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Chapter-19
CODE OF ETHICS
CHAPTER 19 : PROFESSIONAL ETHICS
DRONE VIEW
Volume
Volume
2
1
International Ethical Standards
Board for Accountants (IESBA)
based Ethics
Domestic provision based
Ethics for CAs
Chapter
1
Issued
in 2019
a
Responding to noncompliance of Laws &
Regulation (NOCLAR)
b
Effective
including
provision of:
c
220
Chapter
Fees: Relative size
Taxation services to
audit clients
2
Chapter
3
Chapter
4
Chapter
5
Accounting and
Auditing Standard
The Chartered Accountants
Act, 1949
Including First & Second Schedule to CA
Act, 1949 and related CA Regulations, 1988
Council Guidelines for
Advertisement
Council General
Guidelines, 2008
Self-Regulatory Measures
Recommended by the council
CA FINAL AUDIT BY CA. SJ
Volume
3
Case laws referencer
(not relevant for exams)
A repository of
disciplinary cases
for ready reference
of members sorted
section wise/clause
– wise
Earlier included
as commentary to
various sections and
clauses to Schedules
of the CA Act, 1949.
CHAPTER 19 : PROFESSIONAL ETHICS
Index
VOLUME 1 - CODE OF ETHICS BASED ON IESBA
SCHEDULES TO CA ACT 1949
Guide to the CODE
Schedule - I
Part I
Schedule - II
Part I
New Features of Volume 1 of the Code
Part II
Part II
PART 1 - General Application of Code IESBA
Part III
Part III
PART 2 – Professional Accountant in Business / Service
Part IV
Structure
PART 3 – Professional Accountant in Public Practice
Chapter 3 - Guidelines for Advertisement
VOLUME 2 - ICAI CODE/DOMESTIC CODE
Chapter 4 - Council General Guidelines 2008
Chapter 1 - Applicability of Various Pronouncements
(Including Networking Guidelines)
Chapter 2 - The Chartered Accountants Act & Regulations
A.
Section 2(2) -
Member Deemed to be in practice
B.
Section 6
-
Certificate of Practice
C.
Section 4
-
Member of ICAI i.e. Register of Members
D.
Section 7
-
Members to be known as Chartered Accountants
E.
Section 8
-
How to become a member, removal,
suspension and restoration of membership
F.
Section 27
-
Branch Office
G.
Section 5
-
Follow and Associates Members of ICAI
H.
KYC Norms for CA in Practice (New)
I.
Section 21
-
Disciplinary Proceeding
J.
Section 22
-
Professional and Other Misconduct
ETHICAL STANDARDS BOARD (ESB)
l
Recent Announcements Of Ethical Standards Board
l
Recent Clarifications Of Ethical Standards Board
CA FINAL AUDIT BY CA. SJ
Brahmastra and Drone Charts have similar
content for this chapter hence student having
Brahmastra may simply refer that book only
221
CHAPTER 19 : PROFESSIONAL ETHICS
Important Notes:
222
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
CODE OF ETHICS - VOLUME 1
 Confidentiality : To refrain from:
(a) Disclosing outside the firm or employing organization confidential
PART 1 – General Application of Code IESBA (applies to all professional
information without proper and specific authority or unless there is a
accountants)
legal or professional right or duty to disclose; and
Fundamental Principles of Code of Ethics

(b) Using confidential information acquired as a result of professional and business
Integrity : Professional accountants to be straightforward and honest
in both professional and business relationships.


relationships to their personal advantage or the advantage of third parties

Not knowingly be associated with reports, that:
NOTE: Following are circumstances where professional accountants might,
(a) Contains a materially false or misleading statement;
be required to disclose confidential information:
(b) Contains statements or information provided negligently; or
•
Disclosure is required by law,
(c) Omits or obscures required information; unless opinion modified.
•
Disclosure is permitted by law and is authorized by the client or the
When a professional accountant becomes aware of above information
employing organisation;
the accountant shall take steps to be disassociated from that


Confidentiality : Subsection 114
•
There is a professional duty or right to disclose, in case of:
information.
(i) Peer Review or Quality Review
Objectivity: Not to compromise their professional or business judgment
(ii) Inquiry or investigation by a professional or regulatory body;
because of bias, conflict of interest or the undue influence of others.
(iii) To protect interests in legal proceedings; or
Professional Competence and Due Care :
(iv) To comply with TPE standards
(a) To maintain professional knowledge and skill

