Chartered Accountants

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posted 25 Jan 2014, 12:46 by CA Kunjan Shah

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Chartered Accountant Act

posted 25 Jan 2014, 12:43 by CA Kunjan Shah

1
THE CHARTERED ACCOUNTANTS ACT, 19491
(No. 38 of 1949)
[As amended by The Chartered Accountants
(Amendment) Act, 2006 (No. 9 of 2006)2]
An Act to make provision for the regulation of the
profession of Chartered Accountants.
WHEREAS it is expedient to make provision for the
regulation of the profession of chartered accountants and
for that purpose to establish an Institute of Chartered
Accountants;
It is hereby enacted as follows :−
CHAPTER I
PRELIMINARY
1. Short title, extent and commencement
(1) This Act may be called the Chartered
Accountants Act, 1949.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the
Central Government may, by notification in the Official
Gazette, appoint in this behalf.
2. Interpretation
(1) In this Act, unless there is anything repugnant
in the subject or context,−
____________________
Footnotes given at the end of each Chapter
2
(a) “associate” means an associate member
of the Institute;
3[(aa) “Authority” means the Appellate
Authority constituted under section
22A;
(aaa) “Board” means the Quality Review
Board constituted under section 28A];
(b) “chartered accountant” means a person
who is a member of the Institute;
(c) “Council” means the Council of the
Institute;
(d) “holder of a restricted certificate”
means a person holding a permanent or
temporary restricted certificate granted
by a Provincial Government under the
Restricted Certificates Rules, 1932;
(e) “Institute” means the Institute of
Chartered Accountants of India
constituted under this Act;
4[(ea) “notification” means a notification
published in the Official Gazette];
(f) “prescribed” means prescribed by
regulations made under this Act;
(g) “Register” means the Register of
Members maintained under this Act;
(h) “registered accountant” means any
person who has been enrolled on the
Register of Accountants maintained by
3
the Central Government under the
Auditor’s Certificates Rules, 1932;
5[(ha) “specified” means specified by rules
made by the Central Government under
this Act;
(hb) “Tribunal” means a Tribunal established
under sub-section (1) of section 10B;]
(i) ”year” means the period commencing
on the 1st day of April of any year and
ending on the 31st day of March of the
succeeding year.
(2) A member of the Institute shall be deemed “to
be in practice”, when individually or in partnership with
chartered accountants in practice, he, in consideration of
remuneration received or to be received,−
(i) engages himself in the practice of
accountancy; or
(ii) offers to perform or performs services
involving the auditing or verification of
financial transactions, books, accounts
or records, or the preparation,
verification or certification of financial
accounting and related statements or
holds himself out to the public as an
accountant; or
(iii) renders professional services or
assistance in or about matters of
principle or detail relating to accounting
procedure or the recording, presentation
or certification of financial facts or data;
or
4
(iv) renders such other services as, in the
opinion of the Council, are or may be
rendered by a chartered accountant in
practice;
and the words “to be in practice” with their grammatical
variations and cognate expressions shall be construed
accordingly.
Explanation :− An associate or a fellow of the
Institute who is a salaried employee of a chartered
accountant in practice or a firm of such chartered
accountants shall, notwithstanding such employment, be
deemed to be in practice for the limited purpose of the
6[training of articled assistants].
____________________
1This Act received the assent of the Governor-General on the 1st
May 1949 and was published in Part IV of the Gazette of India
Extraordinary dated the 3rd May 1949.
2This Act received the assent of the President on the 22nd March,
2006, and was published in Part II Section I of Gazette of India
Extraordinary dated the 23rd March, 2006.
3, 4 & 5Inserted by the Chartered Accountants (Amendment)
Act, 2006 and came into force w.e.f. 8.8.2006.
6Substituted, for the words, “training of articled clerks” by the
Chartered Accountants (Amendment) Act, 2006 and came into force
w.e.f. 8.8.2006.
5
CHAPTER II
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF
INDIA
3. Incorporation of the Institute
(1) All persons whose names are entered in the
Register at the commencement of this Act and all persons
who may hereafter have their names entered in the
Register under the provisions of this Act, so long as they
continue to have their names borne on the said Register,
are hereby constituted a body corporate by the name of
the Institute of Chartered Accountants of India, and all such
persons shall be known as members of the Institute.
(2) The Institute shall have perpetual succession
and a common seal and shall have power to acquire, hold
and dispose of property, both movable and immovable,
and shall by its name sue or be sued.
4. Entry of names in the Register
(1) Any of the following persons shall be entitled
to have his name entered in the Register, namely :−
(i) any person who is a registered
accountant or a holder of a restricted
certificate at the commencement of this
Act;
(ii) any person who has passed such
examination and completed such training
as may be prescribed for members of
the Institute;
(iii) any person who has passed the
examination for the Government
Diploma in Accountancy or an
examination recognised as equivalent
6
thereto by the rules for the award of the
Government Diploma in Accountancy
before the commencement of this Act,
and who, although not duly qualified to
be registered as an accountant under
the Auditor’s Certificates Rules, 1932,
fulfils such conditions as the Central
Government may specify in this behalf;
(iv) any person who, at the
commencement of this Act, is engaged
in the practice of accountancy in any
Part B State and who, although not
possessing the requisite qualifications to
be registered as an accountant under
the Auditor’s Certificates Rules, 1932,
fulfils such conditions as the Central
Government may specify in this behalf;
(v) any person who has passed such other
examination and completed such other
training without India as is recognised
by the Central Government or the
Council as being equivalent to the
examination and training prescribed for
members of the Institute:
Provided that in the case of any
person who is not permanently residing
in India, the Central Government or the
Council, as the case may be, may
impose such further conditions as it
may deem fit;
(vi) any person domiciled in India who at
the commencement of this Act is
studying for any foreign examination and
is at the same time undergoing training,
whether within or without India, or,
who, having passed such foreign
7
examination, is at the commencement
of this Act undergoing training, whether
within or without India:
Provided that any such examination
or training was recognised before the
commencement of this Act for the
purpose of conferring the right to be
registered as an accountant under
Auditor’s Certificates Rules, 1932, and
provided further that such person
passes the examination or completes
the training within five years after the
commencement of this Act.
(2) Every person belonging to the class
mentioned in clause (i) of sub-section (1) shall have his
name entered in the Register without the payment of any
entrance fee.
1[(3) Every person belonging to any of the classes
mentioned in clauses (ii), (iii), (iv), (v) and (vi) of subsection
(1) shall have his name entered in the Register
on application being made and granted in the prescribed
manner and on payment of such fees, as may be
determined, by notification, by the Council, which shall
not exceed rupees three thousand:
Provided that the Council may, with the prior
approval of the Central Government, determine the fee
exceeding rupees three thousand, which shall not in any
case exceed rupees six thousand.]
(4) The Central Government shall take such steps
as may be necessary for the purpose of having the names of
all persons belonging to the class mentioned in clause (i) of
sub-section (1) entered in the Register.
8
5. Fellows and Associates
(1) The members of the Institute shall be divided
into two classes designated respectively as associates and
fellows.
(2) Any person shall, on his name being entered in
the Register, be deemed to have become an associate
member of the Institute and be entitled to use the letters
A.C.A. after his name to indicate that he is an associate
member of the Institute of Chartered Accountants.
2[(3) A member, being an associate who has been in
continuous practice in India for at least five years, whether
before or after the commencement of this Act, or whether
partly before and partly after the commencement of this
Act, and a member who has been an associate for a
continuous period of not less than five years and who
possesses such qualifications as the Council may prescribe
with a view to ensuring that he has experience equivalent
to the experience normally acquired as a result of
continuous practice for a period of five years as a chartered
accountant shall, on payment of such fees, as may be
determined, by notification, by the Council, which shall
not exceed rupees five thousand and on application made
and granted in the prescribed manner, be entered in the
Register as a fellow of the Institute and shall be entitled to
use the letters F.C.A. after his name to indicate that he is
a fellow of the Institute of Chartered Accountants:
Provided that the Council may with the prior
approval of the Central Government, determine the fee
exceeding rupees five thousand, which shall not in any
case exceed rupees ten thousand.]
6. Certificate of practice
(1) No member of the Institute shall be entitled
to practise whether in India or elsewhere unless he has
obtained from the Council a certificate of practice:
9
Provided that nothing contained in this sub-section
shall apply to any person who, immediately before the
commencement of this Act, has been in practice as a
registered accountant or a holder of a restricted certificate
until one month has elapsed from the date of the first
meeting of the Council.
3[(2) Every such member shall pay such annual fee
for his certificate as may be determined, by notification,
by the Council, which shall not exceed rupees three
thousand, and such fee shall be payable on or before the
1st day of April in each year:
Provided that the Council may with the prior
approval of the Central Government, determine the fee
exceeding rupees three thousand, which shall not in any
case exceed rupees six thousand.]
4[(3) The certificate of practice obtained under subsection
(1) may be cancelled by the Council under such
circumstances as may be prescribed.]
7. Members to be known as Chartered
Accountants
Every member of the Institute in practice shall, and
any other member may, use the designation of a chartered
accountant and no member using such designation shall
use any other description, whether in addition thereto or in
substitution therefor:
Provided that nothing contained in this section shall
be deemed to prohibit any such person from adding any
other description or letters to his name, if entitled thereto,
to indicate membership of such other Institute of
accountancy, whether in India or elsewhere, as may be
recognised in this behalf by the Council, or any other
qualification that he may possess, or to prohibit a firm, all
the partners of which are members of the Institute and in
10
practice, from being known by its firm name as Chartered
Accountants.
