ICAI Penalises CA For Taking Additional Advisory Assignment While Acting As Statutory Auditor:

ICAI Penalises CA For Taking Additional Advisory Assignment While Acting As Statutory Auditor A statutory auditor cannot take up any additional work like budgeting, variance analysis, or advisory services for the same company, even if the scope is limited, says the ICAI guidelines. This is the disciplinary action taken by the Institute of Chartered Accountants of India (ICAI) in relation to a Chartered Accountant (CA) named Krishanu Bhattacharyya, who served as a statutory auditor of a company, Swapnabhumi Realtors Limited. A complaint was filed by the Regional Director (ER) of the Ministry of Corporate Affairs (MCA), Kolkata, against the CA Krishanu. The key issue in the present case is that during the statutory auditing of the company, the CA also audited the firm accepted a separate assignment from the same company to prepare a budget and variance analysis for indirect expenses.

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When the disciplinary committee examined the variance analysis report prepared by the CA, it discovered that the report was not only an audit-related procedure. The report included certain suggestions or recommendations to manage and monitor expenses. Such suggestions are covered under the internal audit. Since internal audit and management services are strictly not allowed under statutory auditing, as mentioned under Section 144 of the Companies Act, 2013, it was a serious contravention of the law. It was also noted that a separate invoice was issued by the CA for the same recommendation, and an additional fee was charged for the same. It clearly indicates the action performed was an independent engagement.

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