Wednesday, June 25, 2014

CHS - Audit Report

Dec 23

 On "Mutuality"

Transfer Fees recd by Co-op Hsg Soc from incoming & outgoing members (even in excess of limits) is exempt on the ground of mutuality

June 30

Why Tax Practitioners Bill Required For India?

Amendment to Auditor's Report Format Under the Companies Act

<> ” 4.Use of the Term “Profit and Loss Account” or “Statement of Profit and Loss” in the Statutory Audit Reports of Companies.”

One, who may have no real intimate exposure or hand-on mindful field experience in company audit, is quite likely to be left unsure, if not bewildered or totally nonplussed on,-as to whether the cited amendment is simply a cosmetic change in the wording, nothing more, or has a laudable objective or purpose behind the move.

Be that as it could not have been expected otherwise, seizing at the opportunity, another angle thrown up for anyone to offer own Reaction, though not related to ‘companies’, but most certainly to auditing CAs engaged for audit of “Housing Societies”:

The said housing societies, if residential, - unlike other types of co-operative societies, - do not have or are permitted to have any commercial activity, with the object of making a ‘profit’ in its profound sense. It is on this ground that such housing societies claim and are being exempt from taxation, relying on the known and established legal, and time honored, principle of “mutuality”.
Nonetheless, one may have come across instances of audited final accounts of housing societies (of flats or apartments) in which are included/presented,obviously unconsciously unwittingly, an account styled as “profit and loss account”; besides/in addition to a statement of “Receipts and Payments” and/ or “Income and Expenditure”.

If were to go strictly by legal or accounting principles, any year-end surplus in such accounts, in one’s firm view, do not have the characteristics of ‘income’, in any view ‘profit’; at best, to be appropriately called, – “excess of receipts over payments (or outgoings)”.

It is high time that ICAI, the august body overseeing CAs, looks into this and similar other aspects of vital importance to housing societies, deliberates in-depth and comes out with suitable guidelines to auditing CAs. That should effectively assist them in doing a proper audit and reporting.
Subject/Open to well - considered views of experts in ICAI, also those active in the field.


Lastly posted on June 26, 2014

No comments:

Post a Comment