b(oc, of assets# as the case
may be# in the fo((o5in& form;'
a!2e$reciation of asset%b(oc, of assets.
b!<ate of de$reciation.
Xxx Chartered Accountants
c!Actua( cost or 5ritten do5n va(ue# as the
case may be.
d!Additions%deductions durin& the $revious
year 5ith dates9 in the case of any
additions of an asset# date $ut to use9
inc(udin& ad=ustments on account of'
i!Modified >a(ue Added 7ax credit
c(aimed and a((o5ed under the Centra(
3xcise <u(es# 1*--#in res$ect of assets
ac?uired on or after 1st March# 1**-#
ii!chan&e in rate of exchan&e of currency#
and
iii!subsidy or &rant or reimbursement# by
5hatever name ca((ed.
e!2e$reciation a((o5ab(e.
f!+ritten do5n va(ue at the end of the year.
The fi'ed assets can be bifurcated in the
table as C
>uilding & *achineries& 7lants& 2urniture
and 2i'tures& Intangible )ssets
[3ntangible assets li1e:-4no--%o-$Patent
(ig+ts$ Cop# (ig+ts$ 5ra&e 6ar1s$
7icences$ etc. "
The deletions for# the fi'ed assets should
be ta.en in to account for the reporting of
capital receipts in !04e5
,et copies of docu#ents relating to the
ne- ac:uisitions and sale of fi'ed assets.
So that the dates of such transactions can
also be reported in the abo/e for#at
!34d5.
In case of a co#pany get the copy of
resolutions of board for such transactions.
,et a copy of the *O8)T clai#ed in
the E'cise >oo.s.
If last year the audit is not conducted by
us &get a declaration that the opening
18 of the assets is correct.[-B"
In case of co#pany assessees rates and
Xxx Chartered Accountants
#ethods follo-ed as per Co#panies )ct
and Inco#e Ta' )ct. Confir# the
)ccounting 7olicy follo-ed e/ery year&
and put a rele/ant note in case of change.
16.Amounts admissib(e under sections 33A.#
33A.A #33AC# 36# 36A..# 36AC# 36CCA#
36CC.# 362#363;'
a!debited to the $rofit and (oss sho5in& the
amount debited and deduction a((o5ab(e
under each section se$arate(y!9
b!not debited to the $rofit 1 (oss account.
88A):-5ea Development Account
88A)A:-Site (estoration 'un&
88AC:-(eserve for S+ipping )usiness
8*:-".pen&iture on Scientific (esearc+
8*A)): - ".pen&iture for obtaining licence to operate
telecommunication services.
8*AC:-".pen&iture on eligible pro2ects or sc+emes
8*CCA:-".pen&iture b# -a# of pa#ment to associations
an& institutions for carr#ing out rural &evelopment
programs
8*CC):-".pen&iture b# -a# of pa#ment to associations
an& institutions for carr#ing out programs of
conservation of natural resources.
8*D:-Amortisation of certain preliminar# e.penses.
8*":-De&uction for e.pen&iture on prospecting etc. for
certain minerals.
1:.a!Any sum $aid to an em$(oyee as bonus
or commission for services rendered# 5here
such sum 5as other5ise $ayab(e to him as
$rofits or dividend @Section3:1!ii!A
b!Any sum received from em$(oyees
to5ards contributions to any $rovident
fund or su$erannuation fund or any other
fund mentioned in section 88-!x!9 and
due date for $ayment and the actua( date
of $ayment to the concerned authorities
under section 3:1!va!
Ta.e a declaration fro# the assessee
about the a#ount of bonus or
co##ission and a further declaration
that the a#ount so stated -as not to
be paid to the concerned e#ployees as
profits or di/idend [-F"
Chec. the appoint#ent letters&
Xxx Chartered Accountants
incre#ent letters and pro#otion
letters.
8erify the a#ounts paid to
co##ission and #ar.eting e#ployees
and #anagers.
Chec. the a#ount collected & ta.e
declaration about the due date of
pay#ent of pro/ident fund or
superannuation fund or any other fund
& + /erify the e/idence of pay#ent of
such type of funds& such as state#ents
recei/ed fro# 2unds.[-J"
17.Amounts debited to the $rofit 1 (oss
account# bein&;'
a!ex$enditure of ca$ita( nature9
The nature of the concern should be .ept
in #ind for deter#ining nature of
e'penses for -hich all #a9or e'penses
incurred should be chec.ed. E'penses for
follo-ing e'penses should be chec.ed for
finding out capital e'p.C-
(epairs and #aintenance.
