Question

In: Accounting

Which Party Engages the Audit Firm?

Which Party Engages the Audit Firm?

Solutions

Expert Solution

Ans : As per section 44AB, following persons are compulsorily required to get their accounts audited :

  • A person carrying on business, if his total sales, turnover or gross receipts (as the case may be) in business for the year exceed or exceeds Rs. 1 crore. This provision is​ not applicable to the person, who opts for presumptive taxation scheme under section 44AD​ and his total sales or turnover does not exceeds Rs. 2 crores.
  • A person carrying on profession, if his gross receipts in profession for the year exceed Rs. 50 lakhs.
  • An assessee who declaus profit for any previous year in accordance with section 44AD and he decreases profit for any of one 5 assessment year rufuant to the previous year succeding such previous year lower than the profit compused as per section 44AD and his income exceeds the amount which is not chargeable to tax.
  • If an eligible assessee opts out of the presumptive taxation scheme, within the oforesaid period, he cannot choose to revert back to the presumptive taxation scheme for a period of five assessment years thereafter.

(*) For provisions of section 44AD​ refer tutorial on “Tax on presumptive basis in case of certain eligible business”.

  • A person who is eligible to opt for the presumptive taxation scheme of section 44ADA (*) but he claims the profits or gains for such profession to be lower than the profit and gains computed as per the presumptive taxation scheme and his income exceeds the amount which is not chargeable to tax.
  • ​A This provision is not applicable to the person, who opts for presumptive taxation scheme under section 44AD​ and his total sales or turnover does not exceeds Rs. 2 crores.
  • For provision of section 44ADA​, refer tutorial on “Tax on presumptive basis in case of certain eligible business”

  • A person who is eligible to opt for the presumptive taxation scheme of sections 44AE (*) but he claims the profits or gains for such business to be lower than the profits and gains computed as per the presumptive taxation scheme of sections 44AE.
  • For provisions of sections 44AE refer tutorial on “Tax on presumptive basis in case of certain eligible business”.

  • A person who is eligible to opt for the taxation scheme prescribed under section 44BB (*) or section 44BBB (*) but he claims the profits or gains for such business to be lower than the profits and gains computed as per the taxation scheme of these sections.
  • Section 44BB is applicable to non-resident taxpayers engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire basis to be used in exploration of mineral oils. section 44BBB​ is applicable to foreign companies engaged in the business of civil construction or erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project.


Related Solutions

Hale Nelson, CPA, is engaged to audit the financial statements of Hollis Manufacturing, Inc. Hollis engages...
Hale Nelson, CPA, is engaged to audit the financial statements of Hollis Manufacturing, Inc. Hollis engages in very complex sales agreements that create issues with respect to revenue recognition. As a result, Nelson has identified revenue recognition as an audit area of signifi-cant risk that requires special audit consideration.a. Describe the implications of Nelson’s identification of revenue recognition as an area of significant risk. b. Describe how Nelson might decide to react to the significant risk related to revenue recognition.
If a firm engages in false advertising, it might be investigated by the Federal Trade Commission...
If a firm engages in false advertising, it might be investigated by the Federal Trade Commission (FTC) and have its products removed from the market. shut down by the Department of Justice. subject to “penalty by collusion.” shut down by the Securities and Exchange Commission (SEC). investigated by the Stock Market Investigation Bureau (SMIB). False advertising is generally regulated by the Federal Trade Commission (FTC). the Nuclear Regulatory Commission (NRC). the Securities and Exchange Commission (SEC). the Antitrust Division of...
Which of the following is a characteristic of oligopoly but NOT perfect competition? a. Engages in...
Which of the following is a characteristic of oligopoly but NOT perfect competition? a. Engages in advertising and sales promotion b. Profit maximization according to the MR=MC rule c. Firms are prtakers rather than price makers d. Horizontal demand curve and marginal revenue curve The Tragedy of the Commons occurs because a. everyone deserves an equal share on government property. b. social and private costs and benefits differ. c. government property is most heavily used by the wealthy. d. established...
You are the audit supervisor of Azuma Audit firm and currently planning the audit of an...
You are the audit supervisor of Azuma Audit firm and currently planning the audit of an existing client, SWOW Ltd. whose year-end was 30 April 2019. SWOW is a pharmaceutical company, which manufactures and supplies a wide range of medical supplies. The draft financial statements show revenue of $35·6 million and profit before tax of $5·9 million. SWOW’s previous finance director left the company in December 2018 after it was discovered that he had been claiming fraudulent expenses from the...
You are the audit partner of the ABC audit firm, assigned to the audit of XYZ...
You are the audit partner of the ABC audit firm, assigned to the audit of XYZ Ltd. You issued an unmodified auditor's report for the year ended 30 June 2020. In December 2019, three employees of XYZ Ltd. were charged with systematically and deliberately entering fictitious transactions and embezzling about $9 million. ABC audit firm has been notified by the legal representatives of XYZ Ltd. that they are taking legal action against your firm based on the audit for the...
Explain the purpose of an audit firm undertaking an audit of the design and effectiveness of...
Explain the purpose of an audit firm undertaking an audit of the design and effectiveness of internal control procedures.
ANALYSIS QUESTION Does the firm make more profits if it engages in 1st or 2nd -degree...
ANALYSIS QUESTION Does the firm make more profits if it engages in 1st or 2nd -degree price discrimination? Explain with numerical graphical examples. The more detailed the explanation you provide, the more credits you’ll get.
You are the audit manager at Price & Coopers a medium-sized audit firm undertaking the audit...
You are the audit manager at Price & Coopers a medium-sized audit firm undertaking the audit for the year ended 30 June 2018 of Sera Ve Tech Ltd, an electronic component manufacturer located in Sydney. During the planning stage of the audit you discovered that one of Sera Ve Tech Ltd’s major suppliers went bankrupt one month ago, causing major product shortages. To overcome the problem, James Marshall, the husband of the finance director, Norita James, provided electronic components to...
You are the audit manager at Black Blue. a medium-sized audit firm undertaking the audit for...
You are the audit manager at Black Blue. a medium-sized audit firm undertaking the audit for the year ended 30 June 20X8 of High Tech Limited (High Tech), an electronic component manufacturer located in Sydney. During the planning stage of the audit you discovered that one of High Tech's major suppliers went bankrupt one month ago, causing major product shortages. To overcome the problem, Peter James, the husband of the finance director, Natalie James, provided electronic components to High Tech...
You are the audit manager at KPMG & Coopers a medium-sized audit firm undertaking the audit...
You are the audit manager at KPMG & Coopers a medium-sized audit firm undertaking the audit for the year ended 30 June 2018 of Vesta Tech Ltd, an electronic component manufacturer located in Sydney. During the planning stage of the audit you discovered that one of Vesta Tech Ltd’s major suppliers went bankrupt one month ago, causing major product shortages. To overcome the problem, Jonathon Marshall, the husband of the finance director, Nimat Marshall provided electronic components to Vesta Tech...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT