Company Audit –

Schedule III, CARO,

Accounting and Auditing
Standards

By:
CA. Kamal Garg
[B. Com (H), FCA, DISA (ICAI)]
[Insolvency Professional]
 Disclosure Requirements under
Schedule III for AS Compliant Companies
Interest payable to MSME – whether provision
for interest payable required
• Liability of buyer to make payment – agreed date else
before the appointed day – provided that period agreed
cannot exceed 45 days from acceptance day [S. 15];
• Date from which and rate at which interest is payable –
if buyer fails to make payment u/s 15 - the buyer shall,
“notwithstanding anything contained in any agreement
between the buyer and the supplier or in any law for
the time being in force” – liable to pay compound interest
p.m. at 3 times the bank rate [S. 16];
• Requirement to specify unpaid amount with interest in
the annual statement of accounts – S. 22 (MSMED Act)
as well as Schedule III (Companies Act)
 Cash and Cash Equivalents
• Deposits with original maturity of three months or less
only should be classified as cash equivalents;
• Bank balances held as margin money or security against
borrowings are neither in the nature of demand deposits,
nor readily available for use by the company, and
accordingly, do not meet the aforesaid definition of cash
equivalents;
• Under Schedule III – Cash and Cash Equivalents also
comprise of:
“Balances with banks held as margin money or
security against borrowings, guarantees, etc. and
bank deposits with more than 12 months maturity.”
 Cash and Cash Equivalents
• Question: How to deal with this apparent conflict between the
requirements of the Schedule III and the AS with respect to which
items should form part of Cash and cash equivalents
• Answer:
1) AS would prevail over the Schedule III;
2) Company to make necessary modifications in the F.S.;
3) Accordingly, the conflict should be resolved by changing the
caption “Cash and Cash Equivalents” to “Cash and Bank
Balances,” which may have two sub-headings:
a) “Cash and Cash Equivalents” and
b) “Other Bank Balances.”
4) The former should include only the items that constitute Cash
and cash equivalents defined in accordance with AS 3 (and
not the Schedule III), while the remaining line-items may be
included under the latter heading
KGMA
Dividends
• The Schedule III, requires proposed dividend to be
disclosed in the notes. Does this mean that proposed
dividend is not required to be provided for when applying
the Schedule III
• The Old Schedule VI of 1956 Act specifically required
proposed dividend to be disclosed under the head
“Provisions.” In the Schedule III of 2013 Act, this needs to be
disclosed in the notes;
• AS-4 (Revised) requires that if dividends are declared after
the balance sheet date but before the financial statements
are approved for issue, the dividends are not recognised
as a liability at the balance sheet date because no
obligation exists at that time unless a statute requires
otherwise. Such dividends are disclosed in the notes.
KGMA
Secured Loans
• How should we disclose the nature of security in
respect of long term borrowings
• Schedule III also stipulates that the nature of security shall
be specified separately in each case;
• The words "shall be specified separately in each case"
means that the disclosure of security must be made for
each category of borrowing;
• A blanket disclosure of security covering all loans
classified under the same head such as ‘all Term Loans
from Banks’ will not suffice
• It also covers the type of asset given as security e.g.
inventories, plant and machinery, land and building, etc.
KGMA
Default in repayment of loans
• How should we comply the Note 6(c)(vii) of Schedule III
requirement that under the head “Borrowings,” period and
amount of “continuing default” (in case of long-term
borrowing) and “default” (in case of short-term borrowing)
as on the Balance Sheet date in repayment of loans and
interest shall be specified separately in each case.
• The word “loan” has been used in a more general
understanding;
• Hence, the disclosures relating to default should be made for
all items listed under the category of borrowings such as
bonds/ debentures, deposits, deferred payment liabilities,
finance lease obligations, etc. and not only to items classified
as “loans” such as term loans, or loans and advances ,etc.
KGMA