Tra/elling E'p.
Labour 1elfare.
Interest charged by ban. on loans
and date of assets being used.
E'penses dr. to profit + loss
account &on #achinery under trial or
repairs.
)ssets purchased on hire purchases.
7rinting + Stationery + Office
E:uip#ents.
b!ex$enditure of $ersona( nature9
Chec. the appoint#ent letters of the
e#ployees and directors &as to -hich
Xxx Chartered Accountants
e'penses are allo-ed to the# as per.s and
facilities.
Confor# -hether follo-ing heads of inco#e
consists of personal e'penses.
Telephone E'p. + Electricity E'p. [3f a
telep+one is use& from resi&ence$ ta1e a
&eclaration from assessee as to -+ic+
amount is ta1en as pai& for business
an& personal$ also c+ec1 t+e basis of
-or1ing out."
,ift E'penses
Entertain#ent E'penses
(ent paid.
(epairs and #aintenance.
>an. charges and guaranty fees.
Tra/eling and con/eyance.
Salary paid to personal e#ployees $
house hold -or.ers.
c!ex$enditure on advertisement in any
souvenir# brochure# tract# $am$h(et or the
(i,e $ub(ished by a $o(itica( $arty9
)s. for (eser/e >an. of IndiaGs per#ission
4if applicable5 in respect of ad/ertise#ent&
publicity and sales pro#otion e'penditure
incurred in foreign e'change.
In case of co#pany assessee& e'penditure in
foreign currencies as disclosed in @otes
for#ing part of the )udited )ccounts
should be referred. 1here/er applicable& to
cross-chec. the details of ad/ertise#ent&
publicity and sales pro#otion outside
India.
d!ex$enditure incurred at c(ubs#'
i!as entrance fees and subscri$tions9
ii!as cost for c(ub services and faci(ities
used9
Xxx Chartered Accountants
8erify that the salary or per.s include club bills.
8erify the /ouchers for o-ner?s $ director?s
e'penditure relating to clubs.[3f an#"
e! i!ex$enditure by 5ay of $ena(ty or fine
for vio(ation of any (a5 for the time bein&
in force9
ii!any other $ena(ty or fine9
iii!ex$enditure incurred for any $ur$ose
5hich is an offence or 5hich is $rohibited
by (a59
f!amounts inadmissib(e under section -0a!
Interest &royalty& fees for technical ser/ices or
other su# chargeable under this )ct& -hich is
payable outside India& on -hich ta' has not
been paid or deducted under Chapter K8II-
>[De&uction at source"
&!interest# sa(ary# bonus# commission or
remuneration inadmissib(e under section
-0b!%-0ba! and com$utation thereof9
See the clause of salary in the eed before
calculation of salary.
Confir# that the partner is a -or.ing
partner.[Ta.e a suitable declaration"[-A"
Chec. the dra-ings of the partners [9+et+er
as salar# or &ra-ings"
Confir# that the interest is not e'ceeding
!%L on product basis.
Ta.e declaration regarding the salary& bonus&
interest paid$ charges.[-!I"
Chec. the -or.ing of boo. profit
[i.e.business profit"
h!amount inadmissib(e under section -0A3!
read 5ith ru(e :22 and com$utation
thereof9
[".penses e.cee&ing (s.:0$000;-"
3n brief e.ceptions:-
a . Pa#ments un&er contracts entere& in before /-4-
/<=<.
b. Pa#ment b# boo1 a&2ustments for goo&s ; services
supplie& to pa#ee.
c. Pa#ments to persons in to-n;village +aving no
ban1ing facilit#.
&. Pa#ments ma&e to agriculturists & cottage in&. (un
Xxx Chartered Accountants
-it+out t+e ai& of po-er.
e. Pa#ments to ban1s$ agricultural cre&it soc.$ 73C$
>53 & specifie& financial institutions.
f. Certain pa#ments ma&e t+roug+ ban1s li1e.7etter of
Cre&it$ mail or telegrap+ic trf.$ boo1 a&2. & bills of
e.c+ange ma&e pa#able onl# to ban1s.
g. Pa#ments of terminal benefits li1e gratuit#$
compensation etc.
