The Institute of Chartered Accountants of India ( ICAI ) recently held a Chartered Accountant guilty of professional misconduct in light of the Respondent CA’s failure to duly intimate his takeover of statutory audit of the company previously audited by the Complainant CA.
The instant case was filed before the ICAI by a CA who was priorly appointed as the statutory auditor of a Ghaziabad-based machinery manufacturing company for the period from 01.04.2015 to 31.03.2020.
The charges leveled against the Respondent CA arose from the alleged appointment of the Respondent as the statutory auditor of the subject matter company, without duly communicating such change to the Complainant CA as is required under Item 8 of Part-I of the First Schedule to the Chartered Accountants Act, 1949.
The prime allegation against the Respondent CA was that he had conducted audit of, and signed the audit report of the Company for the Financial Year 2019-20 without verifying the provisions of Sections 139 and 140 of the Companies Act, 2013 and Rule 7(1) of the Companies ( Audit and Auditors ) Rules 2014.
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It was submitted by the Complainant that he, nor his firm were removed as statutory auditor for the Financial Year 2019-20 with their appointment being ratified during the Annual General Meeting (AGM) on 30.09.2019, but
Allegations raised against the Respondent CA were shot down by means of submissions through video conference hearing before the ICAI. Respondent CA submitted that his appointment was carried out in accordance with the provisions under Section 139 of the Companies Act and allied rules therein.
The Respondent CA adopted a tangential course of argument, submitting that the Complainant has purported the present matter in light of his personal grievance against one of the partners of the subject-matter Company; further the Complainant was claimed to have been absolutely non-cooperative in the process and refused to issue a No-Objection Certificate (NOC) for the appointment of the Respondent CA.
As a last ditch effort, the Respondent also averred before ICAI of their every intention and attempt to inform the Complainant CA of his appointment, but was prevented from doing so due to unforeseen circumstances
The Board of Discipline of the Institute of Chartered Accountants of India constituted by CA Rajendra Kumar P, Presiding Officer and Dolly Chakrabarty (IAAS, retd.), Government Nominee observed that the Respondent CA has explicitly submitted that no communication had taken place between himself and the Complainant prior to the re-appointment, this being a clear admission of his guilt.
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The Board considered the same to be a violation of Item (8) of Part 1 of the First Schedule to the Chartered Accountants Act, 1949 that mandates an incoming Chartered Accountant to communicate his appointment to the outgoing Chartered Accountant in writing.
From the observations made, it was manifestly clear to the Board that the Respondent is Guilty of Professional Misconduct as per Items (8) and (9) of Part-I of the First Schedule to the Chartered Accountants Act, 1949 and proceeded to impose a fine of Rs.25,000/- in lieu thereof.
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