The client has paid a bribe & accounted it as legal expenses. Since it was a bribe no TDS has been deducted u/s 194 J. What should we do as a statutory auditor?
V P Narasimhan
(Accounts Manager)
(791 Points)
Replied 27 October 2015
It depends upon the amount to book in Business Promotion/Sales Promotion normally done by most of the companies.
Ruchi
(CA)
(1410 Points)
Replied 29 October 2015
It is never advisable to shaw bribe as such in the books of accounts as there is no documenetary or other proof to show the nature of expenses , moreover it would only open room for further litigation for the payer and payee. So it is advisable to show such expenses as some valid busines expense and also deduct tds therein.
Naman
(CA Job)
(33 Points)
Replied 29 October 2015
Ruchi
(CA)
(1410 Points)
Replied 01 November 2015
If your client is showing it as legal expense then tds has to be deducted on it. As an auditor u should treat it as any other expense on which tds liability has not been complied with.
AMBUJ SHARMA
(CHARTERED ACCOUNTANT)
(243 Points)
Replied 04 November 2015
you can show this local conveyance expenses paid in cash, make cash payment vouchers upto rs, 19000. or you can show them as staff welfare expenses like refreshment to staff paid in cash.
Amol S Joglekar
(Partner)
(63490 Points)
Replied 06 November 2015
Disgusting...... How can one suggest to MANIPULATE the accounts? The sanctity of accounts itself will be in jeopardy.
As an auditor, if someone starts telling you that it is BRIBE and all that...simply ask for the signed DECLARATION from the concerned person. Mind you, you are auditor and NOT solution provider. If a company is in the practice of giving bribe, it is a serious offense and it can lead even upto DISCLAIMER report by the auditor.
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