Module: | Specialized Audits, Tech & ESG Disclosures
Q99: Consider the following statements regarding the revised tax audit limits for Chartered Accountants, applicable from April 1, 2026:
1. The ICAI maintained the maximum limit of 60 tax audits per member per financial year to ensure audit quality is not compromised by overwork.
2. The revised guidelines explicitly permit the limit of 60 tax audits to be pooled and freely distributed among the various partners within a chartered accountancy firm.
3. Tax audit assignments conducted under specific presumptive taxation sections, such as 44AD, 44ADA, and 44AE, are excluded from the calculation of the 60-audit limit.
Which of the above statements is/are incorrect?
2. The revised guidelines explicitly permit the limit of 60 tax audits to be pooled and freely distributed among the various partners within a chartered accountancy firm.
3. Tax audit assignments conducted under specific presumptive taxation sections, such as 44AD, 44ADA, and 44AE, are excluded from the calculation of the 60-audit limit.
Which of the above statements is/are incorrect?
✅ Correct Answer: B
🎯 Quick Answer:
B. Only 2 is incorrect.The ICAI enforces a strict numerical cap on how many of these specific audits a single CA can sign to prevent "signature farming." Structural Breakdown: Statement 1 is correct; the ceiling remains at 60 to prioritize quality over volume.
Statement 2 is incorrect; the 2025 revised guidelines specifically clarify that the limit of 60 cannot be distributed or shared among partners in a CA firm; it is a strict individual cap.
Statement 3 is correct; audits for small presumptive businesses are carved out of this limit.
Historical/Related Context: Before these strict limits, some individual CAs were signing thousands of tax audit reports on the final day of filing, making it physically impossible for them to have genuinely reviewed the financial records.
Causal Reasoning: Banning the pooling of limits prevents a scenario where five junior, inactive partners transfer their 300-audit quota to a single senior partner, which would defeat the entire purpose of ensuring sufficient human time is allocated to each audit.