The Disciplinary Committee (DC) of ICAI has decided some cases. These cases are reported in the publication of the ICAI “Disciplinary Cases” VOL- 1. The page Nos. Given below are from this book. The names of Members are not given, in order to maintain confidentiality.
(I) Case of Mr. T. G.
In this case, a Public Sector Bank had complained that the Member, being the concurrent auditor of a Branch, failed to report in their Audit Report for January about certain exceptional and fraudulent transactions. If reported, the Bank could have averted the huge loss suffered by it. Some of the items of high withdrawals by certain parties, some return of large value clearing cheques, kite flying operations of the above parties and some of the other irregularities were listed by the Bank in its complaint.
The defence of the Member was that these irregularities started prior to his appointment as a concurrent auditor. He was not getting enough co-operation from the Branch Staff. Therefore, after submitting the report for one month he had resigned. Further, in one month’s audit it was not possible to unearth a deliberately concealed irregularity. After a detailed inquiry, the DC was not satisfied with the explanation given by the Member and held him guilty of professional misconduct under Clauses (7) and (8) of Part I of the Second Schedule to C.A. Act. However, the DC considered the facts that (i) although the Member was appointed as a concurrent Auditor for the year, he conducted audit for one month only and then resigned, as he did not get sufficient co-operation from the staff of the Branch, (ii) in one month’s span it was not feasible to unearth a perpetual fraud which had been going on for many years and (iii) the role of the member was limited to one month’s audit. On these facts, the DC awarded punishment by way of ‘Reprimand’ only . (P. 114 – 125 of Part I of Vol. -I ) (ii) Case of Mr. S. S. G. In this case, the Excise Intelligence Department had reported that (a) the Member had given an opinion to S.A. Ltd. that no service tax was payable by the company, (b) the Company did not deposit this tax which amounted to evasion of the service tax of about Rs. 142.45 crore and (c) the member had admitted that he had isued the opinion. Before the DC, the Member explained that he was appointed as a retainer of the Group. He also stated that the opinion was given to the company on the query whether the services provided by the company would be liable to service tax under the head Advertising Agency. Thus, the scope was limited to this one category of service. Further, the opinion was not given to the Excise Department but to the company. The Member also explained that this opinion was based on the decision in the reported case of Advertising Club vs. CBEC ( 6 STT 196-MAD). After a detailed enquiry, the DC accepted the submission of the Member and held that he was not guilty of professional misconduct. (P. 98 to 103 of Part II of Vol.I). (iii) Case of Mr. S. J. In this case, the Joint Commissioner of Sales tax filed the complaint against the Member. It was alleged that the Member had certified two different sets of financial statements of BPP Ltd. for 2004-05, 2005-06 and 2006-07 in the name two Firms viz. M/s. J & D and M/s. M.R. & Co. The first set signed in the name of M/s. J & D was filed by the company with the bank and the second set was filed with the Sales Tax Department. This amounted to Professional Misconduct. Before the DC, the Member explained as under: (a) The firm of M/s. J & D was dissolved on 01-04-2005 when it merged with M/s. M.R. & Co. (b) He had signed financial statements of BPP Ltd. as
(ii) Case of Mr. S. S. G.
In this case, the Excise Intelligence Department had reported that (a) the Member had given an opinion to S.A. Ltd. that no service tax was payable by the company, (b) the Company did not deposit this tax which amounted to evasion of the service tax of about Rs. 142.45 crore and (c) the member had admitted that he had isued the opinion. Before the DC, the Member explained that he was appointed as a retainer of the Group. He also stated that the opinion was given to the company on the query whether the services provided by the company would be liable to service tax under the head Advertising Agency. Thus, the scope was limited to this one category of service. Further, the opinion was not given to the Excise Department but to the company. The Member also explained that this opinion was based on the decision in the reported case of Advertising Club vs. CBEC ( 6 STT 196-MAD). After a detailed enquiry, the DC accepted the submission of the Member and held that he was not guilty of professional misconduct. (P. 98 to 103 of Part II of Vol.I).
(iii) Case of Mr. S. J.
In this case, the Joint Commissioner of Sales tax filed the complaint against the Member. It was alleged that the Member had certified two different sets of financial statements of BPP Ltd. for 2004-05, 2005-06 and 2006-07 in the name two Firms viz. M/s. J & D and M/s. M.R. & Co. The first set signed in the name of M/s. J & D was filed by the company with the bank and the second set was filed with the Sales Tax Department. This amounted to Professional Misconduct. Before the DC, the Member explained as under:
(a) The firm of M/s. J & D was dissolved on 01-04-2005 when it merged with M/s. M.R. & Co.
(b) He had signed financial statements of BPP Ltd. as Partner of M/s M.R & Co. for 2004-05 to 2006-07.
(c) The financial statements, alleged to have been signed by him as partner of M/s. J & D for these three years and filed by the company with the Bank were forged by someone. The firm of M/s. J & D was not in existence from 01-04-2005 onwards.
The DC, after examining the evidence produced before it, came to the conclusion that the financial statements filed by the company with the Bank, which were alleged to have been signed by the Member as partner of J & D were forged by someone. On this finding, the DC held that the Member was not guilty of professional misconduct ( P. 111 to 117 Part II of Vol. I).
