M/s Aarav & Associates, a firm of Chartered Accountants, has three partners, CA Aarav, CA Bhavna and CA Chirag. During the year 2026-27, the…

CA Final · Advanced Auditing, Assurance and Professional Ethics · MTP · November 2026
M/s Aarav & Associates, a firm of Chartered Accountants, has three partners, CA Aarav, CA Bhavna and CA Chirag. During the year 2026-27, the partners accepted and signed the following tax audit assignments: Particulars CA Aarav CA Bhavna CA Chirag Tax audit assignments signed in individual capacity under section 44AB(a)/(b) 20 22 12 Tax audit assignments signed as partner of M/s Aarav & Associates under section 44AB(a)/(b) 42 30 45 Tax audits relating to persons covered under section 44AE 4 3 5 Tax audits relating to persons covered under section 44AD 3 2 4 Revised tax audit reports issued during the year 2 3 1 CA Aarav contends that since the firm has three partners, the limit of 60 tax audits can be shared among the partners and, therefore, he can accept additional tax audit assignments. CA Bhavna, on the other hand, argues that the tax audits under sections 44AE and 44AD should also be included while determining the limit of 60. With reference to Chapter VI of the Council General Guidelines, 2008, examine the above contentions and determine whether CA Aarav, CA Bhavna and CA Chirag have complied with the prescribed limit of tax audit assignments. Also state whether the revised tax audit reports are to be considered for this purpose.

Suggested Answer and Working Notes:

Tax Audit Assignments – Chapter VI of Council General Guidelines, 2008: In order to ensure the quality of tax audit, the Council of the Institute has decided the limit on the number of tax audits, to be affected by issuance of new guidelines, as follows (i) the existing limit of 60 tax audit assignments per member to be retained, but the same shall be in respect of tax audit assignments in a particular financial year. (ii) the said limit of 60 would be the aggregate limit in respect of all tax audits accepted and signed by a member, both in his individual capacity and as a partner of a firm(s). In other words, an individual member cannot sign more than 60 tax audit reports in a financial year. (iii) the limit on number of tax audit assignments per partner in a CA Firm cannot be distributed/or shared between the partners. (iv) the limit of 60 would, however, not apply to tax audit assignments arising out of the requirements under clause (c), clause (d) and clause (e) of section 44AB, in relation to persons covered under section 44AE, 44ADA and 44AD, respectively. (v) in the case of revision of tax audit report, the revised tax audit report shall not be taken into account for the purpose of reckoning the said limit of 60. Accordingly: Member Assignments signed in individual capacity under section 44AB(a)/(b) + assignments signed in capacity of Partner under section 44AB(a)/(b) = Assignments counted Compliance CA Aarav 20 + 42 = 62 Non-Compliance CA Bhavna 22 + 30 = 52 Complied CA Chirag 12 + 45 = 57 Complied The assignments relating to sections 44AE and 44AD are excluded from the above computation. The revised tax audit reports are also not counted for determining the limit. Therefore, CA Bhavna and CA Chirag have complied with the limit of 60 tax audit assignments whereas CA Aarav has exceeded the limit and not complied with Guidelines. Further, CA Aarav's contention that the limit of 60 can be shared amongst the partners is incorrect. The limit is applicable individually to each member and cannot be distributed/shared among the partners of the firm. Also, CA Bhavna's contention that audits under sections 44AE and 44AD should be included is incorrect, as such assignments are specifically excluded from the prescribed limit.

Topics: Professional Ethics & Liabilities of Auditors

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