CA Aniket Sunil Talati, president of ICAI, spoke to the media about disciplinary cases. He says that the institute has zero tolerance for such cases. The conference was about new-age thinking and the traditional approach. He mentioned the information with real-time numerical data. In 2021 the central government tightened the actions against chartered accountants, cost accountants and company secretaries. Prime Minister Narendra Modi also commented on disciplinary action during the introduction of GST law. The blog emphasises the number of disciplinary cases happening each year and the ways to reduce such cases.
Disciplinary actions by ICAI:
In 2021, the norms related to the professions of chartered accountants cost accountants, and company secretary was put under tight monitoring. The advice of Justice Yashwant Varma from Delhi high court said that chartered accountants have the right to exercise the suo motu powers. They can handle disciplinary cases even without written compliance. The ICAI is empowered to take the Suo moto power to question the chartered accountants without complaint. ICAI president says that the professional misconduct cases were around two hundred numbers. Previous year ICAI handled the related to the Chinese Shell Company. Aniket Sunil Talati and Ranjeet kumar agarwal were the new presidents of ICAI. They were elected for the post on February 12, 2023. ICAI stand as the second big accounting body. The institute has 7.80 lakh students and 3.75 lakh members. The new president says in some cases the members were removed from the list. The professionals are charged with a penalty also. He says that the total cases for the period from 2007 to 2023 go as 6766. In this total cases, 4249 cases are in the completed status. The balance cases are waiting for justice. He said that economic growth is the goal of ICAI. He furthers that the partnership with the B20 dialogue forum delivers best practices and policies. B20 is the global business community with a rotating presidency. B20 is the official community under the G20 forum. Both the community contribute to the economic growth and opportunities.
Professional misconduct rules for 2023:
Part one of the first, and second schedules of section twenty-two deal with the professional misconduct of CA in practice. There are twenty-two clauses in part one. All the clauses explain the different activities that lead to professional misconduct. If the Chartered accountant is found guilty under the first schedule. The action taken by the institute can be to reprimand the chartered accountant member to name removal or impose a fine of up to one lakh. If the misconduct falls under Schedule Two, the action taken by the institute can be to reprimand the professional member, remove the name or impose a fine of up to five lakhs. The following points elucidate the clauses of part one.
- The 12 clauses of the first schedule are as under:
- Clause one is to allow names. Here the law states that the chartered accountant doing practice or in partnership makes use of his name. Using the name connects the professional and personal identity. He can enter into partnerships with a person in a foreign and with a person not a member of the institute.
- Clause two is about sharing profits. He agrees to pay the share or commission or brokerage of his profession to a non-member.
- Clause three talks about accepting profits.
- Clause four is about entering into a partnership. Here the law says that the qualification of the non-member entering into a partnership should be recognised by the council or the central government.
- Clause five is to secure professional business.
- Clause six talks about the solicitation of clients or professional work. The act is completed directly or indirectly through advertisement, circular, interview or personal communication.
- Clause seven talks about the advertisement of professional attainments.
- Clause eight is communication with the previous auditor. The auditor communicates with the previous auditor in the form of writing. This communication gives the evidence and foundation for understanding the company.
- Clause nine is to comply with sections 139 to 142.
- Clause ten talks about the percentage of profits. The percentage depends upon employment or regulation.
- Clause eleven is about engagement in other businesses. Here the law states that such a thing is allowed as per the direction of the council. An Auditor is not supposed to work as a director or managing director in a company.
- Clause twelve talks about the signature. A non-member can sign on behalf of the chartered accountant in the profit and loss account, balance sheet and financial statements.
- The second schedule interprets professional ethics in the following points:
- The first clause of Schedule Two deals with client information. The auditor discloses the client’s information with the consent of the client or as directed by the law.
- Clause two talks about the report without examination. The reports are submitted in his name after the examination. If he or his partner or employee submits a report without examination, then this clause is applicable.
- Clause three is the accuracy of the forecast.
- Clause four talks about the substantial interest. He should express his opinion on the financial matter of the business in which he or the partner of his firm is involved.
- Clause five is about material facts. If he fails to disclose a fact known to him in a financial statement of the company, then this clause is applicable.
- Clause six talks about the material misstatement by the auditor.
- Clause seven deals with due diligence.
- Clause eight is about sufficient information. If the auditor fails to grab the information necessary to form an opinion, this clause is applicable.
- Clause nine is SA with a guidance note.
- Clause ten talks about the money of clients. If the auditor is not maintaining the client’s money in a separate bank account for a reasonable time, then this clause is applicable.
Professional misconduct affects the chartered accountant doing independent practice comparatively more. The chartered accountants working as auditors or management consultants in the big four firms work for their clients under the company brand name. The liability of the auditing process goes to the big four firms. In the case of independent practice, the professional should understand professional ethics with intensity. ICAI is acting fast in executing professional ethics-related laws. This speed of ICAI creates awareness for chartered accountants.