SA 700 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Appendix XIII permits a member to submit an auditor's report in the format prescribed by law even where it does not meet SA 700 (Revised) — and he is not viewed as having failed to comply.
From the ICAI Guidance Note on Tax Audit (Revised 2026), the concluding edition under the Income-tax Act, 1961. The announcement reproduced at Appendix XIII was issued in August 2013 and revised in February 2022, and is not affected by the change of income-tax statute — Form No. 26 under the Income-tax Rules, 2026 is itself a prescribed format of the kind it addresses.
The problem the Council took up
The announcement — "Applicability of SA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, to formats of auditor's reports prescribed under various laws and/or regulations" — was considered by the Council at its 326th meeting held from 27 to 29 July 2013, and again at its 408th meeting held on 3 and 4 February 2022 in light of SA 700 (Revised).
The issue was application of the standard to cases where the format of the auditor's report is prescribed under the relevant law or the regulation thereunder and is per se not in line with its requirements. The Council noted two practical obstacles:
- in many cases such prescribed auditor's reports were required to be filed online in a preset form, and hence it was not possible for the auditors to make necessary changes to bring them in line with the standard; and
- even where the report was to be submitted in physical form and not filed online, the concerned regulatory or government agencies may not accept audit reports containing any changes made by the auditors to the prescribed formats for that purpose.
What the Council decided
"the Council decided that while the matter was being taken up by the Institute with the relevant regulatory authorities / Government agencies, etc., to change the prescribed formats for bringing the same in line with the requirements of SA 700 (Revised), the members may … submit the auditor's report in the format/s prescribed under the relevant law or regulation until announcement of necessary change is made by the appropriate authority. In such cases the members would not be viewed as having not complied with the provisions of SA 700 (Revised)."
The decision protects the member from a professional misconduct finding for using a non-conforming format he cannot change. It does not reduce the audit. Paragraph 5 of the announcement is explicit: "the auditors would be required to carry out the audits in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India." The relief is confined to the form of the report.
Why the prescribed formats fall short
Paragraph 4: paragraph 49 of SA 700 (Revised) requires that if the auditor is required by law or regulation applicable to the entity to use a specific layout or wording of the auditor's report, the auditor's report shall refer to Standards on Auditing only if it includes, at minimum, each of the elements prescribed in that paragraph.
Paragraph 5 then applies that test:
"On a perusal of a cross section of the formats of the auditor's report prescribed under various laws, specially, the Income-tax Act, 1961 and the Value Added Tax Acts of various States, it is clear that these prescribed formats do not contain all the elements of the auditor's report as required in paragraph 49 of SA 700 (Revised)… Accordingly, it would not per se be possible for the auditors to state in their audit reports that the audit has been carried out in accordance with the Standards on Auditing."
So the consequence is precise. Because Form 3CA and Form 3CB do not carry all the paragraph 49 elements, and because the auditor cannot add them, the report cannot claim compliance with the Standards on Auditing — even though the audit behind it was conducted under them.
The SA 200 foundation
Paragraph 3 quotes paragraph A56 of SA 200, Overall Objectives of the Independent Auditor and the Conduct of An Audit in Accordance With Standards on Auditing:
"A56. In performing an audit, the auditor may be required to comply with legal or regulatory requirements in addition to the SAs. The SAs do not override laws and regulations that govern an audit of financial statements…"
This is the principle from which the whole announcement follows. Where a statutory format and SA 700 conflict, the statute prevails on form, and the profession's own standards accommodate that rather than putting the member in an impossible position.
How this lands in a tax audit
| Point | Effect on the tax audit report |
|---|---|
| Form 3CA and Form 3CB are prescribed under rule 6G and filed through a preset online utility | Squarely within paragraph 1 of the announcement |
| Those formats lack paragraph 49 elements | The report cannot state that the audit was carried out in accordance with the Standards on Auditing |
| The member uses them unaltered | Not viewed as non-compliance with SA 700 (Revised) |
| The audit itself | Still carried out under the Standards on Auditing |
| Paragraph 81.6 of the Guidance Note records that there is no specific place to mention paragraphs expected of SA 700 in the utility | The same gap, seen from the filing end |
| Paragraph 81.4 protects the member where the e-filing schema differs from the notified Form 3CD | The parallel protection on content, resting on lex non cogit ad impossibilia |
The Guidance Note gives the tax auditor two separate shields against defects he cannot control: Appendix XIII for the report format's departure from SA 700, and paragraph 81.4 for the e-filing schema's departure from the notified Form 3CD. Both rest on the same idea — the auditor is answerable for what he can control, and the format is not it.
Audit checklist
- Use Form 3CA or 3CB as prescribed; do not redraft them to meet the standard.
- Do not state in the report that the audit was carried out in accordance with the Standards on Auditing, since the format lacks the paragraph 49 elements.
- Conduct the audit under the Standards on Auditing regardless.
- Keep working papers evidencing SA compliance — the file, not the report, is where it is demonstrated.
- Use the observations paragraph — Para 3 of Form 3CA or Para 5 of Form 3CB — for what the format cannot otherwise carry.
- Record UDIN on the hard copy, per paragraph 81.6.
- Do not treat a schema mismatch as a reporting failure of the auditor.
Common mistakes
- Adding an SA 700 compliance sentence to a format that lacks the required elements.
- Modifying the prescribed format, which the filing utility or the authority may reject.
- Treating the relaxation as reducing the audit rather than only the report.
- Failing to document compliance with the Standards on Auditing in the working papers.
- Assuming the announcement is spent — it runs until the appropriate authority changes the format.