Some CAs making false audit reports for corporate taxpayers, NBR finds

The National Board of Revenue (NBR) has identified a section of Chartered Accountants (CAs) preparing fake and false audit reports causing substantial losses in corporate taxes to the public exchequer.
In a recent study, the revenue board has found massive anomalies in the audit reports of some large corporate taxpayers. Taxmen detected false information, when they cross-checked some audit reports of corporate taxpayers that were submitted with banks and the tax authorities.
Being concerned over the findings, NBR chairman Ghulam Hussain Sunday sent a DO (demi official) letter to the president of the Institute of Chartered Accountants of Bangladesh (ICAB), Md Abdus Salam.
The NBR chairman requested the ICAB president to take steps to check preparation and submission of fake and false audit reports by the chartered accountancy firms.
Corporate taxpayers have to submit audit reports along with the income tax returns to the tax authorities, which should be prepared by the chartered accountancy firms. In some cases, banks also ask for submitting audit reports of the companies.
"The NBR has identified mismatch in information regarding income and expenditures that was furnished in the two audit reports to banks and with tax return," the NBR chairman said in the DO letter.
The government is being deprived of its due tax revenue for these irregularities in audit reports, he wrote.
Although taxpayers submit audit reports for banks and the income tax office in different contexts, such mismatch in information is not acceptable, he said.
"Audit firms cannot shirk the responsibilities and allegations of colluding with taxpayers in evading tax," he said.
Terming the auditing profession a 'noble' one, the NBR chief requested the ICAB president to check such practices by urging the CAs and the related firms to refrain from these malpractices.
A senior NBR official said the taxmen have smelt such irregularities resorted to by some CAs over the years, but this is the first time the revenue authorities have officially expressed concern over the issue.
He said the income tax law has the provision for taking legal action against the persons or firms responsible for or involved in tax evasion.
Tax lawyer and former ICAB president AC Nath said the ICAB can suspend or cancel licences of the CA firms, if it detects any irregularities in their audit reports.
"ICAB can alert its members to such allegations. There is a disciplinary committee under ICAB that is empowered to suspend or cancel licences," he said.
ICAB members have to renew their licences annually, he added.
ICAB is a national professional accounting body of Bangladesh, established under the Bangladesh Chartered Accountants Order 1973 (Presidential Order No. 2 of 1973).
As of April 20, 2012, the institute had 1252 members -- of whom 766 are fellows and 486 are associates; 1107 members are resident in Bangladesh and 145 reside abroad.