By P. N. Shah, H. N. Motiwalla
Chartered Accountants
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The Ethical Standards Board of ICAI has considered some of the ethical issues which have been published in C.A. Journal of November, 2011, at pages 771-772. Some of these issues are as under:
(i) Issue: Whether an auditor is required to provide the client or other auditor of the same enterprise access to his audit working papers ? Working papers are the property of an auditor. An auditor is not required to provide the client access to his audit working papers. The main auditors of an enterprise do not have right of access to the audit working papers of the branch auditors, except in case it is required by the regulatory norms.
(ii) Issue: Whether a joint auditor will be responsible for the work done by other joint auditor? Council direction under Clause (2) of Part I of the Second Schedule to the C.A. Act prescribes that in respect of audit work divided among the joint auditors, each joint auditor is responsible only for the work allocated to him, whether or not he has prepared a separate report on the work performed by him. However, on the other hand, all the joint auditors are jointly and severally responsible for the work which is not inter se divided among the auditors, and also for compliance of requirements of relevant statues.
(iii) Issue: Can a member in practice express his opinion on financial statements of any business or enterprises in which he, his firm or a partner in his firm has a substantial interest? As per Clause (4) of Part I of the Second Schedule to the C.A. Act, a Chartered Accountant in practice shall be deemed to be guilty of professional misconduct, if he expresses his opinion on financial statements of any business or any enterprise in which he, his firm or a partner in his firm has substantial interest. The word ‘substantial interest’ is defined in the Resolution passed by the Council in pursuance to Regulation 190A of the CA Regulations (Please refer Appendix F to Code of Ethics — P. 345).
(iv) Issue: Whether a statutory auditor can accept the system audit of the same entity? The statutory auditor can accept the assignment of a system audit of the same entity, provided it did not involve any scrutiny/review of financial data and information.
(v) Issue: Can a Chartered Accountant receive his professional fees in advance party or in full? There is no bar in the C.A. Act or in the CA Regulations as well as the Code of Ethics in taking the fees in advance.
