TAXATION AUDITS QUALITY REVIEW BOARD- ICAI
Taxation Audits Quality Review Board (TAQRB) constituted in February 2018 is an important wing of ICAI that works to bring improvements in taxation audit practices and thereby help the members to exercise greater diligence while certifying various reports prescribed under the taxation laws and in long run would improve the overall reporting and certification done by them.
COMPOSITION AND INDEPENDENCE OF THE BOARD
The Board comprises of members of the Central Council of the ICAI including Government of India nominee. The Council always endeavours to provide independence to the Board and keep it separate from the disciplinary mechanism of the Institute. TAQRB neither has co-opted members or ex officio members including the President and Vice-president of the ICAI nor has any member of Disciplinary Committee on the Board. The members with significant expertise in the field work under confidentiality covenants.
FUNCTIONS OF BOARD
TAQRB would review any report prescribed under the Income-tax Act, 1961 and Rules framed thereunder, and any report prescribed under the Indirect Tax Laws including Goods and Services Tax Law which are certified by a Chartered Accountant (tax auditor) in respect of certain enterprises with a view to determine, to the extent possible:
- Compliance with the reporting requirements prescribed under various sections of the Income-tax Act, 1961 and Rules thereunder;
- Compliance with the reporting requirements prescribed under various provisions of the Indirect Tax Laws including Goods and Services Tax Law; and
- Compliance with the respective pronouncements, guidance notes of ICAI.
REVIEW PROCESS AND ACTION TAKEN BY THE BOARD
Selection of enterprises for review
The Board would review the reports of various enterprise thereon selected on the following basis:
For suo motto reviews, the enterprises are short-listed on the basis of the criteria decided by the Board, from time to time, using a database available from a nationally renowned source (by random sampling method). After short-listing the enterprises based on the criteria decided by the Board, the required numbers of enterprises are selected using scientific methods such as random sampling.
With the prior approval of the Council, in case of a reference made to it in respect of taxation matters (Direct and/or Indirect) by any regulatory body including Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, Ministry of Corporate Affairs, Comptroller and Auditor General of India, the Central Board of Direct Taxes, the Central Board of Indirect Taxes and Customs, State Commercial Tax Departments etc.
Where serious irregularities in taxation matters (Direct and Indirect) have been highlighted by the media reports.
Three tier review mechanism is used by the Board for conducting the review process, i.e.
Stage 1: Preliminary review by an independent Technical Reviewer.
Stage 2: Review of Preliminary Review Report of Technical Reviewer by the Taxation Audits Quality Review Group (TAQRGs).
Stage 3: Finally, review of Taxation Audits Quality Review Group’s report along with Preliminary review report of a Technical Reviewer by the Taxation Audits Quality Review Board (TAQRB).
EMPANELMENT AS TECHNICAL REVIEWER
The criterion for selection of members to be empanelled as Technical Reviewers is decided by the Board time to time. At present, distinguished members of the profession may empanel themselves as a Technical Reviewer with TAQRB who:
- possess at least 10 (ten) years of post-qualification experience in direct taxation OR 5 (five) years of post-qualification experience in the practice of indirect taxation
- is currently active in the practice of taxation (Direct and/or Indirect).
Appropriate honorarium and CPE hours are also provided to Technical Reviewers for their services. Further, the honorarium to be payable to Technical Reviewers for conducting the review of reports may be decided by the Board from time to time and approved by the appropriate authority of ICAI.
TAXATION AUDITS QUALITY REVIEW GROUPS (TAQRGs)
The Chairman of the Board is authorised to constitute one or more Taxation Audits Quality Review Groups (hereinafter referred to as Review Groups) to conduct reviews of the reports prescribed under various taxation laws – both Direct as well as Indirect (hereinafter referred to as reports) in consultation with the Board. There could be two categories of the Review Groups one being the Industry Specific Review Group and the second being the Generic Review Groups. Industry Specific Review Group may be constituted for reviewing reports of enterprises associated with a particular industry, for example, banking, insurance, electricity, mutual funds, merchant bankers, etc
Members of the Review Groups (other than the ICAI’s Central Council Members, Regional Council Members and the Members of the Branch level management committee) would also be eligible for honorarium as may be decided by the Board from time to time and approved by the appropriate authority of ICAI.
ACTIONS TAKEN BY TAQRB BASED ON REVIEW
The Board may take any of the following actions based of the review of the Tax Audit Report :
- Referring the case to the Director (Discipline) of the Institute for necessary action under the Chartered Accountants Act, 1949; or
- Informing the details of the non-compliance to the regulatory bod(y)ies relevant to the enterprise; or
- In cases where no material non-compliances are observed by the Board, and only immaterial non-compliances are observed, it may decide to appropriately bring out the non-compliance to the attention of the tax auditor or
- Consider the matter complete and filing the case.
PARTNER IN NATION BUILDING
In the interest of the nation and profession, the members may keep themselves apprised with the awareness being created by the Board so as to assist the Government, as a partner in nation building, in ensuring its right share of taxes.
CREATING AWARENESS AMONG THE MEMBERS
Articles in Journal
With a view to educate the members and other stakeholders about the probable non-compliances which may occur while certifying the various reports under the Income-tax Act, 1961 and/or the Indirect Tax Laws including Goods and Service Tax Law, the Board may organise webcasts and seminars/ conferences/ programmes and also organise training programmes for Members for training them as Technical Reviewers.