I have done doctoral degree in in management, particularly into tax management, from Symbiosis International University, with specialization area being transfer pricing, and financial management. I have published 10 articles and papers at national level and International level. I have conducted seminars and delivered lectures at various forums. My Research paper titled International Transfer Pricing: Impact on economies balance of payment has been well appreciated internationally. I have been appointed as reviewer of research work for with international journals.
There are 19 reasons identified for the purpose of classification of points of dispute between the department and the tax payer for acceptance of ALP. These above reasons were further divided into reasons for disputes arising due to taking legislation into incorrect spirit by either tax payer or tax authority, and reasons for disputes arising due to having difference of opinion about the subject matter of case or facts of case.
Reasons for disputes arising due to taking legislation into incorrect spirit are as follows:
| Sr. No. | Reasons |
|---|---|
| 1 | Agreement on comparable |
| 2 | Basis of determination of ALP |
| 3 | Application of Method for ALP |
| 4 | Deliberate mess up by Tax Payer on allocation |
| 5 | Corporate guarantee, its cost & Notional Interest |
| 6 | Basis of adjustment to expenses/income |
| 7 | Deemed Loan |
| 8 | Royalty Payment/Brand Fee |
| 9 | Interest free loan |
| 10 | Comparable not available at time of filing taken by AO |
| 11 | Interest on loan |
| 12 | Valuation of Equity Purchased & Sold |
Reasons for disputes arising due to having difference of opinion about the subject matter of case or facts of case are as follows :
| Sr. No. | Reasons |
|---|---|
| 1 | Product & business differentiation adjustments |
| 2 | Reasons for adjustments to ALP |
| 3 | Share application money as loan |
| 4 | Documentation, evidence |
| 5 | Exclusions / Inclusion from income & Expenses |
| 6 | Markup Margins |
| 7 | Multiple year data taken by tax payer, rejected by AO |
Brief of all reasons: (reason code wise) (Elaborated in thesis)
1. Product & business differentiation adjustments:
The TPO has rejected claim in all the above cases. The argument put forth by TPO
is that, the minor differentiations in the product and business are nullified when
you take gross margins. Hence, use TNMM method with gross margins of comparable,
is an easier and simple to implement, than quantifying the effect of differentiation
and adjusting the ALP accordingly.
2. Agreement on comparable:
The logical and uniform filter criteria used by the TPO for selection of comparable.
The tax payer was never disclosed that this filter criteria will be used for shortlisting
the comparable by the TPO's, making the exercise by the tax payer prone to disputes.
The basis for these filter details are not been disclosed by the TPO, though the
basis sounds to be logical.
This non-disclosure of the filter details every year by the Income Tax Department
creates uncertainty for the tax payer. This uncertainty not desirable and adds to
the disputes arising on account of difference of opinion.
3. Reasons for adjustments to ALP:
The tax payer has argued that the reasons are incorrect. However the TPO has
not changed his stance.
On a side by side study of the reasoning given by the tax payer and the TPO, it
is found that reasoning of both is logical but still non agreement on the same is
prevalent due to the subjectivity prevailing in the legislature, and implementing
mechanism.
4. Basis of determination of ALP:
In case of services, where the ALP is computed on insignificant comparable business
volumes, the TPO has rejected such computations. In cases of goods, the tax payer
has claimed the difference in market situation in various markets to affect the
pricing making the AE & non AE prices non comparable. However on demand of TPO the
tax payer is found not in a position to disclose the full price determination process
and policy. The tax payer has also failed to give reasons as to how different factors,
specific to a country affect the pricing.
In all the cases it is found that the stance taken by the TPO is justified in view
of lack of explanations given by the tax payer.
5. Application of Method for ALP:
In 121 cases it was found that there was a dispute for the reason of the selection
of method applied for arriving at ALP. The reasons cited by tax payer were rejected
by TOP for which he has given his reasons and interpretation. In most of the cases
it is found that the TPO is reasonable in his arguments for rejecting the method
applied by the tax payer.
6. Deliberate mess up by tax payer on allocation:
In 145 cases it is found that the tax payer has in consecutive years changed
the method of determination of ALP. He has also made all the possible adjustments
possible to the ALP. The tax payer is also not consistent over the time period (under
different assessment years) in his application of methods and nature of adjustments
to the ALP. However tax payer has not justified, why different methods are used
or why a particular method is used to arrive at ALP.
