ETHICS AND U

Shrikrishna:
Paarth, are you having a headache?

Arjun:
Lord, in our practice there is nothing but headache.

Shrikrishna:
So what’s new that has happened? Tax deadline? No Extension?

Arjun:
That is a routine headache, an annual feature. But other ethical headaches are
increasing.

Shrikrishna:‘Ethical’
headaches?

Arjun:
Yes. Relating to our Code of Ethics. Whatever you do, there is some
contravention or other. I wonder how we can continue in the profession.

Shrikrishna:
Tell me, what’s the problem.

Arjun:
See, Bhagwan, we need to cater to a large
number of clients who are not very organised in terms of accounting and
record-keeping.

Shrikrishna:
Even in large corporates there is a mess in accounts. But in a ‘posh’
environment it gets concealed.

Arjun:
True. But these small people – SMEs, societies, trusts. Such clients do not
have regular accountants. They are not willing to appoint anyone and also
cannot afford them.

Shrikrishna:
Yes, I’m aware. But that is their problem. Why are you bothered?

Arjun:
Bhagwan, we need to certify their
accounts and sign the audit.

Shrikrishna:
Tell them that unless your accounts are proper, we cannot do the audit. Do they
at least pay your fees?

Arjun:
Don’t ask me! Fees they pay next year. But it is also our social work.

Shrikrishna:
What exactly is the difficulty?

Arjun:
The clients expect us to suggest some person to do up their
accounts.

Shrikrishna:
It is a patch-work. Not a long-term solution.

Arjun:
Right. This problem arises every year at the time of audit. We are helpless. So
we ask someone from our circle to write the accounts, or make up the
differences.

Shrikrishna:
What do you mean by ‘someone from our circle’?

Arjun:
It may be our employees or ex-employees, or someone does the accounts of our
other clients.

Shrikrishna:
I know. There are many such persons who write accounts and simply
take your signature on the audit.

Arjun:
Yes. That’s very common.

Shrikrishna: And you sign the accounts blindly. In good faith.

Arjun:
Yes, Bhagwan, you know
all our trade secrets! That signing gives us even more headaches. But I am
talking about something else here.

Shrikrishna:
And what is that?

Arjun:
When it comes to billing, our CA members raise a common invoice of audit and
accounting.

Shrikrishna:
Oh! That’s dangerous. You cannot render accounting services to
your audit client.

Arjun:
Yes. Our members also take it casually. And what they do is that after
recovering the amount from the client, they don’t pay separate cheques to the
accounts person. That makes things even worse.

Shrikrishna:
Oh! And many may be saying that they paid in cash?

Arjun:
You said it! That is the problem.

Shrikrishna:
It is all the more dangerous if that person is your own employee,
part-time or full-time, whatever.

Arjun:
And in any case, billing should not be common. So your social
service invites trouble for you.

Shrikrishna:
So, what is the lesson you learn?

– Insist
on the clients to get organised.

– Insist
on their appointing their own man for accounts.

– Do
not raise a common invoice even by mistake.

– For
any reason, if his payment is routed through you, make proper documentation and cheque entries.

– Insist
on that person raising a separate bill.

Arjun:
There is one more difficulty. Section 34 of the Maharashtra Public Trusts Act
is very strange. It says the final accounts shall be prepared and submitted to
the Charity Commissioner by the auditor!

Shrikrishna:
Oh! There is a special reason for this. You should know the
history behind it. When these laws were framed the lawmakers believed that the
managing bodies of trusts and societies would consist of social workers. They
would not afford trained and qualified staff and the services of a
professional. So it was thought that an auditor would act as a friend,
philosopher and guide. But the times have changed.

Arjun:
True. Now, the regulators should review the whole situation. The leniency shown
earlier to trusts and societies should no longer continue.

Shrikrishna: Whatever
it may be, but as a professional it is your duty to take care. Don’t act in a
loose manner.

Arjun:
Yes, Bhagwan!

Om
Shanti!

(This
dialogue is based on conflict of interest-maker checker principle, Council
guideline. Contravention of any guideline is misconduct under Item No. 1 Part
II of second schedule to the CA Act.)