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Schedule II
Part I:
Professional misconduct
in relation to
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Request for disclosure must come from client.
Duty in relation to unlawful act by client:
(i)
No duty on
(ii)
No duty to shield him from consequences of tax frauds. |
(iii)
Disclosure immediately. If small fraud may be made with submission of
current return.
(iv)
Genuine mistake/omission client won’t object to make complete disclosure.
(v)
Fraud in past returns/A/c. in which no same C.A. Client Is advised to
disclose. He may continue to act.
(vi)
Fraud relates to A/c. examined/reported by same
(vii)
If fraud in returns/a/c. currently being prepared client advised to
disclose. Else reservation in his report and disassociate with
return.
(viii)Member’s assignment is dispensed with before A/c. completed/reported
on/return submitted
® no further duty.
(ix)
Relates to A/c. not prepared/reported by member, for example where he is
preparing business returns while fraud is there is individual
return of partner,
he may continue with Business A/c. but under no obligation to do
so.
(x)
Impression on Client :
(a)Disclosure only penalty, non disclosure with fine/imprisonment.
(b)Intimation by member to I.T. authorities about disassociation can start
investigation against client.
(xi)
Summon the member to examine him on oath, legal expert advice is taken.
(xii)
For production of Books of Accounts/Documents
® Expert advice.
Clause 2:
“If
he certifies/submits in his/his firm’s name a report of an
examination of financial statements unless examination is
made
by
him / a partner / employee / another
Clause 3:
“Permits
his / his firm’s name to be used in connection with estimate of
earnings contingent upon future transaction in manner which may
lead to belief that he vouches for accuracy of the forecast. “
Note:
He may participate in preparing and servicing them provided he clearly
indicates source of information, basis of forecasts and major
assumption and provided that he doesn’t vouch for accuracy of
the forecasts.
Clause 4:
“Expresses
his opinion on Financial Statement of any Business /
Council clarification:
He or in his firm name shouldn’t accept,
Auditor ship of trust wherein he/partner is either employee or a trustee.
Members should not write Books of Account of clients.
And also the following:
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1. Enterprise/Business in which member’s either owner or partner.
2. Enterprise/Business in which his partner/relative has sub. Interest.
3. Company in which he is director.
4.
Company in which his Partner/Relative is director having sub. Interest.
He should take care of the same while acting as Tax Consultant/Financial
Advisor also. |
Shouldn’t
accept.
Disclose the
fact if audit the same
Disclose the
fact if audit the same |
Clause 5:
“Fails
to disclose a material fact known to him which is not disclosed
in the Financial Statement, but disclosure of which is necessary
to make financial statements not misleading”
Clause 6:
“Fails
to report a material misstatement known to him to appear in a
financial statement with which he is concerned in a professional
capacity.”
Clause 7:
“Does not exercise Due diligence, or is grossly
negligent in the conduct of his professional duties”
E.g.:1. C.A issues false certificates of Cash in Hand,
2. Fails to indicate the mode of valuation of investments.
“Gross negligence” means negligence of high degree arising out of
recklessness and covering misconduct.
Gross negligence is the same thing as ‘negligence’ with the addition of
vituperative epithet.
Vituperative: means offensive, malicious, insulting, abusive, etc.
Epithet: means description, nick name, etc
Clause 8:
“Fails to obtain sufficient information to warrant the
expression of opinion as his exception is sufficient material to
negate the expression of opinion.”
ü
He shouldn’t express it before obtaining required information.
ü
He should reproduce (brief self-explanatory explanation) the notes of
qualificatory nature in report to enable reader to know
importance of these qualification.
Clause 9:
“Fails
to invite attention to any material departure from generally
accepted procedure of audit applicable to the circumstances.”
Clause 10:
“Fails
to keep moneys of his client in separate banking A/c. or to use
such moneys for purposes other than those for which they are
intended within a reasonable time.”
Explanations:
(i)
Advance received by
(ii)
It doesn’t apply to expenses to be spent within reasonably short time.
These need not be deposited into separate bank account.
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