Code of Ethics

 (i) Issue: In a representation submitted to a company u/s. 225(3) of the Companies Act, 1956, the auditors of the company included the contribution made by the firm in strengthening the control procedures of the company during their association with the company. Is it misconduct? Para (i) under Clause (6) of Part 1 of the First Schedule to the CA Act, provides for scope of such representation, which an Auditor is entitled to make u/s. 225(3) of the Companies Act, 1956. This section permits a retiring auditor to make a representation in writing (not exceeding a reasonable length) to the company. The proposition of the partner to highlight contributions made by the firm in strengthening the control procedures in the representation should not be included in such representation because the representation letter should not be prepared in a manner so as to seek publicity. The Code of Ethics issued by the Institute makes it amply clear that the right to make representation does not mean that an auditor has any prescriptive right or a lien on an audit. The wording of his representation should be such that apart from the opportunity not being abused to secure needless publicity, it does not tantamount directly or indirectly to canvassing or soliciting for his continuance as an auditor. The letter should merely set out in a dignified manner how he has been acting independently and conscientiously through the term of office and may, in addition, indicate if he so chooses his willingness to continue as auditor if re-appointed by the shareholders. The representation proposed by the auditors could not be approved since, it may lead to his being held P. N. Shah H. N. Motiwalla Chartered Accountants icai and its members guilty of professional misconduct under Clause (6) of Part 1 of the First Schedule to the Act.

(ii) Issue:

Can a Chartered Accountant in practice, accept original professional work emanating from the client introduced to him by another member? Para (i) under Clause (6) of Part 1 of the First Schedule to the Act prescribes that a member should not accept the original professional work emanating from a client introduced to him by another member. If any professional work of such client comes to him directly, it should be his duty to ask the client that he should come through the other member dealing generally with his original work.

(iii) Issue:

Whether a Chartered Accountant in practice can give public interviews and also whether he can furnish details about himself or his firm in such interviews? A Chartered accountant in practice can give public interviews. While doing so, due care should be taken to ensure that such interviews or details about the member or his/her firm is not given in a manner highlighting the professional attainments, which may hit clauses (6) & (7) of the First Schedule of the Act.

(iv) Issue:

 Whether a Chartered Accountant in practice can use expression like Income Tax Consultant, Cost Accountant, Company Secretary, Cost Consultant or a Management Consultant? Council direction under Clause (7) of Part 1 of the First Schedule to the Act which prescribes that it is improper for a Chartered Accountant to state on his professional documents that he is an Income tax Consultant, Cost Accountant, Company Secretary, Cost Consultant or a Management Consultant. However, it is permitted to mention his/her degrees.

(v) Issue:

Can a Chartered Accountant in practice give the date of setting up the practice or date of establishment on the letterheads and other professional documents, etc.? Council direction under Clause (7) of Part 1 of the First Schedule to the Act prescribes that the date of setting up of the firm on the letterheads and the professional documents, etc. should not be mentioned. However, in the Website, the year of establishment can be given on a specific “pull” request.