Professional Miscoducts

Question 1

S1Part I Clause 1

Answer 1

allows any person to practice in his name as a chartered accountant unless such person is also a chartered accountant in practice and is in partnership with or employed by him

Question 2

S1Part I Clause 2

Answer 2

pays or allows or agrees to pay or allow, directly or indirectly, any sharecommission or brokerage in the fees or profits of his professional business, to anyperson other than a member of the Institute or a partner or a retired partner or the legalrepresentative of a deceased partner, or a member of any other professional body orwith such other persons having such qualification as may be prescribed, for thepurpose of rendering such professional services from time to time in or outside India.

Question 3

S1 Part I Clause 3

Answer 3

accepts or agrees to accept any part of the profits of the professional work ofa person who is not a member of the Institute

Question 4

S1Part I Clause 4

Answer 4

enters Into partnership, in or outside India, with any person other thenChartered Accountant in practice or such other person who is a member of any otherprofessional body having such qualifications as may be prescribed including a residentwho but for his residence abroad would be entitled to be registered as a member underclose (V) of sub–section (1) of section 4 or whose qualifications are recognized by theCentral Government or the Council for the purpose of permitting such partnerships

Question 5

S1 Part I Clause 5

Answer 5

Secures either through the services of a person who is not an employee ofsuch Chartered Accountant or who is not his partner or by means which are not open toa Chartered Accountant, any professional business

Question 6

S1 Part I Clause 6

Answer 6

Solicits clients or professional work either directly or indirectly by circularadvertisement personal communication or interview or by any other meansProvided that nothing herein contained shall be construed as preventing or prohibiting(i) Any Chartered Accountant from applying or requesting for or inviting or securingprofessional work from another chartered accountant in practice or(ii) A member from responding to tenders or enquiries issued by various users ofprofessional services or organizations from time to time and securing professionalwork as a consequenceHowever, as per the guideline issued by the Council of the Institute of CharteredAccountants of India, a member of the Institute in practice shall not respond to anytender issued by an organization or user of professional services in areas ofservices which are exclusively reserved for chartered accountants, such as auditand attestation services. However, such restriction shall not be applicable whereminimum fee of the assignment is prescribed in the tender document itself orwhere the areas are open to other professionals along with the CharteredAccountants.

Question 7

S1 Part I Clause 7

Answer 7

Advertises his professional attainments or services, or uses any designation orexpressions other than the Chartered Accountant on professional documents, visitingcards, letter heads or sign boards unless it be a degree of a University established by law inIndia or recognized by the Central Government or a title indicating membership of theInstitute of Chartered Accountants or of any other institution that has been recognized bythe Central Government or may be recognized by the CouncilProvided that a member in practice may advertise through a write up, setting out theservice provided by him or his firm and particulars of his firm subject to suchGuidelines as may be issued by the Council

Question 8

S1 Part I Clause 8

Answer 8

Accepts position as auditor previously held by another charteredaccountant or a certified auditor who has been Issued certificate under the RestrictedCertificate Rules, 1932 without first communicating with him in writing.

Question 9

S1 Part I Clause 9

Answer 9

Accepts an appointment as auditor of a company without first ascertainingfrom it whether the requirements of Section 225 of the Companies Act, 1956, in respectof such appointment have been duly complied with

Question 10

S1 PART I Clause 10

Answer 10

“Charges or offers to charge, accepts or offers to accept In respect of anyprofessional employment fees which are based on a percentage of profits or which arecontingent upon the findings, or results of such employment, except as permitted underany regulations made under this ActThe Council of the Institute has however framed Regulation 192 which exemptsmembers from the operation of this clause in certain professional services. The saidRegulation 192 is reproduced192. Restriction on fees–To Chartered Accountant in practice shall charge or offer tocharge, accept or offer to accept, in respect of any professional work, fees whichare based on a percentage of profits, or which are contingent upon the findings orresults of such work, provided that(a) In the case of a receiver or a liquidator, the fees may be based on a percentage ofthe realization or disbursement of the assets(b) In the case of an auditor of a co–operative society, the fees may be based on apercentage of the paid up capital or the working capital or the gross or net incomeor profits(c) In the case of a valuer for the purposes of direct taxes and duties, the fees may bebased on a percentage of the value of property valued;(d) in the case of certain management consultancy services as may be decided by theresolution of the Council from time to time, the fees may be based on percentagebasis which may be contingent upon the findings, or results of such work;e) in the case of certain fund raising services, the fees may be based on a percentageof the fund raised
f) in the case of debt recovery services, the fees may be based on a percentage ofthe debt recovered(g) in the case of services related to cost optimisation, the fees may be based on apercentage of the benefit derived; and”

Question 11

S1 Part I Clause 11

Answer 11

Engages in any business or occupation other than the profession orChartered accountant unless permitted by the Council so to engageProvided that nothing contained herein shall disentitle a chartered accountant frombeing director of a company (Not being managing director or a whole time directorunless he or any of his partners is interested in such company as an auditor

Question 12

S1 Part I Clause 12

Answer 12

Allows a person not being a member of the institute in practice or a membernot being his partner to sign on his behalf or on behalf of his firm, any balance sheetprofit and loss account, report or financial statements.

