Arjun: (Chants Shrikrishna’s bhajan) ‘Hey Bhagwan. You are so kind! Where are you today? Please come and give me your ‘darshan’.
Shrikrishna: Arrey Parth, what happened to you today? You are in such a happy mood. Did your Government give further extension of time?
Arjun: No, Lord. But they will have to give it. Their own site is not working for the last many days. The new utility has gone for a toss.
Shrikrishna: Really? But the system was working all right till recently.
Arjun: Yes, but they suddenly thought of changing the system. They engaged a new service provider for a huge amount of money. And nothing is working well. It’s totally in a mess.
Shrikrishna: Anyway, let it be. Tell me, why are you so happy today?
Arjun: I got a good audit assignment. Two directors of a big private limited company approached me today through a common friend.
Shrikrishna: Oh, I see. What for?
Arjun: They offered me the statutory and tax audit of the company. They say they are not happy with their present CA.
Shrikrishna: Why?
Arjun: He takes a long time to complete the work, charges exorbitant fees and harasses them in tax matters.
Shrikrishna: Do you know their existing CA?
Arjun: Not directly. But I have heard that firm’s name. They are quite large in size. They have a good name.
Shrikrishna: So when will you take up the work?
Arjun: Immediately. They want it urgently as they are going for a new project. The two directors are giving the appointment letter tomorrow itself.
Shrikrishna: Very good. But you will have to write to the previous auditor.
Arjun: Yes. Actually, I called one of their partners who has signed the last year’s audit.
Shrikrishna: What did he say?
Arjun: He said ‘No problem, please go ahead’. I asked for his NOC. He said not to worry. They were not very keen to retain that audit. The formalities can be done later.
Shrikrishna: So, starting the work immediately?
Arjun: Of course! Why should I leave the opportunity? They are paying a good fee and during Covid I have a liquidity crunch.
Shrikrishna: Arjun, I doubt whether you are the same Arjun to whom I narrated the Bhagwad Gita in the Mahabharata.
Arjun: Why? What makes you think that way?
Shrikrishna: That Arjun was very intelligent, brave, honest and ethical. You are behaving the exact opposite way. All my preachings on ethics have gone to waste.
Arjun: I don’t understand. I did speak with the previous auditor. Only then I decided to start the work. They need it urgently.
Shrikrishna: They may need it. But what about your ethics? How can you compromise on them?
Arjun: I will definitely write to them. Now our Institute has permitted communication by email also. Who has time to wait for registered post AD?
Shrikrishna: My dear Arjun, your intellect seems to be covered by ‘moha’. You are not able to use your discretion and are forgetting your duty.
Arjun: Why do you say that?
Shrikrishna: Firstly, you should think why such a large company would approach you at the last moment. Are the reasons given by them convincing? Did you verify the facts?
Arjun: I am aware that these so-called large CA firms do not render proper service. So, their clients are never happy.
Shrikrishna: But have they resigned? Or have they been removed?
Arjun: But the directors are giving me a regular letter of appointment. I will take a copy of the resolution if you suggest so.
Shrikrishna: Arjun, will it suffice? Please read Clause (9) of Part 1 of the First Schedule to your CA Act. You must ensure compliance with the Company Law provisions on change of auditors.
Arjun: Like what?
Shrikrishna: Their resignation, the reasons for the resignation, then calling of EGM. Its notices, minutes, attendance register… Don’t take it so lightly.
Arjun: But many people accept just an appointment letter from the directors.
Shrikrishna: Then they are sure to invite trouble for themselves. Be loyal to your profession. Clients take advantage of the lack of unity in your profession.
Arjun: Then what should I do?
Shrikrishna: Ensure all secretarial compliances, better take a certificate from a CS. Verify the papers for yourself. And what about the previous auditor’s fee? If the undisputed audit fees are pending, then you can’t accept the audit.
Arjun: But the directors are disputing the fees. They say he charged too much!
Shrikrishna: But once their fee is appearing as outstanding in the balance sheet and it is signed by the directors, it is treated as undisputed. The subsequent dispute is irrelevant.
Arjun: Where is this written?
Shrikrishna: See your Council’s Guidelines of 8th August, 2008 – Chapter VII.
Arjun: But their partners have assured me they have no objection.
Shrikrishna: This is dicey. Never accept such things just in good faith. We are in kaliyug.
Arjun: Thanks for opening my eyes. I will tell the client…
Shrikrishna: Actually, this is a very elementary thing. It is unfortunate that your ‘lobha’ (temptation) made you forget this lesson.
Arjun: But this is all unnecessary. Why do they create hurdles?
Shrikrishna: Arjun, you are mistaken. Imagine that you are in the position of the previous auditor. And some client criticises you, approaches another CA, doesn’t pay your fees…
Arjun: Agreed, agreed, agreed! I’ve understood. I remember two of my friends faced a disciplinary case in a similar situation. Good that you cautioned me. Much obliged, Lord!
Shrikrishna: Take care. I have no time to narrate to you the Gita once again!
||Om Shanti||
[This dialogue is based on Clause Nos. (8) and (9) of Part 1 of the First Schedule to the CA Act and Council General Guidelines – Chapter VII]
