The Disciplinary Committee of the Institute of Chartered Accountants of India ( ICAI ) rejected the accusation against the Chartered Accountant ( CA ) regarding the omission of the stay order in the audit report due to insufficient evidence.
The complainant had been the Secretary of a society during the period 2009 to 2011. The Complainant, along with the then Chairman and President of the Society, allegedly attempted to secretly sell a plot of Society land for Rs.1.85 Crores without proper procedure. This led to objections from Society members, resulting in the cancellation of the sale proceedings during a General Meeting on July 10, 2011. A stay order was later granted by the Nominee of Registrar, Board of Nominee, Ahmedabad, to maintain the status quo.
Subsequently, an expense incurred during the sale attempt was objected to by Society members, leading to a resolution in the AGM on June 23, 2013, to recover the amount equally from all three concerned Office Bearers, including the Complainant.
The Respondent-CA, appointed as Internal Auditor of the Society from 2013-14 to 2017-18, faced allegations regarding his audit report for the fiscal year 2017-18. The crux of the charge was that he failed to highlight in his report that the amount debited to the Complainant’s personal account violated a Stay Order from the Board of Nominee Court, Ahmedabad.
Additionally, the Complainant stated that he had informed the Respondent via emails on multiple occasions but received no response. He also argued that if any wrongdoing occurred, all members of the Managing Committee should be held responsible, not just three. However, the Respondent did not address these concerns in his audit report.
The Respondent-CA argued that there was no stay order regarding the resolution passed in a general meeting on June 23, 2013, which involved expenses incurred by the Complainant and two others. He pointed out that the expenses were debited after approval in the AGM and that he duly noted this transaction in his internal audit report, indicating no negligence on his part.
Regarding the allegation of not mentioning the stay order in his audit report, the Respondent stated that neither the Complainant nor the Society provided a copy of the order, making him unaware of its existence. The Committee found no evidence to suggest that the Respondent was aware of the stay order, thus not holding him guilty of professional misconduct.
Additionally, a new allegation raised by the Complainant regarding illegal development fees was not considered by the Committee as it was not part of the original complaint or the inquiry. Therefore, the Respondent was cleared of alleged professional misconduct under the Chartered Accountants Act, 1949.
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