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What is audit?

DigitalCA
Aug 12, 2019

 

Financial auditing is the process of examing an organization’s  (or individual's) financial records to determine if they are Accurate and in Accordance with any Applicable Rules. ( Including accepted accounting standards) regulation and laws.

External auditors come in the outside the organization to examine accounting and financial records and Provide an independent opinion on these records.  Law requires that all public companies have their Financial statements externally audited.

Internal auditors work for the organization as internal employees to examine records and help improve Internal processes such as operations, internal controls, risk management and governance.

Audit of accounts by certain person {sec 44AB} ?  

Different taxpayers

When they are covered by the provision of compulsory audit under section 44AB

A person Carrying on business

If the total Sales, Turnover or Gross receipt in business for the previous  year(s) relevant to the assessment year exceed or exceeds Rs. 1 cored**

A person carrying on professional

If his Gross Receipt in the profession for the previous year(s) relevant to the assessment  year Exceed Rs .50 Lakh **

A person Covered under section 44AD*, 44AE,44AF, 44BB or 44BBB

If Such person claims  that the profits and gains from the business are lower then the profits and gains computed under section  ( irrespective of his turnover)

A person covered Under Section 44AD

If such person Claims that the profits and gains from the business are lower then the profits and gain computed in accordance with the provisions of section 44AD (1) and if His income exceeds the maximum amount which is not chargeable to tax (applicable from the assessment year 2011-12 to 2016-17)

A person covered under section 44ADA

If such person claims that the profits and gains from the profession and lower then the  profits and gains computed in accordance with the provisions of section 44ADA and if his income exceeds the maximum amount which is not chargeable to tax ( Applicable from the assessment year 2017-18)

A person covered under section 44AD(4)

If a person carrying on business is covered by the provisions  of section 44AD(4) and his income exceeds the maximum amount which is not chargeable to income tax in the previous year (Applicable from the assessment year 2017-18)

 

By: Ashutosh Sharma (GST Executive) at DIgital CA