8. Disabilities
Notwithstanding anything contained in Section 4, a
person shall not be entitled to have his name entered in or
borne on the Register if he −
(i) has not attained the age of twenty-one years
at the time of his application for the entry of
his name in the Register; or
(ii) is of unsound mind and stands so adjudged by
a competent Court; or
(iii) is an undischarged insolvent; or
(iv) being a discharged insolvent, has not
obtained from the Court a certificate stating
that his insolvency was caused by misfortune
without any misconduct on his part; or
(v) has been convicted by a competent Court
whether within or without India, of an offence
involving moral turpitude and punishable with
transportation or imprisonment or of an
offence, not of a technical nature, committed
by him in his professional capacity unless in
respect of the offence committed he has either
been granted a pardon or, on an application
made by him in this behalf, the Central
Government has, by an order in writing,
removed the disability; or
(vi) has been removed from membership of the
Institute on being found on inquiry to have
been guilty of professional or other
misconduct:
11
Provided that a person who has been removed
from membership for a specified period, shall not be
entitled to have his name entered in the Register until the
expiry of such period.
____________________
1Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 8.8.2006:-
“(3) Every person belonging to any of the classes mentioned
in clauses (ii), (iii), (iv), (v) and (vi) of sub-section (1) shall have his
name entered in the Register on application being made and granted in
the prescribed manner and on payment of the prescribed fee, which
shall not exceed rupees three hundred in any case.”
2Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 8.8.2006:-
“(3) A member, being an associate who has been in
continuous practice in India for at least five years, whether before or
after the commencement of this Act, or whether partly before and partly
after the commencement of this Act, and a member who has been an
associate for a continuous period of not less than five years and who
possesses such qualifications as the Council may prescribe with a view
to ensuring that he has experience equivalent to the experience
normally acquired as a result of continuous practice for a period of five
years, as a chartered accountant shall, on payment of the prescribed
entrance fee, which shall not exceed rupees two hundred in any case,
and on application made and granted in the prescribed manner, be
entered in the Register as a fellow of the Institute and shall be
entitled to use the letters F.C.A. after his name to indicate that he is
a fellow of the Institute of Chartered Accountants.”
3Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 8.8.2006:-
“(2) Every such member shall pay such annual fee for his
certificate as may be prescribed, and such fee shall be payable on or
before the 1st day of April in each year.”
4Inserted by the Chartered Accountants (Amendment) Act, 2006
and came into force w.e.f. 8.8.2006.
12
CHAPTER III
COUNCIL OF THE INSTITUTE
9. Constitution of the Council of the Institute
(1) There shall be a Council of the Institute for the
management of the affairs of the Institute and for
discharging the functions assigned to it under this Act.
1[(2) The Council shall be composed of the following
persons, namely:--
(a) not more than thirty-two persons
elected by the members of the Institute
from amongst the fellows of the
Institute chosen in such manner and
from such regional constituencies as
may be specified:
Provided that a fellow of the Institute,
who has been found guilty of any
professional or other misconduct and
whose name is removed from the
Register or has been awarded penalty of
fine, shall not be eligible to contest the
election,−
(i) in case of misconduct falling
under the First Schedule of this
Act, for a period of three years;
(ii) in case of misconduct falling
under the Second Schedule of
this Act, for a period of six years,
from the completion of the period of
removal of name from the Register or
payment of fine, as the case may be;
13
(b) not more than eight persons to be
nominated in the specified manner, by
the Central Government.]
2[(3) No person holding a post under the Central
Government or a State Government shall be eligible for
election to the Council under clause (a) of sub-section (2).
(4) No person who has been auditor of the
Institute shall be eligible for election to the Council under
clause (a) of sub-section (2), for a period of three years
after he ceases to be an auditor.]
3[10. Re-election or re-nomination to Council
A member of the Council, elected or nominated under
sub-section (2) of section 9, shall be eligible for re-election
or, as the case may be, re-nomination:
Provided that no member shall hold the office for
more than three consecutive terms:
Provided further that a member of the Council, who
is or has been elected as President under sub-section (1) of
section 12, shall not be eligible for election or nomination as
a member of the Council.]
4[10A. Settlement of dispute regarding election
In case of any dispute regarding any election under
clause (a) of sub-section (2) of section 9, the aggrieved
person may make an application within thirty days from
the date of declaration of the result of election to the
Secretary of the Institute, who shall forward the same to
the Central Government.
10B. Establishment of Tribunal
(1) On receipt of any application under section
10A, the Central Government shall, by notification, establish
14
a Tribunal consisting of a Presiding Officer and two other
Members to decide such dispute and the decision of such
Tribunal shall be final.
(2) A person shall not be qualified for
appointment,−
(a) as a Presiding Officer of the Tribunal
unless he has been a member of the
Indian Legal Service and has held a
post in Grade I of the service for at
least three years;
(b) as a Member unless he has been a
member of the Council for at least one
full term and who is not a sitting
member of the Council or who has not
been a candidate in the election under
dispute; or
(c) as a Member unless he holds the post of
a Joint Secretary to the Government of
India or any other post under the
Central Government carrying a scale of
pay which is not less than that of a
Joint Secretary to the Government of
India.
(3) The terms and conditions of service of the
Presiding Officer and Members of the Tribunal, their place
of meetings and allowances shall be such as may be
specified.
(4) The expenses of the Tribunal shall be borne
by the Council.]
11. Nomination in default of election or nomination
If any body of persons referred to in section 9 fails to
elect any of the members of the Council which it is
15
empowered under that section to elect, the Central
Government may nominate a person duly qualified to fill the
vacancy, and any person so nominated shall be deemed to
be a member of the Council as if he had been duly elected.
12. President and Vice-President
(1) The Council at its first meeting shall elect two of
its members to be respectively the President and the Vice-
President thereof, and so often as the office of the President
or the Vice-President becomes vacant the Council shall
choose another person to be the President or the Vice-
President as the case may be:
Provided that on the first constitution of the
Council a member of the Council nominated in this behalf
by the Central Government shall discharge the functions of
the President, until such time as a President is elected
under the provisions of the sub-section.
(2) The President shall be the Chief Executive
Authority of the Council.
(3) The President or the Vice-President shall hold
office for a period of one year from the date on which he is
chosen but so as not to extend beyond his term of office as
a member of the Council, and, subject to his being a
member of the Council at the relevant time, he shall be
eligible for re-election 5[under sub-section (1)]
(4) On the expiration of the duration of the
Council, the 6[President and the Vice-President] of the
Council at the time of such expiration shall continue to
hold office and discharge such administrative and other
duties as may be prescribed until such time as a new
7[President and the Vice- President] shall have been
elected and shall have taken over 8[charge of their duties.]
16
13. Resignation of membership and casual
vacancies
(1) Any member of the Council may at any time
resign his membership by writing under his hand addressed
to the President, and the seat of such member shall
become vacant when such resignation is notified in the
Official Gazette.
(2) A member of the Council shall be deemed to
have vacated his seat if he is declared by the Council to
have been absent without sufficient excuse from three
consecutive meetings of the Council 9[or he has been found
guilty of any professional or other misconduct and
awarded penalty of fine,] or if his name is, for any cause,
removed from the Register under the provisions of section
20.
(3) A casual vacancy in the Council shall be filled
by fresh election from the constituency concerned or by
nomination by the Central Government, as the case may
be, and the person elected or nominated to fill the vacancy
shall hold office until the dissolution of the Council:
Provided that no election shall be held to fill a
casual vacancy occurring within 10[one year] prior to the
date of the expiration of the duration of the Council, but
such a vacancy may be filled by nomination by the Central
Government after consultation with the President of the
Council.
(4) No act done by the Council shall be called in
question on the ground merely of the existence of any
vacancy in, or defect in the constitution of, the Council.
14. Duration and dissolution of Council
(1) The duration of any Council constituted under
this Act shall be three years from the date of its first
meeting, on the expiry of which it shall stand dissolved and
17
a new Council constituted in accordance with the provisions
of this Act.
(2) Notwithstanding the expiration of the duration
of a Council (hereinafter referred to as the former Council),
the former Council shall continue to exercise its functions
until a new Council is constituted in accordance with the
provisions of this Act, and on such constitution, the former
Council shall stand dissolved.
11[15. Functions of Council
(1) The Institute shall function under the overall
control, guidance and supervision of the Council and the
duty of carrying out the provisions of this Act shall be
vested in the Council.
(2) In particular, and without prejudice to the
generality of the foregoing powers, the duties of the
Council shall include −
(a) to approve academic courses and their
contents;
(b) the examination of candidates for
enrolment and the prescribing of fees
therefor;
(c) the regulation of the engagement and
training of articled and audit
assistants;
(d) the prescribing of qualifications for
entry in the Register;
(e) the recognition of foreign qualifications
and training for the purposes of
enrolment;
18
(f) the granting or refusal of certificates of
practice under this Act;
(g) the maintenance and publication of a
Register of persons qualified to practice
as chartered accountants;
(h) the levy and collection of fees from
members, examinees and other
persons;
(i) subject to the orders of the appropriate
authorities under the Act, the removal of
names from the Register and the
restoration to the Register of names
which have been removed;
(j) the regulation and maintenance of the
status and standard of professional
qualifications of members of the
Institute;
(k) the carrying out, by granting financial
assistance to persons other than
members of the Council or in any other
manner, of research in accountancy;
(l) the maintenance of a library and
publication of books and periodicals
relating to accountancy;
(m) to enable functioning of the Director
(Discipline), the Board of Discipline, the
Disciplinary Committee and the Appellate
Authority constituted under the
provisions of this Act;
(n) to enable functioning of the Quality
Review Board;
19
(o) consideration of the recommendations of
the Quality Review Board made under
clause (a) of section 28B and the
details of action taken thereon in its
annual report; and
(p) to ensure the functioning of the Institute
in accordance with the provisions of this
Act and in performance of other
statutory duties as may be entrusted
to the Institute from time to time.]
