CA Found Guilty of professional misconduct; Board imposed penalty of Rs 25,000 for violation

The Institute of Chartered Accountants of India (ICAI) has recently issued a disciplinary order against a Chartered Accountant over professional misconduct and violation of professional ethics.

The complainant, CA Sunil Kumar, performed the tax audit of M/s Arora Tyres for FY 2015-16. For FY 2016-17, CA Rajendra Agrawal, the Respondent, was appointed as a Tax Auditor of the entity without written communication or a No Objection Certificate (NOC) from the previous auditor, which is a violation of Item (8) of Part I of the First Schedule of the Chartered Accountants Act, 1949.

While the matter was decided to be heard on January 25, 2025, the complainant did not appear before the ICAI’s Board of Discipline, but the respondent attended the hearing through a video conference. In the hearing, he admitted that he did not obtain a written NOC from the complainant. The respondent further added that the client had contacted him after the complainant had refused to do the work. He believed formal communication was not very important, as he had a longstanding personal relationship with the complainant.

The board observed that written communication with the previous auditor is mandatory under the ICAI Code of Ethics to ensure ethical compliance. Since he already admitted that he failed to obtain the written communication from the complainant, this clearly shows a violation of professional conduct.

The Board found CA Rajendra Agrawal guilty of professional misconduct under Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949. The Board also imposed a penalty of Rs 25,000 on him for the violation.