Clause 6 – Part I – First Schedule Flashcards
A special notice has been issued for a resolution at 3rd AGM of L Ltd., providing expressly that CA A shall not be re-appointed as an auditor of the company. Consequently, CA A submitted a representation in writing to the company with a request to circulate to the members.
In the detailed representation, CA. A included the contributions made by him in strengthening the control procedures of the company during his association with the company and also indicated his willingness to continue as an auditor if re-appointed by the shareholders of the company.
Soliciting Clients:
Provision:
As per Clause (6) of Part I of the First Schedule to the CA Act, 1949,
a CA in practice shall be deemed to be guilty of professional misconduct if he -
solicits clients or professional work either directly or indirectly by circular, advertisement, personal communication or interview or by any other means.
except applying or requesting for or inviting or securing professional work from another CA in practice and responding to tenders.
–> Further, section 140(4) of the Companies Act, 2013, provides a right, to the retiring auditor, to make representation in writing to the company.
–> The retiring auditor has the right for his representation to be circulated among the members of the company and to be read
out at the meeting.
–> However, the content of letter should be set out in a dignified manner how he has been acting independently and conscientiously through the term of his office and may, in addition, indicate, if he so chooses, his willingness to continue as auditor, if re- appointed by the shareholders.
–> The proposition of the auditor to highlight contributions made by him in strengthening the control procedures in the representation should not be included in such representations because the representation letter should not be prepared in a manner so as to seek publicity.
Analysis & Conclusion:
–> Thus, highlighting contributions made by him in strengthening the control procedures, while submitting representation U/S 140(4)(iii) of the Companies Act 2013, would amount to canvassing or soliciting for his continuance as auditor.
–> Therefore, CA A will be held guilty for professional misconduct under Clause (6) of Part I of First Schedule to the Chartered Accountants Act, 1949.
CA. S and CA. M are two partners of the CA firm ‘SM and Associates’. Being very pious, CA. S organized a religious ceremony at his
home for which he instructed his printing agent to add his designation “Chartered Accountant” with his name in the invitation cards. Later on, the invitations were distributed to all the relatives, close friends and clients of both the partners.
Printing of Designation “Chartered Accountant” on Invitations for Religious Ceremony:
Provision:
As per Clause (6) of Part I of the First Schedule to the CA Act, 1949,
a CA in practice shall be deemed to be guilty of professional misconduct if he -
solicits clients or professional work either directly or indirectly by circular, advertisement, personal communication or interview or by any other means.
–> However, as per the Guidelines issued by the Council of ICAI under Clause 6 –> the Council of the ICAI is of the view that the designation “Chartered Accountant” as well as the name of the firm may be used in greeting cards, invitations for marriages, religious ceremonies and any other specified matters, provided that such greeting cards or invitations etc. are sent only to clients, relatives and close friends of the members concerned.
Analysis & Conclusion:
–> In the given case, CA. S has instructed to write designation “Chartered Accountant” on invitation cards for a religious ceremony and distributed the same to all the relatives, close friends and clients of both the partners.
–> In this context, it may be noted that the Council has allowed using designation “Chartered Accountant” in invitations for religious ceremony, provided these are sent to clients, relatives and close friends of the members concerned only.
–> Therefore, CA. S would be held guilty of professional misconduct under the said clause for sending such invitations to the relatives, close friends and clients of CA. M as well.
