The Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) has reprimanded CA. Meena for professional misconduct. The complaint, filed by the Deputy Registrar of Companies, New Delhi, involved multiple lapses in the audit of a company’s financial statements for the fiscal year 2020-2021. The committee found the respondent guilty of professional misconduct under Items (7) and (9) of Part I of the First and Second Schedules of the Chartered Accountants Act, 1949.
During the hearing, CA. Meena acknowledged her mistakes, admitting she had incorrectly selected the profit and loss account format and failed to notice that a subscription money receipt was reflected in the wrong financial year. However, the committee determined that her audit report failed to reflect a discrepancy between the profit and loss statement and the balance sheet regarding revenue from operations. Furthermore, the committee noted a lack of proper disclosure concerning the receipt of share capital and a failure to demonstrate compliance with the Companies Act, 2013 regarding her own appointment as a statutory auditor. Based on these findings, the Disciplinary Committee ordered a reprimand.
THE INSUTE OF CHARTERED ACCOUNTANTS OF NDIA
(Set up by an Act of Parliament)
[DISCIPLINARY COMMITTEE [BENCH-IV (2024-2025)]
[Constituted under Section 21B of the Chartered Accountants Act, 1949]
ORDER UNDER SECTION 21B(3) OF THE CHARTERED ACCOUNTANTS ACT, 1949 READ WITH RULE 19(1) OF THE CHARTERED ACCOUNTANTS (PROCEDURE. OF INVESTIGATIONS OF PROFESSIONAL AND OTHER MISCONDUCT AND CONDUCT OF CASES) RULES, 2007.
File No: [PR/G/410/2022/DD/280/2022/DC/1782/2023]
In the matter of:
Sh. Mangal Ram Meena
Deputy Registrar of Companies
Registrar of Companies,
Versus.
CA. Meena
MEMBERS PRESENT:
1. CA. Shri Jiwesh Nandan, I.A.S (Retd), Presiding Officer and Government Nominee (In person)
2. Ms. Dakshita Das, I.R.A.S. (Retd.), Government Nominee (Through VC)
3. CA. Mangesh P Kinare, Member (In person)
4. CA. Abhay Chhajed, Member (In person)
DATE OF HEARING : 06th January 2025
DATE OF ORDER : 20th January 2025
1. That vide Findings dated 16.10.2024 under Rule 18(17) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Disciplinary Committee was inter-alia of the opinion that CA. Meena (hereinafter referred to as the Respondent”) is GUILTY of Professional Misconduct falling within the meaning of Item (7) of Part I of Second Schedule and Item (9) of Part I of First Schedule to the Chartered Accountants Act, 1949.
2. That pursuant to the said Findings, an action under Section 21B(3) of the Chartered Accountants (Amendment) Act, 2006 was contemplated against the Respondent and a communication was addressed to her thereby granting an opportunity of being heard in person/ through video conferencing and to make representation before the Committee on 06thJanuary 2025.
3. The Committee noted that on the date of the hearing on 06thJanuary 2025, the Respondent was present in person at ICAI Bhawan, New Delhi. During the hearing, the Respondent accepted her mistake, stating that that the format of profit and loss account of the Company was wrongly selected by her and subscription money was received in the bank account of the Company on 03/04/2021 during next Financial Year i.e. 2021-2022. These mistakes could not get her attention and the same remained unnoticed.
4. The Committee considered the reasoning as contained in Findings holding the Respondent ‘Guilty’ of Professional Misconduct vis-a-vis verbal representation of the Respondent. The Committee noted that the submissions made by the Respondent as aforestated have been dealt with by it at the time of hearing under Rule 18.
5. Thus, keeping in view the facts and circumstances of the case, material on record including verbal representation of the Respondent on the Findings, the Committee noted that though the Revenue from Operation was shown in the Statement of Profit and Loss, the effect of the same has not been reflected in the Balance Sheet under the head Reserves & Surplus nor its effect has been reflected in the form of increase in cash / debtor / bank in the balance sheet. This fact was not reported by the Respondent in her Audit Report. Further, there is nothing on record to show the reason of casual vacancy i.e. whether it was due to death, resignation and disqualification. Further, the Respondent has failed to prove that the compliance of Section 139(8) of the Companies Act, 2013 was made in her appointment as Statutory Auditor of the Company i.e. whether her appointment was approved at General Meeting of the Company within three months.
6. The Committee further noted that the Respondent, being the statutory auditor has brought on record the bank statement and during the hearing had admitted that the amount of subscription money was received on 03/04/2021 in the Bank account of the Company, which showed that she was aware of the fact that the said amount of Rs. 1,00,000/- of subscribed share capital was received in the financial year 2021-2022 and not in the financial year 2020-21. Despite this vital fact, the Respondent has not made any disclosure about this fact in her audit report for the said financial year 2020-2021. Moreover, in the financial statements of the Company for Financial Year 2020-2021 audited by the Respondent, the disclosure regarding the amount of share capital receivable was not shown appropriately/separately. Hence, the Professional Misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 16th October 2024 which is to be read in consonance with the instant Order being passed in the case.
7. Accordingly, the Committee was of the view that the ends of justice would be met if punishment is given to him in commensurate with his Professional Misconduct.
8. Thus, the Committee ordered that the Respondent e. CA. Meena be REPRIMANDED under Section 21B(3)(a) of the Chartered Accountants Act 1949.
Sd/-
(SHRI JIWESH NANDAN, I.A.S. (RETD.)
(PRESIDING OFFICER AND GOVERNMENT NOMINEE)
Sd/-
(MS. DAKSHITA DAS, I.R.A.S.{RETD.})
GOVERNMENT NOMINEE
Sd/-
(CA. MANGESH P KINARE)
MEMBER
Sd/-
(CA. ABHAY CHHAJED)
MEMBER
