Audit without written noc from previous auditor-reprimand converted in to caution by High Court as CA was fresher in practice and omission was procedural

Audit without written NOC from previous auditor-reprimand converted in to caution by High Court as the chartered accountant (CA) was only fresher into practice, the omission was procedural and trivial and no moral turpitude involved.

ABCAUS Case Law Citation:

997 2016 (08) HC
Date/Month of Judgment: August, 2016

Brief Facts of the Case:

The judgment of the High Court was pronounced on the reference made by the Council of Institute of Chartered Accountants of India (ICAI) under sub-Section 5 of Section 21 of the Chartered Accountants Act, 1949.

Earlier, One Chartered Accountant (complainant) made a complaint to the ICAI against another Chartered Accountant (the respondent) that he had taken up the audit of a company whose previous auditor was the complainant, without obtaining a written no objection (NoC) from the complainant. According to the complainant, he had a valid objection as his auditor fee was outstanding for the previous years audit conducted by him.

Before the Disciplinary Committee (DC) of the ICAI, the respondent CA pleaded that he had obtained oral sanction from the complainant. During the proceedings, the Disciplinary Committee also discovered that the complainant had received the outstanding audit fee.

The respondent CA also pointed out that the fact that he had started his practice in the year 2001 and the audit which he had undertaking without written consent pertained to the year 2002.  The respondent highlighted that this was the first assignment of audit undertaken by him when he was a fresher who had just started the practice.

However, the Council of ICAI,  after considering the report of the Disciplinary Committee, in the year 2011, recommended a reprimand to the respondent CA to be the appropriate penalty in the case.

Contentions of the Respondent before High Court:

The respondent CA urged that even a reprimand, though it might not have any financial implications, would cast a shadow upon his character and integrity and such penalty was not appropriate in the light of the facts and circumstances of the case. 

The attention of the Hon’ble High Court was invited to an instance whereby the ICAI in case of an indictment, sent a letter of caution instaed of reprimand as the remedial measure.

Held:
The High Court directed the Council of the ICAI to issue a letter of caution to the respondent CA in place of reprimand.