Tax Audit Series - 2 - Audit Report Format: Namaste

Tax Audit Series - 2 – Audit Report Format
CA. PRAMOD JAIN

B. COM (H), FCA, FCS, FCMA, LL.B, DISA, MIMA
Namaste
In series - 2 we would discuss what are the audit reports and which report format is to
be used by an auditor.
FORM 3CA / FORM 3CB
We all know that tax audit report u/s 44AB has to be either in Form 3CA or Form
3CB. The annexure to both reports is in Form 3CD, which is prepared by the
management and auditor certifies it to be true and correct in Form 3CA/3CB.
When is Form 3CA to be used?
Form 3CA is to be used when the financial statements of the entity are audited under
any other law. For example a Company could be audited under Companies Act 2013.
One may have a view that every company financials are audited under the Companies
Act 2013. However, there could be few cases that a financial statement of a company
is not audited under Companies Act, some cases could be:
• A company having a different financial year under the Companies Act 2013 as
approved by NCLT
• A company incorporated on or after 1st January (in such case the 1st financial
year would end on next 31st March)
A LLP under tax audit would always use Form 3CA as its accounts are audited under
LLP Act, 2008 when its turnover exceeds Rs. 40 Lakhs.
Form 3CA is used in such cases as financial statements are audited under their
respective law, where the auditor gives his opinion on true and fair view on the
financial statements under that law.
When is Form 3CB to be used?
Form 3CB is to be used in all other cases i.e., when financials statements of the entity
are not audited under any other law. This is so as in Form 3CB, the auditor gives his
true and fair view on financial statements in S. No. 3 of the Form. Form 3CA does not
contain auditor opinion on financial statements.
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Tax Audit Series – 2 – Audit Report Format
CA. PRAMOD JAIN

SA 700
It is pertinent to note that all auditors should invariably comply with Standards on
Auditing including SA 700/705/706 while conducting audit as they are mandatory on
them.
SA 700 ‘Forming an Opinion and Reporting on Financial Statements’, prescribes a

format of the auditor’s report on financial statements, which has been made effective
in respect of audits of financial statements for periods beginning on or after 1st April
2012. However, having regard to the importance of these respective responsibility, it
is suggested that these respective responsibility paragraphs relating may be provided
in the space provided for giving observations, etc., under clause (3) of Form No.3CA
or Clause (5) of Form No.3CB as the case may be. The suggested paras as per ICAI
Tax Audit Guidance Note (Revised 2014) are as under:
Assessee’s Responsibility for the Financial Statements and the Statement of

Particulars in Form 3CD
• The assessee is responsible for the preparation of the aforesaid financial

statements that give a true and fair view of the financial position and financial
performance (if applicable) in accordance with the applicable Accounting
Standards issued by the Institute of Chartered Accountants of India. This
responsibility includes the design, implementation and maintenance of internal
control relevant to the preparation and presentation of the financial statements
that give a true and fair view and are free from material misstatement, whether
due to fraud or error.
• The assessee is also responsible for the preparation of the statement of

particulars required to be furnished under section 44AB of the Income-tax Act,
1961 annexed herewith in Form No. 3CD read with Rule 6G(1)(b) of Income
Tax Rules, 1962 that give true and correct particulars as per the provisions of
the Income-tax Act, 1961 read with Rules, Notifications , circulars etc that are
to be included in the Statement.
Tax Auditor’s Responsibility

• My/ Our responsibility is to express an opinion on these financial statements
based on my/our audit. I/We have conducted this audit in accordance with the
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CA. PRAMOD JAIN

Standards on Auditing issued by the Institute of Chartered Accountants of

India. Those Standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
• An audit involves performing procedures to obtain audit evidence about the

amounts and disclosures in the financial statements. The procedures selected
depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control
relevant to the preparation and fair presentation of the financial statements in
order to design audit procedures that are appropriate in the circumstances but
not for the purposes of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting estimates
made by management, as well as evaluating the overall presentation of the
financial statements.
• I/We believe that the audit evidence I/we have obtained is sufficient and
appropriate to provide a basis for my/our audit opinion.
• I/We are also responsible for verifying the statement of particulars required to
be furnished under section 44AB of the Income-tax Act, 1961 annexed
herewith in Form No. 3CD read with Rule 6G (1) (b) of Income-tax Rules,
1962. I/ We have conducted my/our verification of the statement in accordance
with Guidance Note on Tax Audit under section 44AB of the Income-tax Act,
1961, issued by the Institute of Chartered Accountants of India.
I hope this document is of use to you. I thank Ms. Ria Agarwal in assisting me to
compile this part of the series. Your suggestions and comments would be highly
appreciated
Best Regards
CA. Pramod Jain

[email protected]
+91 9811073867
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Tax Audit Series - 2 – Audit Report Format

CA. PRAMOD JAIN

FORM 3CA / FORM 3CB

When is Form 3CA to be used?

When is Form 3CB to be used?

CA. PRAMOD JAIN

SA 700 ‘Forming an Opinion and Reporting on Financial Statements’, prescribes a

Assessee’s Responsibility for the Financial Statements and the Statement of

• The assessee is responsible for the preparation of the aforesaid financial

• The assessee is also responsible for the preparation of the statement of

Tax Auditor’s Responsibility

CA. PRAMOD JAIN

Standards on Auditing issued by the Institute of Chartered Accountants of

• An audit involves performing procedures to obtain audit evidence about the

CA. Pramod Jain

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