+. Pa#ments to temporar# emplo#ees or +aving no
ban1 accounts.[6ust get a &eclaration as suc+!
i. Pa#ments on t+e &a# -+ic+ is a ban1 +oli&a# or
stri1e of ban1s
2. Pa#ment to agent -+o is re?uire& to pa# in cas+ for
goo&s;services on be+alf of suc+ person...
,o through the cash boo. for pay#ents.
If found such entries get a state#ent of the
sa#e fro# the concern.
,et a declaration fro# the #anage#ent that
the pay#ents in gi/en state#ent are the only
pay#ents &and there are no other pay#ents
of the si#ilar nature.
,i/e a note in the report that DIt has not been
possible to verify whether the payment in excess
of Rs.20,000/- have been made otherwise that by
crossed cheque or ban draft as the necessary
evidence was not in the possession of the
mana!ement.?
i!$rovision for $ayment of &ratuity not
a((o5ab(e under section -0A7!9
De&uction is onl# allo-e& if:-
a. Gratuit# is pai& or pa#able &uring t+e previous #ear.
b. 9+ere provision is ma&e for pa#ment of sum to-ar&s
approve& gratuit# fun&.
=!any sum $aid by the assessee as an
em$(oyer not a((o5ab(e under section
-0A*!9
@ Pa#ments as an emplo#er to-ar&s setting up or formation
of an# fun&$ trust$ compan#$ AAP$ or )A3$ societ# un&er
Societies (egistration Act$/8=0. $e.cept -+ere suc+ sum is so
pai&$ for t+e purpose of Sec.8=B/C BivC or BvC[BivCsum pai& as
contribution to-ar&s recognise& provi&ent fun&$
superannuation fun&.BvCsum pai& as contribution to-ar&s
approve& gratuit# fun&.!
,! $articu(ars of any (iabi(ity of a contin&ent
nature.
The contingent liability #ay be for
follo-ing.
a.Clai#s against concern not ac.no-ledged as
Xxx Chartered Accountants
debts.
b. Esti#ated a#ount of contracts re#aining
to be e'ecuted on capital account and not
pro/ided for.
c.Other #oney for -hich co#pany is
contingently liable.
Ta.e declaration stating the contingent
liabilities.[-!!"
AS-4 [(ontingencies and Events !cc,rring After the -alance Sheet "ate
t+e financial statements is base& on t+e information -+ic+ is available at t+e &ate on -+ic+ t+e financial statements are
approve&. "vents occurring after t+e balance s+eet &ate t+at in&icate t+at an asset ma# +ave been impaire&$ or t+at a liabilit#
ma# +ave e.iste&$ at t+e balance s+eet &ate are$ t+erefore$ ta1en into account in i&entif#ing contingencies an& in &etermining t+e
amounts at -+ic+ suc+ contingencies are inclu&e& in financial statements.!
1).Particu(ars of $ayments made to $ersons
s$ecified under section -0A8!b!.
[Persons covere& un&er 40AB:CBbCare :-A! in case of
in&ivi&ual:-an# relative of t+e assessee )!in case of a
compan#$ firm$ AAP$ or %>':- an# &irector of t+e compan#$
partner of t+e firm $or member of AAP$ or famil#$ or an#
relative of suc+ &irector$ partner or memberB("7A53D" :-in
relation to an in&ivi&ual $means t+e +usban&$ -ife$ brot+er$
or sister or an# linen ascen&ant or &escen&ant of t+at
in&ivi&ual.C"
Obtain a declaration regarding the persons
specified in section 3I)4%54b5 before
co##ence#ent of an audit.
Obtain a list of e'penditure in respect of
-hich pay#ent has been #ade$ is to be
#ade for goods ser/ices and facilities
4including re#uneration and interest to
partners5 to the abo/e #entioned categories
of persons.
1*.Amounts deemed to be $rofits and &ains
under section 33A. or 33A.A or 33AC.
88A):-5ea Development Account
88A)A:-Site (estoration 'un&
88AC.:-(eserves for S+ipping )usiness
80.Any amount of $rofit char&eab(e to tax
under section -1 and com$utation thereof.