The TPO has consistently rejected the claims of tax payer and come out with his
own working about the ALP. In certain cases it is found that the TPO is harsh on
the tax payer due to the mess up done by them in their ALP computations.
7. Corporate guarantee, its cost & Notional Interest:
Tax payer has given corporate guarantee to its associate without taking any
consideration. The ALP was decided in all of the above cases to be NIL by the tax
payer, citing the reason that it is not a transaction. The associate has gained
advantage due to the corporate guarantee. The tax payer will not give this guarantee
to any other party not related to it and that it was given for the purpose of getting
advantage. It is taken as transaction by the TPO and assessed equivalent to a bank
guarantee. The corporate guarantee has given advantage to the associate by reducing
its interest cost. This is a direct benefit to the associate and for which tax payer
should get benefit. Thus guarantee cost, processing cost, and notional interest
have to be considered for ALP, which the TPO has done.
8. Share application money as loan:
Tax payer had given share application money to its associate overseas. This
money was pending for allotment of shares for a period more than one year. The TPO
held that the money was deemed loan given to the associate and the interest on the
same is to be added to the income of the tax payer which is not received. The basis
claimed for the same by TPO is that "the allotment of shares has to be within a
reasonable time", and the reasonable time according to TPO is time allowed for allotment
as per laws India.
The stand of TPO is partially correct, for the reason that the law of the place
of associate is to be considered for the purpose of reasonable time determination.
9. Basis of adjustment to expenses/income:
It is found that the TPO has not agreed to the basis of adjustment to the ALP
as suggested by the tax payer, and the TPO has given his basis.
This basis is considered is an average ratio of the expenses of the comparable companies
to be compared with the actual ratio and safe harbor margin of 5% is followed. It
is also found that the TPO has audited the expenses of the tax payer in almost all
the cases and raised queries about the reasons for the expenses. The reasons and
explanations of the tax payer are found not to clarify fully the expenses, compelling
the TPO is disallowing the same.
In most of the cases the data regarding the competitors is not available to tax
payer and the TPO both, thus leaving the decision on arbitrary understanding of
the TPO, and explanations of the tax payer. The same is true with differentiable
services between associates like technical services & technical fees, commissions.
10. Documentation, evidence:
It was found that the TPO had rejected the working of the tax payer for lack
of evidence and documentation based on which the computations for ALP were made.
Most of the cases referred in this were based on CUP & TNMM.
11. Deemed Loan:
It is found that the share application money and advance payment for supply
given to associate was with the associate for more than reasonable period, in 26
cases the money was with associate for more than one year and in other cases it
was almost one year. The TPO held the transaction to be deemed as loan transaction
and ALP interest was imposed as addition to the income of the assesse.
12. Royalty Payment/Brand Fee:
It is found that the TPO has objected to the payment of royalty and brand fee.
The argument regarding the brand fee by the TPO is that the brand has no proprietary
rights of the brand owner and hence can be used by anybody unless it is registered
as patent, trademark or copyright. Thus all the payments for brand fee are being
rejected by the TPO. The tax payer has argued in this matter that the brand helps
in getting business and for this benefit a fee is paid. The TPO is found correct
on law point. But the tax payer is right on the business logic.
It is found in all the cases that the rate of royalty paid by the tax payer has
not been accepted by the TPO. The royalty paid by comparable is taken as benchmark
and rate of royalty payment adjusted. How much royalty is sufficient and at Arm's
Length is decided arbitrarily. It is found that neither the tax payer nor the TPO
has used any of the valuation techniques for intangible assets to arrive at computation
of royalty payment. No market assessment is considered for the same.
In cases where the tax payer is using technology from AE and doing business with
AE only, and with no non AE, the TPO has considered that the royalty payment is
not to be made and has taken ALP to be NIL. The reason given is that the since the
tax payer is not involved into commercial utilization of technology, the royalty
payment is not warranted. The commercial use is restricted to AE only and hence
it is practically captive utilization of technology where in royalty payment is
unnecessary. In these cases it is found that the TPO is correct in his approach.
13. Interest free loan:
The tax payer has not charged any interest to AE and claimed ALP to be NIL.
The TPO has not on grounds that the same is against the Arm's Length Principle.
The TPO is found correct in his stand.
