The Institute of Chartered Accountants of India’s Disciplinary Committee (Bench-II) has reprimanded CA. Rajiv Ranjan and imposed a fine of Rs. 25,000. This action follows findings of professional misconduct under the Chartered Accountants Act, 1949. The committee concluded that Mr. Ranjan was negligent in his duties as a statutory auditor for FY 2020-21, failing to adhere to ethical guidelines and verify necessary documents as per the Companies Act, 2013. Specifically, he did not obtain a no-objection from the previous auditor, CA. Chandan Khandelwal, before accepting the audit. Despite Mr. Ranjan’s submission that the audit was conducted under time constraints during the pandemic, and that the complainant’s office was closed, the committee determined that he exhibited a casual approach and relied solely on a company letter, which violates the Code of Ethics. His communication with a different CA was also deemed irrelevant as she was not the preceding auditor.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
PR-107/2022-DD/100/2022/DC/1752/2023
[DISCIPLINARY COMMITTEE [BENCH-II (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
[PR-107/2022-DD/100/2022/DC/1752/2023]
In the matter of:
CA. Chandan Khandelwal
Partner, MIS A K Agarwal & Associates
Chartered Accountants….Complainant
versus
CA. Rajiv Ranjan
Partner, M/s A K ARYA & Co.
Chartered Accountants….Respondent
Members Present:-
CA. Ranjeet Kumar Agarwal, Presiding Officer (in person)
Mrs. Rani S. Nair, IRS (Retd.), Government Nominee (through VC)
Shri Arun Kumar, IAS (Retd.), Government Nominee (through VC)
CA. Sanjay Kumar Agarwal, Member (in person)
CA. Cotha S Srinivas, Member (in person)
Date of Hearing : 28th March, 2024
Date of Order : 17th May, 2024
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, the Disciplinary Committee was, inter-alia, of the opinion that Rajiv Ranjan (hereinafter referred to as the ‘Respondent’) is GUILTY of Professional Misconduct falling within the meaning of Item (8) and (9) of Part I of the First Schedule and Item (7) and (8) of Part I of the Second Schedule to the Chartered Accountants Act, 1949.
2. That pursuant to the said Findings, an action under Section 218 (3) of the Chartered Accountants (Amendment) Act, 2006 was contemplated against the Respondent and a communication was addressed to him thereby granting opportunity of being heard in person / through video conferencing and to make representation before the Committee on 281h March 2024.
3. The Committee noted that on the date of the hearing held on 28’h March 2024, the Respondent was present through video conferencing and made his verbal representation on the Findings of the Disciplinary Committee, inter-alia, stating that the audit in the instant matter was done at the request of the director of the Company within a short time frame. The Respondent further added that the mistake on his part was that he failed to obtain the no-objection from the Complainant before accepting the audit as during that time, Corona pandemic was ongoing in the Country and everything was shut down. He visited the Complainant office’s as well, but it was closed. The Respondent also added that he was still conducting the audit of the Company.
4. The Committee considered the reasoning as contained in the Findings holding the Respondent Guilty of Professional Misconduct vis-a-vis verbal representation of the Respondent.
5. Keeping in view the facts and circumstances of the case, material on record including verbal representation on the Findings, the Committee noted that the Respondent failed to verify or obtain any of the documents as required in terms of the Code of Ethics to ascertain as to whether the requirements of Section 139 and Section 140 of the Companies Act, 2013 were complied. In the Code of Ethics, it is clearly mentioned that only a Certificate from the management will not be sufficient and the Respondent has himself admitted that he has relied on the letter of the Company dated 22nd September 2021 which is a clear case of violation of Code of Ethics.
5.1 The Committee further noted that any communication of the Respondent with CA. Suman Chaudhary does not hold any relevance since she was not the previous auditor, and the communication of CA. Suman Chaudhary with the Complainant cannot be treated as a substitute of the communication which was required to be done by the Respondent with the Complainant. The Committee noted that the Respondent failed to obtain sufficient and appropriate evidence to express an opinion on the financial statements of the Company, whether they are giving a true and fair view or not. The Committee also noted that the Respondent followed a very casual approach while auditing the financials of the Company and was grossly negligent in discharge of his professional duties as Statutory Auditor of the Company for FY 2020-21.
5.2 Hence, professional misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 70, February 2024 which is to be read in consonance with the instant Order being passed in the case.
6. Accordingly, the Committee was of the view that ends of justice will be met if punishment is given to him in commensurate with his professional misconduct.
7. Thus, the Committee ordered that CA. Rajiv Ranjan, be Reprimanded and also a Fine of Rs. 25,0001- (Rupees Twenty Five Thousand only) be imposed upon him payable within a period of 60 days from the date of receipt of the Order.
Sd/-
(CA. RANJEET KUMAR AGARWAL)
PRESIDING OFFICER
Sd/-
(MRS. RANI S. NAIR, IRS RETD.)
GOVERNMENT NOMINEE
Sd/-
(SHRI ARUN KUMAR, IAS RETD.)
GOVERNMENT NOMINEE
Sd/-
(CA. SANJAY KUMAR AGARWAL)
MEMBER
Sd/-
(CA. COTHA S SRINIVAS)
MEMBER