4/:[in s+ort!-Profits C+argeable to 5a.:-9+ere an# person
+as ta1en an# &e&uction of e.p. Ar loss in an# #ear a!
subse?uentl# +e +as rec&. an# amt. in respect of suc+ e.p. Ar
loss$ t+at s+oul& be treate& as income of t+at #ear. b! t+e
successor +as rec&. Suc+ amt in subse?uent #ears$ t+at
s+oul& be treate& as income of t+at #ear of suc+ successor.
5+is provision also applies to ba& &ebts recovere& later.
Ta.e a brief loo. to-ards the a#ounts
credited to parties + re#ained till the
closing balance. Such #ay be the a#ounts&
-hich #ight ha/e recei/ed out of bad debts
Xxx Chartered Accountants
reco/ered.
Obtain copies of last three years profit +
loss a$c. s& see the bad debts -ritten off +
get a list of parties. The parties #ay still be
dealing -ith concern& but concern #ight
ha/e s:uared off so#e disputable a#ounts&
in such a case go through a#ount to a#ount
recei/ed and get e'planation of the a#ounts
recei/ed against specific bills. The
unclai#ed a#ounts by any bills #ay be the
a#ounts against bad debts.
Confir# the capital receipts& -hether they
belong to such a#ounts s:uared off earlier.
81.Bi!"n res$ect of any sum referred to in
c(ause a!#c!#d! or e! of section -3.# the
(iabi(ity for 5hich#'
48) 'ollo-ing &e&uctions s+all be allo-e& onl# on actual
pa#ments.
BaC5a. &ut# cess or fee
BcC )onus or commission -+ic+ ot+er-ise -oul& not +ave
been pai& as profits or &ivi&en&
B&C3nterest on an# loan or borro-ing from an# public
financial institution $ in accor&ance -it+ t+e terms an&
con&itions of t+e agreement governing suc+ loan or
borro-ings.
BeC3nterest on an# term loan from a sc+e&ule& ban1.
4)5 $re'existed on the first day of the
$revious year but 5as not a((o5ed in the
assessment of any $recedin& $revious
year and 5as
a!$aid durin& the $revious year9
b!not $aid durin& the $revious year9
.! 5as incurred in the $revious year and
5as
a! $aid on or before the due date for
furnishin& the return of income of the
$revious year under section 13*1!9
b! not $aid on or before the aforesaid
date.
Obtain the copies of the orders passed by the
ta'ation authorities to confir# the
liability.
Chec. the ta' accounts
,et declarations about the liabilities in these
Xxx Chartered Accountants
clauses -hich pre-e'isted on the first day
of the year. [-!%"
ii!"n res$ect of any sum referred to in
c(ause b! of section -3.# the (iabi(ity for
5hich'
[48)BbC De&uction s+all be allo-e& onl# on actual
pa#ments.:-Contribution to an# provi&en& fun& or
superannuation fun& or gratuit# fun& or an# ot+er fun&
for t+e -elfare of t+e emplo#ees."
A! Pre'existed on the first day of the
$revious year but 5as not a((o5ed in the
assessment of any $recedin& $revious
year;
a! nature of (iabi(ity9
b! due date for $ayment under second
$roviso to section -3.9
c! actua( date of $ayment9
d! if $aid other5ise than in cash#
5hether the sum has been rea(ised
5ithin fifteen days of the aforesaid
due date9
.! 5as incurred in the $revious year;
a! nature of (iabi(ity
b! due date of $ayment under second
$roviso to section -3.9
c! actua( date of $ayment9
d! if $aid other5ise than in cash#
5hether the sum has been rea(ised
5ithin fifteen days of the aforesaid
due date.
Obtain the copies of the orders passed by the
ta'ation authorities to confir# the
liability.
Chec. the ta' accounts
,et declarations about the liabilities in these
clauses -hich pre-e'isted on the first day
of the year.
BState -hether sales ta'& custo#s duty& e'cise duty or any
other indirect ta'& le/y& Cess& i#post& etc.& is passed
through the profit + loss account.
88.a!Amount of Modified >a(ue Added 7ax
credits avai(ed of or uti(ised durin& the
$revious year and its treatment in the
$rofit and (oss account and treatment of
outstandin& Modified >a(ue Added 7ax
credits in the accounts.
Confir# the credits ta.en at the end of
the year. See -hether they are recorded
in the boo.s of (,-%0 etc.
