The Ethical Standards Board of ICAI has given answers to some of the ethical issues raised by our members. These are published on page 1794 of C.A. Journal for June, 2012. Some of these issues are as under.
(i) Issue: Can a Chartered Accountant in practice share his fees with the Government in respect of Government Audit? The Institute came across certain Circulars/Orders issued by the Registrar of various State Co-operative Societies, wherein it has been mentioned that certain amount of audit fee is payable to the concerned State Government and the auditor has to deposit a percentage of his audit fee in the State Treasury by a prescribed challan within a prescribed time of the receipt of audit fee. In view of the above, the Council considered the issue and while noting that the Government is asking auditors to deposit such percentage of their audit fee for recovering the administrative and other expenses incurred in the process, the Council decided that as such there is no bar in the Code of Ethics to accept such assignment wherein a percentage of professional fees is deducted by the Government to meet the administrative and other expenditure.
(ii) Issue: Can a goodwill of a Chartered Accountants’ firm be purchased? The Council of the Institute considered the issue whether the goodwill of a proprietary firm of Chartered Accountant can be sold/transferred to another eligible member of the Institute, after the death of the proprietor concerned and came to the view that the same is permissible. Accordingly, the Council passed the Resolution that the sale/transfer of goodwill in the case of a proprietary firm of Chartered Accountants to another eligible member of the Institute, shall be permitted, subject to the provisions appearing at pages 129-130 of the Code of Ethics 2009 edition.
(iii) Can a practising Chartered Accountant solicit clients or professional work by advertisement? Clause (6) of Part-1 of the First Schedule to the Act prohibits a practising Chartered Accountant from soliciting clients or professional work either directly or indirectly by circular, advertisement, personal communication or interview or by any other means.
However, there are the following exceptions to it:
(i) A member can respond to tenders or enquiries issued by various users of professional services or organisations from time to time and securing professional work as a consequence.
(ii) A member may advertise changes in partnerships or dissolution of a firm, or of any change in the address of practice and telephone numbers, the advertisement being limited to a bare statement of facts and consideration given to the appropriateness of the area of distribution of newspaper or magazine and number of insertions.
(iii) A member is permitted to issue a classified advertisement in the Journal/Newspaper of the Institute intended to give information for sharing professional work on assignment basis or for seeking professional work on partnership basis or salaried employment in the field of accounting profession, provided it only contains the accountant’s name, address, telephone, fax number and e-mail address.
