QUERY: | During the financial year 2015-16 charitable trust has given donation directly to the hospitals with instructions that this particular amount should be used only for the treatment of a particular patient and there are certain cheques issued in favour of the patients for outside treatment and the necessary medical bills and hospital reports are taken and kept on record. Besides the above in all cases the trust takes a printed application form duly filled and signed by patient or his kin and in the said form the complete address is available. In no case the copy of PAN card of patient or his relative or AADHAR card is taken. While finalizing the audit, the auditors have demanded the copies of AADHAR card or PAN card of patient which is not possible to obtain now because majority of the patients come from outside Mumbai. Of course all the patients shall be available at given address. Whether the auditors are correct in asking the trustees to obtain PAN card or ADHAR card? |
ANSWER: | The auditors have great responsibilities while attesting the financial statements. Paragraphs 38 and 39 of Frame-work of Assurance Engagement reads as under: 38. "The practitioner plans and performs an assurance engagement with an attitude of professional skepticism to obtain sufficient appropriate evidence about whether the subject matter information is free of material misstatement. The practitioner considers materiality assurance engagement risk, and the quantity and quality of avoidable evidence when planning and performing the engagement, in particular, when determining the nature, timing and extent of evidence gathering procedures." 39. The practitioner plans and performs an assurance engagement with an attitude of professional skepticism recognising that circumstances may exist that cause the subject matter information to be materially misstated. An attitude of professional skepticism means the practitioner makes a critical assessment, with a questioning mind, of the validity of evidence obtained and is alert to evidence that contradicts or bring into question the reliability of documents or representations by the responsible party. For example, an attitude of professional skepticism is necessary throughout the engagement process for the practitioner to reduce the risk of overlooking suspicious circumstances of overgeneralising when drawing conclusion from observations, and of using faulty assumptions in determining the nature, timing and extent of evidence gathering procedures and evaluating the results thereof" . Therefore, it would be advisable for trust to obtain AADHAR card or PAN card of the patients to prove that they are genuine. |
EXPERT: | CA. H. N. Motiwalla |
SECTION(S): | 11 |
GENRE: | Taxation (Domestic) |
CATCH WORDS: | Property held for charitable purposes - Donation directly to the hospitals |
Opinion Of Eminent Legal Luminaries On Controversial Issues
Property held for charitable purposes – Donation directly to the hospitals
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