The Comptroller and Auditor General of India (CAG) has brought to the fore a deviation where several chartered accountants’ are taking up tax audit assignments beyond the prescribed limit.

As many as 22 chartered accountants had each issued more than 400 tax audit reports for just one year (assessment year 2013-14).

This is the case when the limit prescribed by the CA Institute for each chartered accountant was only 45 reports for financial years upto 2013-14, the CAG said in a report tabled in Lok Sabha.

The Government auditor has urged the Finance Ministry to introduce suitable control mechanism in the income tax department so as to ensure that tax audit limits are not breached.

This control mechanism could be devised in consultation with the CA Institute, the CAG report has suggested.

The Government auditor has not accepted the Finance Ministry’s contention that it would be difficult for the income tax department to regulate the number of tax audit reports filed by a chartered accountant.

The CAG wants the Finance Ministry to ensure that existing tax audit limits are adhered to so as to maintain the quality of tax audits conducted by chartered accountants.

The CA Institute had in February 2014 raised the limit of tax audit assignments from 45 to 60 and specified that the revised limit would be effective from audits conducted during financial year 2014-15 onwards.

Meanwhile, CAG has also urged the Finance Ministry to prohibit chartered accountants who is a relative of an assessee or directors of the assesse company, from signing any report or certificates.

This aspect will be examined during the budgetary exercise of 2015-16, the Finance Ministry has said.

>srivats.kr@thehindu.co.in

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