14. Comparable not available at time of filing taken by AO:
It was found that the TPO had rejected comparable companies proposed by the
tax payer and added comparable whose data was not available at the time of filing
the transfer pricing report by the tax payer. This action of the TPO is not correct
for the fact that unknown data cannot be considered.
15. Exclusions / Inclusion from income & Expenses:
Included a vast number of heads:
16. Markup Margins:
It was found that the disputes were about the markup margins that were used
for the ALP determination under TNMM and cost plus method. There were different
variations of dispute under this:
17. Interest on loan:
The tax payer has given loans to the AE. The rate of interest charged for the
same is not being accepted by the TPO.
The TOP has argued that the transactions have to be at ALP. In doing so the TPO
has considered the risk factor used by the Indian banks and said that the transactions
should be marked at LIBOR plus the risk factor of Indian banks. The TPO has explained
that, because the tax payer is an Indian entity it will face similar risks that
Indian banks face. Hence Indian markups were to be used for ALP determination.
18. Multiple year data taken by tax payer, rejected by TPO:
It was found that tax payer had considered multiple year data to arrive at TNMM
based (margin based) comparable. However the same was rejected by TPO in all the
cases. It is found that the TPO was right in his decision. This finding is based
on the legal provision under Income Tax Act 1961, where the law states that the
comparable have to be of the relevant period unless the earlier period data significantly
affects the pricing. In all the 86 cases the pricing was not to get affected by
prior period data. The tax payer has claimed that OECD provisions give space for
multiple year data. The tax payer has failed to consider that the Law of Land in
India is different than that of OECD guidelines.
19. Valuation of Equity Purchased & Sold:
It was found that the tax payer had purchased equity shares in and from AE.
The explanations and submissions by the tax payer are found not to be based on any
financial data but on projections about the business benefit about the same. The
basis of these projections is not given by the tax payer. Thus the TPO has used
his own understanding to make the valuations.
It is found that ITAT though is a top fact finding body for the income tax matters, its role has been till now restricted to decisions and disputes on procedural matters. It has so far not given any directional ruling so far as the intentions of the tax payer or the AO/TPO are revealed. In spite of old rulings of the Supreme Court regarding the intention behind the pricing of the international related party transaction, so far it is still a wait for such rulings from ITAT.
Of the above reasons for dispute found, ITAT has addressed most of the reasons except reason code No. 1, 6, 8, 9, 14, 18 and 22. Even after covering 11 reasons of the total found above, ITAT has not put light on the intentions behind transactions. Intentions being very important part, when it comes to the subjective legislation are yet not commented by the ITAT. This is after the fact that the Supreme Court has very long back clarified in (M.CT.M. Chidambaram Chettiar & Ors. vs. Commissioner Of Income Tax, 1965)that the intentions are very important. Orders of ITAT considered so far relate to cases reported till August 2012. (Detailed findings from reported cases are elaborated in thesis)
Interviews of MNC Officials & Tax Practitioners:
1. In most cases the price determination is found to be out of control of the tax payer. After the decision on price, which is not known if it is at ALP; justification is prepared to fit it into ALP as per legislation. This is a very clear case of purposeful and undue tax avoidance by the tax payer. Or for that matter disregard to the tax system of the country. Through the interview it was found that the respondent was consistently emphasizing on the global strategies and pricing being dictated by the same. The legislation is not playing any role in price determination.
2. It is found that the arm's length principle is not clear with the tax payer or they do not intend to follow it in its spirit. The same is also found in the cases analyzed. In case of corporate guarantee, the AE is drawing advantage from corporate guarantee. Such advantage has to earn some reward for the tax payer. Such arguments are found to be made because of non-acceptance of the spirit of the legislature by the tax payer.
3. The tax compliance is incidental to the pricing decision. Tax practitioners and the tax payer officials are told post pricing decision to do the compliance. The pricing process does not consider the legislation. That's the reason the tax practitioners are not aware about the intention behind the pricing decision. They are not revealed the intention. They just do the tax compliance.
Interviews of tax authorities:
1. It is found that the tax payers are not willing to accept any via media as settlement to dispute. They want full ALP as they have worked out. During interviews of the DRP officials it was revealed that, irrespective of the order for resolution of dispute, the tax payer is continuing with his appeal to higher authorities. This is a waste of time of dispute settlement mechanism, highlighting the intentions of the tax payer that, he is not interested in settling the dispute.
