Reg mistake in Tax audit report of A.y 2009-10

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CA. Naveen Jain (Querist)
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24 September 2010 Sir, I have recd a tax audit assigment of a firm of which tax audit of previous f.y 2009-10 was done by other C.A.
In the tax audit report of A.Y 2009-10, the bank balance shown in B/S is Rs. 591911/- but as I saw the bank statement the actul bank balance as on 01/04/2009 was 576571/-.

Now pls guide what disclosure or adjustment in this year tax audit report should I mention
Or can we claim that excess amount as expense in this year as a previous year expense.

Pls guide

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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24 September 2010 The client may be directed to prepare a bank reconciliation statement as on 32/03/2009. While reconciling so, if any amount has to be adjusted in revenue expenditure/income, that amount has to be adjusted in the statements of f.y 2009-10 as prior period items.
The auditor of f.y 2009-10 has to mention the adjustments of prior period items in the notes forming part of the accounts.

CA. Naveen Jain

CA. Naveen Jain (Querist)
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24 September 2010 But sir in bank reconcilation he will mention as "Cheque recd but not cleard" and in actual that cheque is not reflecting in bank statement for F.Y 2009-10 then how can we justify it

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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24 September 2010 The client may be requested to give the date and name of party from whom cheque has been received, and if it has become stale pass reverse entry in f.y 2009-10 and also obtain a balance confirmation from that party, failing which note may be given that party's balance is not reconciled for want of balance confirmation.

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