Professional Misconduct: ICAI Reprimands Auditor for Not Reporting Mandatory Cash Flow Statement

A complaint has been filed by Shri Vineet Rai, Deputy Registrar of Companies (West Bengal), against CA (Chartered Accountant) Shilpi Agarwal for mistakes in auditing the company M/s Pioneer Financial & Management Services Ltd. For the financial year (FY) 2017-18.

During the investigation, the DROC discovered that Pioneer Financial & Management Services Ltd was engaged in suspicious and illegal activities. While checking the company’s filings, several issues were found. Since CA Shilpi Agarwal was the auditor of the company for the financial year 2017-18 and also certified the company’s Form AOC-4, the DROC filed a complaint against her.

There were two key allegations against CA Shilpi Agarwal. The first allegation is that she failed to audit or comment on the Cash Flow Statement of the company for FY 2017-18. Additionally, she certified Form AOC-4, even though the company did not furnish a Cash Flow Statement, which is a compulsory document every non-small company is required to attach. The first charge has been proved against the CA. The second charge on the chartered accountant is that the company was allegedly running a micro-loan app scam and not recording loan-related income. However, no solid documentary evidence has been provided to prove this charge against her. Therefore, this charge has not been proved against the CA.

CA Shilpi Agarwal claimed that she was pregnant during that period, which caused a delay in communication. Further claimed that the missing Cash Flow Statement was an inadvertent mistake during scanning/uploading. The company’s business of loan apps did not exist in the financial year 2017-18. She has admitted her mistake and has said that she will make sure the same mistake will not be repeated in the future.

In the final decision, the ICAI Disciplinary Committee found CA. Shilpi Agarwal GUILTY of Professional Misconduct falling within the meaning of Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. The CA is “Reprimanded” under Section 21B(3)(a) of the Chartered Accountants Act, 1949. Meaning, she has been given a warning from the ICAI, but no removal from membership.