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Annual audit & Financial Audit

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Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2010 My company was having certain old expense provisions in the books in the year 2008, during the audit of 2009 (calender year), reversed the provisions as it is.
But during the financial year audit for 2009-10, decided to reinstate those provision and show it as other income, since during assesment there would be a problem in justifying the low expenses.
What are the implications, is the company justified

Rishab Mathur

Rishab Mathur (Expert)

29 May 2010 It depends the nature of expenses. Just reduction of expense provision in following year will not trigger any problem if you have basis for it. e.g low salary provision can be justified by reduction in no. of employees, low interest can be justified by reduction in amount of loan

Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2010 Hi! Thanks for the reply.
is the company correct in applying separate set of process in Annual audit then in Financial Audit.
Since in annual audit it reversed the provisions to expenses account, but in tax audit wants to reverse it to other income

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