Hello,
As per Sch VI, I believe it is compulsory for a Company to show its Audit Fees and other Professional Charges even if they've not been received for that year. Isn't this correct?
Now, in a case where Accounts for the financial year 9-10 have been audited but there is no mention of Professional Charges in P/L A/c and now a new auditor is appointed for financial year 10-11. How should the new auditor deal with the same? And how shall that entry be passed in this year?
as per section 209 of the co's Act, an company is mandatorily requried to maintina its bks of a/c's on accrual basis. Hnece the co is requried to accrue at the year end, the Audit Fees & prof charges even if they are yet to be paid.
As per the requriements of Part II to schedule Vi, the co is requried to disclose it's Audit fees and fees for other professional services seprately in it's P&L A/c. if this has not been done then it would amount contravnetion of law.
the new auditor cannot do anything for the previous year, as he has not audited the co's accounts. However while auditing the accounts for the year for whihc he is being appointed , he should ensure that the Co discloses all the fees paid to the auditor's seperately undr distinctive ehads in the P&L A/c.
However if the professional fees related to the previous years & it was not shown in the accounts, then it can be shonw in the current year's P&L account as an Prior Period item.
CAclubindia
