ICAI issues SOP for Police and Law Enforcement on handling Chartered Accountants during Investigations

The Institute of Chartered Accountants of India (ICAI) has issued a thorough Standard Operating Procedure (SOP) to assist police and other law enforcement authorities with investigations, searches, seizures, interrogations, detentions, and arrests of Chartered Accountants (CAs).

This initiative seeks to ensure that CAs’ professional rights are protected and that due process is followed in such circumstances.

The SOP highlights that, while CAs, like all professionals, must cooperate with legal inquiries, their professional obligations and rights should not be jeopardized. Key elements include rules for conducting CA office searches, guidelines for document seizure, and proper interrogating methods. The SOP also addresses the detention and arrest of CAs, advising that law enforcement agencies maintain transparency and adhere to established legal standards.

The ICAI’s approach comes in response to an increase in scrutiny of CAs in situations involving financial irregularities. By publishing this SOP, the ICAI wants to strike a balance between the need for investigations and the protection of CA rights, ensuring that law enforcement agencies handle such situations in a fair and legitimate manner.

The Relevant Text of the SOP is as follows:

Preliminary Inquiry

Before proceeding against a Chartered Accountant, the investigator shall ascertain as to whether the person being proceeded against is a Member of the Institute of Chartered Accountants of India. For this purpose, verification of membership be done from the “Trace a Member” Link available at the ICAI portal.

Investigation, Search and Seizure

1) All the communications for calling of documents, information etc. with the Chartered Accountants should be in writing.

2) Reasonable time should be given by the investigating agency to a Chartered Accountant to respond to its query(ies).

3) Only such documents as they relate to a particular client (for which investigation is being carried out) should be called for or seized from the Chartered Accountant, and not the papers relating to any other client.

4) The Investigating Officer should ensure that no Press or Media personnel are permitted to enter premises that are being searched and further no disclosure of the name of the Chartered Accountant be made to the Press till the completion of an investigation.

5) During the Investigation, search and seizure, the Chartered Accountant should not be subject to any harassment, physical assault, abuse, misbehaviour or ill-treatment and the procedure established by law is followed at all times.

6) All the necessary permissions required under law should be obtained and procedural safeguards should be complied with at the time of carrying out such investigation, search and seizure.

7) The provisions of law and directions of the Hon’ble Supreme Court as well as by the Hon’ble High Courts should invariably be complied with while carrying out such Investigation, search and seizure.

Interrogation, Detention and Arrest

1) Only in case of non-cooperation on the part of a Chartered Accountant in answering questions or producing documents available with him, he should be called to the office of the investigating agency for questioning. Sections 41 and 41A of the Code of Criminal Procedure, 1973 should be complied with strictly as well with the judgment of the Hon’ble Supreme Court in Arnesh Kumar v. State of Bihar (2014) 8 SCC 273 and Satender Kumar Antil v. CBI, 2022 SCC OnLine SC 825.

2) It may be noted that the time frame for retention of audit documentation under Standard of Audit (SA) 230 is only for a period of seven years from the date of the audit report for the respective year. There is no mandate for a Chartered Accountant to retain such documents beyond seven years. Personnel at the ground level should be sensitised to this provision while seeking documents from a Chartered Accountant.

3) Where the Chartered Accountant complies with the requirements of investigation and co-operates with the investigating agency(ies), no arrest should be made.

4) Where there is no prima facie evidence of misappropriation or fraud and where a Chartered Accountant has not been a beneficiary thereof, he should not be arrested.

5) The investigating agency must apply its mind as to whether there is mens-rea or collusion on the part of the Chartered Accountant, before effecting an arrest.

6) No FIR should be registered against a Chartered Accountant except with the prior permission of an officer not below the rank of Superintendent of Police.

7) During the questioning and interrogation, an Advocate of the choice of Chartered Accountant should be permitted to be present and the entire interrogation should be video recorded.

8) Investigating officials must maintain decorum, decency, etiquette, moral and ethical behaviour that is required to be shown to a regulated professional.

9) The Chartered Accountant should never be subject to intimidation, threat, abusive behaviour or physical assault and due process of law be complied with at all times.

For Official SOP Download PDF Given Below: