Crux of Question — Tax Auditor didnt refer and follow SAs and GNs while doing tax audit
Crux of Answer —
- If Form 3CB is applicable, Tax audit involves framing opinion on financial statement. So tax audit includes audit of financial statements. So auditor should do statutory audit and tax audit simultaneously. If FORM 3CA is applicable as in case of companies, we have to comment on form 3CD only , such assignment is also audit of financial data (elements of financial statements). Any ways tax audit involves audit of financial data.
As it involves audit of financial data, compliance of SAs & GNs is mandatory, auditor should have followed it.
2. Further as per SA 210 before accepting audits pre-conditions should be fulfilled. One of the pre-condition clearly explains auditor’s right and assesses obligation to give access to available information / give additional infor as requested / access to people for audit related inquiry.
So tax auditor has right to obtain all the information required and not just tax oriented information. If auditor has not taken such information again it is non-compliance of SAs
3. Further following SA and obtaining all relevant information and maintaining documentation ,must as tax auditor can be quizzed by income tax authorities in future also.
4. He is not required to quote SAs in tax audit report as format is not as per SA 700 but following all other SAs is must by auditor.
So conclusion tax auditor is at fault.