Question ID : 36932

218933

Internal auditors are now under pressure from Industry to also provide consulting services on tax matters. They expect the internal audit fee to cover consulting on tax matters as well. Is there any written clarification from ICAI which will help us members in convincing the industry that the two cannot be clubbed together apart from recommendations of ICAI?

Answer ID : 76226

I don't agree with your views on pressure from Industry. As you very well aware Internal Audit is an independent management function, involves a continuous and critical appraisal of the functioning and our Role is to suggest improvements, add value and strengthen the overall governance mechanism. Under this, how can we provide Consulting services on Tax? If some body provides tax services, how can he called Internal Auditor? However, I checked up ICAI Publications particularly 'know your ethics' being published in monthly Journals. I did not find any. You may provide use link: http://kb.icai.org/web/viewer.html?file= /pdfs/PDFFile5b28ea7a453463.98959865.pdf to explain your Client what is Internal Audit.

Answer ID : 76293

Internal audit is the audit of the scope agreed between the client and auditor. If in the scope of work it has been agreed by the internal auditor that the internal audit firm also guide or provide taxation related services then they are bound to provide otherwise not. It is very clear guideline from ICAI that Internal auditor cannot be tax auditor and not the GST auditor.

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