(b) To act diligently in accordance with applicable technical and
Professional Behaviour :
1.
professional standards
To comply with relevant laws and regulations and avoid any action that
may bring discredit to the profession
(c) Serve with professional competence & exercise sound judgment
2.
Professional accountants should be honest and truthful and should not:
(d) Develop continuing awareness
(a) Make exaggerated claims
(e) Continuing professional development
(b) Make disparaging references or unsubstantiated comparisons
(g) Shall take steps to train subordinates
(c) Any violation of Advertisement Guidelines issued by the Council
CA FINAL AUDIT BY CA. SJ
223
CHAPTER 19 : PROFESSIONAL ETHICS
PART 2 – Professional Accountant in Business / Service
This is part of the code illustrates the application of conceptual
(ii)
Evaluate the threats identified; and
(iii)
Address the threats
framework contained in PART-A to Professional Accounts in Business.
A. Threats
PART 3 – Professional Accountant in Public Practice
A. Threats
 Self – interest : E.g. A financial interest in a client or jointly holding
a financial interest with a client.
 Self – review : E.g. The discovery of a significant error during areevaluation of the work of the professional accountant
 Advocacy : E.g. Promoting shares in a listed entity when that entity
is a financial statement audit client
 Familiarity: E.g.Long association of senior personnel with the
assurance client
 Intimidation : E.g. Being threatened with litigation
B. Safeguards that may eliminate or reduce threats to an acceptable level:
Self-interest
Threat
Examples
- Having a
direct financial
interest in a
client
- Undue dependence on total
fees from a
Client
- Close business
relationship
with a client
- Possibility of
losing a client.
- Potential employment with
a client
- Having access
to confidential
information
personal gain
 Safeguards created by profession, legislation or regulations;and
 Safeguards in the work environment.
Threats, Evaluation of Threats and Safeguards (Part 3: Professional
Accounts in Public Practice)
Conceptual Framework
Specifies an approach for a professional accountant to:
(i)
224
Identify threats to compliance with the fundamental principles;
CA FINAL AUDIT BY CA. SJ
Self-review
Threat
Threat to not
appropriately
evaluate the
results of a
previous judgment made
Examples
- A loan to or
from an
assurance
client
- Participating
in incentive
-compensation
arrangements
offered by
the employing
organization
- Having access
to corporate
assets for
personal use
- Being offered a
gift or special
treatment
Advocacy
Threat
Familiarity
Threat
Intimidation
Threat
Threat to
promote a
client’s or
employing
organization’s
position
The threat that
due to a long or
close relationship
with a client,
or employing
organization, a
professional accountant will be
too sympathetic
to their interests
or too accepting
of their work
Threat that a professional accountant
will be deterred from
acting objectively
because of actual or
perceived pressures,
including attempts
to exercise undue
influence over the
accountant.
Examples
- Promoting
shares in a
entity
- Acting as
an advocate
Examples
of client in
- A member of
litigation
the engageor disputes
ment team
with third
having a close
parties
or immediate
- Lobbying
family relationin favor of
ship with a dilegislation
rector or officer
on behalf of
of the client or
a client
employer
- A former partner of the firm
being a director
or officer
- Long association of an audit
team member
with the audit
client
Examples
- Being threatened
with dismissal or
replacement in relation to a client engagement because
of a disagreement
about a professional
matter.
- Being feeling pressured to agree with
the judgment of a
client because the
client has more
expertise on the
matter in question.
- Being informed
that a planned
promotion will not
occur unless the
accountant agrees
with an inappropriate accounting
treatment.
CHAPTER 19 : PROFESSIONAL ETHICS
• Using different partners and engagement teams for the provision of non-
B. Evaluation of Threats:
assurance services
Policies and procedures might impact the evaluation of whether a threat to
compliance with the fundamental principles is at an acceptable level.
(i) Acceptable level : Third party test, party likely conclude that the
• Involving another firm to perform or re-perform might address self-interest,
self-review, advocacy, familiarity or intimidation threats.
• Separating teams might address a self-interest threat.
accountant complies with the fundamental principles.
(ii) Reasonable and Informed Third Party : Consideration by the
Part1 - Code of Ethics : IESBA CODE: Provisions effective 1st
October 2022
professional accountant about whether the same conclusions would
likely be reached by another party.
(1) Responding to Non-Compliance with Law and Regulations (NOCLAR) C. Addressing Threats
Sections 260 and 360
If the identified threats to compliance are not at an acceptable level,
the accountant shall address the threats by eliminating them or reducing
Introduction- Non-compliance with laws and regulations (“non-compliance”)
them to an acceptable level. The accountant shall do so by:
(i)
[1] Introduction & Scope
Eliminating the circumstances,
comprises of acts of omission or commission, intentional or unintentional,
(ii) Applying safeguards, to reduce the threats to an acceptable level; or
which are contrary to the prevailing laws or regulations committed by:
(iii) Declining or ending the specific professional activity.

