Delhi High Court Upholds Removal of CA from ICAI Members List for Furnishing Incorrect Audit Report:

Delhi High Court Upholds Removal of CA from ICAI Members List for Furnishing Incorrect Audit Report The Delhi High Court has confirmed the removal of a Chartered Accountant's name from the register of members of the Council of the Institute of Chartered Accountants of India (ICAI) due to significant mistakes made in the audit. The Reserve Bank of India (RBI) sent a communication to the ICAI, pointing out that the audit report of the company Escorts Finance Limited, submitted by Shri S.N. Shivakumar's Firm M/s N.M. Raiji & Co. for FY 2004-2005 did not show the company's true liabilities and correct disclosures. The audit report was claimed to be incomplete, as it did not disclose public deposits and issues like "evergreening of assets", making the company look financially more stable than it actually was.

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In response to this RBI's communication, the ICAI started investigating the case. It found that the respondent firm failed to detect some financial issues of the company. There were three serious charges against the respondent. The first allegation was that the respondent did not verify the company's full liability on public deposits. The second charge was that the respondent firm failed to detect "evergreening" of company assets. The third charge was that he did not issue the required auditor's certificate as per RBI rules. He was given many opportunities to explain, but he did not properly respond or appear. The institute sent this matter to the Delhi High Court under Section 21(5) of the Chartered Accountants Act, 1949, for the final decision.

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The High Court agreed with the ICAI, stating that the two charges were found true. Since no one appeared on behalf of the accused, the court confirmed the removal of the respondent from the register of members of ICAI for three months.