• A company need not disclose information for defaults other

than repayment of loan and interest, e.g., compliance with
debt covenants;
• The Schedule III requires specific disclosures only for default in
repayment of loans and interest and not for other defaults;
• Though two different terms, viz., continuing default (in case of
long term borrowing) and default (in case of short-term
borrowing) have been used, the requirement should be taken to
disclose default “as on the balance sheet date” in both the
cases;
• Any default that had occurred during the year and was
subsequently made good before the end of the year does
not need to be disclosed.
Property, Plant and Equipment –
AS 10 (Revised) and Schedule III
On 1.4.2018, X Limited acquired a machine for Rs. 50 lakhs. The
down payment is 20% and balance shall be paid over 5 equal
annual instalments. Incremental borrowing rate is 11%. Find out
the cost of machine.
Acquisition cost = PV of cash flows @ 11% = Rs. 39.57
Year Cash PVF PV Finance Creditors
Flows Cost
0 10 1 10.00 0 29.57
1 8 0.9009 7.21 3.25 24.82
2 8 0.8116 6.49 2.73 19.55
3 8 0.7312 5.85 2.15 13.70
4 8 0.6587 5.27 1.51 7.21
5 8 0.5935 4.75 0.79 0.00
50.00 39.57 10.43
The finance cost shall be recognised over the period of deferred
credit
Date Particulars Dr. Cr.
1.4.2018 PPE – Machine A/c Dr. 39.57
To Trade Payables A/c 29.57
To Bank A/c 10.00
31.3.2019 Finance Costs A/c Dr. 3.25
To Trade Payables A/c 3.25
31.3.2019 Trade Payables A/c Dr. 8.00
To Bank A/c 8.00
 Illustrative list of disclosures required under
the Companies Act 2013
• Section 69 - Transfer of certain sums to CRR account when
company buys back the shares;
• Section 129 - Financial Statements – the company shall disclose
the deviation from the accounting standards, the reasons for
such deviation and the financial effects, if any;
• Section 131 - Voluntary revision of financial statements - the
detailed reasons for revision of such F.S. shall be disclosed;
• Section 182 - political contributions - disclose in its profit and
loss account;
• Section 186 - Loan and investment by company - disclose to
the members in the F.S. full particulars and purpose of the loans
given, investment made or guarantee given or security provided
 Certain Matters to be
looked into by the Auditors
 Certain Matters
• Tally Software permissibility under the Co. Act, 2013;
• Cash Flow Statement in Form GSTR 9C – how to get
audited statement when its not applicable on the dealer;
• Reporting about ICoFR – whether mandatory in all cases;
• Consolidation of Section 8 Co. – considerations thereof;
• Consolidation of Associates and JVs in the absence of
subsidiary – considerations thereof;
• Key Audit Matter – precautionary documentation;
• Information in Directors’ Report different from
Information in Auditors’ Report – considerations thereof;
 Cash Flow
Certify that Statement
 Books of account, etc.,
to be kept by company [Section 128]
• The books of account and other relevant books and papers
shall be retained completely in the format in which they were
originally generated, sent or received, or in a format which shall
present accurately the information generated, sent or received and
the information contained in the electronic records shall
remain complete and unaltered – Rule 3(2) of Companies
(Accounts) Rules, 2014.
 Certain Matters
frequency of an enterprise's reporting should not
affect the measurement of its annual results –
• For the companiesPara which
27 andare28 doing interim period
reporting – how to assess whether an employee benefit is
short term or long term;
• Advance Tax Audit Fees – implications as a statutory
auditor and tax auditor;
• Difference of opinion in between partners during an
audit – considerations thereof;
• Communication with previous auditor – no reply from
predecessor – whether its in nature of NOC;
• Letter head of the auditor – mentioning ISO Certified Firm/
Names of Other Firms;
 Certain Matters
• Obtaining audit evidence and written representations –
whether mandatory under the Companies Act, 2013;
• CARO, 2016 was applicable in preceding year but not
applicable in the current year – still reporting under
CARO, 2016 was made – whether any implications;
• Attendance at AGM by auditor – whether mandatory;
• Preceding year’s report was Qualified – what to do in the
current year;
• Share application money – considerations while reporting
under CARO, 2016;
• Non-current investments vs. Long-term investments –
any distinction
 Certain Matters
• Auditor has mentioned his membership number “F” is
prefixed to Auditor’s Report;
• Opening paragraphs of the Auditors Report states to have
“examined the attached Balance Sheet….”;
• Report was not addressed to anyone;
• Membership Number of auditor was only mentioned in
Audit Report – what about CARO, Balance Sheet, Statement
of Profit and Loss
 Certain Matters under CARO
• None of the fixed assets have been revalued during the year;
• In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues
to financial institutions or banks;
• “The management has conducted physical verification of the
fixed assets during the year and we are informed that
discrepancies noticed were not material”;
• “Programme of physical verification is reasonable, though all the
assets not verified. Management is in process of identifying
discrepancies, if any, on such verification.”
• “The company has maintained proper records of inventory. No
material discrepancies were noticed on physical verification of
inventory except as recorded by excise department as per note….”;
 Certain Matters under CARO
• “(a) The parties to whom loans have been given by the company are
repaying the principal amounts as stipulated and interest thereon
wherever applicable;
(d) In case of overdue amounts exceeding Rs.1 Lakh reasonable
steps have been taken by the company for recovery of principal
amount and interest thereon and necessary provisions have been
made wherever such amounts appear to be doubtful of recovery”;
• “The company is regular in depositing undisputed statutory dues
including provident fund, investor education and protection fund,
employee state insurance, income tax, sales tax, wealth tax, custom
duty, excise duty, Cess and other statutory dues with the appropriate
authorities. Late deposit if any has been attached in the Form
3CD attached.”
 Certain Matters under CARO
• “According to the information and explanations given to us,
no fraud on or by the company has been noticed or
reported during the course of our audit”;
• Physical verification of the fixed assets is covered under
a scheme of verification over a period of three years. No
serious discrepancy was noticed on such verification during
the period.”
Certain Issues observed
or opined by ICAI
 Issue 1: Inventory

