The long-held argument from ICAI is that the disciplinary body should have CA only, not non-CA. The government said that non-CA’s are necessary to understand the professional ethic from a different angle. The five-member team will include two CAs and three non-CA from 2022-23. The present committee consist of three members and two non-CA professionals. Towards the end of 2022 year, the changes will come into practice. ICAI takes the responsibility of selecting three non-CA candidates and sending the names for the approval of MCA. The amendment bill 2021 states that the inclusion of three non-CA is compulsory. ICAI argues that understanding is essential for taking action. CA qualified professionals can only understand the challenges of the profession. Negligence is the reason for the mistake in most cases. The government says that transparency is possible only by appointing a non-CA professional.
ICAI is the second largest institute in the world. The education and professional standard followed in India influences the world. The ethical values direct the disciplinary committee to take action against the members crossing the chartered accountant’s act, 1949. Three divisions of the disciplinary mechanism are as follows: the Director, Board of discipline and disciplinary committee.
The director of the disciplinary committee is appointed under section 21. The chartered accountant’s act explains the different professional misconduct in different sections. There are two schedules in the CA act. The second schedule explains the sections for higher punishments. The first schedule makes the board of discipline involved. The actions taken initially by the disciplinary board are as follows: reprimand of the member, name removal for three months, and imposing a fine of 1, 00,000. The first schedule has twelve classes. The classes are as follows: Allow name, share profits, accept profits, enter into partnership, secure professional business, solicit clients or professional work, advertise attainments or use designation, communicate with the previous auditor, comply with sections 139-142, percentage of profits, engages in other business, and allow to sign.
The disciplinary committee take care of the cases that fall under the first and second schedule. The action taken by the committee is as follows: a reprimand of the member, removal of the name permanently or for a fixed period, and a fine of 5, 00,000. Part one of the second schedule has ten clauses. The ten clauses are as follows: client’s information, report without examination, forecast accuracy, substantial interest, material facts, material misstatement, due diligence, sufficient information, SA and guidance note, and money of clients.
Professional misconduct of chartered accountant cases:
Recently ICAI announced the misconduct of auditors publicly. Misstatement is perceived as a falsified document. ICAI monitors the data, documents, and relationships. Some of the examples from the cases declared as a non-member by ICAI are as follows:
• CA Anand MalikarjunUkamanal is removed from the register for two years. He is sentenced to a fine of 50,000. He is found guilty under the following sections: 5,6,7, and 8 of the second schedule. Section 5 is about material facts. If the auditor fails to disclose material facts, it falls under sections 5 and 6. Section 7 is about the negligence of professional duties. Section eight is about providing information that is necessary to explain the opinion. The non-membership period starts on 4th February 2022.
• CA N Basker is found guilty with clauses 6 and 7 of the second schedule of part I. Clauses 6 and 7 are again about material misstatementand due diligence. He is out of the chartered accountancy profession for three months. He is supposed to pay a fine of 25,000.
• CA Ramachandran K K is found guilty under clauses seven and eight of the second schedule, part I. He is removed for one month with a fine of 25,000. He is found guilty under seven and eight of the second schedule.
• CA. SaikatDatta is found guilty as per clause 9 of part I, clause 2 of part IV of the first schedule, and Clause seven, part I of the second schedule. Clause seven of schedule two is about non-exercising due diligence, and Section nine of part I is about non-assessment of the requirement of the companies act, 1956. Clause 2 part IV of the first schedule is about bringing disrepute to the chartered accountancy profession. In the opinion of the council, misconduct cases reduce professional value.
What is the role of non-CA in the disciplinary committee?
Non-CA candidates do not have in-depth knowledge of accounting. They have good knowledge of current affairs and technology. This general illusion helps understand the case and administrate the disciplinary actions. New technologies like artificial intelligence and forensic auditing are forming the reason for audit failures. So, understanding the technical reasons help professionals to take appropriate actions. Judgements based on illusions and the latest standards will help the professionals to gain confidence after the judgement. Chartered accountants are being monitored for professional standards. It should be gentle and practical. Non-CA professionals create a professional environment when dealing with misconduct cases.
Bio-diversity helps give room to professional actions. Having non-CA in the disciplinary committee makes the operations smooth. The new rule comes into existence from 2022-23. Professional ethics comes from knowledge and experience. After completing chartered accountancy, professionals need to act as per the ethics.