At Perry & Associates CPAs, we often observe that non-corporate entities such as sole proprietorships, partnerships, and HUFs face recurring challenges in the preparation of reliable financial statements. Common issues include inadequate disclosure of accounting policies, failure to adhere to the accrual basis of accounting, incorrect inventory valuation, and premature or delayed revenue recognition. We also find frequent errors in expense classification, depreciation accounting, and the treatment of provisions, contingent liabilities, and government grants. Additionally, personal expenses are sometimes inappropriately included in business accounts, and events after the balance sheet date are often overlooked. These errors compromise financial transparency and can lead to tax disallowances and compliance risks. Moreover, CAs must adhere to strict audit assignment limits—no more than 60 tax audits per CA under Section 44AB, and a cap on statutory audits as per the Companies Act and ICAI guidelines. At Perry & Associates, we stress the importance of following proper accounting standards and maintaining clarity in financial reporting to support informed decision-making and uphold stakeholder trust.
Check out the original article by Masha Borak here.