The Institute of Chartered Accountants of India ( ICAI ) imposed penalties on Chartered Accountants ( CA ) for failure to communicate acceptance of audit to predecessor CA amounts to professional misconduct.
The Board of Discipline viewed that CA was guilty of Professional Misconduct falling within the meaning of Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949.
It was alleged that the Respondent did not communicate in writing with the Complainant before acceptance of the audit of Zila Panchayat, Balrampur for the financial year 2016-17, the Board took into view the requirement of Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949.
The Board observed that there are two essential requirements under Item (8) of Part of the First Schedule to The Chartered Accountant Act, 1949. The requirement for communicating with the previous auditor being a Chartered Accountant in practice would apply to all types of audit viz., statutory audit, tax audit, internal audit, concurrent audit or any other kind of audit.
Although the mandatory requirement of communication with a previous auditor being a Chartered Accountant applies, in a uniform manner, to audits of both government and non-government entities, In the case of audit of government Companies/banks or their branches, if the appointment is made well in time to enable the obligation cast under this clause to be fulfilled, such obligation must be complied with before accepting the audit
The Board Comprising CA. Rajendra Kumar P, Presiding Officer, Ms Dolly Chakrabarty and CA. Priti Savla, Member noted that the Complainant was the Auditor of Zila Panchayat, Balrampur for the financial year 2015-16. Further, Respondent was appointed statutory auditor of Zila Panchayat, all implementing agencies, Janpad, Panchayat Balrampur, Kusmi, Rajpur, Ramchandrapur, Shankargarh and Wadrafnagar for the next financial year i.e. 2016-17.
The Board was of the view that the Respondent was required to communicate with the Complainant being the previous auditor before the acceptance of the audit irrespective of the type of audit and also retain in his hands the positive evidence of communication which he failed to do so.
Thus, in the absence of positive evidence of communication on the part of the Respondent with the Complainant before accepting the Statutory Audit of Zila Panchayat Balrampur for the Financial Year 2016-17, the Board held the Respondent guilty in respect of the charge alleged,
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