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Studycafe Admin | May 29, 2022 | Views 1

CA who made 15 years Fake Accounts of Registered Charitable Trust only in 2 days Guilty of Professional Misconduct

CA who made 15 years Fake Accounts of Registered Charitable Trust only in 2 days Guilty of Professional Misconduct

The Disciplinary Directorate of the Institute of Chartered Accountants of India (ICAI) has held a Chartered Accountant who made 15 years fake Accounts of a registered Charitable Trust only in 2 days guilty of Professional Misconduct.

In respect of financial statements, the Complainant sent a letter dated 24th September 2015 to the Respondent seeking clarification on the following issues on the financial statement prepared by the Respondent as under:

i. There was no sign of any concerned trustee of the Trust on the financial statement.

ii. All the financial statements for the years 2010 to 2012 were made on 22.10.2013 and the financial statements for years 2013 to 2015 were made on 13.09.2015 and the same raised question as to whether books of accounts were prepared regularly.

iii. What urgency was told Mr. Ashok Lohani to prepare these financial statements of this trust in one day.

iv. According to the registration order and trust deed why did not the Respondent contact President/Working Trustee before preparing these financial statements.

v. Have the Respondent got any copy of the unanimously passed resolution from the Trust board for preparing the above-mentioned financial statements.

vi. Have the Respondent got any authorized appointment Jetter, provided by this registered Charitable Trust-Board for functioning as an Auditor.

vii. Which Trustee of the Trust Board had contacted the Respondent for preparing these financial statements.

viii. Were any resolutions passed by the Trust board regarding renting out the shops of this registered trust.

ix. Had any audit report been prepared regarding these financial statements.

x. Are these accounts of trust submitted to the Income Tax Department for I. T. Returns.

xi. Is any PAN Card No. of this trust available

xii. Is there any financial statement/audit report available prior to 2000

xiii. Please provide the explanations in the financial statements prepared by the Respondent about worship expenses, meal expenses, and flour expenses in this Religious & Charitable Trust.

xiv. Please also explain worship expenses in financial statements. What is the meaning of (-58) in the year 2004 and (-284) in the year 2005″.

Respondent Submitted that:

1. The true facts of the case is that he had been appointed for checking and confirmation of the accounts and · preparation of Income & Expenditure Account and Balance Sheet of Smt. Kalawati Lakhani Religious & Charitable Trust by Shri Ashok Lohani who was said to be one of the trustees of the above named Trust.

2. Further, in this regards Shri Ashok Lohani gave the Respondent a Trust Deed and a written application wherein the Respondent checked and confirmed that Shri Ashok Lohani is the Trustee of the Trust. After accepting the work a copy of Accounts of the Trust was provided to him which he has to be checked.

3. The Income & Expenditure Account and Balance Sheet of the same were prepared on the basis of data provided by Shri Ashok Lohani. As per the Respondent, the Audit Report or Income Tax Return for the same were neither prepared nor filed by him.

4. The Respondent affirmed that the prescribed procedure was followed at the time of checking accounts. Mr. Ashok Lohani or any legal authority never did any complaint about his work including the complainant Shri S.D. Khetani.

5. Further, the Respondent submitted that he -does not know the Complainant and he never did any work for the Complainant. In this regard, his first objection is that the third party i.e., the Complainant does not have any locus standi to call him to give answers for any questions about professional work done by him for any client.

6. As far as the question of the Complainant is concerned, the Respondent stated that no questions is related to his work and all the questions are related to the internal disputes between the Complainant and between his client Shri Ashok Lohani, which is not his concern.

7. In furtherance, the Res·pondent brought on record a copy of Tally’s prepared Balance Sheet and Profit & Loss Account which were signed by Shri Ashok Kumar, based on which/Certificates were issued by the Respondent.

8. Further, during the hearing, he admitted his mistake that he signed the financial statements without getting approved the same from the trustee of the auditee trust.

9. Thereafter, the Respondent made his final submissions and after recording the submissions of both the parties. The Committee concluded the hearing on the captioned matter.

Observations of the Committee

The Committee was of the view that as letter-heads and stationery of the Respondent have been used for the preparation of accounts of the Trust, it proves that the Respondent has prepared the accounts of the Trust himself and then has audited the same. Hence he has not acted independently while auditing the accounts of the Trust.

Moreover, the Committee noted that the accounts of the Trust are not signed by any Trustee of the Trust. When the Committee questioned the Respondent, he replied that the same has been certified based upon data of Tally which was signed by Shri Ashok Kumar.

However, he accepted this mistake and admitted that he has realized this mistake now and same would not be repeated in the future.

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