CA guilty of Misconduct for Accepting Audit without resignation of previous Auditor

The Disciplinary Committee in the matter of CA. Manoj Kumar Jain Vs. CA, Amit Agrawal has held CA guilty of Misconduct for Accepting Audit without the resignation of the previous Auditor.

The Complainant was the partner of M/s Manoj Santosh and Co., Chartered Accountants and they were appointed as statutory auditors of M/s Gutgutia Cements Limited (hereinafter referred to as Company), from 01.04.2015 to 31.03.2020. Their appointment for Financial Year 2019-20 was ratified in the AGM which was held on 30th September 2019. However, the Respondent signed the audit report of the Company for the Financial Year 2019-20 on 15th December 2020.

Thus, the Board noted that as per the resolution passed for the Respondent’s appointment in the meeting of the Board of Directors of the Company held on 06th October 2020, a casual vacancy had been created on account of the completion of tenure of the Complainant and a special resolution had been passed for non-reappointment of the Complainant. However, as per the copy of ADT-1 brought on record by the Complainant, his appointment was up to FY 2019-20. Also, no resignation letter from the Complainant was available on the ROC portal in terms of the requirement of Section 140(2) of the Companies Act, 2013.

The Board also noted that it was the case of the Complainant that neither he had resigned nor been removed from the position of the Statutory Auditor of the company. Further, he did not receive any Notice from the company as required under Section 140 of the Companies Act 2003.

Thus, the Board was of the view that the Respondent was required to ensure that necessary formalities as prescribed under Companies Act, 20i3 have been complied with for non-reappointment of the Complainant before acceptance of the audit of the Company for FY 2019-20. However, he did not bring on record documentary evidence to substantiate the same. Thus, the Board held the Respondent guilty in respect of the charge alleged.

CONCLUSION:

Thus, in conclusion, in the considered opinion of the Board, the Respondent is GUILTY of Professional Misconduct falling within the meaning of Item (8) and (9) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

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