Draft Audit Report procedure requires internal approval and higher authority referral where significant tax dues are identified.

Audit officers must record the auditee's replies in working papers and prepare a Draft Audit Report for internal administrative use; the DAR is placed before the audit plan sanctioning authority and, for matters exceeding prescribed thresholds, before a higher authority with a concise narration of dues. Findings must cite underlying circulars, notifications, or decisions of administrative and judicial bodies, and disputed points require further consultation before finalisation.

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