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CAG Report Exposes Shocking Carelessness And Blunders By CAs

The Comptroller & Auditor General of India (CAG) has issued a report No. 32 of 2014 setting out the results of the performance audit of “Appreciation of Third Party (Chartered Accountant) Certification in Assessment Proceedings of the Department of Revenue”.

The report makes for shocking reading because it exposes the utterly careless manner in which the Chartered Accountants have conducted audits and issued certificates in blatant disregard of all basic norms.

According to the CAG’s report, there has been short levy of taxes to the extent of Rs 2,813.11 crore in the 367 cases which were surveyed, as a result of wrong audit reports issued by CAs.

The report also points out that there are 616 cases where CAs have committed mistakes in allowance of exemption or deductions, charging of tax on book profit under Section 115JB, adoption of arm’s length price and reporting on cash payments exceeding Rs 20,000 per day.

The CAG report gives several illustrations of such carelessness and also provides the names and membership numbers of the CAs who have conducted the audit.

The report also laments that no action u/s 288 of the Act has been taken by the department against the erring CAs.

It may be recalled that the ITAT has recently in Vijay V Meghani vs. DCIT (ITAT Mumbai) passed severe strictures against the CA profession for alleged falling standards. The Tribunal has also advised the ICAI to take action against erring members and to tackle the issue on a war footing.

In response to the criticism advanced by the ITAT, the ICAI had issued a stern response that the comments of the ITAT are “sweeping” and “not warranted”. The ICAI also assured that it would take steps to “expunge” the comments made by the ITAT.

Now, it requires to be seen what action the ICAI will take in the light of the scathing criticism of the CAG.


9 comments on “CAG Report Exposes Shocking Carelessness And Blunders By CAs
  1. Aman Daga says:

    This is the mistake of Both the sides
    1. Clients don’t want to pay taxes.
    2. For making fees CA issued Fraudless Reports.

    This is become the tendency of India now the time.

    Now we have to take initiative to report all the issue.

    We CAs are bound by our profession and we are obliged for the same..

    We have to work with integrity and make practise to suggest client the areas of Tax Saving and other benefits available to them due to tax paying instead of making them tax evaders

    Now its upto the ICAI to make a proper guidelines to overcome this suggestion.

    Because now this is not a matter of only those CAs but the matter of whole CA profession.

    We all CAs are with Our ICAI to make them proper judgemative and we should respect the ICAI

  2. N Singh says:

    The reason is that our professionals can’t work more according to the provisions of applicable laws they work as their clients are required and followed by utilizing their power of authorization granted as certified financial professional. This kind of act increase in corrupt practice and scandals of black money.

  3. Bhavani says:

    There are many CA’s in Hyderabad as well who just for the sake of few bucks,certify the companies balance sheets without looking into the credentials.This should be an eye opener for many more of these people.

  4. Surrender says:

    Most Auditors have been overlooking / ignoring / unconcerned about provisions of The MSMED Act, 2006, which overrides other laws of the land and requires reporting of any BUYER defaulting in timely payment for supplies from registered Micro and Small Enterprises and then not making provision for penal interest @ thrice the Bank Rate of RBI and such other compliances, mandated since 2nd October, 2006. Most of the Public Sector Buyers and their Auditors have not even been aware of such provisions since 02.10.2006. Is CAG or other Authorities really been monitoring such contempt of statutory provisions ??

  5. It should be an eye opener for the Taxpayers, who consider our beloved C.A(s) as their Hanuman, who by advising tax planning save them from the clutches of the Department, Tax Payers, please beware of such so called Mr. know-all(s)-

  6. Advocates invariably procedure committed animal and they would take on even on PM or President or any as a special class if any commits deliberate error that way people like Jeet Malani or Palkiwala only difference former very forcefully while the other congenially just because Parsi community assured the Raja of then small state called Bharuch that the parsi community would merge with people but yet maintain their clarity that way Palkhivala did.

    Every one of you know he was not a CA but a Literature graduate with a law degree and he was the best tax luminary why just because he studied deeply unlike present day peripheral types…so tax payers just respected him even superior to very judges why very judges too respected Palkhivala as he was committed to law and practice , in fact he was one top constitutional lawyers of India!

    Every one need to respect the independence of judiciary as also the advocacy with solid ethics and morality!

  7. Advocates invariably procedure committed animal and they would take on even on PM or President or any as a special class if any commits deliberate error that way people like Jeet Malani or Palkiwala only difference former very forcefully while the other congenially just because Parsi community assured the Raja of then small state called Bharuch that the parsi community would merge with people but yet maintain their clarity that way Palkhivala did.

    Every one of you know he was not a CA but a Literature graduate with a law degree and he was the best tax luminary why just because he studied deeply unlike present day peripheral types…so tax payers just respected him even superior to very judges why very judges too respected Palkhivala as he was committed to law and practice , in fact he was one top constitutional lawyers of India!

    Every one need to respect the independence of judiciary as also the advocacy with solid ethics and morality!

  8. sir,
    what you see my dear CAs in CAG report please?

    when they cannot properly handle taxation job given by Revenue, do you think they can interpret laws when they cannot interpret simple tax sections like exceptions, sorry!

  9. sir,
    what you see my dear CAs in CAG report please?

    when they cannot properly handle taxation job given by Revenue, do you think they can interpret laws when they cannot interpret simple tax sections like exceptions, sorry!

3 Pings/Trackbacks for "CAG Report Exposes Shocking Carelessness And Blunders By CAs"
  1. […] See also Vijay V Meghani vs. DCIT (ITAT Mumbai) & CAG Report Exposes Shocking Carelessness And Blunders By CAs […]

  2. […] See also Vijay V Meghani vs. DCIT (ITAT Mumbai) & CAG Report Exposes Shocking Carelessness And Blunders By CAs […]

  3. […] it would take steps to get the ITAT’s observations “expunged”. Thereafter, the CAG made the shocking revelation of the utterly careless manner in which CAs have issued audit reports and caused a revenue loss of […]

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