A complaint was received against the Respondent pursuant to an investigation conducted by the CBI in relation to fraudulent sanction and disbursement of Government grant amounting to Rs. 86.23 lakhs. The investigation disclosed that the Respondent had issued 14 Utilization Certificates in Form GFR 19-A in the names of 14 applicants, without verification of authentic records and for a professional fee of Rs. 20,000/-. The Respondent was named as an accused in the CBI investigation report, wherein it was recorded that the certificates were issued without inspection of supporting documents and formed part of a larger fraudulent scheme. The Committee noted that the Respondent admitted to having issued and signed the said 14 Utilization Certificates and also certified the Receipts and Payment Accounts for the relevant period. However, the Respondent failed to produce any working papers or documentary evidence in support of the certificates issued by him. The Respondent contended that due to shifting of his office, the records could not be traced and that SA-230 on Audit Documentation was not applicable for the relevant period. The Committee observed that AAS-3, ‘Documentation’, which was applicable at the relevant time, required retention of working papers for a reasonable period sufficient to meet professional and legal requirements. The Respondent failed to demonstrate adoption of any reasonable procedures for custody and retention of working papers, particularly when the CBI investigation commenced. Accordingly, the Committee held the Respondent GUILTY of Professional Misconduct falling within the meaning of Clause (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. PR/ PR-48/15-DD/88/2015-DC/759/18

Respondent firm was the statutory auditor of the Companies since their incorporation. It was alleged that the Respondent was engaged in statutory audit as well as bookkeeping services of the Companies, had retained their documents and passwords, raised an additional professional bill over and above the agreed contractual fee and despite receipt of audit fees, neither completed the audit nor resigned as Statutory Auditor. The Committee examined the Contracts of Services executed for Financial Year 2009-10 and for the period from April 2011 to March 2013 and observed that the scope of work included maintenance of books of accounts and allied services and that monthly bills were raised and paid in accordance with the agreed annual professional fee of Rs. 4 lakhs, indicating that the said contracts were subsisting during subsequent years as well. The Committee further noted from the email correspondences that despite repeated requests by the Complainant for return of documents and passwords, the Respondent did not deny possession thereof and merely demanded payment of professional fees. The Committee observed that members are not permitted to write the books of accounts of their auditee clients, and reliance was placed on the Guidance Note on Independence of Auditors. Regarding the demand of additional fees amounting to Rs. 2,12,500/-, the Committee observed that most of the services claimed as additional were already covered under the existing contract of services, and such demand was unjustified. The Committee further observed that despite receipt of audit fees for Financial Year 2014- 15, the Respondent failed to complete the audit, and even if irregularities were noticed, he was duty-bound to complete the audit and report the same by appropriately modifying his audit opinion in accordance with Standard on Auditing (SA) 705 or alternatively resign or disclaim his opinion. Accordingly, the Committee held the Respondent GUILTY of Professional and Other Misconduct falling within the meaning of Clause (1) of Part II of the Second Schedule and Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. PR/218/2015-DD/233/2015-DC/807/2018