2. The tax authorities have annual and biannual meets wherein they discuss the criteria used for comparable selection. This is done to maintain uniformity through the country in implementation of legislation. It is found that the filter criteria are not being changed by the authorities. With experiences they have updated the same. The tax authorities have been taking all steps to collect due tax and stop undue tax avoidance.
3. In interviews of DRP member, indications were found that the tax practitioners get paid on man hour of work and hence they are interested in the dispute to linger around. The appeal in spite of appearing before the DRP is a result of the same. The submissions made are not significant and in most cases repetitive. Indications have been found about the vested interests of the practitioners in non-settlement of disputes.
4. Tax practitioners have claimed that the authorities are relentless in making additions and they are not willing to accept any arguments. Indications are given that the tax authorities fear audit query and vigilance, and to avoid the same are doing baseless additions. When such indications were analyzed in the TPO orders studied, it was found that in some instances, justification to additions was inadequate and the same is upheld in ITAT in other cases. However it is found that such a claim against the tax authorities is found to be not valid.
Relating to Hypothesis 1:
The reasons for disputes sighted in the analysis of the cases done as mentioned
in the findings, also highlight the contradicting approach of the tax authorities
and that of the tax payer. The arguments put forth in the TPO orders bring us to
a conclusion that the tax payer is trying to avoid as much tax as possible and the
tax authorities are trying to recover as much tax as possible. This is a contradiction.
None of the two sides are compromising on their stand and hence the number of cases
into litigation in India is also very high. This can be said even from the fact
that out of 887 companies and 1606 cases, in 682 companies and 1078 cases there
is addition to ALP made. Meaning out of the sample, in 67.12% cases out of 76.89%
companies there is contradicting approach of the tax payer and that of the tax authorities.
This indicates contradiction in approach of the parties.
For instance, in cases of corporate guarantee given by tax payer to AE, the tax
payer claims that there is no transaction since there is no cost is involved for
the guarantor. Hence the question of ALP for the same does not arise. There is no
price charge since there is no cost. Thus nothing is charged to the AE. Such a claim
is countered by TPO saying that there is gain to the AE due to the corporate guarantee
and hence the same must be treated as bank guarantee and charges for the same should
have been charged. In such cases the approach of the TPO is to get rightful tax
and that of the tax payer is to avoid all possible tax. Similarly there it is found
that the tax payer has used various different reasons to justify the claim for ALP.
This is found over the period of time as well that, the tax payer has been making
attempts to find different heads to do transactions with AE, and claim adjustments
for the same, indicating deliberate mess up to save tax liability. The TPO has countered
the same by rejecting these claims by the tax payer. A huge number of such instances
were found during the analysis of the cases. (It is elaborated in detail in thesis)
Relating to hypothesis 2:
Through the years on the time line, it is found that the adjustments to the ALP
made by the TPO are changing. The TPO's were not that aggressive in making additions.
Looking at the approach of the MNC's they have become aggressive in making the adjustments
to the ALP. The approach of the tax payer is found to be of avoiding all tax that
is possible.
A few examples to elaborate the spirit in interpretation of the legislature are
elaborated in thesis; where in the Indian legislature states that the multiple year
data of the comparable may be used to compute ALP if such data is of significance
to the situation. The OECD guidelines state that multiple year data may be considered
to arrive at ALP. This is conveniently interpreted by the tax payer by using multiple
year data to compute ALP which is close to his transfer price. In other such cases
where in internal uncontrolled comparable were available the tax payer; instead
of using CUP method with internal comparable, has used TNNM or external comparable
for CUP method to justify his claim for ALP. In case of brand fee paid to the AE,
the TPO has disallowed it in all cases with a stand that the brand is not registered
in India. It makes business logic, to pay brand fee if the brand is expected to
have impact on the revenues of the tax payer. The TPO in these cases has stuck to
the statements correct in the law; however he has not paid attention to the business
logic.
The spirit in the legislation is lost and the legislation is being interpreted in
the correct text. This is exposing the possibility of twisting the legislature in
the way desired by the tax payer or that by the tax authorities. The intention behind
the transaction is not seen. The same is disguised by the tax payer into various
aspects which come out as reasons for dispute between the two. In (M.CT.M. Chidambaram
Chettiar & Ors. vs. Commissioner Of Income Tax, 1965), the Supreme Court of India
has held that the intention behind the transfer has to considered before making
any decision on tax avoidance by the tax payer. Thus in international transfer pricing
at ALP, the intention behind the pricing is to be considered before making the TP
audit. The spirit of the legislation is of self-compliance for non-tax avoidance.
