The Institute of Chartered Accountants of India has taken disciplinary action against three Chartered Accountants in two separate cases, highlighting concerns about professional compliance and audit diligence within the accounting profession.
ICAI Committee Rules on Misuse of Certificate of Practice
The Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) has found a Chartered Accountant guilty of professional misconduct for continuing to hold a full-time Certificate of Practice (COP) while simultaneously being engaged in full-time salaried employment.
According to the committee’s findings, the case originated from a complaint alleging that the member remained listed as a partner in a chartered accountant firm and continued to maintain an active COP while working in a corporate organization. Under the regulatory framework governing ICAI members, such an arrangement is not permitted unless specific permissions are obtained from the Institute.
The committee reviewed several documents during its proceedings, including ICAI membership records, income-tax documentation and Form-16 issued by the employer. These records indicated that the member continued to remain associated with a CA firm and regularly paid COP fees for several years while being employed in a full-time corporate role.
ICAI’s disciplinary body observed that Chartered Accountants holding a full-time COP are not allowed to engage in full-time employment unless they have received formal approval from the Institute. Maintaining an active COP while simultaneously working in a salaried position was therefore considered inconsistent with the professional standards prescribed for members.
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Evidence Examined During Disciplinary Proceedings
The committee’s review focused on documentary evidence that reflected the member’s professional status and employment history over a period of time. Membership data and income-tax records suggested a continued association with the accounting firm even as employment records confirmed full-time corporate engagement.
Such records played a central role in establishing the timeline of the alleged misconduct. The committee noted that the payment of COP fees over several years demonstrated the continuation of professional practice status, despite the existence of full-time employment elsewhere.
Based on the available documentation, the committee determined that the member’s conduct amounted to a breach of the professional requirements set out under the regulatory framework governing chartered accountants.
Lapses Identified in Bank Concurrent Audit Assignment
In a separate disciplinary matter, the ICAI committee also took action against two Chartered Accountants for lapses identified during a bank concurrent audit assignment.
The committee observed that the auditors did not exercise the required degree of professional skepticism and due diligence while conducting audits of loan accounts. According to the findings, this lack of scrutiny resulted in serious irregularities and issues related to fraud not being reported in the audit reports.
Concurrent audits are intended to identify financial irregularities at an early stage, particularly in loan accounts and banking transactions. However, in the case under review, the auditors submitted clean audit reports despite the presence of significant irregularities that, according to the committee, should have been detected during the course of the audit.
During the proceedings, the disciplinary body examined audit documentation submitted by the respondents along with other materials available on record. The committee evaluated whether the auditors had complied with the professional standards expected in such assignments.
Penalties Imposed Under the Chartered Accountants Act
After reviewing the facts and evidence presented in both matters, the committee concluded that the conduct in each case amounted to professional misconduct under the Chartered Accountants Act, 1949.
In the case involving the misuse of the Certificate of Practice, the committee ordered that the member be reprimanded and directed the payment of a monetary penalty of ₹50,000 within the prescribed time period. In the second case concerning lapses during the concurrent audit assignment, both Chartered Accountants were similarly reprimanded. Each was also directed to pay a penalty of ₹1,00,000.
The disciplinary actions form part of ICAI’s regulatory oversight over the professional conduct of its members, with the disciplinary mechanism intended to address violations of professional standards and ensure adherence to the framework governing the accounting profession.
