Disciplinary Committee (Bench-IV) of the Institute of Chartered Accountants of India (ICAI) found CA Pawan Gupta guilty of professional misconduct in a matter related to the statutory audit of M/s Advance Surfactants India Limited. The Committee held that Gupta failed to comply with auditing standards, particularly SA 230 (Audit Documentation), as he did not retain the audit working papers for the statutory audit conducted for FY 2014–15. Although Gupta argued that records were kept at the company’s corporate office and that he no longer had access to them, the Committee noted his own affidavit before the NCLT, where he acknowledged the absence of any such documentation in his possession.
Gupta contended that his earlier submissions were not adequately considered and claimed that the complaint lacked substantial evidence. He also alleged procedural lapses and factual inaccuracies. However, the Committee maintained that these points had already been addressed during the earlier hearings under Rule 18. The absence of proper documentation, a fundamental requirement under ICAI auditing standards, cast serious doubt on the audit’s conduct.
Considering the findings and representations made, the Committee concluded that the misconduct was established and ordered removal of CA Pawan Gupta’s name from the Register of Members for a period of one month. The decision was made in accordance with Section 218(3) of the Chartered Accountants Act, 1949, and relevant rules under the 2007 procedure regulations. The order was signed and issued on 16th May 2024.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
[DISCIPLINARY COMMITTEE [BENCH-IV (2024-2025)]
[Constituted under Section 21B of the Chartered Accountants Act, 19491
ORDER UNDER. SECTION 218(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/330/2019/DD/308/2019/D01501/2021]
In the matter of:
CA. Kishan Gopal Somani .. Complainant
CA. Pawan Gupta
Partner, M/s Narinder Arora & Co.,
Chartered Accountants—..Respondent
MEMBERS PRESENT:.
1. CA. Ranjeet Kumar Agarwal, Presiding Officer (In person)
2. Shri Jiwesh Nandan, I.A.S (Retd.), Government Nominee (In person)
3. Ms. Dakshita Das, I.R.A.S. (Retd.), Government Nominee (Through VC)
4. CA. Mangesh P Kinare, Member (In person)
5. CA. Abhay Chhajed, Member (In person)
DATE OF HEARING : 28th MARCH, 2024
DATE OF ORDER : 16th May, 2024
1. That vide Findings dated 05.02.2024 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. Pawan Gupta (hereinafter referred to as the Respondent”) is GUILTY of Professional Misconduct falling within the meaning of Items (5),. (6), (7), (8) and (9) 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 an opportunity of being heard in person/ through video conferencing and to make representation before the Committee on 28th March 2024.
3. The Committee noted that on the date of hearing on 28th March 2024, the Respondent was present through video conferencing, and he verbally reiterated his written representation dated 29th February 2024 on the Findings of the Disciplinary Committee, which, inter-alia, are given as under:-
(a) The Hon’ble Disciplinary Committee has not considered the replies filed by the Respondent dated 20th January 2021, 17th October 2021 and 07th November 2021. It construed that these findings are against the principle of natural justice.
(b) The Complaint contained factual errors as they have failed to apprise that every year renewal was done by the Complainant’s client after taking and verification of all the documents and visit by branch officials from/of the Company including the verification of all the records.
(c) The Hon’ble Disciplinary Committee failed to observe that this Complaint was filed on frivolous grounds and without any substance and clinching evidence against the Respondent. The Complainant has not enclosed any documents showing dereliction of duties and responsibilities on the part of the Respondent.
(d) The Respondent prayed that the findings of the Hon’ble Disciplinary Committee dated 05.02.2024 in view of the submissions and documentary evidence be set aside.
4. The Committee considered the reasoning as contained in Findings holding the Respondent ‘Guilty’ of Professional Misconduct vis-à-vis written and verbal representation of the Respondent. The Committee noted that the issues/ 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 and material on record including written and verbal representation of the Respondent on the Findings, the Committee noted that during the hearing(s), the Counsel for the Respondent has admitted that he has no working papers related to the Statutory Audit of M/s Advance Surfactants India Limited as same were retained at the premises of the Company and all these facts have been disclosed by him in affidavit dated 25/09/2019 filed with NCLT. The Committee further noted that the Respondent in said affidavit has stated that his place of work was at corporate office of the Company and all the records of the Company were maintained at the corporate office of the Company till 2016.
6. Further, the Respondent confirmed in the affidavit that he is no more associated with the Company and he has no record or document related to the Company in his possession. The Committee was of the view that Respondent has failed to comply with generally accepted auditing principles issued by ICA’. The Committee held that the Respondent failed to fulfill the requirements of SA 230 ‘Audit Documentation’. In view of the requirements of SA 230, which was applicable to the Statutory Audit carried out by the Respondent for financial year 20142015, the Respondent did not comply with the requirements of SA 230 as he failed to retain in his custody audit documentation related to audit assignment of M/s Advance Surfactants India Limited undertaken by him for the prescribed period of seven years. In fact absence of any audit documentation with the Respondent raises serious doubts as regards proper conduct of Audit itself. Hence, the Professional Misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 05th February 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 name of the Respondent i.e. CA. Pawan Gupta be removed from the Register of Members for a period of 01 (One) month.
Sd/-
(CA. RANJEET KUMAR AGARWAL)
PRESIDING OFFICER
Sd/-
(SHRI JIWESH NANDAN, I.A.S. {RETD.})
GOVERNMENT NOMINEE
Sd/-
(MS. DAKSHITA DAS, I.R.A.S.{RETD.})
GOVERNMENT NOMINEE
Sd/-
(CA. MANGESH P KINARE)
MEMBER
Sd/-
(CA. ABHAY CHHAJED}
MEMBER
