Written back of creditors

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 March 2013 Sir,

Management says the auditor to written back the creditors under Section 41 of IT Act, 1961 and take that amount in P&L A/c in that case is it responsibility of CA to take written representation of the same from the management?

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)

16 March 2013 First of all; an auditor is not in a position of an accountant that he should follow the instructions of the management.
.
While conducting the audit; if the auditor verifies that a liability is long outstanding; it means it is no more payable.
.
In such situation; the management is right to write back the amount and credit the same to the profit and loss account.
.
No written explanations are required for such transactions.

Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2013 thank you sir

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)

17 July 2013 To write back the creditor you have to take a resolution and account for by writing back the creditors u/s 41 of the IT Act. The auditor will not raise any objection but he can simply put a note that creditors and debtors balance are not confirmed by the parties.

You can do so and transfer the amount of creditors to P & L A/c under the head liabilities written back

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2013 thank you sir..

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now