ICAI Holds CA Guilty of Professional Misconduct Over Signing Tax Audit Report with Part-Time COP

The Institute of Chartered Accountants of India (ICAI) Disciplinary Committee has held a Chartered Accountant (CA) guilty for professional misconduct after finding that he conducted and uploaded a tax audit report while holding only a part-time Certificate of Practice (COP).

The present matter concerns a Chartered Accountant (CA) named Arun Pandharinath Lanke. The Central Board of Direct Taxes (CBDT) had provided information to the ICAI relating to the tax audit reports filed in 2010-11 by its members in 2011. After that, the Secretary of the Taxation Audits Quality Review Board (TAQRB) sent a council recommendation to the Disciplinary Directorate regarding the audits reportedly conducted by members not holding COP, members holding part-time COP, and members whose names had been removed from the Register of Members’.

The aforesaid note of TAQRB raised allegations against CA Arun Pandharinath Lanke (Membership No. 107521), Mumbai, that he signed and certified a Tax Audit Report during FY 2010-11 even though he only had a Part-Time Certificate of Practice, which was not allowed.

When the committee analysed the facts of the case, it noted that according to the provisions of Section 6(1) of the Chartered Accountants Act, 1949, and the decision of the Council Meeting held in March 2004, any chartered accountant (CA) in part-time practice (holding a certificate of practice and also engaged in any other business and/or occupation) is not allowed to perform the attest function and that the resolution has been passed by the Council in pursuance of the provision of Regulation 190A.

It was further observed that although seven tax audits were reported, the respondent CA admitted to conducting one tax audit during the period when he was teaching in an educational institution and held a part-time COP. His teaching hours in a week are less than 25. The Committee ruled that members in part-time practice are not allowed to perform audit or certification work under ICAI regulations.

Considering the aforesaid findings, the ICAI Disciplinary Committee concluded that certification of tax audit reports is a statutory attest function allowed only for members with a full-time COP. Therefore, the respondent Chartered Accountant (CA) was held guilty for professional misconduct falling within the meaning of Item (1) of Part II of the Second Schedule to the Chartered Accountants Act, 1949.