a client/professional accountant’s employing organisation;

TCWG of a client or employing organisation;
D. Safeguards

management of a client/ employing organisation; or
Safeguards are actions individually or in combination that the accountant

other individuals working for or under the direction of a client/ employing
organisation
takes that effectively reduce threats to an acceptable level.
Examples
However, NOCLAR under Revised Code of Ethics address the personal
• Assigning additional time and qualified personnel, might address a self-
misconduct unrelated to the business activities of the client/ employing
organisation and non-compliance by parties other than listed out in the
interest threat.
• Having an appropriate reviewer, might address a self-review threat.
definition of NOCLAR.
CA FINAL AUDIT BY CA. SJ
225
CHAPTER 19 : PROFESSIONAL ETHICS
Scope- As per IESBA, following examples would be covered in NOCLAR:-
accountant in public practice expresses an opinion on whether FS give
 Fraud, corruption and bribery
a true fair view by an A-FRFW (specifically separate definition of Audit
 Money laundering, terrorist financing and proceeds of crime
added for NoCLAR).
 Securities markets and trading

Listed entity?
 Banking and other financial products and services
Entity whose shares, stock or debt are quoted or listed on a recognized
 Data protection
stock exchange, or are marketed under the regulations of a recognized stock
 Environmental protection
exchange or other equivalent body.
 Public health and safety
 Tax and pension liabilities and payments
Q.
professional accountants in service?
Disclosure, which is Contrary to Law not Required:
A.
A.