Ta.e a declarations regarding the sa#e&
Xxx Chartered Accountants
about the utilised or unutilised.[-!0"
b!Particu(ars of income or ex$enditure of
$rior $eriod credited or debited to the
$rofit and (oss account.
Confir# the ite# !!4d5 in the for# + see
-hether any ite# found to be reported.
AS./ [et 'rofit or 0oss for the 'eriod, 'rior 'eriod %tems and (hanges in Acco,nting 'olicies
5+e term Eprior perio& itemsE$ as &efine& in t+is Statement$ refers onl# to income or e.penses -+ic+ arise in t+e current perio&
as a result of errors or omissions in t+e preparation of t+e financial statements of one or more prior perio&s. 5+e term &oes not
inclu&e ot+er a&2ustments necessitate& b# circumstances$ -+ic+ t+oug+ relate& to prior perio&s$ are &etermine& in t+e current
perio&$ e.g.$ arrears pa#able to -or1ers as a result of revision of -ages -it+ retrospective effect &uring t+e current perio&.
Prior perio& items are generall# infre?uent in nature an& can be &istinguis+e& from c+anges in accounting estimates.
Accounting estimates b# t+eir nature are appro.imations t+at ma# nee& revision as a&&itional information becomes 1no-n. 'or
e.ample$ income or e.pense recognise& on t+e outcome of a contingenc# -+ic+ previousl# coul& not be estimate& reliabl# &oes
not constitute a prior perio& item
Prior perio& items are normall# inclu&e& in t+e &etermination of net profit or loss for t+e current perio&. An alternative
approac+ is to s+o- suc+ items in t+e statement of profit an& loss after &etermination of current net profit or loss. 3n eit+er case$
t+e ob2ective is to in&icate t+e effect of suc+ items on t+e current profit or loss.
83.2etai(s of any amount borro5ed on hundi
or any amount due thereon inc(udin&
interest on the amount borro5ed! re$aid#
other5ise than throu&h an account $ayee
che?ue.@Section :*2A
=<D:-Amounts )orro-e& or (epai& on %un&i:-3f t+e amount
so borro-e& or repai& is not b# account pa#ee c+e?ue $suc+
amount s+all be t+e income of t+e person so borro-ing or
repa#ing.[".pl:-5+e amount so repai& s+all also inclu&e t+e
interest pai& -+ile repa#ing t+e amount.!
8-.a!B Particu(ars of each (oan or de$osit in
an amount exceedin& the (imit s$ecified in
section 8:*SS ta,en or acce$ted durin& the
$revious year;'
:=<SS:-6o&e of ta1ing or accepting certain loans an&
&eposits.[7imit is (s.:0$000;--.e.f. /-4-8<!
i! name# address and $ermanent account
numberif avai(ab(e 5ith the assessee!of
the (ender or de$ositor9
ii! amount of (oan or de$osit ta,en or
acce$ted9
iii! 5hether the (oan or de$osit 5as
s?uared u$ durin& the $revious year9
iv! maximum amount outstandin& in the
account at any time durin& the $revious
year9
v! 5hether the (oan or de$osit 5as ta,en or
acce$ted other5ise than by an account
$ayee che?ue or an account $ayee ban,
draft.
Xxx Chartered Accountants
5+is section &o not appl# to t+e person from -+om t+e loan
or &eposit is ta1en or accepte& an& t+e person b# -+om
t+e loan or &eposit is ta1en or accepte& are bot+ +aving
agricultural income an& neit+er of t+em +as an# income
c+argeable to ta..[Cir Fo.**/$ Dt.:8;0/;/<<0B/<<0C$/88
35(!
,i/e a note in the report that DIt has not been
possible to verify whether the mode of tain! loan
have been made otherwise than by crossed
cheque or ban draft as the necessary evidence
was not in the possession of the mana!ement.?
b!Particu(ars of each re$ayment of (oan
or de$osit in an amount exceedin& the
(imit s$ecified in section 8:*7 made
durin& the $revious year;'
:=<5:-6o&e of repa#ment of certain &eposits[7imit is
(s.:0$000;--.e.f. /-4-8<!
i! name# address and $ermanent account
numberif avai(ab(e 5ith the assessee!of
the $ayee9
ii! amount of the re$ayment9
iii! maximum amount outstandin& in the
account at any time durin& the $revious
year9
iv! 5hether the re$ayment 5as made
other5ise than by account $ayee che?ue
or account $ayee ban, draft.
