Is it okay if relatives transfer money to AP account for personal reasons?
Such transactions are acceptable at the first level. However, if the volume or frequency is high. For example, transactions exceeding ₹5 lakhs in a year they may raise red flags during an audit.
In such cases, the auditor will seek a written explanation from the Authorized Person (AP). Based on the response, the auditor may either note it as an observation or consider the explanation satisfactory and remove the observation.