12[15A. Imparting education by Universities and
other bodies
(1) Subject to the provisions of this Act, any
University established by law or any body
affiliated to the Institute, may impart
education on the subjects covered by the
academic courses of the Institute.
(2) The Universities or bodies referred to in subsection
(1) shall, while awarding degree,
diploma or certificate or bestowing any
designation, ensure that the award or
designation do not resemble or is not identical
to one awarded by the Institute.
(3) Nothing contained in this section shall enable
a University or a body to adopt a name or
nomenclature which is in any way similar to
that of the Institute.]
13[16. Officers and employees, salary, allowances,
etc.
(1) For the efficient performance of its duties, the
Council shall−
20
(a) appoint a Secretary to perform such
duties as may be prescribed;
(b) appoint a Director (Discipline) to
perform such functions as are assigned
to him under this Act and the rules and
regulations framed thereunder;
(2) The Council may also−
(a) appoint such other officers and
employees as it considers necessary;
(b) require and take from the Secretary or
from any other officer or employee such
security for the due performance of his
duties, as the Council considers
necessary;
(c) prescribe the salaries, fees, allowances
of the officers and employees and their
terms and conditions of service;
(d) with the previous sanction of the Central
Government, fix the allowances of the
President, Vice-President and other
members of the Council and members
of its Committees.
(3) The Secretary of the Council shall be entitled
to participate in the meetings of the Council but shall not
be entitled to vote thereat.]
17. Committees of the Council
(1) The Council shall constitute from amongst its
members the following Standing Committees, namely:-
(i) an Executive Committee,
21
(ii) an Examination Committee, and
14[(iii)a Finance Committee.]
15[(2) The Council may also form such other
committees from amongst its members as it consider
necessary for the purpose of carrying out the provisions of
this Act, and any Committee so formed may, with the
sanction of the Council, co-opt such other members of the
Institute not exceeding one-third of the members of the
committee as it thinks fit, and any member so co-opted
shall be entitled to exercise all the rights of a member of
the committee.
(3) Each of the Standing Committees shall consist
of the President and the Vice-President ex officio, and
minimum of three and maximum of five members to be
elected by the Council from amongst its members.]
(4) The President and the Vice-President of the
Council shall be the Chairman and Vice-Chairman
respectively of each of the Standing Committees.
(5) Every member of the Standing Committee
other than the Chairman and the Vice-Chairman shall hold
office for one year from the date of his election, but, subject
to being a member of the Council, he shall be eligible for
re-election.
(6) The Standing Committees shall exercise such
functions and be subject to such conditions in the exercise
thereof as may be prescribed.
18. Finances of the Council
(1) There shall be established a fund under the
management and control of the Council into which shall be
paid all moneys received by the Council and out of which
shall be met all expenses and liabilities properly incurred by
the Council.
22
(2) The Council may invest any money for the
time being standing to the credit of the fund in any
Government security or in any other security approved by
the Central Government.
16[(3) The Council shall keep proper accounts of
the fund distinguishing capital from revenue in the manner
prescribed.
(4) The Council shall prepare in the manner
prescribed and approve, prior to the start of the financial
year, an annual financial statement (the budget) indicating
all its anticipated revenues as well as all proposed
expenditures for the forthcoming year.
(5) The annual accounts of the Council shall be
prepared in such manner as may be prescribed and be
subject to audit by a chartered accountant in practice to be
appointed annually by the Council:
Provided that no member of the Council or a person
who has been a member of the Council during the last four
years or a person who is in partnership with such member
shall be eligible for appointment as an auditor under this
sub-section:
Provided further that, in the event it is brought to
the notice of the Council that the accounts of the Council
do not represent a true and fair view of its finances, then,
the Council may itself cause a special audit to be
conducted:
Provided also that, if such information, that the
accounts of the Council do not represent a true and fair
view of its finances, is sent to the Council by the Central
Government, then, the Council may, wherever appropriate
cause a special audit or take such other action as it
considers necessary and shall furnish an action taken report
on it to the Central Government.]
23
17[(5A) As soon as may be practicable at the end of
each year, the Council shall circulate the audited accounts to
its members at least fifteen days in advance and consider
and approve these accounts in a special meeting convened
for the purpose.
(5B) The Council shall cause to be published in the
Gazette of India not later than the 30th day of September
of the year next following, a copy of the audited accounts
and the Report of the Council for that year duly approved
by the Council and copies of the said accounts and Report
shall be forwarded to the Central Government and to all
the members of the Institute.]
(6) The Council may borrow from a scheduled
bank, as defined in the Reserve Bank of India Act, 1934,
(II of 1934) or from the Central Government−
(a) any money required for meeting its
liabilities on capital account on the
security of the fund or on the security
of any other assets for the time being
belonging to it, or
(b) for the purpose of meeting current
liabilities pending the receipt of income,
by way of temporary loan or overdraft.
____________________
1Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 5.9.2006:-
“(2) The Council shall be composed of the following persons,
namely:-
(a) not more than twenty-four persons elected by
members of the Institute from amongst the fellows of the
Institute chosen in such manner and from such regional
constituencies as may be specified in this behalf by the Central
Government by notification in the Official Gazette;
(b) six persons nominated by the Central
Government.”
2Inserted by the Chartered Accountants (Amendment) Act, 2006
and came into force w.e.f. 5.9.2006.
24
(Contd. from pre-page)
3Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 8.8.2006:-
“10. Mode of election to the Council
(1) Elections under clause (a) of sub-section (2) of
section 9 shall be conducted in the prescribed manner.
(2) Where any dispute arises regarding any such
election, the matter shall be referred by the Council to a
Tribunal appointed by the Central Government in this behalf
and the decision of such Tribunal shall be final:
Provided that no such reference shall be made except on
an application made to the Council by an aggrieved party within
thirty days from the date of the declaration of the result of the
election.
(3) The expenses of the Tribunal shall be borne by
the Council.”
4Inserted by the Chartered Accountants (Amendment) Act, 2006
and came into force w.e.f. 17.11.2006.
5Inserted by the Chartered Accountants (Amendment) Act, 2006
and came into force w.e.f. 8.8.2006.
6&7Substituted, for the word “President”, in both the places by
the Chartered Accountants (Amendment) Act, 2006 and came into force
w.e.f. 8.8.2006.
8Substituted, for the words, “charge of his duties” by the
Chartered Accountants (Amendment) Act, 2006 and came into force
w.e.f. 8.8.2006.
9Inserted by the Chartered Accountants (Amendment) Act, 2006
and came into force w.e.f. 17.11.2006.
10Substituted, for the word, “six months” by the Chartered
Accountants (Amendment) Act, 2006 and came into force w.e.f.
17.11.2006
11Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 17.11.2006:-
“15. Functions of the Council
(1) The duty of carrying out the provisions of this
Act shall be vested in the Council.
(2) In particular, and without prejudice to the
generality of the foregoing power, the duties of the Council shall
include —
(a) the examination of candidates for
enrolment and the prescribing of fees therefor;
25
(Contd. from pre-page)
(b) the regulation of the engagement and
training of articled and audit clerks;
(c) the prescribing of qualifications for entry
in the Register;
(d) the recognition of foreign qualifications
and training for purposes of enrolment;
(e) the granting or refusal of certificates of
practice under this Act;
(f) the maintenance and publication of a
Register of persons qualified to practise as chartered
accountants;
(g) the levy and collection of fees from
members, examinees and other persons;
(h) the removal of names from the Register
and the restoration to the Register of names which have
been removed;
(i) the regulation and maintenance of the
status and standard of professional qualifications of
members of this Institute;
(j) the carrying out, by financial assistance
to persons other than members of the Council or in any
other manner, of research in accountancy;
(k) the maintenance of a library and
publication of books and periodicals relating to
accountancy; and
(l) the exercise of disciplinary powers
conferred by this Act.”
12Inserted by the Chartered Accountants (Amendment) Act,
2006 and came into force w.e.f. 8.8.2006.
13Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 17.11.2006:-
“16. Staff, remuneration and allowances
(1) For the efficient performance of its duties, the
Council may --
(a) appoint a Secretary who may also, if so
decided by the Council, act as Treasurer;
(b) appoint such other officers and servants
as it deems necessary;
(c) require and take from the Secretary or
from any other officer or servant of the Council such
security for the due performance of his duties, as the
Council considers necessary;
26
(Contd. from pre-page)
(d) fix the salaries, fees, allowances and
other conditions of service of the officers and servants of
the Council;
(e) with the previous sanction of the Central
Government, fix the allowances of the President, Vice-
President and other members of the Council and
members of its Committees.
(2) Notwithstanding anything contained in subsection
(1), on the first constitution of the Council the
Secretary shall be a person appointed by the Central
Government in consultation with the Council, and he shall hold
office during the pleasure of the Central Government, but so as
not to exceed a period of three years from the date of his
appointment.