,i/e a note in the report that DIt has not been
possible to verify whether the mode of
repayment of loan have been made otherwise
than by crossed cheque or ban draft as the
necessary evidence was not in the possession
of the mana!ement.?
4These particulars need not be gi/en in the
case of a ,o/ern#ent co#pany& a ban.ing
co#pany or a corporation established by a
Central& State or 7ro/incial )ct.5
86.2etai(s of brou&ht for5ard (oss or
de$reciation a((o5ance# in the fo((o5in&
manner to the extent avai(ab(e;
"erial
#umber
$ssessment
%ear
#ature of loss or allowance
&in Rupees'
Obtain the copies of last assess#ent order
Xxx Chartered Accountants
and returns filed as
-ell as the co#putation of the inco#e.
8:.Section'5ise detai(s of deductions# if any#
admissib(e under Cha$ter >"'A.
1ollowing is the list of ded,ctions, which can normally
be considered for this cla,se
80CCC:-Pension 'un& G 3n&ivi&uals
80D:- 6e&ical insurance premia G 3n&ivi&uals &
%>'s
80DD:- 6aintenance inclu&ing me&ical treatment of
+an&icappe& &epen&ant. G (esi&ent in&ivi&uals or
(es.%>'s
80DD):- 6e&ical 5reatment ".penses G (esi&ent
in&ivi&uals or (es.%>'s
80":- (epa#ment of loan ta1en for +ig+er stu&ies G
3n&ivi&uals
80G:- Donations to certain fun&s$ c+aritable
institutions G All Assessees
80GG:- (ent pai& for furnis+e& ; unfurnis+e&
accommo&ation G 3n&ivi&uals
80GGA:- Certain &onations for scientific researc+ or
rural &evelopment G All Assessees not +aving an# income
c+argeable un&er t+e +ea& HProfits & Gains of business or
professionI
807:- 3nterest of certain securities $&ivi&en&s etc. G
3n&ivi&uals & %>'s
80>:- 3ncome of totall# blin& or p+#sicall#
+an&icappe& persons G (esi&ent in&ivi&uals
!TE:- At+er &e&uctions are more or less specificall# given
$t+us t+e# are not consi&ere& above .Pl. go t+roug+ Act for
t+em.
>efore stating allo-able deductions & get
copies of rele/ant e/idence.
In case of lac of e/idence the note #ay be
stated as D2e have not stated here any other
ded,ctions ,the evidence for which co,ld
not be seen at the time of a,dit.3?
87.a! +hether the assessee has deducted tax
at source and $aid the amount so deducted to
the credit of the Centra( Covernment in
accordance 5ith the $rovisions of Cha$ter
X>""'..
Go t+roug+ t+e recor&s an& ans-er accor&ingl#$ also
c+ec1 t+e le&ger accounts for t+e same.
5+e proofs of pa#ments must be 1ept as au&it
evi&ence.
See t+e forms file& for 5DS &etails:-
'orm Fo.:4:-(eturn for 5DS on Salar#.
'orm Fo.:*:-(eturn for 5DS on interest on securities.
'orm Fo.:=:-(eturn for 5DS on Divi&en&s ; >nits.
'orm Fo.:=A:-(eturn for 5DS on interest ot+er t+an
H3nterest on securitiesI >;s.:0=['orm:=!.
'orm Fo.:=C:-(eturn for 5DS on pa#ments to
contractors or subcontractors.
'orm Fo.:=J:-(eturn for 5DS on rent.
'orm Fo.:=4:-(eturn for 5DS on fees for professional
or tec+nical services.
b! "f the ans5er to a! above is in Ne&ative#
Xxx Chartered Accountants
then &ive the fo((o5in& detai(s;
"erial
#umber
(articulars of )ead under
which tax is deducted at
source
$mount of
*ax deducted
at source
&in Rupees'
8).a!"n the case of a tradin& concern# &ive
?uantitative detai(s of $rinci$a( items of
&oods traded;
i!D$enin& stoc,9
ii!Purchases durin& the $revious year9
iii!Sa(es durin& the $revious year9
iv!C(osin& stoc,9
v!shorta&e%excess#if any.
b!"n the case of a manufacturin& concern#
&ive ?uantitative detai(s of the $rinci$a(
items of ra5 materia(s# finished $roducts
and by'$roducts;
A. <a5 materia(s;
i!o$enin& stoc,9
ii!$urchases durin& the $revious years9
iii!consum$tion durin& the $revious year9
iv!sa(es durin& the $revious year9
v!c(osin& stoc,9
vi!Byie(d of finished $roducts9
vii!B$ercenta&e of yie(d9
viii!shorta&e%excess# if any.
