ICAI Levies Penalty on CA for Undertaking Statutory LLP Audit Without Obtaining NOC from Previous Auditor

The Institute of Chartered Accountants of India (ICAI) Board of Discipline has fined a Chartered Accountant for taking an Audit Assignment without communicating and obtaining a No Objection Certificate (NOC) from the previous auditor.

The case was filed by CA. Parmar Haresh Kumar Jivanlal, Partner of M/s HJP & Co., against CA. Ketan Ganpatbhai Barevadia. As per the complainant, HJP & Co was the statutory auditor of Jas Fuels LLP for the FY 2019-20. However, for the next financial year, 2020-21, the CA Ketan Barevadia took over the position of the auditor of the same firm without first communicating in writing with CA Parmar’s firm. CA Ketan allegedly took the audit assignment without obtaining a No Objection Certificate (NOC) from the complainant.

Such action is treated as professional misconduct under Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949. The matter was examined by the ICAI Board of Discipline. The respondent, CA Ketan, in the written submission as well as during the hearing, accepted the allegations against him. He admitted that he had made a mistake by undertaking the audit without communicating with the previous auditor of the company. He assured the board that this mistake would not be repeated.

Since the respondent auditor voluntarily accepted his default, the Board concluded that no further investigation was required. The Board held that CA. Ketan Barevadia had violated professional standards by accepting the audit assignment without complying with the mandatory communication process.

Accordingly, the ICAI Board of Discipline found CA. Ketan Ganpatbhai Barevadia, guilty of professional misconduct falling within the meaning of Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949 and imposed a penalty of Rs 25,000 on him.