CA who accepted Tax Audit appointment without communicating to previous auditor held for misconduct [Read Order]

CA who accepted Tax Audit appointment without communicating to previous auditor held for misconduct [Read Order]

In the matter of CA. Shripad S Puranik vs CA. Sanjay Nathalal Shah, the charge against the Respondent was that he accepted and conducted a tax audit of M/s Sejal Internal Ltd. (hereinafter to be referred to as the “Company”) for F.Y. 2014-15 on 31.10.2015 despite knowing the facts that the previous auditors had declined acceptance of audit for non-payment of fees. The Complainant also alleged that the Respondent also failed to seek NOC from the Complainant Firm. The Committee noted that accordingly the Respondent was held prime facie guilty of professional misconduct falling within the meaning Clause (8) of Part I of the First ·Schedule and Clause (1) of Part II of the Second Schedule of Chartered Accountant Act 1949.

The Committee noted as per merits of the case it is evident that the Respondent accepted and conducted the audit of the Company for F.Y. 2014-15 without ensuring that the pending fee of the previous auditor is paid. Further, there is no correspondence on record that establishes that the Respondent sought no objection from the Complainant before accepting the audit.

In terms of the reasoning discussed above and in the considered opinion of the Committee in the absence of any defence from the Respondent, it is concluded that the Respondent not only failed to communicate with previous auditor but also has accepted the appointment as Tax auditor when undisputed fees of the previous auditor i.e. the Complainant Firm was outstanding and thereby ignoring the Council Guidelines 1-CA (7)/02/2008 dated 8th August, 2008 in this regard. Hence, the Respondent is held guilty under the said charges for professional misconduct falling within the meaning of Item (8) of Part I of the First Schedule and Item (1) of Part II of Second Schedule to the Chartered Accountants Act, 1949.

However, The Committee noted that although in this case the Respondent accepted the audit without ensuring that pending fee of the Complainant is duly paid, but looking into the admission of the Complainant that admitted that his fees are received from the clients only due to intervention of the Respondent, the Committee decided to take lenient.

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 the Respondent i.e. CA. Sanjay Nathalal Shah, (M.No.116251) be reprimanded.

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