Question ID : 40710

TAX AUDIT ENGAGEMENT

As per 2nd SechedulePart-I , clause 4 -A member of the Institute shall not express his opinion on financial statements of any business or enterprise in which one or more persons who are his “relatives” within the meaning of Accounting Standard (AS - 18) . As per AS 18 Relatives - in relation to an individual, means the spouse, son,daughter, brother, sister, father and mother who may be expected to influence, or be influenced by, that individual in his/her dealings with the reporting enterprise Since definition of relative in AS-18 does not include spouse's father & mother , whether i can take up tax audit assignments of father-in-laws 'proprietorship/partnership business. Please clarify & help me .

Answer ID : 80608

Pl see my observation to query no. 40707

Answer ID : 80613

No. Even if father-in-law is not included in definition of the term relative, he may influence in your dealings. There may be threat to objectivity and may be familiarity threat for the audit. Hence it not advisable to take up the assignment.

---