In the realm of professional accountancy, maintaining ethical standards is paramount. Chartered Accountants (CAs) must adhere to stringent regulations to ensure their practice aligns with established guidelines. One such regulation is the 60-assignment limit for tax audits in an assessment year (AY).
The 60-Assignment Limit:
A member in practice is deemed guilty of professional misconduct if they accept more than 60 tax audit assignments for the AY. However, there are notable exceptions to this rule:
1. Exclusion of Certain Sections:
- Sections 44AD, 44ADA, and 44AE: Audits of businesses or professions falling under these sections are not included in the 60-assignment limit.
2. Section 44AB audit necessitated by any other statute:
- Section 44AB: Audits required by any statute that necessitates a report as per section 44AB of the Income Tax Act are excluded if the auditee’s turnover is below the specified threshold in section 44AB.
Applicability Per Partner:
The 60-assignment limit is applied per partner in a CA firm. This rule has several critical aspects:
1. Multiple Firms:
- If a partner is part of multiple firms, the limit of 60 assignments applies across all those firms. Partners cannot circumvent the limit by spreading assignments across different firms.
2. Individual Capacity:
- When a partner accepts tax audit assignments individually, the total number of assignments (whether accepted directly or as a firm partner) must not exceed 60.
3. Joint Auditors and CA Firms:
- In the case of joint tax auditors, the assignment counts separately for each member or firm. For a CA firm, the 60-assignment limit applies to every partner within the firm.
Conclusion: Adhering to the 60-assignment limit ensures that Chartered Accountants maintain high professional standards. The Supreme Court has affirmed ICAI’s right to fix/revise the number of tax audits a CA can undertake.
For further details, refer to the Code of Ethics (Revised 2019 edition) issued by ICAI.
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