While preparing its financial statements and while framing

its accounting policies, Company ‘X’, has used the
following words:
'Inventories are valued using weighted average cost
method or specific identification method as applicable'.

Whether the accounting policy has been disclosed

properly.
 Issue 2: Commission and Cash Discount
A company is engaged in the business of manufacturing and sale of
The present obligation
pharmaceuticals. in respect
For marketing of involves
it generally commission and cash
a distributor (say
discount
agent) or a to agents and customers, respectively, arises only
stockiest.
uponagent
The realization
will get of sale proceeds.
commission Hence, thebased
(various percentages) correcton
accounting
collection policy
period is toperiod
(various recognize liability
buckets). for commission
The sooner the collection,and
the
cashthe
more discount oncepercentage.
commission sale proceeds are realized. There is no
need to create a provision for cash discount and the
commission
The whenprovides
company also revenuecashis discount
bookedto- its
EAC opinionThe
customers. Query 5
earlier
Volume
the 23 more the cash discount.
payment,

Commission and cash discount shall be payable upon realization of

sale proceeds.

The accounting policy of the company is to make provision for

commission/ cash discount when the revenue is booked.
 Issue 3: Revenue Recognition

An entity has stated in its financial statement that revenue has been
recognized in accordance with AS 9. Whether the disclosure is in
accordance with AS.

No. The entity should separately disclose the accounting policy for
different type of incomes as explained in AS 9 i.e. sales, royalty,
dividend and interest. In case of other type of incomes, an
explanation pertaining to method of recognizing revenues should
be explained in its accounting policies - AS 9 – Para 14 and AS 1 –
Para 23
Issue 4: Inventories valued and certified by Management

No. AsAnper
auditor has on
Guidance mentioned
InventoriesinAudit,
Auditor's
use of words "as valued
Report by
and certified in the
respect of inventories
management" as Report may result in
in the Auditor's
belieffollows:
that the auditor has relied on the valuation and certification of
management without performing any other audit procedure to verify
• "asand
valuation taken, as valued
existence and certified
of inventories. So, by the words indicate
such
existencemanagement"
of disclaimer for inventories.
Therefore, an auditor should avoid usage of words "as valued and
certified by the management" in the Auditor's Report - January 2010
Whether
edition of "A anStudy
auditor
on can use theseof Financial Reporting
Compliance
words in issued
Requirements" his report?
by ICAI
 Issue 5: Revaluation of Inventory
In the books of a leading real estate developer (say "X"), there
There is no provision is given under AS 2, "Valuation of Inventories" to
are residential complexes which are constructed but not sold at
revalue
the endcost
of of items ofyear.
financial inventory.
X hasAsshown
well, as per AS
them 2, inventories
as inventory. Forshould
the
bepurpose
valued of
at valuation
the lower ofof inventory
cost and of
netresidential
realisable complexes,
value. Therefore,
it has in
respect
revaluedof cost
both ofaspects
land oninventory valuation
which those policy followed
complexes by X is not
are constructed.
correct.
Ultimately, X has revalued cost of inventory of complexes.

Whether, inventory valuation policy of X is correct or not?

