Full-time Employment as CFO while holding Certificate of Practice is Professional Misconduct: ICAI reprimands Chartered Accountant

Full-time Employment as CFO - Full-time Employment - CFO - Certificate of Practice - Professional Misconduct - Misconduct - ICAI reprimands Chartered Accountant - ICAI - Chartered Accountant - taxscan

The Institute of Chartered Accountants of India (ICAI) has rebuked Chartered Accountant Abhay Batra for taking up a full-time position as Chief Financial Officer (CFO) while concurrently holding a Full-time Certificate of Practice (CoP). This action is considered a breach of professional conduct.

The background of the case is that Gaurav Deo Shah (the ‘Informant’) was employed as an Assistant Manager with the Human Resource Department at Purple Panda Fashions Private Limited from 6th February 2015 to 26th January 2018.

On consideration of the complaint received from a female employee relating to sexual harassment, action was taken against the Informant, and his services with the company were terminated. The Respondent-CA Abhay Batra had also been employed by the same conopal as Chief Financial Officer since 25th January 2015.

The Informant alleged against the Respondent that he was in employment for a period of 5 years, i.e., from 2011 to 2016, with the Company while holding a full-time Certificate of Practice.

To substantiate the same, he submitted a copy of the offer letter dated 18th November 2015 issued by the Company to the Respondent and a reply dated 13th Feb 2019 by ICAI to an online RTI application in which it is stated that the Respondent held a full-time Certificate of Practice since 01.09.2011 to 01.10.2016.

The same informant further alleged that the Respondent was involved in illegal activities such as forgery, fraud, cheating, cybercrime, hacking of phone or the internet, breach of privacy of others, posting of threats to people’s lives, violation of the Minimum Wages Act, etc.

Nonetheless, the Board noted that at first glance, the CA was not found to be responsible for the second set of allegations. Consequently, the board focused on investigating the initial accusation, which pertained to holding a full-time Certificate of Practice while being employed.

The respondent submitted that he has not been in practice (or ever have practised in the past) in his own name or as part of a firm of Chartered Accountants, or in any other way. Also, he has not accepted any appointment as an auditor of any proprietorship, partnership, private or public limited company, or any Other entity.

The respondent also submitted that He has not audited any entity/ given any opinion/ given any assurance in the capacity of a Chartered Accountant holding CoP. Further claimed that he has not engaged any articled assistant, audit assistant or industrial trainee.

Subsequently claimed that he has not availed any benefit that entails holding of a Certificate of Practice. It was a bona fide mistake, as no pecuniary or other benefit(s) was derived by him white inadvertently holding Certificate of Practice.

The Board perused the membership file of the Respondent and noted that the Respondent filed Form-2 — Form of application for entry in the Register dated 25th July 2011 with the ICAI stating that he was a paid assistant in the firm M/s Batra Harish & Co. with effect from Ist August 2010 and paid the entrance fees along with the annual Membership and Certificate of Practice Fees for 2011-12.

He became a Member of ICAI with effect from Ist September 2011 along with holding Certificate of Practice. Further, in Form-9 (Form of application for restoring the name in the Register) dated 9th December 2016 filed by the Respondent with ICAI it was mentioned that he was under employment with M/s Purple Panda Fashions Private Limited.

Also noted that the Respondent selected the option “NO” at point 18 in the said Form, which asked whether the applicant intends to practice as a Chartered Accountant under the Chartered Accountants Act, 1949. However, the Respondent paid the membership fees along with the COP fees on 10th October 2016. He surrendered his Certificate of Practice with effect from 15th February 2018.

In this regard, the Board took into view Regulation 190A of Chartered Accountants Regulations, 1988, which deals with the provision for Chartered Accountants in practice not to engage in any other business or occupation, and the same reads as below:

“Ä Chartered Accountant in practice shall not engage in any business or occupation other than the profession of accountancy, except with the permission granted in accordance with a resolution of the Council”

The permissible categories of engagements approved by the Council under Regulation 190A, are available in Appendix No. 9 to the Chartered Accountants Regulations, 1988 which provides as under:

(B) “Members of the Institute in practice may engage in the following categories of business or occupations, after obtaining the specific and prior approval of the Council in each case:-

I. Full time or part-time employment in business concerns provided that the member and/or his relatives do not hold substantial interest in such concerns.

The Board noted that it was evident that from September 1, 2011, to October 1, 2016, the Respondent maintained the Certificate of Practice while being employed full-time. Although there is no evidence to suggest that he gained any financial benefits from holding the Certificate of Practice during his full-time employment, it is evident that with a little caution, he could have informed the Institute about his employment and possibly retained his Certificate of Practice with a part-time status.

Nonetheless, the fact remains that maintaining the Certificate of Practice while being employed full-time is a violation of the provisions outlined in Regulation 190A of the Chartered Accountant Regulations, 1988, on the part of the Respondent.

Thus, in conclusion, the Board has reached the firm conclusion that the Respondent is culpable of Professional Misconduct as defined by Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

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