ICAI Disciplinary Committee Reprimands CA for Acting as Statutory and Internal Auditor Simultaneously

A complaint was filed by Smt. Shobha Shandilya, Director of M/s PLN9 Security Services Pvt. Ltd., against CA Amit Agrawal, statutory auditor of the company for FY 2014-15 and 2015-16, and reappointed for FY 2016-17 until his resignation in October 2017.

In December 2016, while holding office as statutory auditor, the Respondent accepted an internal audit assignment of the same company and issued a Review Report dated 22.01.2017 for April-November 2016, along with a limited review for FY 2015-16. Email correspondence established acceptance of the assignment and agreed professional fees of Rs. 2 lakh.

Issue Raised: Whether accepting internal audit work while serving as statutory auditor, and failing to report material discrepancies in the statutory audit report, constituted professional misconduct under Items (5), (6), (7) and (8) of Part I of the Second Schedule to the Chartered Accountants Act, 1949.

Committee’s Decision: The Disciplinary Committee of the The Institute of Chartered Accountants of India held that acceptance of internal audit services during tenure as statutory auditor was a clear violation of Section 144 of the Companies Act, 2013 and impaired auditor independence. The plea that statutory audit for FY 2016-17 had not commenced was rejected, as the Respondent continued to hold office during the relevant period.

The Committee further held that failure to disclose discrepancies relating to salary, wages and unauthorised expenses in the statutory audit report reflected lack of due diligence and insufficient audit evidence. Thus, the Respondent was found guilty of professional misconduct under Items (5), (6), (7) and (8) of Part I of the Second Schedule. By order dated February 2026, he was reprimanded and fined Rs. 2,00,000, payable within 60 days.

To Read Full Judgment, Download PDF Given Below