(3) The Secretary of the Council shall be entitled to
participate in the meetings of the Council but shall not be
entitled to vote thereat.”
14Substituted, for the words, “a Disciplinary Committee” by the
Chartered Accountants (Amendment) Act, 2006 and came into force
w.e.f. 17.11.2006.
15Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 17.11.2006:-
“(2) The Council may also form such other committees from
amongst its members as it deems necessary for the purpose of
carrying out the provisions of this Act, and any committee so formed
may, with the sanction of the Council, co-opt such other members of
the Institute not exceeding two-thirds of the members of the
committee as the committee thinks fit, and any member so co-opted
shall be entitled to exercise all the rights of a member of the
committee.
(3) Each of the Standing Committees shall consist of the
President and the Vice-President ex-officio, and three other members of
the Council elected by the Council:
Provided that in the case of the Disciplinary Committee, out of
the members to be elected, two shall be elected by the Council, and
the third nominated by the Central Government from amongst the
persons nominated to the Council by the Central Government.”
16Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 17.11.2006:-
“(3) The Council shall keep proper accounts of the fund
distinguishing capital from revenue.
27
(Contd. from pre-page)
(4) The annual accounts of the Council shall be subject to
audit by a chartered accountant in practice to be appointed annually by
the Council:
Provided that no member of the Council or a person who is in
partnership with such member shall be eligible for appointment as an
auditor under this sub-section.
(5) As soon as may be practicable at the end of each year,
but not later than the 30th day of September of the year next following,
the Council shall cause to be published in the Gazette of India a copy of
the audited accounts and the Report of the Council for that year and
copies of the said accounts and Report shall be forwarded to the Central
Government and to all the members of the Institute.”
17Inserted by the Chartered Accountants (Amendment) Act,
2006 and came into force w.e.f. 17.11.2006.
28
CHAPTER IV
REGISTER OF MEMBERS
19. Register
(1) The Council shall maintain, in the prescribed
manner, a Register of the Members of the Institute.
(2) The Register shall include the following
particulars about every member of the Institute, namely:-
(a) his full name, date of birth, domicile,
residential and professional address;
(b) the date on which his name is entered
in the Register;
(c) his qualifications;
(d) whether he holds a certificate of
practice; and
(e) any other particulars which may be
prescribed.
(3) The Council shall cause to be published in such
manner as may be prescribed, a list of members of the
Institute as on the 1st day of April of each year, and shall,
if requested to do so by any such member, send to him a
copy of such list 1[on payment of such amount as may be
prescribed.]
2[(4) Every member of the Institute shall, on his
name being entered in the Register, pay such annual
membership fee as may be determined, by notification, by
the Council, which shall not exceed rupees five thousand:
Provided that the Council may with the prior
approval of the Central Government, determine the fee
29
exceeding rupees five thousand, which shall not in any
case exceed rupees ten thousand.]
20. Removal from the Register
(1) The Council may remove from the Register
the name of any member of the Institute−
(a) who is dead; or
(b) from whom a request has been received
to that effect; or
(c) who has not paid any prescribed fee
required to be paid by him; or
(d) who is found to have been subject at the
time when his name was entered in the
Register, or who at any time thereafter
has become subject, to any of the
disabilities mentioned in section 8, or
who for any other reason has ceased to
be entitled to have his name borne on
the Register.
(2) The Council shall remove from the Register the
name of any member in respect of whom an order has been
passed under this Act removing him from membership of
the Institute.
3[(3) If the name of any member has been removed
from the Register under clause (c) of sub-section (1), on
receipt of an application, his name may be entered again
in the Register on payment of the arrears of annual fee and
entrance fee along with such additional fee, as may be
determined, by notification, by the Council which shall not
exceed rupees two thousand:
Provided that the Council may with the prior
approval of the Central Government, determine the fee
30
exceeding rupees two thousand, which shall not in any
case exceed rupees four thousand.]
____________________
1Inserted by the Chartered Accountants (Amendment) Act, 2006
and came into force w.e.f. 17.11.2006.
2Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 8.8.2006:-
“(4) Every member of the Institute shall, on his name being
entered in the Register, pay such annual membership fee differing in
amount according as he is an associate or a fellow of the Institute as
may be prescribed.”
3Inserted by the Chartered Accountants (Amendment) Act, 2006
and came into force w.e.f. 8.8.2006.
31
CHAPTER V
MISCONDUCT
1[21. Disciplinary Directorate
(1) The Council shall, by notification, establish a
Disciplinary Directorate headed by an officer of the
Institute designated as Director (Discipline) and such
other employees for making investigations in respect of
any information or complaint received by it.
(2) On receipt of any information or complaint
along with the prescribed fee, the Director (Discipline)
shall arrive at a prima facie opinion on the occurrence of
the alleged misconduct.
(3) Where the Director (Discipline) is of the
opinion that a member is guilty of any professional or other
misconduct mentioned in the First Schedule, he shall place
the matter before the Board of Discipline and where the
Director (Discipline) is of the opinion that a member is
guilty of any professional or other misconduct mentioned in
the Second Schedule or in both the Schedules, he shall
place the matter before the Disciplinary Committee.
(4) In order to make investigations under the
provisions of this Act, the Disciplinary Directorate shall
follow such procedure as may be specified.
(5) Where a complainant withdraws the
complaint, the Director (Discipline) shall place such
withdrawal before the Board of Discipline or, as the case
may be, the Disciplinary Committee, and the said Board or
Committee may, if it is of the view that the circumstances
so warrant, permit the withdrawal at any stage.]
32
2[21A. Board of Discipline
(1) The Council shall constitute a Board of
Discipline consisting of−
(a) a person with experience in law and
having knowledge of disciplinary
matters and the profession, to be its
presiding officer;
(b) two members one of whom shall be a
member of the Council elected by the
Council and the other member shall be
nominated by the Central Government
from amongst the persons of eminence
having experience in the field of law,
economics, business, finance or
accountancy;
(c) the Director (Discipline) shall function
as the Secretary of the Board.
(2) The Board of Discipline shall follow summary
disposal procedure in dealing with all cases before it.
(3) Where the Board of Discipline is of the
opinion that a member is guilty of a professional or other
misconduct mentioned in the First Schedule, it shall afford
to the member an opportunity of being heard before
making any order against him and may thereafter take any
one or more of the following actions, namely :−
(a) reprimand the member;
(b) remove the name of the member from
the Register up to a period of three
months;
(c) impose such fine as it may think fit
which may extend to rupees one lakh.
33
(4) The Director (Discipline) shall submit before
the Board of Discipline all information and complaints
where he is of the opinion that there is no prima facie case
and the Board of Discipline may, if it agrees with the
opinion of the Director (Discipline), close the matter or in
case of disagreement, may advise the Director (Discipline)
to further investigate the matter.
21B. Disciplinary Committee
(1) The Council shall constitute a Disciplinary
Committee consisting of the President or the Vice-
President of the Council as the Presiding Officer and two
members to be elected from amongst the members of the
Council and two members to be nominated by the Central
Government from amongst the persons of eminence
having experience in the field of law, economics, business,
finance or accountancy:
Provided that the Council may constitute more
Disciplinary Committees as and when it considers
necessary.
(2) The Disciplinary Committee, while considering
the cases placed before it shall follow such procedure as
may be specified.
(3) Where the Disciplinary Committee is of the
opinion that a member is guilty of a professional or other
misconduct mentioned in the Second Schedule or both the
First Schedule and the Second Schedule, it shall afford to
the member an opportunity of being heard before making
any order against him and may thereafter take any one or
more of the following actions, namely: -
(a) reprimand the member;
34
(b) remove the name of the member from
the Register permanently or for such
period, as it thinks fit;
(c) impose such fine as it may think fit,
which may extend to rupees five lakhs.
(4) The allowances payable to the members
nominated by the Central Government shall be such as may
be specified.
21C. Authority, Disciplinary Committee, Board of
Discipline and Director (Discipline) to have powers of
civil court
For the purposes of an inquiry under the provisions
of this Act, the Authority, the Disciplinary Committee, Board
of Discipline and the Director (Discipline) shall have the
same powers as are vested in a civil court under the Code
of Civil Procedure, 1908*, in respect of the following
matters, namely:−
(a) summoning and enforcing the attendance of
any person and examining him on oath;
(b) the discovery and production of any
document; and
(c) receiving evidence on affidavit.
Explanation :− For the purposes of sections 21, 21A,
21B, 21C and 22, “member of the Institute” includes a
person who was a member of the Institute on the date of
the alleged misconduct although he has ceased to be a
member of the Institute at the time of the inquiry.
* No.5 of 1908
35
21D. Transitional provisions
All complaints pending before the Council or any
inquiry initiated by the Disciplinary Committee or any
reference or appeal made to a High Court prior to the
commencement of the Chartered Accountants
(Amendment) Act, 2006, shall continue to be governed by
the provisions of this Act, as if this Act had not been
amended by the Chartered Accountants (Amendment) Act,
2006.]
3[22. Professional or other misconduct defined
For the purposes of this Act, the expression
“professional or other misconduct” shall be deemed to
include any act or omission provided in any of the
Schedules, but nothing in this section shall be construed to
limit or abridge in any way the power conferred or duty
cast on the Director (Discipline) under sub-section (1) of
section 21 to inquire into the conduct of any member of
the Institute under any other circumstances.]