If the same is not taken correctly the intention behind the TP is doubted to be
not of tax avoidance.
Relating to hypothesis 3:
Out of the 19 reasons found, 7 pertain to the disputes exclusively due to having
difference of opinion on the subject matter and facts of the case. The other 12
reasons are found to be due to taking the legislation in incorrect spirit, but this
in these cases has led to interpretation of the text of the legislature in the way
the tax payer desires or the tax authorities want. Both of these interpretations
are correct in the text of the legislation. This means that all the 19 reasons of
dispute are due to subjectivity in the legislature.
For instance the tax payer has given reasons for selection of a CUP method to compute
ALP, for the same the TPO has given his own reasons for selection of TNNM. Both
are correct in law. Similarly interest on loan given to AE, is also subjected to
ALP. For this ALP there is no fixed benchmarking. The LIBOR or MIBOR or even the
PLR of Indian banks can be taken. Tax payer selects the one suitable for him and
the TPO takes the one which gives maximum tax. Similarly in cases of contradicting
reasons cited by TPO and the tax payer, for adjustment to ALP; it can be seen that
both; the tax payer and the TPO is correct in law due to the subjectivity in legislature.
From the findings and the qualitative data it is concluded that all the 3 hypotheses
made are accepted.
Taxing Internationals related party transactions is a clash between two philosophies:
Capitalism and welfare. The MNC's are capitalist motivated and have to maximize
their global PAT, whereas the governments require taxes for welfare purpose. These
opposing principles are the basis of all disputes relating to International TP at
philosophical level.
At the implementation level, the intentions of the tax payer are to avoid all possible
tax and that of the tax authorities is to collect all rightful tax. The legislation
is made up with a background of self-compliance and hence loosely knitted, giving
rise to multiple interpretations of facts, which are all correct in text and hence
there are a lot of disputes. The subjectivity in the legislature is causing disputes.
There is a requirement of simple and objective method for taxing international related
party transactions.
Price Irrelevance Model is introduced through this work at a conceptual stage which will have to be further studied, which will substantially reduce the disputes and be more objective in its approach.
There is a clear arbitrage opportunity currently for reduction in the overall tax payable, enhancing the profit after tax (PAT) of the overall group. The tax authorities stand to lose the rightful revenue from the transaction in form of tax. This situation can be eliminated.
The international transactions with tax payer are to be subjected to TDS at the corporate tax rates prevailing in the tax payer country. This will nullify the arbitrage opportunity. The situation that will arise due to the TDS at corporate tax rates is as follows:
1. In case of over pricing by the AE to tax payer and in case of underpricing by
tax payer to AE:
The AE payment will be made at agreed price less the TDS rates decided. The tax
payer claims deduction on the amount paid to AE. His profits are reduced by that
extent of the payment made to AE and the profits reduced. AE remittance is reduced
by the TDS rates. This means that the tax authorities are receiving the TDS on payments
made to the AE at TDS rates. The revenue authorities get their due. The AE is charged
extra as TDS / withholding tax.
2. In case of underpricing by AE to tax payer and in case of overpricing by tax
payer to AE:
The payment will be made to AE at the agreed price less the TDS at decided tax rates.
This price will not be fair price but a price lower than the fair price. The tax
payer will be able to claim only the price of payment to tax payer as the deduction
as business expenditure. His profits will be more by the amount of underpricing
made for the transaction made with AE. This extra profit will be subjected to tax
at corporate tax rates. AE is charged less TDS which is recovered through tax of
tax payer.
The concept is of the price of transaction not being material to the consequence of tax payment. This proposition is named by researcher as Price Irrelevance Model (PMI).
The PIM basically eliminates the computation of ALP. Hence the disputes arising due to agreement on ALP are completely eliminated. It is seen that the PIM will eliminate 15 reasons of disputes completely. Reason code number 6,8,11 and 12 may not be fully taken care by PIM.
Considering the fact that the different countries will have different tax rates, hence it will be important that the rate of taxing international related party transactions will have to be different. Hence it is also proposed that considering the various considerations other than revenue considerations the government will have to come up with country wise taxation rates for all such transactions to be taxed.
Balance of Payment (BoP) deficit is become a challenging task for the policy makers to manage. Policy makers are not keeping any stone unturned to ensure that the BoP does not go unfavourable. This is true especialy in developing and underdeveloped economies. Tax differentials have significant impact on the trade deficits, is well proved through research. It is also known fact that the international transfer pricing is used as a strategy by the multinationals. This is not only to maximize their group profit after tax but also as a tool for tax management, resource allocation, risk management.
Transfer pricing is looked as an issue of dispute between rightful tax to the governments and freedom of the multinationals for maximizing profits and strategy implementation. However transfer pricing has greater economic impact than mere taxation issues. It has larger impact on the balance of payment of the nation. The adjustment to the arm's length price by the tax authorities implies probable impact on the BoP. With specific focus on the current account transactions of the BoP, this study focuses on the impact transfer pricing can have on the BoP. Taking published data from Government of India the study tries to quantify the impact of the transfer pricing on the current account of India over the period of six financial years. Results indicate a strong impact of transfer pricing on BoP.
Transfer Pricing, Balance of Payment, Current account transactions, Trade Deficit.
International Transfer Pricing today is a subject of high discussion amongst multinationals. Research indicates its use for Tax management, strategic purpose as also for management control purpose. The issue is further highlighted by the fact that the international related party transactions are now more than 60% of international trade. This fact brings up serious questions regarding the implementation of the concept of profit center as a type of responsibility center. The paper points towards the diversion from performance evaluation criteria given under the profit center that is profit. This paper finds pointers towards the changes in the performance evaluation criteria other than profit for a profit center head, through extensive literature survey and discussions with industry professionals.
Transfer Pricing, Performance Evaluation, Profit Center, International Trade.
Worldwide there are a lot of controversies and debates between the tax authorities and the MNC's about the related party transaction pricing. The tax authorities contest on the grounds that non arm's length price is depriving them of rightful revenue and that the MNC's are doing this to save on tax liability. This is not the case always. It is one of the considerations in the related party transfer pricing. The study tries to find the objectives behind the pricing strategy by the MNC's. Through extensive literature survey the study finds that the tax liability management is not the only objective that the MNC's have while pricing the related party transactions but there are other objectives that have priority in the global strategy of the MNC's which also play a vital role in pricing strategy. The global objectives demand movement of funds from one location to other for various purposes for which non arm's length pricing is used. The study finds that non tax outlook in transfer pricing is very strong and in some cases compelling to affect the transfer pricing strategy. The study finds various purposes other than tax liability management which the MNC's have to attend to while deciding their related party pricing strategy.
Arm's Length Price; Pricing Strategy; Related Party Transactions; Tax Liability Management; Transfer Pricing.
As the world comes closer to being a one village, the multinational companies are
expanding multifold, tapping possible opportunities to grow and fulfill their goals.
In line with the principals of capitalism, one of their goal is to maximize their
global profit after tax. The globalization doesn't mean elimination of political
boundaries. The economies have to be governed and there is a cost to it, for which
taxes are levied. The governments have ever increasing list of welfare activities
for which they look for all the rightful taxes, which is in line with the principles
of welfare economics.
This paper studies the clash in principles of capitalism and the welfare economics,
highlighted through international transfer pricing. Through extensive literature
and study of arguments for and against the Arm's Length price working, it is found
that the concept of global village comes with a requirement if balancing the coexistence
of capitalism and welfare economics.
Capitalism, welfare economics, Transfer pricing, global village.
The question of ethics is time and again raised in corporate world. Doing the things ethical way is time and again repeated and the history continues to repeat itself with the selfish motives of the corporate. It may be Enron, Satyam or the subprime cries the corporate world looks at fulfilling their selfish motives which affects the other stakeholders. This makes a strong case of looking at ways and means to curb such motives. The current mandatory reporting is not playing its role in curbing these motives even in western world. One of the ways is Audit. The researcher looks at option of Audit of Ethics. Researcher concludes that a detailed code of conduct for Ethics is must for such audit with a assumption that the auditor will strictly abide by his code of conduct and such audit report is to be mandatorily made public so that all the stake holders are aware about the practices that the corporate are involved into. It is also assumed that the auditor will take the text of the guidelines n correct spirit and not correct text. This will help in changing the approach of the corporate on practices that are correct in law as per text but not correct in the spirit of the law.
Ethical Practices, Financial reporting, Audit, Corporate reporting, Ethical reporting, Ethical Control, management ethics, Ethics in audit, unethical practices.