Disciplinary Action Alert: What Constitutes Professional Misconduct for CAs:

Disciplinary Action Alert: What Constitutes Professional Misconduct for CAs

The ICAI or the Institute of Chartered Accountants of India, has issued a list of professional or other misconducts which highlights some specific issues under which a CA may be held guilty. The list is divided into two categories, i.e., the First Schedule (less severe misconducts) and the Second Schedule (serious misconducts). Further is given the full list of misconducts under both the categories issued by the ICAI:

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First Schedule: Professional Misconduct by Members in Practice

• Allowing Non-Qualified Candidates to Practice: To allow a person who is not a Chartered Accountant to practice in their name or sharing of fees with such persons.
• Improper Fee Arrangement: Payment of or acceptance of commission/brokerage, except for as allowed under ICAI regulations (e.g., fee sharing with a non-CA).
• Usage of Another CA's Credentials: Certifying or submitting reports in one's own name while the work being submitted was done by another CA.
• Improper Advertising or Solicitation: Soliciting clients via unethical means, through WhatsApp or any other platform, or advertising their services in violation of ICAI guidelines.
• Acceptance of Conflicting Engagements: Signing up for cases/assignments that might conflict with the existing engagements without client consent.
• Disclosure of Client Information: Providing a client's confidential information without the client's permission, except if obliged by the law.
• Certification Without Due Diligence: Issuance of certificates or reports such as financial statements or tax audits without proper verification or due care.
• Failure in Obtaining Registration: Practicing in absence of a valid certificate of practice or falling short on complying with registration procedure.
• Negligence in Professional Duties: Failing to exercise due diligence in audits, tax filings, or any other professional services, leading to errors or omissions.
• Violation of ICAI Guidelines: Not adhering to the ICAI's Code of Ethics, such as engaging in activities not permitted for practicing CA.

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Second Schedule: Professional Misconduct by Members in Practice or Otherwise

• Falsification of Documents: Signing or certifying such reports that are either false, misleading, or unauthenticated.
• Fraud or Misrepresentation: Engaging in deceitful activities, such as misrepresenting financial data or aiding clients in tax evasion.
• Failure to Report Irregularities: Not reporting material misstatements or irregularities found in audits, such as bank or company audits.
• Gross Negligence: Grave negligence while performing professional duties, leading to significant financial or regulatory consequences.
• Collusion with Clients: Assisting clients in illegal activities, such as manipulating financial records or evading regulatory compliance.
• Non-Compliance with Standards: Falling short on adhering to compulsory accounting standards, Auditing Standards, or other professional guidelines published by ICAI.
• Undertaking Prohibited Services: Giving services such as management consultancy to audit clients, violating independence norms.
• Criminal Convictions: Getting convicted for an offence that involves moral turpitude, leading to professional misconduct.
• Bringing Disrepute to the Profession: Getting involved in such activities that may tarnish the reputation of the CA profession, for example, unethical public behaviour.
• Non-Disclosure of Conflicts: Failing to disclose financial or personal interests that impair professional independence or objectivity.

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Misconducts Applicable to All Members

• Non-Compliance with ICAI Regulations: Violating ICAI’s rules, such as not responding to disciplinary enquiries or failing to pay
• membership fees.
• False Declarations: Providing false information to ICAI, such as in membership applications or continuing professional education (CPE) compliance.
• Misconduct in Other Capacities: Engaging in unethical behaviour while not in practice (e.g., as an employee or director) that violates the Code of Ethics.