4[22A. Constitution of Appellate Authority
(1) The Central Government shall, by notification,
constitute an Appellate Authority consisting of−
(a) a person who is or has been a judge of a
High Court, to be its Chairperson;
(b) two members to be appointed from
amongst the persons who have been
members of the Council for at least one
full term and who is not a sitting
member of the Council;
(c) two members to be nominated by the
Central Government from amongst
persons having knowledge and
practical experience in the field of law,
36
economics, business, finance or
accountancy.
(2) The Chairperson and other members shall be
part-time members.
22B. Term of office of Chairperson and members of
Authority
(1) A person appointed as the Chairperson shall
hold office for a term of three years from the date on which
he enters upon his office or until he attains the age of sixtyfive
years, whichever is earlier.
(2) A person appointed as a member shall hold
office for a term of three years from the date on which he
enters upon his office or until he attains the age of sixty-two
years, whichever is earlier.
22C. Allowances and conditions of service of
Chairperson and members of Authority
The allowances payable to, and other terms and
conditions of service of, the Chairperson and members and
the manner of meeting expenditure of the Authority by the
Council and such other authorities shall be such as may be
specified.
22D. Procedure to be regulated by Authority
(1) The office of the Authority shall be at Delhi.
(2) The Authority shall regulate its own
procedure.
(3) All orders and decisions of the Authority shall
be authenticated by an officer duly authorised
by the Chairperson in this behalf.
37
22E. Officers and other staff of Authority
(1) The Council shall make available to the
Authority such officers and other staff members as may
be necessary for the efficient performance of the functions
of the Authority.
(2) The salaries and allowances and conditions of
service of the officers and other staff members of the
Authority shall be such as may be prescribed.
22F. Resignation and removal of Chairperson and
members
(1) The Chairperson or a member may, by notice
in writing under his hand addressed to the Central
Government, resign his office:
Provided that the Chairperson or a member shall,
unless he is permitted by the Central Government to
relinquish his office sooner, continue to hold office until the
expiry of three months from the date of receipt of such
notice or until a person duly appointed as his successor
enters upon his office or until the expiry of term of office,
whichever is earlier.
(2) The Chairperson or a member shall not be
removed from his office except by an order of the Central
Government on the ground of proved misbehaviour or
incapacity after an inquiry made by such person as the
Central Government may appoint for this purpose in which
the Chairperson or a member concerned has been
informed of the charges against him and given a
reasonable opportunity of being heard in respect of such
charges.
22G. Appeal to Authority
(1) Any member of the Institute aggrieved by
any order of the Board of Discipline or the Disciplinary
38
Committee imposing on him any of the penalties referred to
in sub-section (3) of section 21A and sub-section (3) of
section 21B, may within ninety days from the date on
which the order is communicated to him, prefer an appeal
to the Authority:
Provided that the Director (Discipline) may also
appeal against the decision of the Board of Discipline or the
Disciplinary Committee to the Authority, if so authorised by
the Council, within ninety days:
Provided further that the Authority may entertain
any such appeal after the expiry of the said period of ninety
days, if it is satisfied that there was sufficient cause for not
filing the appeal in time.
(2) The Authority may, after calling for the
records of any case, revise any order made by the Board
of Discipline or the Disciplinary Committee under subsection
(3) of section 21A and sub-section (3) of section
21B and may -
(a) confirm, modify or set aside the order;
(b) impose any penalty or set aside, reduce,
or enhance the penalty imposed by the
order;
(c) remit the case to the Board of Discipline
or Disciplinary Committee for such
further enquiry as the Authority
considers proper in the circumstances of
the case; or
(d) pass such other order as the Authority
thinks fit:
Provided that the Authority shall give an
opportunity of being heard to the parties concerned before
passing any order.]
39
____________________
1Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 17.11.2006:-
“21. Procedure in inquiries relating to misconduct of
members of Institute
(1) Where on receipt of information by, or of a
complaint made to it, the Council is prima facie of opinion that
any member of the Institute has been guilty of any professional
or other misconduct, the Council shall refer the case to the
Disciplinary Committee, and the Disciplinary Committee shall
thereupon hold such inquiry and in such manner as may be
prescribed, and shall report the result of its inquiry to the
Council.
(2) If on receipt of such report the Council finds that
the member of the Institute is not guilty of any professional or
other misconduct, it shall record its finding accordingly and
direct that the proceedings shall be filed or the complaint shall
be dismissed, as the case may be.
(3) If on receipt of such report the Council finds that
the member of the Institute is guilty of any professional or other
misconduct, it shall record a finding accordingly and shall
proceed in the manner laid down in the succeeding sub-sections.
(4) Where the finding is that a member of the
Institute has been guilty of a professional misconduct specified
in the First Schedule, the Council shall afford to the member an
opportunity of being heard before orders are passed against him
on the case, and may thereafter make any of the following
orders, namely:-
(a) reprimand the member;
(b) remove the name of the member from
the Register for such period, not exceeding five years,
as the Council thinks fit:
Provided that where it appears to the
Council that the case is one in which the name
of the member ought to be removed from the
Register for a period exceeding five years or
permanently, it shall not make any order
referred to in clause (a) or clause (b), but shall
forward the case to the High Court with its
recommendations thereon.
(5) Where the misconduct in respect of which the
Council has found any member of the Institute guilty is
misconduct other than any such misconduct as is referred to in
sub-section (4), it shall forward the case to the High Court with
its recommendations thereon.
(6) On receipt of any case under sub-section (4) or
sub-section (5), the High Court shall fix a date for the hearing of
the case and shall cause notice of the date so fixed to be given
to the member of the Institute concerned, the Council and to the
40
(Contd. from pre-page)
Central Government, and shall afford such member, the Council
and the Central Government an opportunity of being heard, and
may thereafter make any of the following orders, namely:−
(a) direct that the proceedings be filed, or
dismiss the complaint, as the case may be;
(b) reprimand the member;
(c) remove him from membership of the
Institute either permanently or for such period as the
High Court thinks fit;
(d) refer the case to the Council for further
inquiry and report.
(7) Where it appears to the High Court that the
transfer of any case pending before it to another High Court will
promote the ends of justice or tend to the general convenience
of the parties, it may so transfer the case, subject to such
conditions, if any, as it thinks fit to impose, and the High Court
to which such case is transferred shall deal with it as if the case
had been forwarded to it by the Council.
Explanation I :− In this section “High Court” means the
highest civil court of appeal, not including the Supreme Court,
exercising jurisdiction in the area in which the person whose
conduct is being inquired into carries on business, or has his
principal place of business at the commencement of the inquiry:
Provided that where the cases relating to two or more
members of the Institute have to be forwarded by the Council to
different High Courts, the Central Government shall, having
regard to the ends of justice and the general convenience of the
parties, determine which of the High Courts to the exclusion of
others shall hear the cases against all the members.
Explanation II :− For the purposes of this section
“member of the Institute” includes a person who was a member
of the Institute on the date of the alleged misconduct although
he has ceased to be a member of the Institute at the time of the
inquiry.
(8) For the purposes of any inquiry under this
section, the Council and the Disciplinary Committee shall have
the same powers as are vested in a civil court under the Code of
Civil Procedure, 1908, in respect of the following matters,
namely:-
(a) summoning and enforcing the
attendance of any person and examining him on oath;
(b) the discovery and production of any
document; and
(c) receiving evidence on affidavit.”
2Inserted by the Chartered Accountants (Amendment) Act, 2006
and came into force w.e.f. 17.11.2006.
41
(Contd. from pre-page)
3Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 17.11.2006:-
“22. Professional misconduct defined
For the purposes of this Act, the expression “professional
misconduct” shall be deemed to include any act or omission specified in
any of the Schedules, but nothing in this section shall be construed to
limit or abridge in any way the power conferred or duty cast on the
Council under sub-section (1) of section 21 to inquire into the conduct of
any member of the Institute under any other circumstances.”
4Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006, and came into force w.e.f. 17.11.2006:-
“22A. Appeals
(1) Any member of the Institute aggrieved by any order of
the Council imposing on him any of the penalties referred to in subsection
(4) of section 21, may within thirty days of the date on which
the order is communicated to him, prefer an appeal to the High Court:
Provided that the High Court may entertain any such appeal
after the expiry of the said period of thirty days, if it is satisfied that the
member was prevented by sufficient cause from filing the appeal in
time.
(2) The High Court may, on its own motion or otherwise,
after calling for the records of any case, revise any order made by the
Council under sub-section (2) or sub-section (4) of section 21 and may−
(a) confirm, modify or set aside the order;
(b) impose any penalty or set aside, reduce,
confirm, or enhance the penalty imposed by the order;
(c) remit the case to the Council for such further
inquiry as the High Court considers proper in the circumstances
of the case; or
(d) pass such other order as the High Court thinks
fit:
Provided that no order of the Council shall be modified
or set aside unless the Council has been given an opportunity
of being heard and no order imposing or enhancing a penalty
shall be passed unless the person concerned has also been
given an opportunity of being heard.
Explanation :- In this section “High Court” and “member of the
Institute” have the same meanings as in section 21.”
42
CHAPTER VI
REGIONAL COUNCILS
23. Constitution and functions of Regional Councils
(1) For the purpose of advising and assisting it on
matters concerning its functions, the Council may constitute
such Regional Councils as and when it deems fit for one or
more of the regional constituencies that may be specified
by the Central Government under clause (a) of sub-section
(2) of section 9.
(2) The Regional Councils shall be constituted in
such manner and exercise such functions as may be
prescribed.
43
CHAPTER VII
PENALTIES
24. Penalty for falsely claiming to be a member,
etc.