 Issue 6: Cash Flow Statement
In the cash flow statement an entity has categorised its cash
flows during a particular period into four categories, which are,
Cash flow from Operating Activities, Cash flow From Investing
Activities, Cash Flow from Financing Activities and Cash flow
from Other Activities.

Whether the entity has categorised its cash flows correctly as

per AS 3, Cash Flow Statements?
 Issue 7: Provision for Bad Doubtful Debts

As perAPara
company
16(b)(Xof Ltd.)
AS 4,has disclosed in the
"Contingencies andfinancial
Events Occurring After
statementSheet
the Balance its accounting
Date" in policy in respect
respect of ofa creation
contingency, the
of provision for doubtful debts as follows:
uncertainties which may affect the future outcome should be
disclosed in the financial statement.
So, an• "Provision for doubtful
entity should disclosedebts, if any,orwould
the event timebewhen
madeprovision
at the for
appropriate time."
contingency of non-recoverability of debts should be made. In the
given case, X Ltd. has disclosed that "Provision for doubtful debts, if
any, would be made at the appropriate time". It should disclose the
event Whether aboveprovision
or time when accounting policy
would regarding
be made. Thus, accounting policy
provision is appropriate?
disclosed by X Ltd. is contrary to AS 4.
 Issue 8: Cheques in Hand
According to paragraph 49 of the "Framework for the preparation and
presentation of financial statements" as issued by ICAI, an asset is a
A company
"resource is engaged
controlled in the business
by the enterprise of setting-up
as a result hydro-
of past events from
power
which plant, benefits
economic generating and selling
are expected hydro-power.
to flow The
to the enterprise".
company
Hence, chequesreceives
in handrevenue and govt.assupport
to be considered assets asthrough
on the
cheques.
Balance Sheet date should be in possession and control of the
As per the
company company's
in such a waycurrent accounting
that these can bepolicy,
used asbased
at theon
year-ending
company's 31 March 20X1, cheques/ drafts in hand
directive.
received on or before 15 th April 20X1 are accounted for as
Therefore, the company's policy of treating such cheque/ drafts which
are'cheques-in-hand' for the20x1
received after 31 March year
but ending
dated on31or March
before 1520X1
April
(irrespective
20X1 of whetherissuch
as 'cheques-in-hand' chequeSuch
not correct. or draft is dated
cheques should31be
March or before).
accounted in the subsequent period accordingly - EAC opinion Query
15 Volume 24
 Issue 9: Tax paid pursuant to demand
As per Para(Y4.2
A company Ltd.)ofisAS 5, "Netin Profit
engaged or Lossoffor
the business the Period,
providing worksPrior
Period
contractItems and Few
service. Changes
days inback,
Accounting Policies"a –notice from tax
it had received
authority raising items
“extraordinary a demandare ofincome
tax on works contract services
or expenses provided
that arise from
by it of Rs.
events XXXX.
or transactions that are clearly distinct from the ordinary
activities of the enterprise and, therefore, are not expected to
recur frequently or regularly”
Y Ltd. paid this demand and in the books such payment is being
In the given
recorded as case, providingexpenditure.
extra ordinary works contract service is ordinary activity
of Y Ltd. Thus, tax paid either pursuant to the demand raised by the
tax authority or otherwise in this connection is also a part of ordinary
activity of Y Ltd.
Whether payment
Recognising of tax demand
such payments raised
as extra by the item
ordinary taxation authority
is contrary to can
Para
recognise
4.2 of AS as5 -extra ordinary
January 2010 item?
edition of "A Study on Compliance of
Financial Reporting Requirements" issued by ICAI
 Issue 10: Interest u/s 234B and 234C
Short payment of advance tax installments invites levy of
interest under sections 234B and 234C of the Income Tax Act.
The company has following questions in regard to the
classification of interest levied u/s 234B and 234C of the Income
Tax Act:

Should the company classify interest u/s 234B and 234C as

tax expense in the financial statements

Is such interest an 'extraordinary item' in accordance with

AS 5
 Issue 10: Forex Gain
As per Para 4.1 of AS 9, "Revenue Recognition", Revenue is the
gross inflow of (A
A company cash, receivables
Ltd.) has prepared or other
its consideration arising in the
financial statements. In
course of the ordinary
the financial activities
statement, of anexchange
foreign enterprise gain
from the
on sale
salesof
goods, from the(like
transactions rendering
gain of
onservices, and from
subsequent the use by
recognition of others
closingof
enterprise resources yielding interest, royalties and dividends.
foreignPara
Further debtors) have
13 of AS included that
11 provides in sales
exchangerevenue. But arising
differences other
onexchange
settlementgains have disclosed
of monetary items or as on
other income. recognition of
subsequent
monetary items at the end of the accounting period should be
recognised as income or expense.
From Para 4.1 of AS 9 and Para 13 of AS 11, A Ltd. is correct in
treatment of exchange gains other than exchange gains on sales
Whether above
transactions. treatment
Exchange gainsofon foreign
sales exchange
transactionsgains is correct
should not be
included in sales revenue, it should be included in other income
 Issue 11: Tax paid u/s 56(2)(viia)
During the current year, company Y has acquired 100% shareholding of
company X. Y has made the transaction at an agreed per share price
As accordingly,
and, per AS 13made investment includes
the payment to otheracquisition
shareholders.charges
The per
share
whichprice
arepaid by Y is less
incurred than the per share
on acquisition fair value of X.
of shares.
In per
As the the
current case,
current profit (deemed
provisions of section income)
56(2)(viia)itself is Income-tax
of the a result of
acquisition
Act, 1961 in and
caseis consideration
not an element paidwithout
is lesswhich
than thefair transaction
value then
difference
could notis have
to be deemed
happened. as income
Taxes ofonthesuch
company.
profit Accordingly,
cannot be
company Y has certain deemed income which is taxable as 'other
considered
income'. as acquisition
As per related costs
Y, this tax expense so it will
is incurred notdue
solely formto part
the
of cost of investment.
transaction.
Hence, it cannot be capitalized.
Whether
Y should charge taxes
suchpaid
tax towould form of
statement part of and
profit costloss
of in the
investment; if not then what should be the treatment of
year in which
such it is incurred.
tax expense.
 Issue 12: Related Party Disclosures

As per Para 23 of AS 18, "Related Party Transactions“, if there

A company (C Ltd.) entered into transactions with various related
have
partiesbeen transactions
including with personnel
key management related parties, during the
and their relatives. In
existence of a statement
the financial related party
the relationship,
company hasthedisclosed
entity should
these
transactions
disclose a by dividing related
description parties
of the into three categories,
relationship between i.e., the
'key management personnel (KMP), 'relatives of KMP' and 'other
parties.
related parties'.
In the instant case, C Ltd. has disclosed description of
relationship only in case of transactions with KMP and their
relatives, but has not disclosed the type of relationship in case
ofWhether
transactions
relatedwith
partyother relatedhave
transactions parties.
been properly disclosed?
Therefore, related party transactions in this case have not
been properly disclosed.
Issue 13: Leasehold and Freehold Properties

The company following its past practices has shown

leasehold and freehold buildings under the sub-head
'Buildings' under head 'Fixed assets'. The company has
not sub-classified 'buildings' into 'freehold' and 'leasehold'.

Whether there is any statutory requirement as per the

Companies Act, 2013 to show buildings as leasehold and
freehold separately
 Issue 14: Earning Per Share
Para 15 of Accounting Standard 20, "Earnings Per Share", requires
that BEPS should be calculated by dividing net profit for the
A company (company Z) has prepared its financial statements for
period attributable
the year ended March to 31,the20XX.
equity shareholders
During the year Aprilby1, 20XX
weighted
to
average number
March 31, 20XX,ofCompany
equity shares
Z hasoutstanding
issued new during the period.
equity shares. The
company has computed Basic Earnings Per Share (BEPS) by
dividing
From the netPara
the above profit15for
of the period
AS 20, an attributable
entity shouldtouse the weighted
equity
shareholders
average numberby of
number
equityofshares
equity shares outstanding
outstanding during atthetheperiod.
end of It
the use
can't year.number of equity shares outstanding either at the beginning
or at the end of the year, except when there is no increase/
decrease in equity share capital during the period.
Whether Company Z has computed BEPS correctly
Referring to above, in the instant case Company Z has not computed
BEPS correctly.
 Issue 15: Revenue recognition for destination
based contracts
A company is engaged in the manufacture of goods (such as network
solutions, mobile equipments, etc.) used in telecom industry. Sale of goods
generally happens via applying and winning tenders. From revenue
recognition standpoint, significant portion of sale is destination based
contracts. The company generally uses Railway as carrier mode. The
company has adopted following policy to recognize revenue:

"Revenue from sale of goods/other sale of goods is recognized when the

goods are dispatched from company's premises. From revenue recognition
standpoint, sales for destination based contracts and sales made near period
end are recognized within the period if the entity reasonably expects that
goods shall reach destination within or before the period end. Further, sales
is also recognized for goods ready for dispatch but kept in company's
premises due to customer's specific request."
 Issue 15: Revenue recognition for destination
In accordance with AS 9,based
revenuecontracts
should be recognized at the time
ofThe
transfer of significant risks and rewards and after fulfilling other
company states that the above policy "….reasonably expects that goods
conditions
shall reachasdestination
laid out inwithin
AS 9.or Thus,
before the
the Revenue
period endshould
…" but be it isrecognized
creating a
aspractical
soon asdifficulty since excise
the significant riskduty
andand/or
rewardssalesoftax has to beofpaid
ownership oncehave
goods the
goods
been move out,
passed on however
to the salesand
buyer sometimes,
other is not recognized
conditions as becauseingoods
stipulated AS 9
may not have reached destination. This is causing problems with other
areregulatory
satisfied. The company has to assess the transfer of significant
departments.
risks and reward based on facts, circumstances, contractual terms with
consumers,
Question 1:who will bear
Whether the loss inpolicy
the accounting case isgoods
correctareand
lostif yes,
in transit
how theetc.
Thecompany
date ofshould
dispatchassess reasonable
of goods expectation
to carrier has to that goods would
be assessed haveof
in light
reached the destination?
the transfer of significant risks and rewards.
Note: The above suggested treatment is for accounting purposes only
and does not
Question 2: address
Whether the perspective
in case from excise
of destination duty/salessale
based contracts, tax.can be
recognized by the company based on the dispatch of materials to carrier?
 Issue 16: Disclosure for Impairment Testing

In the F.S, a company has not disclosed any information to

indicate that it has conducted any impairment test of its
assets during the financial year. Is it correct?
No. As per Para 6 of AS 28, "Impairment of Assets“, an entity should
assess at each balance sheet date whether there is any indication
that an asset may be impaired. So, an entity should disclose either
its accounting policy in respect of impairment of assets or whether
the entity has conducted impairment test during the financial year. I
 Issue 17: Disclosure about EPS

A Company (C Ltd.) has disclosed Earnings Per Share (EPS) on the face
of Statement of profit or loss, but omitted to disclose any other
information related to EPS as required by AS 20. Is it correct?

• basic and diluted EPS excluding extraordinary items (net of tax expense)
• the amounts used as the numerators in calculating basic and diluted
earnings per share
• a reconciliation of those amounts to the net profit or loss for the period
• the weighted average number of equity shares used as the
denominator
• a reconciliation of these denominators to each other
• the nominal value of shares along with the earnings per share figures.
Specimen Key Audit Matter
Paragraph Reporting
 Control design
Personnel interviews
Historical comparisons
Practical
Considerations Benchmarking assumptions
Sensitivity analysis
Assessing transparency
Tests of details
Specimen Other Information
Paragraph Reporting
 Auditor’s Liabilities
under various Statutes
 Nature of Liabilities

civil liability liability

liability for
for criminal arising from
unaudited
negligence or liability professional
statements
misfeasance misconduct
Civil liability for
negligence or misfeasance
• authorised the issue of prospectus
as an expert and such prospectus
contained misstatements – Section
35 of Companies Act, 2013
Criminal liability under Co. Act, 2013

• prospectus includes any statement which is

untrue or misleading in form or context in which it is
included or where any inclusion or omission of any
matter is likely to mislead – Section 34;
• auditor’s duties non compliance of the Sections
139, 143, 144 and 145 – Section 147;
• punishment of fine and imprisonment for an offence
of fraud – Section 447;
• deliberate act of commission or omission in the
balance sheet, report, certificate, return etc. –
Section 448;
• punishment for false evidence – Section 449
Criminal liability under
IPC, 1860
• issuing or signing false certificate –
Section 197;
• falsification of books, papers,
valuable security or account – Section
447A
Criminal liability under Income Tax
Act, 1961
• Falsification of books of account or document,
etc. – Section 277A;
• abetment to make a false statement or declaration -
rigorous imprisonment and fine, for giving false
information in the Return prepared by him in his
representative capacity or where false report or
statement is furnished on the basis of his examination
of client’s records – Section 278 read with Rule 12A