CA guilty of misconduct for signing the Financial statements without mentioning Financial Year

The Institute of Chartered Accountant of India(ICAI) in the matter of M/s. Rattan Worldwide Pvt. Ltd. Vs. CA. Mahendra Jagannath Tiwari has fined CA of Rs.50000 for signing the Financial statements with mentioning Financial Year.

The Disciplinary Committee was inter-alia of the opinion CA. Mahendra Jagannath Tiwari (M.No.118416), Bhayandar (hereinafter referred to as the Respondent”) was GUILTY of professional misconduct falling within the meaning of Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949.

FINDINGS:

The Committee noted the Complainant’s Counsel while explaining the charges started from various other charges on which the Respondent was held prima­facie not guilty by the Director (Discipline). Accordingly, the Committee categorically asked the Complainant to limit his arguments to the charge on which the Respondent was held Prima-Facie Guilty by Director (Discipline). The Complainant’s Counsel on that charge, to substantiate the fact the financial statements are deliberately undated, submitted that the audit reports and financial statements of the Company were filed by the Respondent on the MCA portal at much later than the due date.

Committee noted that the Respondent, on the same, at the outset, questioned on locus-standi of the Complainant as according to him the Complainant was not authorized by Board of Directors to file the present complaint against him. The Committee on perusal of documents on records clarified him that the present case was filed by the Complainant in his personal capacity and accordingly directed him to argue on merits of the case.

Committee hence observed that for the alleged period i.e. financial year 2016-17 and 2017-18 the Respondent had not mentioned any date of signing, on financial statements. However, in the audit report, the Respondent, failed to mention date of signing in respect of the financial year 2016-17 only. The Committee observed that the Respondent was grossly negligent in mentioning the date of slgning of the financial statement and audit report in respect of the previous financial year i.e. 2015-16 also.

When the Respondent was informed about the actual dates of filling of AOC-4, he accepted the same and submitted before the Committee that the late filing fee was duly paid by the Company for delayed filing of AOC-4. The Respondent added in his submission that his omission to put date through oversight was unintentionally and was never for causing harm or loss to anyone. He added that it was a minor lapse on his part which may be condoned, and he may be absolved/exonerated from the charge of violation of SA-700 with respect to non -mentioning of the date on the financial statements and the audit report.

They also noted that the financial statements for the Financial Years 2015- 16 to 2017-18 of the Company were signed by the Respondent, and even though the said documents were signed and sealed by the Respondent, yet they were left undated, which is a clear violation of SA 700 (Forming an Opinion and Reporting on Financial Statements).

Para 47 of SA 700 deals with “other auditor’s responsibilities” according to which “The auditor’s report shall be dated no earlier than the date on which the auditor has obtained sufficient appropriate audit evidence on which to base the auditor’s opinion on the financial statements, including evidence that:

(a) All the statements that comprise the financial statements, including the related notes, have been prepared; and

(b) Those with the recognized authority have asserted that they have taken responsibility for those financial statements”.

In view of the above, the Committee noted that since the Respondent left his reports undated, the same being a clear violation of SA 700.

Looking into the fact that the financial statements and the audit report were undated (as depicted in table at para 5 above) , which was a clear violation of SA 700, the Committee is of the view that the Respondent, while signing the Audit Report and Financial statements of the Company, failed to exercise due diligence expected from him and was grossly negligent in performing his professional assignments.

CONCLUSION:

In view of the above findings stated in the above para’s vis-a-vis material on record, the Committee in its considered opinion holds the Respondent GUILTY under Item (7) of Part-I of the Second Schedule to the Chartered Accountants Act, 1949.

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