CA Final · Advanced Auditing, Assurance and Professional Ethics · Professional Ethics & Liabilities of Auditors

CA Sinha audits Vega Engineering Ltd. The company asks his firm to compute current and deferred tax liabilities and assets so that it can pass accounting entries supporting tax balances in its financial statements. Another firm partner, CA Roy, plans to engage a tax valuation expert for a separate matter and asks what he should consider before using the expert's work. Which pair of statements is correct under the Code of Ethics text?

Preparing current and deferred tax calculations for accounting entries is described as a tax calculation service. Before using an expert's work, a chartered accountant should consider the expert's reputation, expertise and resources, and whether the expert is subject to applicable professional and ethics standards.

1. AThe service of preparing calculations of current and deferred tax for accounting entries is a tax calculation service; before using an expert, consider the expert's reputation, expertise, resources and whether the expert is subject to professional and ethics standardsCorrect
2. BThe service is a tax planning service; before using an expert, only the fee quoted needs to be considered
3. CThe service is a valuation service; before using an expert, only the expert's nationality matters
4. DThe service is a tax advocacy service; before using an expert, no factors need to be considered