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Provision for audit fees

05 October 2016

Hello Friends,

My company has made provision towards Audit Fees for Rs. 10 lacs in financial year 2015-16. Entry passed was Audit Fees Dr. and Provision for Audit Fees Cr. In the computation of 2015-16, the provision amount has been disallowed and added back in profit and loss.

Now in 2016-17 we received bill from auditors for Rs. 12 lacs towards Audit fees. I am having confusion what entry is required to be passed now to close the provision and book the expense.

Thank you.

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6 Replies

CA. sanjeet Kumar Ojha (Chartered Accountant) (272 Points)
Replied 05 October 2016

first of all provision for audit fees will not be disallowed as per income tax act subject to tds has been deducted and deposited within timeline.

Now in 2016-17,
Dr provision for audit feed
cr name of auditor

Dr name of auditor
Cr Bank

thanks
Sanjeet
sksanjeet38 @ gmail.com

SUNEEL KUMAR (Sr. Accounts & Finance Executive) (163 Points)
Replied 06 October 2016

I agree with Mr Sanjeet kumar & book entries.

It shouldn't disallow. But TDS deduction with accurate ℅ & TDS deposit should be in timeline

Hiral N Mehta (CA) (44 Points)
Replied 06 October 2016

TDS has not been deducted and it would be deducted in 2016-17 as the provision was made late and TDS payment due date had already passed.

SHUNMUAGRAJ.A (Chartered Accountant) (34 Points)
Replied 07 October 2016

Hi,

30% on audit fees provision will be disallowed in FY 2015-16. In FY 2016-17 you have received a invoice towards professional charges for Rs. 12 lacs which means in FY 2015 -16 you have made short provision.

Find below the accounting entry in FY 2016-17.

Audit fees ( P&L) Dr 2,00,000/-

Provision for audit fees (B/s) Dr 10,00,000/-

TDS payable ( B/s) Cr 1,20,000/-

Audit fee payable (B/s) Cr 10,80,000/-

-------------------------------------------------------------------------------------------------

If you need any further clarification please let me know.

Thanks.

CA.A. SHUNMUGARAJ. FCA

9865018852.

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