The Institute of Chartered Accountants of India (ICAI), suggested to the government that tax audits along with tax compliance services directed to the company through its statutory auditor must not interfere as management service, a segment of offering which they are restricted from rendering.
The suggestion arrives while the government is working on revising the Company’s Act to revise the audit. When the suggestion of the Institute of Chartered Accountants of India (ICAI) has been accepted then the same is provided with some relaxation in the asked framework.
The companies act restricts the auditors from providing the 8 mentioned services along with the management services to the firms they are performing an audit.
In the absence of a law which consists of the management service, the audit regulator National Financial Reporting Authority (NFRA), thinks that the tax advisory consists of the management service.
“ICAI’s view has been that tax audits and tax compliance services are not managed services. But that is the Institute’s view. NFRA has a different view. The government is examining it and it is now entirely in the government’s domain. ICAI’s view has been communicated to the ministry of corporate affairs,” specified that the individual is aware of the communication of ICAI tax audit and the government.
The government thinks of restricting the auditors from providing any non-audit service to their audit clients through the method of revision to the companies act.
In addition to its position on this issue, ICAI’s position comes amid ongoing disputes between audit firms and NFRA regarding an audit service that the watchdog says auditors shouldn’t provide:
The ambiguity comes since the company’s act does not describe the management service.
NFRA provides audit quality review reports that represent the statutory concern, in the absence of the management service it is to be learned in literal terms i.e the services furnished via the auditor towards the management.
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The tax compliance services would be supportive of audits, they do not take it as a threat to auditor independence.
The emails furnished to the ministry along with the NFRA asking for comments for the story would not be answered while posting.
The ministry is working on a tight regulatory audit when the expert panel offered sweeping revisions.
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The auditors along with the credit rating agencies stood by the intense statutory scrutiny in which there would be a scam of the systemically essential business because of the stress in the economy as regulators and investors anticipated the same corporate governance gatekeepers for understanding the company affairs that they rate or audit.