Any person who −
(i) not being a member of the Institute −
(a) represents that he is a member of the
Institute; or
(b) uses the designation Chartered
Accountant; or
(ii) being a member of the Institute, but not having
a certificate of practice, represents that he is in
practice or practises as a chartered
accountant, shall be punishable on first
conviction with fine which may extend to one
thousand rupees, and on any subsequent
conviction with imprisonment which may
extend to six months or with fine which may
extend to five thousand rupees, or with both.
24A. Penalty for using name of the Council,
awarding degree of chartered accountancy, etc.
(1) Save as otherwise provided in this Act, no
person shall−
(i) use a name or the common seal which is
identical with the name or the common
seal of the Institute or so nearly
resembles it as to deceive or as is likely
to deceive the public;
44
(ii) award any degree, diploma or
certificate or bestow any designation
which indicates or purports to indicate
the position or attainment of any
qualification or competence similar to
that of a member of the Institute; or
(iii) seek to regulate in any manner
whatsoever the profession of
chartered accountants.
(2) Any person contravening the provisions of subsection
(1) shall, without prejudice to any other
proceedings which may be taken against him, be
punishable with fine which may extend on first conviction
to one thousand rupees, and on any subsequent conviction
with imprisonment which may extend to six months, or with
fine which may extend to five thousand rupees, or with
both.
1[(3) ……….]
25. Companies not to engage in accountancy
(1) No company, whether incorporated in India or
elsewhere, shall practise as chartered accountants.
(2) If any company contravenes the provisions of
sub-section (i), then, without prejudice to any other
proceedings which may be taken against the company,
every director, manager, secretary and any other officer
thereof who is knowingly a party to such contravention
shall be punishable with fine which may extend on first
conviction to one thousand rupees, and on any subsequent
conviction to five thousand rupees.
26. Unqualified persons not to sign documents
(1) No person other than a member of the
Institute shall sign any document on behalf of a chartered
45
accountant in practice or a firm of such chartered
accountants in his or its professional capacity.
2[(2) Any person who contravenes the provisions of
sub-section (1) shall, without prejudice to any other
proceedings, which may be taken against him, be
punishable on first conviction with a fine not less than five
thousand rupees but which may extend to one lakh rupees,
and in the event of a second or subsequent conviction with
imprisonment for a term which may extend to one year or
with fine not less ten thousand rupees but which may
extend to two lakh rupees or with both.]
27. Maintenance of branch offices
(1) Where a chartered accountant in practice or a
firm of such chartered accountants has more than one office
in India, each one of such offices shall be in the separate
charge of a member of the Institute:
Provided that the Council may in suitable cases
exempt any chartered accountant in practice or a firm of
such chartered accountants from the operation of this
sub-section.
(2) Every chartered accountant in practice or a
firm of such chartered accountants maintaining more than
one office shall send to the Council a list of offices and
the persons in charge thereof and shall keep the Council
informed of any changes in relation thereto.
28. Sanction to prosecute
No person shall be prosecuted under this Act except
on a complaint made by or under the order of the Council
or of the Central Government.
____________________
1The following sub-section (3) omitted by the Chartered
Accountants (Amendment) Act, 2006 w.e.f. 8.8.2006:-
“(3) Nothing contained in this section shall apply to any
University established by law or to any body affiliated to the Institute.”
46
(Contd. from pre-page)
2Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 8.8.2006:-
“(2) Any person contravening the provisions of sub-section
(1) shall, without prejudice to any other proceedings, which may be
taken against him, be punishable with fine which may extend on first
conviction to one thousand rupees, and on any subsequent conviction with
imprisonment which may extend to six months or with fine which may extend
to five thousand rupees or with both.”
47
1[CHAPTER VIIA
QUALITY REVIEW BOARD
28A. Establishment of Quality Review Board
(1) The Central Government shall, by notification,
constitute a Quality Review Board consisting of a
Chairperson and ten other members.
(2) The Chairperson and members of the Board
shall be appointed from amongst the persons of eminence
having experience in the field of law, economics, business,
finance or accountancy.
(3) Five members of the Board shall be
nominated by the Council and other five members shall be
nominated by the Central Government.
28B. Functions of Board
The Board shall perform the following functions,
namely :−
(a) to make recommendations to the
Council with regard to the quality of
services provided by the members of
the Institute;
(b) to review the quality of services
provided by the members of the
Institute including audit services; and
(c) to guide the members of the Institute
to improve the quality of services and
adherence to the various statutory and
other regulatory requirements.
48
28C. Procedure of Board
The Board shall meet at such time and place and
follow in its meetings such procedure as may be specified.
28D. Terms and conditions of services of Chairperson
and members of Board and its expenditure
(1) The terms and conditions of service of the
Chairperson and the members of the Board, and their
allowances shall be such as may be specified.
(2) The expenditure of the Board shall be borne
by the Council.]
____________________
1Inserted by the Chartered Accountants (Amendment) Act, 2006
and came into force w.e.f. 17.11.2006.
49
CHAPTER VIII
MISCELLANEOUS
29. Reciprocity
(1) Where any country, specified by the Central
Government in this behalf by notification in the Official
Gazette, prevents persons of Indian domicile from becoming
members of any institution similar to the Institute of
Chartered Accountants of India or from practising the
profession of accountancy or subjects them to unfair
discrimination in that country, no subject of any such
country shall be entitled to become a member of the
Institute or practise the profession of accountancy in India.
(2) Subject to the provisions of sub-section (1),
the Council may prescribe the conditions, if any, subject to
which foreign qualifications relating to accountancy shall be
recognised for the purposes of entry in the Register.
1[29A. Power of Central Government to make
rules
(1) The Central Government may, by notification,
make rules to carry out the provisions of this Act.
(2) In particular, and without prejudice to the
generality of the foregoing powers, such rules may provide
for all or any of the following matters, namely :−
(a) the manner of election and nomination
in respect of members to the Council
under sub-section (2) of section 9;
(b) the terms and conditions of service of the
Presiding Officer and Members of the
Tribunal, place of meetings and
allowances to be paid to them under
sub-section (3) of section 10B;
50
(c) the procedure of investigation under
sub-section (4) of section 21;
(d) the procedure while considering the
cases by the Disciplinary Committee
under sub-section (2), and the fixation
of allowances of the nominated
members under sub-section (4) of
section 21B;
(e) the allowances and terms and
conditions of service of the Chairperson
and members of the Authority and the
manner of meeting expenditure by the
Council under section 22C;
(f) the procedure to be followed by the
Board in its meetings under section
28C; and
(g) the terms and conditions of service of
the Chairperson and members of the
Board under sub-section (1) of section
28D.]
30. Power to make regulations
(1) The Council may, by notification in the
“Gazette of India”, make regulations for the purpose of
carrying out the objects of this Act. 2[……….]
(2) In particular, and without prejudice to the
generality of the foregoing power, such regulations may
provide for all or any of the following matters :−
(a) the standard and conduct of
examinations under this Act;
51
(b) the qualifications for the entry of the
name of any person in the Register as a
member of the Institute;
(c) the conditions under which any
examination or training may be treated
as equivalent to the examination and
training prescribed for members of the
Institute;
(d) the conditions under which any foreign
qualification may be recognised;
(e) the manner in which and the conditions
subject to which applications for entry in
the Register may be made;
(f) the fees payable for membership of
the Institute and the annual fees
payable by associates and fellows of the
Institute in respect of their certificates;
(g) the manner in which elections to
3[……….] the Regional Councils may be
held;
(h) the particulars to be entered in the
Register;
(i) the functions of Regional Councils;
(j) the training of articled and audit
4[assistants], the fixation of limits within
which premia may be charged from
articled 5[assistants] and the
cancellation of articles and termination
of audit service for misconduct or for
any other sufficient cause;
52
(k) the regulation and maintenance of the
status and standard of professional
qualifications of members of the
Institute;
(l) the carrying out of research in
accountancy;
(m) the maintenance of a library and
publication of books and periodicals on
accountancy;
(n) the management of the property of the
Council and the maintenance and audit
of its accounts;
(o) the summoning and holding of
meetings of the Council, the times and
places of such meetings, the conduct of
business thereat and the number of
members necessary to form a quorum;
(p) the powers, duties and functions of the
President and the Vice-President of the
Council;
(q) the functions of the Standing and other
Committees and the conditions subject
to which such functions shall be
discharged;
(r) the terms of office, and the powers,
duties and functions of the Secretary
and other officers and servants of the
Council; 6[and]
7[(s) ……….]
(t) any other matter which is required to
be or may be prescribed under this Act.
53
(3) All regulations made by the Council under
this Act shall be subject to the condition of previous
publication and to the approval of the Central Government.
(4) Notwithstanding anything contained in subsections
(1) and (2) the Central Government may frame
the first regulations for the purposes mentioned in this
section, and such regulations shall be deemed to have
been made by the Council, and shall remain in force from
the date of the coming into force of this Act, until they are
amended, altered or revoked by the Council.
30A. Powers of Central Government to direct
regulations to be made or to make or amend
regulations
(1) Where the Central Government considers it
expedient so to do, it may, by order in writing, direct the
Council to make any regulations or to amend or revoke any
regulations already made within such period as it may
specify in this behalf.
(2) If the Council fails or neglects to comply with
such order within the specified period, the Central
Government may make the regulations or amend or
revoke the regulations made by the Council, as the case
may be, either in the form specified in the order or with
such modifications thereof as the Central Government
thinks fit.
