Failure to comply with SA 560 and AS 4 while issuing revised audit reports results in reprimand, two-month removal, and Rs.1 lakh fine
Meetu Kumari | Feb 23, 2026 |
ICAI Disciplinary Committee Finds CA Guilty for Deficient Revised Audit Reports
A complaint was filed by Mr. Deepak Sood, AGM, Punjab National Bank, against CA Amit Gandhi, statutory auditor of M/s Super Multicolour Printers Pvt. Ltd., M/s Shivek Labs Ltd., and M/s Dunn Foods Pvt. Ltd. for FY 2013-14. The Respondent initially issued audit reports dated 04.09.2014 showing profits, which were used by the companies to seek enhancement of credit facilities from a bank consortium.
He issued revised audit reports reflecting substantial losses, citing depletion of security value and identification of obsolete and slow-moving stock. The complainant alleged a lack of due diligence or collusion, contending that banks restructured facilities based on the revised figures. The respondent stated that revisions were made in good faith due to later events impacting inventory valuation.
Main Issue: Whether issuing revised audit reports without proper disclosures in compliance with SA 560 and AS 4 amounts to professional misconduct under Clause (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949.
Committee’s Ruling: The Disciplinary Committee of the Institute of Chartered Accountants of India held the Respondent guilty of professional misconduct. It found that while revised reports were issued, they lacked mandatory disclosures explaining the nature and scope of revision as required under SA 560. There was no appropriate “Emphasis of Matter” or clarification restricting procedures to the amended aspects.
The Committee further observed that the drastic shift from profits to heavy losses due to stock obsolescence shortly after the original reports warranted heightened professional skepticism. Failure to adequately disclose the financial impact and nature of such later events, as required under AS 4, demonstrated a lack of due diligence. Thus, under Section 21B(3), the Respondent was reprimanded, his name was removed from the Register of Members for two months, and a fine of Rs. 1,00,000 was imposed.
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