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Eternal vigilance: (Cl. (7) of Part I of 2nd Schedule)
Shrikrishna (S) – Yes, My dear Arjun, how was your vacation? How was your Europe tour?
Arjun (A) – Well, my family had lot of fun there. It was quite smooth. But I was constantly worried.
S – Why?
A – So many things pending in office. Many articles on leave for exam. There were phone calls almost every two hours.
S – Oh! So sad! You mean to say, in your absence nobody can tackle the things here?
A – All are useless. Even the partners depend upon me for small decisions.
S – How many years are you in the profession now?
A – More than 25 years.
S – Still you have not built up a good organisation? Have you learnt to delegate work to juniors? Haven’t you established systems?
A – Off and on I try to; But the staff is not stable. They don’t want to learn. Qualified people are afraid of taking decisions. And about articles and trainees, the less said the better.
S – If such is the situation, how can you perform well even if you are here? CA Profession is essentially a team-work.
A – I feel, our profession is a continuous struggle. You never feel that you have settled down. Every now and then something new crops up.
S – But then, have you spared any time to train your staff and articles?
A – Where is the time to do all that? It is always a fire-fighting exercise. You should see our plight in September.
S – I know, you have to sign many audits.
A – This year, there is further fuel to fire.
S – Why? What is new this year?
A – All these years, we were just uploading the returns. Actual audit reports, we sign much later. Sometimes, even while doing next year audit. From this year, we need to upload the audit reports as well!
S – Oh! That means just as I told Bhagavad-Gita to you in Mahabharata, I need to spend a lot of time telling you about systems.
A – It is easy to preach all that philosophy. Same is the case with those Management trainers. Everything seems very sweet when they talk. But the worries come back as soon as the training session is over.
S – That only shows that you are not a professional. What I told in Geeta was not merely for that Mahabharata war. I told you that life itself is a continuous war. You need to equip yourself to fight it.
A – Tell me all those things after 30th September. Till then I have no time. I have to complete so many audits.
S – Arjun dear, precisely for that you need to work on systems. Otherwise, you will sign wrong balance sheets.
A – Who told you that the balance sheets we sign are correct? We only write that it is true and fair!
S – That is why there are so many disciplinary cases for negligence.
A – How to cope up with so much work? Everybody comes at the 11th hour.
S – That is why you need to plan. You need to be pro-active. You need to communicate and initiate things well in time. This is the appropriate time to plan the work to be completed in September.
A – I am told, they don’t take all the errors that seriously. They say even if there is some negligence, it does not matter. What is punished is only ‘gross negligence’! That means, there should be some blunder! A gross negligence?
S – You are mistaken. Now the trend is changing. In the year 2006, your CA Act was amended. Earlier, on the Second Schedule, Part one, Clause (7) mentioned only about gross negligence. But now, they have also added ‘lack of due diligence’.
A – My God! That makes it too wide! Many times, we just change the year and print the same audit report.
S – Due to computers, there is a cut and paste. Very dangerous!
A – I am told, there are many misconduct cases for errors even in charitable trusts’ balance sheet. I don’t understand how does it matter? There is no tax liability. It may be a small school.
S – This is a common misconception. You are so much obsessed with the thoughts of taxation! You believe, there is nothing beyond taxation. Remember, you cannot forget your role and duties as an auditor. Audited balance-sheet is used for many things other than tax. It is used for giving grants in aid. It may have implications in service tax. Or ever TDS to be done by trusts.
A – I remember one case where a member signed a trust’s balance-sheet. It was correct. But the cash book showed negative cash balance on a few days in between! Addition made in income tax was also deleted.
S – Still he was held guilty. There is obviously a lapse in the role as an auditor. Your signature loses credibility. Whether revenue or any person is affected or not is immaterial.
A – Then you better explain to me all these things next month. I should not wait till September.
S – Yes. This year is 150th birth anniversary of my beloved disciple – Swami Vivekananda. He appealed to the people to wake up and act. Same way, there is special awakening required among professionals. And now there are grave consequences under new Companies Bill.
A – I will follow your advice, O Lord!
The above dialogue is with reference to Clause (7) of Part I of Second Schedule, which reads as under :
A chartered accountant in practice shall be deemed to be guilty of professional misconduct, if he –
Clause (7): does not exercise due diligence, or is grossly negligent in the conduct of his professional duties.
[Note: This is the most important and serious charge of misconduct. Discussion on this clause may continue with few illustrations.]