8[30B. Rules, regulations and notifications to be laid
before Parliament
Every rule and every regulation made and every
notification issued under this Act shall be laid, as soon as
may be after it is made or issued, before each House of
Parliament, while it is in session, for a total period of thirty
days which may be comprised in one session or in two or
more successive sessions, and if, before the expiry of the
54
session immediately following the session or the
successive sessions aforesaid, both Houses agree in
making any modification in the rule, regulation or
notification, or both Houses agree that the rule, regulation
or notification should not be made or issued, the rule,
regulation or notification, shall thereafter have effect only
in such modified form or be of no effect, as the case may
be; so, however, that any such modification or annulment
shall be without prejudice to the validity of anything
previously done under that rule, regulation or notification.]
9[30C. Power of Central Government to issue
directions
(1) In the event of non-compliance by the Council
of any provisions of this Act, the Central Government may
give to the Council such general or special directions as it
considers necessary to ensure compliance and the Council
shall, in the discharge of its functions under this Act,
comply with such directions.
(2) If, in the opinion of the Central Government,
the Council has persistently made default in giving effect
to the directions issued under sub-section (1), it may,
after giving an opportunity of being heard to the Council, by
notification, dissolve the Council, whereafter a new Council
shall be constituted in accordance with the provisions of this
Act with effect from such date as may be decided by the
Central Government:
Provided that the Central Government shall ensure
constitution of a new Council in accordance with the
provisions of this Act within a period of one year from the
date of its dissolution.
(3) Where the Central Government has issued a
notification under sub-section (2) dissolving the Council, it
shall, pending the constitution of a new Council in
accordance with the provisions of this Act, nominate any
person or body of persons not exceeding five members to
55
manage the affairs and discharge all or any of the
functions of the Council under this Act.
30D. Protection of action taken in good faith
No suit, prosecution or other legal proceeding shall
lie against the Central Government or the Council or the
Authority or the Disciplinary Committee or the Tribunal or
the Board or the Board of Discipline or the Disciplinary
Directorate or any officer of that Government, Council,
Authority, Disciplinary Committee, Tribunal, Board, Board
of Discipline or the Disciplinary Directorate, for anything
which is in good faith done or intended to be done under
this Act or any rule, regulation, notification, direction or
order made thereunder.
30E. Members, etc., to be public servants
The Chairperson, Presiding Officer, members and
other officers and employees of the Authority, Disciplinary
Committee, Tribunal, Board, Board of Discipline or the
Disciplinary Directorate shall be deemed to be public
servants within the meaning of section 21 of the Indian
Penal Code.*]
31. Construction of references
Any reference to a chartered accountant or a
registered accountant or a certified or qualified auditor in
any other law or in any document whatsoever shall be
construed as a reference to a chartered accountant in
practice within the meaning of this Act.
32. Act not to affect right of accountants to
practise as such in Acceding States
Nothing contained in this Act shall affect the right of
any person who, at the commencement of this Act, is
entitled to engage himself in the practice of accountancy in
* No. 45 of 1860
56
any Part B State under any law in force in that State, to
continue to engage himself in the practice of accountancy
in that State after the commencement of this Act.
____________________
1Inserted by the Chartered Accountants (Amendment) Act, 2006
and came into force w.e.f. 8.8.2006.
2The words “and a copy of such regulations shall be sent to each
member of the Institute” omitted by the Chartered Accountants
(Amendment) Act, 2006 w.e.f. 8.8.2006
3The words “the Council and” omitted by the Chartered
Accountants (Amendment) Act, 2006 w.e.f. 8.8.2006
4&5Substituted, for the word, “clerks” by the Chartered
Accountants (Amendment) Act, 2006 and came into force w.e.f.
8.8.2006.
6Inserted by the Chartered Accountants (Amendment) Act, 2006
and came into force w.e.f. 8.8.2006
7The following clause omitted by the Chartered Accountants
(Amendment) Act, 2006 w.e.f. 8.8.2006:-
“(s) the exercise of disciplinary powers conferred by this Act;
and”
8Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 8. 8. 2006:-
“30B. Laying of regulations
Every regulation made under this Act shall be laid, as
soon as may be after it is made, before each House of
Parliament, while it is in session, for a total period of thirty days
which may be comprised in one session or in two or more
successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions
aforesaid, both Houses agree in making any modification in the
regulation, or both Houses agree that the regulation should not
be made, the regulation shall thereafter have effect only in such
modified form or be of no effect, as the case may be; so,
however, that any such modification or annulment shall be
without prejudice to the validity of anything previously done
under the regulation.”
9Inserted by the Chartered Accountants (Amendment) Act,
2006. However, section 30C came into force w.e.f. 8.8.2006, whereas
sections 30D and 30E came into force w.e.f. 17.11.2006.
57
1[THE FIRST SCHEDULE
[See sections 21(3), 21A(3) and 22]
PART I
Professional misconduct in relation to chartered
accountants in practice
A chartered accountant in practice shall be deemed
to be guilty of professional misconduct, if he −
(1) allows any person to practice in his name as a
chartered accountant unless such person is also a
chartered accountant in practice and is in partnership
with or employed by him;
(2) pays or allows or agrees to pay or allow, directly or
indirectly, any share, commission or brokerage in
the fees or profits of his professional business, to
any person other than a member of the Institute or a
partner or a retired partner or the legal
representative of a deceased partner, or a member
of any other professional body or with such other
persons having such qualifications as may be
prescribed, for the purpose of rendering such
professional services from time to time in or outside
India.
Explanation :− In this item, “partner” includes a
person residing outside India with whom a chartered
accountant in practice has entered into partnership
which is not in contravention of item (4) of this Part;
(3) accepts or agrees to accept any part of the profits of
the professional work of a person who is not a
member of the Institute:
Provided that nothing herein contained shall be
construed as prohibiting a member from entering
into profit sharing or other similar arrangements,
58
including receiving any share commission or
brokerage in the fees, with a member of such
professional body or other person having
qualifications, as is referred to in item (2) of this
Part;
(4) enters into partnership, in or outside India, with any
person other than a chartered accountant in practice
or such other person who is a member of any other
professional body having such qualifications as may
be prescribed, including a resident who but for his
residence abroad would be entitled to be registered
as a member under clause (v) of sub-section (1) of
section 4 or whose qualifications are recognised by
the Central Government or the Council for the
purpose of permitting such partnerships;
(5) secures, either through the services of a person who
is not an employee of such chartered accountant or
who is not his partner or by means which are not
open to a chartered accountant, any professional
business:
Provided that nothing herein contained shall be
construed as prohibiting any arrangement permitted
in terms of items (2), (3) and (4) of this Part;
(6) solicits clients or professional work either directly
or indirectly by circular, advertisement, personal
communication or interview or by any other means:
Provided that nothing herein contained shall be
construed as preventing or prohibiting−
(i) any chartered accountant from applying or
requesting for or inviting or securing
professional work from another chartered
accountant in practice; or
59
(ii) a member from responding to tenders or
enquiries issued by various users of
professional services or organisations from
time to time and securing professional work as
a consequence;
(7) advertises his professional attainments or services,
or uses any designation or expressions other than
chartered accountant on professional documents,
visiting cards, letter heads or sign boards, unless it
be a degree of a University established by law in
India or recognised by the Central Government or a
title indicating membership of the Institute of
Chartered Accountants of India or of any other
institution that has been recognised by the Central
Government or may be recognised by the Council:
Provided that a member in practice may advertise
through a write up setting out the services provided
by him or his firm and particulars of his firm subject to
such guidelines as may be issued by the Council;
(8) accepts a position as auditor previously held by
another chartered accountant or a certified auditor
who has been issued certificate under the Restricted
Certificate Rules, 1932 without first communicating
with him in writing;
(9) accepts an appointment as auditor of a company
without first ascertaining from it whether the
requirements of section 225 of the Companies Act,
1956* in respect of such appointment have been
duly complied with;
(10) charges or offers to charge, accepts or offers to
accept in respect of any professional employment,
fees which are based on a percentage of profits or
which are contingent upon the findings, or results of
* No. 1 of 1956
60
such employment, except as permitted under any
regulation made under this Act;
(11) engages in any business or occupation other than
the profession of chartered accountant unless
permitted by the Council so to engage:
Provided that nothing contained herein shall
disentitle a chartered accountant from being a
director of a company (not being a managing director
or a whole time director) unless he or any of his
partners is interested in such company as an
auditor;
(12) allows a person not being a member of the Institute
in practice, or a member not being his partner to
sign on his behalf or on behalf of his firm, any
balance-sheet, profit and loss account, report or
financial statements.
PART II
Professional misconduct in relation to members of the
Institute in service
A member of the Institute (other than a member in
practice) shall be deemed to be guilty of professional
misconduct, if he being an employee of any company, firm
or person−
(1) pays or allows or agrees to pay directly or indirectly
to any person any share in the emoluments of the
employment undertaken by him;
(2) accepts or agrees to accept any part of fees, profits
or gains from a lawyer, a chartered accountant or
broker engaged by such company, firm or person or
agent or customer of such company, firm or person
by way of commission or gratification.
61
PART III
Professional misconduct in relation to members of the
Institute generally
A member of the Institute, whether in practice or
not, shall be deemed to be guilty of professional
misconduct, if he−
(1) not being a fellow of the Institute, acts as a fellow of
the Institute;
(2) does not supply the information called for, or does
not comply with the requirements asked for, by the
Institute, Council or any of its Committees, Director
(Discipline), Board of Discipline, Disciplinary
Committee, Quality Review Board or the Appellate
Authority;
(3) while inviting professional work from another
chartered accountant or while responding to tenders
or enquiries or while advertising through a write up,
or anything as provided for in items (6) and (7) of
Part I of this Schedule, gives information knowing it
to be false.