.. 4inished $roducts%.y $roducts;
i!o$enin& stoc,9
ii!$urchases durin& the $revious year9
iii!?uantity manufactured durin& the
$revious year9
iv!sa(es durin& the $revious year9
v!c(osin& stoc,9
vi!shorta&e%excess# if any.
BInfor#ation #ay be gi/en to the e'tent
a/ailable
Obtain a copy of assess#ent order &stoc.
state#ent sub#itted to ban.ers
)lso chec. in/entory records of the entire
year.
The following note may be given in case of
no stock records found. Closing stock
found valued according to the
provisions of Sec.145A of the Income
Tax Act, on the asis of the
!uantitative information of closing
Xxx Chartered Accountants
stock provided " the assessee. The
!uantitative details provided " the
assessee for our report, are enclosed
here#ith as received.
8*."n the case of a domestic com$any# detai(s
of tax on distributed $rofits under section
116'D in the fo((o5in& form;'
//*A:-5a. on &istribute& profits of &omestic companies
a!tota( amount of distributed $rofits9
b!tota( tax $aid thereon9
c!dates of $ayment 5ith amounts.
30.+hether any cost audit 5as carried out# if
yes# enc(ose a co$y of the re$ort of such
audit @See section 13**!A
Confir# the report of cost auditors for the any
re#ar.s of notes& -hich #ay be useful for us
to decide about our notes and :ualifications.
/8<B<C:-9+ere t+e assessing officer consi&ers t+at t+e return
of income furnis+e& b# t+e assessee is &efective$ +e ma# give
+im an opportunit# to rectif# t+e &efect to assessee.
31.+hether any audit 5as conducted under
the Centre 3xcise Act#1*--# if any# enc(ose a
co$y of the re$ort of such audit.
38.Accountin& ratios 5ith ca(cu(ations as
fo((o5s;'
a!Cross $rofit%7urnover9
b!Net $rofit%7urnover9
c!Stoc,'in'trade%7urnover9
d!Materia( consumed%4inished &oods
$roduced.
Xxx Chartered Accountants
)TE 1O(K M@E(T)KE@
ND73S
Xxx Chartered Accountants
';S7AN2A<2 23C/A<A7"DNS <3EF"<32
,et an )uthorisation stating that the partner -ho is signing the declarations is authorised to
declare the facts on behalf of the re#aining partners.
Obtain a true copy of the partnership deed signed by all the partners.[-!"
eclaration stating that there has been no change in the profit sharing ratios during the year
by all the partners.[-%"
Obtain a list of boo.s of accounts #aintained by the assessee.[-0"
eclaration that the acti/ity is the sa#e + no other acti/ity is being conducted.[-3"
Ta.e a declaration fro# the client the details as in declaration [-=" )S >ELO1
etails of 7rofor#a credit& dra-bac.& refund of duties ad#itted as due but not credited to 7+L
)$c.
@a#eC- 7eriodC-
"r.#o. +ate of ,laim (articulars of ,laim "ta!e at
which claim
pendin!
$mount Rs. (osition at the
end of the year
If Recd.
$fter year
end ,+ate
of receipt
Remars
If last year the audit is not conducted by us &get a declaration that the opening 18 of the fi'ed
assets is correct.[-B"
eclaration that the a#ount of bonus or co##ission -as not other-ise payable to the
e#ployees as profit or di/idend.[-F"
Ta.e declaration about the due date of pay#ent of pro/ident fund or superannuation fund or
any other fund [-J"
Ta.e a declaration regarding the -or.ing partners.[-A"
Ta.e declaration regarding the salary& bonus& interest paid$ charges.[-!I"
Ta.e declaration stating the contingent liabilities.[-!!"
,et declarations about the liabilities in 30> 4a5&4b5&4c5&4d5&4e5 -hich pre-e'isted on the first
day of the year.[-!%"
Ta.e a declarations regarding the CE@8)T utilised or unutilised.[-!0"