What changed
Previously, tax audit work was assigned to one of the Statutory Central Auditors (SCAs) with a prescribed fee. Now, PSBs can appoint any chartered accountant firm as tax auditor at the Head Office level, with fee decided by Board/ACB approval.
What it means for you
Banks gain flexibility to choose tax auditors independently, potentially reducing costs and improving audit quality. The Board/ACB must ensure fee reasonableness, shifting oversight responsibility to bank management.
What you must do
- Review current tax auditor appointment process at Head Office to align with new flexibility.
- Ensure Board/ACB approval is obtained for fee and appointment of any CA firm as tax auditor.
- Update internal policies to reflect the removal of mandatory SCA assignment for tax audit.
- Communicate the change to audit committees and finance teams for compliance.
Who it affects
All nationalised banks, Associate banks of SBI, Statutory Central Auditors (SCAs), Chartered accountant firms
Does this circular apply to tax audits for years before 2006-07?
No, the circular explicitly states it applies from the year 2006-07 onwards.
Can we appoint a CA firm that is not one of our SCAs as tax auditor?
Yes, the circular allows PSBs to appoint any chartered accountant firm as tax auditor at the Head Office level, not limited to SCAs.
Who approves the fee for the tax auditor?
The fee must be approved by the bank's Board or Audit Committee of the Board (ACB) as reasonable.