CA Sandeep Kanoi
A careful analysis of Guidance Note on Revision of the Audit Report issued by the Council of the Institute of Chartered Accountants of India would reveal that it is permissible for the respondent to rectify and revise the audit report even after it is submitted. There is no embargo or prohibition as such. The guidance note of 2003 lends further support to the same. A perusal of the extracted portion would go to confirm that the Council per se did not find revising the audit report as an irregularity, but the Council was of the opinion that not specifically mentioning and not informing the members that the audit report dated 10.08.1990 is a revised report, is an irregularity and the same was construed as a misconduct.
Now, the crucial point which falls for consideration is whether the conduct of the respondent in not specifically mentioning the audit report dated 10.08.1990 as a revised report would fall within the parameters of misconduct as understood in terms of Section 22 read with Clause 7 of the II Schedule of the C.A. Act.
In this context, the argument of the learned counsel for the respondent is to the effect that the submission of the audit report dated 10.08.1990 would not fall within the scope of misconduct as what was done was rectifying the mistake which was committed in the first audit report by oversight or otherwise at an earlier point of time and as such the act of rectification cannot be termed as negligence much less gross negligence. He would further submit that respondent being diligent and conscious of his responsibility having come to realize the mistake committed earlier had taken immediate steps to correct the same, which is evidenced by the letters addressed by him on 05.03.1990 and 10.04.1990. The record would further disclose that the Club itself had admitted that their staff had failed to appraise the audit assistant about the liquor stock which was kept in the other room and thereby the mistake was owned up by the Club itself and had virtually taken the blame on themselves rather than pointing out an accusing finger at the respondent.
In exercise of the jurisdiction under Section 21 of the Act, the High Court would take action against the finding Member only if the High Court accepts the finding made by the Council and not otherwise. In the present case, in the light of the discussion, we find that on a closure scrutiny of the material on record, the only finding that has been recorded by the Council is that the finding provisionally guilty of not mentioning the audit report dated 10.08.1990 as a revised audit report, which finding in the facts of the present case is totally unsustainable as we had held that the audit report dated 10.08.1990 was only the statutory audit report which was submitted for the purpose of consideration by the General Body of the Club.
Having considered the rival submissions and in particular the fact that what has been found fault by the Council is not making of a revised audit report but not mentioning the audit report dated 10.08.1990 was a revised audit report cannot be termed as negligence on the part of the respondent. One another view, which is possible in the facts of this case is that the audit report dated 10.08.1990 alone is the audit report, which has been submitted for consideration of the members. Inasmuch as, the earlier audit report dated 12.02.1990 never came to be considered by the General Body and the same was considered for the first time on 12.08.1990. In that view of the matter, it can be safely stated that the audit report dated 10.08.1990 alone is the audit report giving the auditor’s opinion with respect to the affairs of the Club.
We should not lose sight of the fact that a professional cannot be condemned for all and sundry trivial mistakes committed involuntarily in the course of discharge of his duties.
In the light of the discussion above, we are of the opinion that this is a fit case where in exercise of the powers conferred on this court under Section 2 (6A) of the C.A. Act to direct for dismissal of the complaint and accordingly we direct the Institute to dismiss the complaint.