Sir,in ca final pm chapter 7 question 2 point 4:suppression of current accounts:instead of “accountant” the word that should be used is “member” or “auditor” as how can accountant make reservation in report..please clarify
ICAI issued these recommendations for frauds in taxation, now in Income Tax Act Sec 44AB they say audit should be done by “ACCOUNTANT” and then they define in Sec 288 Accountant as Chartered Accountant. So here accountant simply means CA, who may be just preparing tax return or who may be auditor also. So here Accountant is not just the person doing book keeping it means a CA who can be auditor also.
The Institute of Chartered Accountants of India has considered the role of chartered accountants in relation to taxation frauds by an assessee and has made the following major recommendations:
(i) A professional accountant should keep in mind the provisions of Section 126 of the Evidence Act whereby a barrister, an attorney, a pleader or a Vakil is barred from disclosing any communication made to him in the course of and for the purpose of his employment.
(ii) If the fraud relates to past years when the accountant did not represent the client, the client should be advised to make a disclosure. The accountant should also be careful that the past fraud does not in any way affect the current tax matters.
(iii) In case of fraud relating to accounts examined and reported upon by the professional accountant himself, he should advise the client to make a complete disclosure. In case the client refuses to do so, the accountant should inform him that he is entitled to dissociate himself from the case and that he would make a report to the authorities that the accounts prepared or examined by him are unreliable on account of certain information obtained later. In making such a report, the contents of the information as
such should not be communicated unless the client consents in writing.
(iv) In case of suppression in current accounts, the client should be asked to make a full disclosure. If he refuses to do so, the accountant should make a complete reservation in his report and should not associate himself with the return.
However, it can be argued that the auditor has a professional obligation to ensure that the client is fully aware of the seriousness of the offence and to seriously consider full disclosure of the matter.