The Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) has reprimanded CA. P. Vijaya Sivasankar for professional misconduct. The committee found the chartered accountant guilty of professional misconduct under Items (5), (6), (7), and (8) of Part-I of the Second Schedule to the Chartered Accountants Act, 1949. The charges related to her failure to report various non-compliances with Accounting Standards and Schedule VI of the Companies Act, 1956, in the audit report of M/s Rajesh Exports Limited for the financial year 2012-13. While the respondent admitted to some minor lapses, she argued that these were technical in nature, based on professional judgment, and did not materially misstate the financial statements. The Disciplinary Committee acknowledged the non-compliances but concluded that they were technical and did not harm investors or affect the decisions of financial statement users. As the company’s accounts were adopted without objection, the committee determined that a punishment proportionate to the misconduct was 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
PPR/254C/2016/DD/115/INF/2016/DC/1354/2020
In the matter of:
CA. P. Vijaya Sivasankar
….Respondent
MEMBERS PRESENT:
CA. Charanjot Singh Nanda, Presiding Officer (Present in Person)
Smt. Anita Kapur, Government Nominee (Present in Person)
Dr. K. Rajeswara Rao, Government Nominee (Present through Video Conferencing Mode)
CA. Sushil Kumar Goyal (Present in person)
CA. Piyush S. Chhajed, Member (Present through Video Conferencing Mode)
Date of Hearing: 25th June 2024
Date of Order: 21st January, 2025
1. That vide findings under Rule 18(17) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 dated 22ndJanuary 2024, the Disciplinary Committee was, inter-alia, of the opinion that P. Vijaya Sivasankar (hereinafter referred to as the “Respondent”) was GUILTY of Professional Misconduct falling within the meaning of Items (5), (6), (7) and (8) of Part-I of Second Schedule to the Chartered Accountants Act, 1949.
2. The Committee noted that the charge against the Respondent is that she failed to report various non-compliances with respect to Accounting Standards and Schedule VI to the Companies Act 1956 in her audit report of M/s Rajesh Exports Limited (hereinafter referred to as ‘Company’) for the financial year 2012-13 and thus failed to comply with her reporting obligations thereon.
3. That pursuant to the said findings, an action under Section 21B(3) of the Chartered Accountants Act, 1949 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 25th June 2024.
4. The Committee noted that on the date of hearing held on 25thJune 2024, the Respondent was present through Video Conferencing Mode and made her verbal submissions on the findings of the Disciplinary Committee. The Committee noted that the Respondent had also submitted her written representation dated 8th June 2024. In the verbal and written submissions, the Respondent while accepting certain minor lapses had, inter-alia, submitted as under:
a. That difference in professional judgment was due to technical interpretations which cannot be constituted as charge of professional misconduct.
b. There were few inconsequential oversights and errors on the part of the Company management. However, none of those points, individually or collectively made financial statements in question misleading or materially misstated or suffering from any significant omission affecting public interest.
c. The management’s view that “net presentation of the cash flow” related to the loan transactions was appropriate.
d. That “Fixed Deposits with Bank” was correctly presented as a separate sub line item under Note 15 Cash and Equivalents. The same was in accordance to the general instructions 6.Q to the Schedule VI Revised.
e. That merely because the Respondent had not ensured the headings or any variation in presentation as suggested in Para 6.4 of the Guidance Note, the Respondent cannot be held guilty of professional misconduct.
f. There was no deficiency in the disclosure on liquidity restriction on Bank deposits presented in Note 5. The omission of the other amount of liquidity restriction was an inconsequential amount of less than 0.01%.
g. That judgment of compliance of AS-9 was based on the text used in the accounting policy.
h. According to the framework for preparation and presentation of financial statements, grouping of exchange difference along with sales, according to its nature being integral to the export business, forming part of ordinary activities and hence making part of income is accurate presentation.
i. That AS 11 had no application in the hedge accounting of probable forecast transactions and firm commitments.
j. According to the provisions in AS-11, it is not possible to draw any inference that inclusion of “currency hedging and forex fluctuation costs” within the line item ‘Cost of Material Consumed’ in the profit and loss account was against the requirements of Para 40(a) of AS-11.
5. The Committee considered the reasoning as contained in the findings holding the Respondent Guilty of professional misconduct vis-à-vis submissions of the Respondent in the matter made before it.
6. Keeping in view the facts and circumstances of the case, along with the material on record including representations on the findings, the Committee noted that there were non- compliances of Accounting Standards and Schedule VI of the Companies Act 1956 in financial statements for the financial year 2012-13 of the Company and the same are spelt out in the Committee’s Findings dated 22nd January 2024 which is to be read in conjunction with the instant Order being passed in the case.
7. On consideration of the overall facts of the case, the Committee viewed that the said discrepancies were technical in nature and was not affecting the decision of the users of financial statements. The Committee also noted that the Company is still continuing and the accounts of the Company for the said financial year were adopted without objections. Accordingly, the Committee viewed that there was no harm to the investors. The Committee viewed that the ends of justice will be met if punishment commensurate with misconduct is given to the Respondent.
8. Accordingly, the Committee, upon considering the nature of charge and the facts of the matter ordered that P. Vijaya Sivasankar be reprimanded.
Sd/-
(CA. CHARANJOT SINGH NANDA)
PRESIDING OFFICER
Sd/-
(SMT. ANITA KAPUR)
GOVERNMENT NOMINEE
Sd/-
(DR. K. RAJESWARA RAO)
GOVERNMENT NOMINEE
Sd/-
(CA. SUSHIL KUMAR GOYAL)
MEMBER
Sd/-
(CA. PIYUSH S CHHAJED)
MEMBER
DATE: 21st January, 2025
PLACE: NEW DELHI
