ICAI’s Technical Guide on Audit of Urban Improvement Trusts (UITs)/ Development Authorities

ICAI’s Technical Guide on Audit of Urban Improvement Trusts (UITs)/ Development Authorities

ICAI has released a Technical Guide on ‘Audit of Urban Improvement Trusts (UITs) and Development Authorities’. This guide helps Members/ Auditors in identifying specific matters which are important while reporting on the financial statement with greater emphasis where such entities follow cash basis of accounting.

ICAI’s Technical Guide on Audit of Urban Improvement Trusts (UITs)/ Development Authorities (dt. 1 Sept. 2018)

Urban Improvement Trusts (UITs)/ Development Authorities (DDA, GDA, HUDA, etc.) are required to maintain proper books of account and other relevant records and prepare annual financial statements including the Balance Sheet in such form as the State Government may prescribe. The accounts of these entities are subjected to audit annually by the provisions of Local Fund Audit Act of respective States.

Urban Improvement Trusts (UITs)/ Development Authorities (DDA, GDA, HUDA, etc.) generally follow cash basis of accounting, however few of them have shifted to accrual basis of accounting. Generally, these entities follow general accounting principles and in addition to local fund audits, also get their accounts audited under the provisions of the Income Tax Act 1961 for getting exemption of the Sections 11 and 12 of the Income Tax Act, 1961 wherever required.

There is no specific implementation guide or guidance which has been issued for audit of such entities however audit of these entities is conducted either as an annual audit of the financial statements as prescribed under the relevant act and/or the audit is conducted as per requirement of section 12A(1)(b) of the Income Tax Act 1961. The auditor is required to express the true and fair opinion on the statement of affairs and statement of income and expenditure following applicable Standards on Auditing, keeping in view the basis of accounting followed by the entity.

This ICAI’s Technical Guide on ‘Audit of Urban Improvement Trusts (UITs)/ Development Authorities’ identifies specific matters to assist the auditor which are important while reporting on the financial statement with the greater emphasis where such entities follow cash basis of accounting so as to enhance proper and consistent reporting of the cash receipts, cash payments and cash balances of the entity. It will also enhance comparability with the entity’s own financial statements of previous periods and with the financial statements of other entities.

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