Accounting regulator ICAI today issued a clarification saying that internal auditors appointed as tax auditors can continue to do their work if their selection for the job took place before December 12 last year.     

The Institute of Chartered Accountants of India decided that with effect from December 12 last year internal auditors cannot be appointed as tax auditors, but after several representations from assessees about their problems with this new rule, the institute decided to relax it.    

As per the decision an internal auditor cannot carry out tax audit on or after December 12.     

"Subsequently representations have been received pointing out the hardships being caused by the decision in respect of those internal auditors who have been appointed as tax auditors for the financial 2008-09 on or before December 12,2008," the ICAI said in a statement released today.    

Keeping this hardship in mind, the institute decided that the decision will apply to appointments made on or after December 12, so internal auditors appointed as tax auditors of a company can do the job for the year ended March 31 2009.     

The accounting regulator in its council meeting last year in October had decided that the internal auditor of an assessee, whether working with the organisation or independently, cannot be appointed as tax auditor.