PART IV
Other misconduct in relation to members of the Institute
generally
A member of the Institute, whether in practice or
not, shall be deemed to be guilty of other misconduct, if
he−
(1) is held guilty by any civil or criminal court for an
offence which is punishable with imprisonment for a
term not exceeding six months;
62
(2) in the opinion of the Council, brings disrepute to the
profession or the Institute as a result of his action
whether or not related to his professional work.
THE SECOND SCHEDULE
[See sections 21(3), 21B(3) and 22]
PART I
Professional misconduct in relation to chartered
accountants in practice
A chartered accountant in practice shall be deemed
to be guilty of professional misconduct, if he−
(1) discloses information acquired in the course of his
professional engagement to any person other than
his client so engaging him, without the consent of
his client or otherwise than as required by any law
for the time being in force;
(2) certifies or submits in his name, or in the name of
his firm, a report of an examination of financial
statements unless the examination of such
statements and the related records has been made
by him or by a partner or an employee in his firm or
by another chartered accountant in practice;
(3) permits his name or the name of his firm to be
used in connection with an estimate of earnings
contingent upon future transactions in a manner
which may lead to the belief that he vouches for the
accuracy of the forecast;
(4) expresses his opinion on financial statements of any
business or enterprise in which he, his firm, or a
partner in his firm has a substantial interest;
63
(5) fails to disclose a material fact known to him which is
not disclosed in a financial statement, but disclosure
of which is necessary in making such financial
statement where he is concerned with that financial
statement in a professional capacity;
(6) fails to report a material misstatement known to
him to appear in a financial statement with which he
is concerned in a professional capacity;
(7) does not exercise due diligence, or is grossly
negligent in the conduct of his professional duties;
(8) fails to obtain sufficient information which is
necessary for expression of an opinion or its
exceptions are sufficiently material to negate the
expression of an opinion;
(9) fails to invite attention to any material departure
from the generally accepted procedure of audit
applicable to the circumstances;
(10) fails to keep moneys of his client other than fees or
remuneration or money meant to be expended in a
separate banking account or to use such moneys for
purposes for which they are intended within a
reasonable time.
PART II
Professional misconduct in relation to members of the
Institute generally
A member of the Institute, whether in practice or
not, shall be deemed to be guilty of professional
misconduct, if he−
(1) contravenes any of the provisions of this Act or the
regulations made thereunder or any guidelines
issued by the Council;
64
(2) being an employee of any company, firm or person,
discloses confidential information acquired in the
course of his employment except as and when
required by any law for the time being in force or
except as permitted by the employer;
(3) includes in any information, statement, return or
form to be submitted to the Institute, Council or any
of its Committees, Director (Discipline), Board of
Discipline, Disciplinary Committee, Quality Review
Board or the Appellate Authority any particulars
knowing them to be false;
(4) defalcates or embezzles moneys received in his
professional capacity.
PART III
Other misconduct in relation to members of the Institute
generally
A member of the Institute, whether in practice or
not, shall be deemed to be guilty of other misconduct, if he
is held guilty by any civil or criminal court for an offence
which is punishable with imprisonment for a term
exceeding six months.]
____________________
1Substituted, for the following, by the Chartered Accountants
(Amendment) Act, 2006 and came into force w.e.f. 17.11.2006:-
“[THE FIRST SCHEDULE
(See Sections 21(4) and 22)
PART I
Professional misconduct in relation to chartered accountants in practice
A chartered accountant in practice shall be deemed to be guilty
of professional misconduct, if he−
(1) allows any person to practise in his name as a
chartered accountant unless such person is also a chartered accountant
in practice and is in partnership with or employed by himself;
(2) pays or allows or agrees to pay or allow, directly or
indirectly, any share, commission or brokerage in the fees or profits of
his professional business, to any person other than a member of the
65
(Contd. from pre-page)
Institute or a partner or a retired partner or the legal representative of a
deceased partner;
Explanation :− In this item “partner” includes a person residing
outside India with whom a chartered accountant in practice has
entered into partnership which is not in contravention of item (4) of this
Part.
(3) accepts or agrees to accept any part of the profits of
the professional work of a lawyer, auctioneer, broker, or other agent
who is not a member of the Institute;
(4) enters into partnership with any person other than a
chartered accountant in practice or a person resident without India who
but for his residence abroad would be entitled to be registered as a
member under clause (v) of sub-section (1) of section 4 or whose
qualifications are recognised by the Central Government or the
Council for the purpose of permitting such partnerships, provided that
the chartered accountant shares in the fees or profits of the business of
the partnership both within and without India;
(5) secures, either through the services of a person not
qualified to be his partner or by means which are not open to a
chartered accountant, any professional business;
(6) solicits clients or professional work either directly or
indirectly by circular, advertisement, personal communication or
interview or by any other means;
(7) advertises his professional attainments or services, or
uses any designation or expressions other than chartered accountant on
professional documents, visiting cards, letter heads or sign boards,
unless it be a degree of a University established by law in India or
recognised by the Central Government or a title indicating membership
of the Institute of Chartered Accountants or of any other institution
that has been recognised by the Central Government or may be
recognised by the Council;
(8) accepts a position as auditor previously held by another
chartered accountant or a restricted state auditor without first
communicating with him in writing;
(9) accepts an appointment as auditor of a company
without first ascertaining from it whether the requirements of section
225 of the Companies Act, 1956, in respect of such appointment have
been duly complied with;
(10) charges or offers to charge, accepts or offers to
accept in respect of any professional employment fees which are
based on a percentage of profits or which are contingent upon the
findings, or results of such employment, except in cases which are
permitted under any regulations made under this Act;
(11) engages in any business or occupation other than the
profession of chartered accountants unless permitted by the Council so
to engage:
66
(Contd. from pre-page)
Provided that nothing contained herein shall disentitle a
chartered accountant from being a director of a company, unless he or
any of his partners is interested in such company as an auditor;
(12) accepts a position as auditor previously held by some
other chartered accountant or a restricted state auditor in such
conditions as to constitute undercutting;
(13) allows a person not being a member of the Institute or
a member not being his partner to sign on his behalf or on behalf of his
firm, any balance-sheet, profit and loss account, report or financial
statements.
PART II
Professional misconduct in relation to members of the Institute in
service
A member of the Institute (other than a member in practice)
shall be deemed to be guilty of professional misconduct, if he being an
employee of any company, firm or person−
(a) pays or allows or agrees to pay directly or indirectly to any
person any share in the emoluments of the employment undertaken by
the member;
(b) accepts or agrees to accept any part of fees, profits or
gains from a lawyer, a chartered accountant or broker engaged by
such company, firm or person or agent or customer of such company,
firm or person by way of commission or gratification;
(c) discloses confidential information acquired in the course
of his employment except as and when required by law or except as
permitted by the employer.
PART III
Professional misconduct in relation to members of the Institute
generally
A member of the Institute, whether in practice or not, shall be
deemed to be guilty of professional misconduct, if he−
(1) includes in any statement, return or form to be
submitted to the Council any particulars knowing them to be false;
(2) not being a fellow styles himself as a fellow;
(3) does not supply the information called for, or does not
comply with the requirements asked for, by the Council or any of its
Committees.
THE SECOND SCHEDULE
(See Sections 21(5) and 22)
PART I
Professional misconduct in relation to chartered accountants in practice
requiring action by a High Court
A chartered accountant in practice shall be deemed to be guilty
of professional misconduct, if he−
(1) discloses information acquired in the course of his
professional engagement to any person other than his client, without
67
(Contd. from pre-page)
the consent of his client or otherwise than as required by any law for the
time being in force;
(2) certifies or submits in his name or in the name of his
firm a report of an examination of financial statements unless the
examination of such statements and the related records has been
made by him or by a partner or an employee in his firm or by another
chartered accountant in practice;
(3) permits his name or the name of his firm to be used
in connection with an estimate of earnings contingent upon future
transactions in a manner which may lead to the belief that he vouches
for the accuracy of the forecast;
(4) expresses his opinion on financial statements of any
business or any enterprise in which he, his firm or a partner in his firm
has a substantial interest, unless he discloses the interest also in his
report;
(5) fails to disclose a material fact known to him which is not
disclosed in a financial statement, but disclosure of which is necessary
to make the financial statement not misleading;
(6) fails to report a material mis-statement known to him to
appear in a financial statement with which he is concerned in a
professional capacity;
(7) is grossly negligent in the conduct of his professional
duties;
(8) fails to obtain sufficient information to warrant the
expression of an opinion or his exceptions are sufficiently material to
negate the expression of an opinion;
(9) fails to invite attention to any material departure from
the generally accepted procedure of audit applicable to the
circumstances;
(10) fails to keep moneys of his client in a separate banking
account or to use such moneys for purposes for which they are
intended.
PART II
Professional misconduct in relation to members of the Institute generally
requiring action by a High Court
A member of the Institute, whether in practice or not, shall be
deemed to be guilty of professional misconduct, if he−
(i) contravenes any of the provisions of this Act or the
regulations made thereunder;
(ii) is guilty of such other act or omission as may be
specified by the Council in this behalf, by notification in the Gazette of
India.
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