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Corporate Accounting Services Manager for Dezan Shira and Associates' India Office, Jitender Sharma, discusses the various aspects of audit and audit reports in India.
What are the different types of Audit for companies in India?
India's Company law prescribes four different kinds of audit for companies, namely internal audit, statutory audit, cost audit, and secretarial audit. Further, section 44AB of the Income Tax Act, 1961, lays down the provisions for income tax audit.
What is the significance of Auditor’s Opinion?
Audit reports contain auditor’s opinion based on the information reviewed and analyzed during the verification of the firm’s financial statements.
Investors may use this information to assess the firm’s financial performance and position for their investment opportunity, while the company’s directors and shareholders may use it to measure the integrity of management and transparency of financial statements.
What are the major types of audit opinions that can be expressed by an Auditor in India?
Upon completing the report, auditors may issue one of the following four opinions:
- Unqualified Opinion - financial records and statements of a company give a true and fair view and are in conformity with the accounting principles generally accepted in India.
- Qualified Opinion - not entirely confident that the financial statement of the company represents its accounts fairly, and if there are certain areas that do not comply with GAAP.
- Adverse Opinion - entity’s financial statements do not fairly represent its financial positions, results, and cash flows.
- Disclaimer of opinion - unable to express an opinion on the entity’s financial statements.
What is the due date by which a taxpayer should get its books audited in India as per Income tax act, 1961?
The due date for completing tax audit and filing of tax audit report with the income tax department is September 30 of the relevant assessment year.
What is the penalty for not getting the accounts audited as required by section 44AB of Income tax Act, 1961?
The penalty for failure of conducting an audit of accounts is minimum of 0.5 percent of total sales, turnover or gross receipt that can go up to INR 1,50,000 (US $2,108).
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