Question 13

S1 Part II Clause 1

Answer 13

pays or allows or agrees to pay directly or indirectly to any person any sharein the emoluments of the employment undertaken by him

Question 14

S1 Part II Clause 2

Answer 14

accepts or agrees to accept any part of fees, profits or gains from a lawyer, achartered accountant or broker engaged by such company, firm or person or agent orcustomer of such company, firm or person by way of commission or gratification[Note: A member in the foregoing circumstances would be guilty of misconductregardless of the fact that he was in whole–time or part–time employment or that he washolding Certificate of Practice along with his employment]

Question 15

S1 Part III Clause 1

Answer 15

not being a fellow of the Institute, acts as a fellow of the Institute

Question 16

S1 Part III Clause 2

Answer 16

does not supply the information called for, or does not comply with therequirements asked for, by the Institute, Council or any of its Committees Director(Discipline), Board of Discipline, Disciplinary Committee, Quality Review Board or theAppellate Authority

Question 17

S1 Part III Clause 3

Answer 17

while inviting professional work from another chartered accountant or whileresponding to fenders or enquiries or while advertising through a write up, or anythingas provided for in items (6) and () of Part of this Schedule, gives information knowingit to be false

Question 18

S1 Part IV Clause 1

Answer 18

is held guilty by any civil or criminal court for an offence which is punishable withimprisonment for a term not exceeding six months

Question 19

S1 Part IV CLAUSE 2

Answer 19

in the opinion of the Council, brings disrepute to the profession or the Institute as a result of his action whether or not related to his professional work

Question 20

S2 Part I Clause 1

Answer 20

Discloses Information acquired in the course of his professional engagementto any person other than his client so engaging him without the consent of his client orotherwise than as required by any law for the time being in force

Question 21

S2 Part I Clause 2

Answer 21

If he certifies or submits in his name or in the name of his firm, a report of anexamination of financial statements unless the examination of such statements and therelated records has been made by him or by a partner or an employee In his firm or byanother chartered accountant in practice

Question 22

S2 Part I Clause 3

Answer 22

Permits his name or the name of his firm to be used in connection with anestimate of earnings contingent upon future transactions in manner which may lead tothe belief that he vouches for the accuracy of the forecast

Question 23

S2 Part I Clause 4

Answer 23

Expresses his opinion on financial statements of any business or enterprisein which he, his firm, or a partner in his firm has a substantial interest

Question 24

S2 Part I Clause 5

Answer 24

Fails to disclose a material fact known to him which is not disclosed in afinancial statement, but disclosure of which is necessary in making such financialstatement not misleading where he is concerned with that financial statement in aprofessional capacity

Question 25

S2 Part I Clause 6

Answer 25

Fails to report a material misstatement known to him to appear in a financialstatement with which he is concerned in a professional capacity

Question 26

S2 Part I Clause 7

Answer 26

Does not exercise due diligence, or is grossly negligent in the conduct of hiprofessional duties

Question 27

S2 Part I Clause 8

Answer 27

Fails to obtain sufficient information which is necessary for expression of an opinion or its exceptions are sufficiently material to negate the expression of anopinion

Question 28

S2 Part I Clause 9

Answer 28

Fails to invite attention to any material departure from the generally acceptedprocedure of audit applicable to the circumstances.

Question 29

S2 Part I Clause 10

Answer 29

Fails to keep moneys of his client other than fees or remuneration or moneymeant to be expended in a separate banking account or to use such moneys forpurposes for which they are intended within reasonable time.

Question 30

S2 Part II Clause 1

Answer 30

contravenes any of the provisions of this Act or the regulations made there under or any guidelines issued by the Council

Question 31

S2 Part II Clause 2

Answer 31

being an employee of any company, firm or person, discloses confidentialinformation acquired in the course of his employment except as and when required byany law for the time being in force or except as permitted by the employer

Question 32

S2 Part II Clause 3

Answer 32

Includes in any information, statement, return or form to be submitted to theInstitute, Council or any of its Committees, Director (Discipline), Board of DisciplineDisciplinary Committee, Quality Review Board or the Appellate Authority any particularsknowing them to be false

Question 33

S2 Part II Clause 4

Answer 33

Defecate or embezzled money received in his professional capacity

Question 34

S2 Part III

Answer 34

A member of the Institute, whether in practice or not, shall be deemed to be guilty ofother mis–conduct, if he is held guilty by any civil or criminal court for an offence whichis punishable with imprisonment for a term exceeding six monthsImprisonment awarded for a term exceeding six months in any civil/criminal mattertreated as a major offence under ‘other misconduct’ is included in this Schedule.Where the Director (Discipline) is of the opinion that a member is guilty of anyprofessional or other misconduct mentioned in the second schedule or in both theSchedule, he shall place the matter before the Disciplinary Committee