The Institute of Chartered Accountants of India (ICAI) has found a Chartered Accountant guilty of professional misconduct for not following accounting policies and imposed a fine of two lakh rupees.
The first charge against the Respondent is that he has overlooked the fact that certain accounting policies have not been followed. The Director (Discipline) in his prima facie opinion has held that the Respondent has failed to exercise due diligence for not following the laid down policy for sales returns. The Respondent has agreed with the observations of the QRB that the Company has not followed the prescribed accounting policy in respect of accounting of sales return and thereby a deviation took place.
It is the laid down accounting policy of the Company that to have provisions based on an estimate of expected sales returns be recognized and recorded in the books.
The Respondent through the audit team made certain estimation toward sales return however instead of reporting about deviation from accounting policy the Respondent recorded the same in the statement of unadjusted audit differences and made the same as a part of the management representation letter
The Committee noted that “balance confirmation from parties was neither taken by the Respondent nor he initiated any steps to confirm the same, more so when variation in trade payable towards the last three years was far greater when compared to the trade receivables. There are error(s) in the cash flow statement, therefore the consolidated financial statements could not be said to be free from material misstatement and this also proves the casual approach of the Respondent. The Committee while taking note of the submission of the Respondent was satisfied that there was no malafide intention on the part of the Respondent.”
Finding the Chartered Accountant guilty of misconduct, the committee observed that “if the effect of the misstatements brought before the Committee is considered in aggregation, its consequential effect would certainly exceed the allowable limits of materiality. The Committee further looking into the gravity of charges alleged vis-a-vis admission of the Respondent before it, was of the view that the ends of justice shall be met if punishment including fine is imposed on the Respondent.”
“Therefore, keeping in view the facts and circumstances of the case, material on record and submissions of the Respondent before it, the Committee ordered that CA. Khushroo B. Panthaky (M.No.042423) be: reprimanded with the fine of Rs.200,000/- (Two lakh Rupees) to be payable by him within period of 30 days of receipt of the order and in case of non-payment of fine, the name shall be removed for 30(Thirty) days,” the committee said.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
