ICAI Reprimands CA And Imposes Rs. 1 Lakh Fine For Issuing Review Report Without Peer Review Certificate

The Respondent, CA. Sumit Gupta, had issued a Limited Review Report dated 13 November 2018 on the half-yearly financial results of Fourth Dimension Solutions Ltd. for the period ended 30 September 2018. At the time of signing the report, the Respondent’s firm had applied for peer review on 7 September 2018 but the Peer Review Certificate was issued only on 5 March 2019. Thus, on the date of signing the report, the Respondent did not hold a valid Peer Review Certificate.

Regulation 33(1)(d) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 requires that limited review or audit reports submitted to stock exchanges must be issued only by auditors holding a valid Peer Review Certificate from ICAI. Despite this requirement, the Respondent accepted the assignment and signed the review report without possessing such certificate.

Main Issue: Whether issuing a limited review report for a listed company without holding a valid Peer Review Certificate, as required under Regulation 33(1)(d) of SEBI (LODR) Regulations, amounts to professional misconduct and failure to exercise due diligence under the Chartered Accountants Act, 1949.

Committee Decides: The Disciplinary Committee observed that the Respondent issued the limited review report on 13 November 2018 without holding a valid Peer Review Certificate, which was a mandatory requirement under SEBI (LODR) Regulations. Being a professional, he was expected to be aware of the applicable regulatory provisions before accepting such assignment.

The Committee held that issuing the report without the required certification reflected lack of due diligence and conduct unbecoming of a Chartered Accountant. Therefore, the Respondent was held guilty of professional and other misconduct under Clause (2) of Part IV of the First Schedule and Clause (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949.

The Committee reprimanded the Respondent, removed his name from the Register of Members for one month, and imposed a fine of Rs. 1,00,000, payable within 60 days.

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