ISLAMABAD: The Federal Board of Revenue (FBR) Chairman Shabbar Zaidi in a letter urged the SECP chairman to ensure that companies submit transparent financial statements for the purpose of taxation.

Zaidi said that it has been observed that the quality of statements filed by the financial companies especially private limited companies are not in line with the standards.

The FBR chairman has taken up the issue with the SECP chairman at a time when the government has already initiated measures to document the economy.

He said that in many cases companies make huge additions to the incomes which are non-defensible during the taxation proceedings.

Moreover, he added that the quality of ‘audit’ by the taxation officer is not as per best practices.

Zaidi said that the FBR is improving the system and shall seek Institute’s assistance or guidance on the matter.

He said the extension in the date of filing returns for tax year 2018 is an opportunity for the companies to review their accounts and file improved positions if required.

In the past, FBR’s stance on the matter was different and as per information, no case was ever referred to for any disciplinary proceedings against auditors by the institute or management of the companies by SECP to FBR.

Now, Zaidi said the FBR intends to act diligently in the matter.

He said that Companies Ordinance, 2016 form provide the basis for the companies to file qualitative financial statements but the objective can only be achieved once the quality of annual financial statements is in line with the international best practices.

It is therefore suggested that special and concerted emphasis be laid down by both the addressee institutions for assuring that the financial statements reflect correct financial position and there is no possibility of any understatement, including non-compliance with the laws of taxation especially the withholding provisions.

FBR chairman stated that necessary instructions be issued to the relevant field formations.

Furthermore, if allowed under the law, the investigations and disciplinary proceedings initiated against the directors, auditors by the SECP and the Institute respectively should be shared with the FBR.

Published in Dawn, July 6th, 2019