As per the revised provisions of Section 260 of Volume -I of the Code of
As per IESBA Code, disclosure of the matter to an appropriate authority
Ethics, provisions of NOCLAR with reference to professional accountants
would be precluded if doing so would be contrary to law or regulation.
in service apply only to the senior professional accountants employed
with listed entities(earlier all employees of listed entities).
[2] Applicability of NOCLAR in India
Q.
Whether the provisions of Responding to NOCLAR apply to all
Are the professional accountants in public practice required to
Senior professional accountants in service?
comply with the provisions of NOCLAR with regard to all professional
Refers to the Key Managerial Personnel (reference to KMP added). They are
assignments?
directors, officers, or senior employees able to exert significant influence over
Provisions of NOCLAR from the standpoint of professional accountants in
and make decisions regarding, the acquisition, deployment, and control of
public practice are applicable to Audit engagements of entities, the shares
the employing organization’s human, financial, technological, physical, and
of which are listed on recognized stock exchanges(s) in India and have a
intangible resources. There is a greater expectation for such individuals to
net worth of INR 250 crores or more (earlier all listed entities).
take whatever action is appropriate in the public interest to respond to non-
“Audit” or “Audit engagement”?
compliance or
Shall mean a reasonable assurance engagement in which a professional
226
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
suspected non-compliance than other professional accountants within the
employing organization. This is because of senior professional accountants’
roles, positions, and spheres of influence within the employing organization.
Measures to be take in case of imminient breach – Provisions repealed
(withdrawn)
[4] Documentation Requirements in NOCLAR
Revised Code over and above require the professional accountant to
follow the additional documents requirements as under:
[3] Responding to NOCLAR - Summary Chart
In case of
Employment
Responsibility of
Senior Professional
Accountant in
Service
Responsibilities of
Professional
Accountant other
than Senior
Professional
Accountant
In case of
Audit Engagement
Responsibilities
of Professional
Accountant
Steps to be taken
for responding
Obtaining an understanding
of the matter
Addressing the matter
Seeking Advice
Determining whether
further action is needed
Determining whether to
disclose the matter to an
Appropriate Authority
How MGT /
TCWG have
responded to
the matter.
The course of action the
accountant considered, the
judgments made and the
decisions that were taken,
having regard to the reasonable
and informed third party test.
How the accountant
is satisfied that the
responsibility of
public interest has
been fulfilled.
This documentation is in addition to complying with the documentation
requirements under applicable auditing standards like requirements to
document:
(a)
Significant matters arising during audit, conclusions reached,
judgement taken.
(b)
Significant matter of discussion with management, TCWG and other
suspected and identified non-compliances.
Imminent Breach
Documentation
CA FINAL AUDIT BY CA. SJ
227
CHAPTER 19 : PROFESSIONAL ETHICS
(2)
Q.
Fees – Relative Size - Paragraphs 410.3 to R410.6
Audit client represent more than 40% (in case of Non-PIE) or 20%
(PIE) of the total fees for two consecutive years?
INTRODUCTION
If the fees from a single client (& its related parties) is in excess the
Q.
A.
What measures shall be taken by the firm if the fees received from an
A.
The firm shall disclose the fact to the Institute(earlier TCWG) in case the
prescribed amended threshold, then same is to be reported to the Institute.
fees received from an Audit client for two consecutive years represents
What are the threats in case of fee dependence from a single Audit
more than the mentioned limits.
client?
If the fees continues to exceed mentioned limits, the firm shall in each
According to provisions of paragraph 410.3 A1 of Volume-I of the Code of
such year disclose this fact to the Institute.
Ethics, when the total fees generated from an Audit client by the firm
expressing the audit opinion represent a large proportion of the total fees of
Reporting format-
that firm, the dependence on the client and concern about losing the client
Ethical Standards Board of the Institute shall define the framework and
create a self-interest or intimidation threat.
mechanism of reporting.
Exceptions–
Q.
A.
What is the threshold percentage of gross annual professional fees (i.e.
Firms exempted - where the total fees received by the firm does not
limit beyond which there will be threats) received for an audit client
exceed Rs. 20 lakhs(earlier 5Lacs) in respect of a firm including fees
which is not and is a public interest entity?
received by the firm for other services rendered through the medium of a
Threshold percentage of gross annual professional fees (i.e total fees)
different firm or firms in which such member or firm may be a partner or
received from an audit client which is:
proprietor to all audit clients above thresholds are not applicable.
•
•
228
A.
not a public interest entity (non-PIE) and its related entities is 40% for
B.
Audit Clients exempted - Provisions of Fees-relative size are notapplicable
2 consecutive years (earlier 15%)
in the case of audit of government Companies, public undertakings,
is a public interest entity (PIE) and its related entities is 20% for 2
nationalized banks, and public financial institutions, or where appointments
consecutive years (earlier 15%) then disclosure is required.
of auditors are made by Government or Regulators (added).
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
VOLUME 2 : ICAI Code / Domestic Code
Public interest entity (PIE) As per the Code of Ethics, Public interest entities include: (a)
A listed entity; or
(b)
An entity:
 Statements
(i) Defined by regulation or legislation as a public interest entity; or
 Guidance Notes
(ii) For which the audit is required by regulation or legislation to be
 Accounting Standards, Quality Control and Engagement Standard
Chapter 1 – Accounting and Auditing Standard
conducted in compliance with the same independence requirements
 Conflicts Between statement and standard
that apply to the audit of listed entities. Such regulation might be
 Conflicts between old and a new standard.
promulgated by any relevant regulator, including an audit regulator. For
purpose of this definition, it may be noted that Banks and Insurance
Companies are to be considered as Public Interest Entities.
(3)
Tax Services to Audit Clients - Subsection 604
Chapter 1 – Applicability of Various Pronouncements
Statements
Secure compliance by members for the proper discharge of their functions
Authority
Lists
INTRODUCTION
Statements are mandatory
A list of statements issued
Providing tax services to an audit client might create a self-review or
(a) In the event of any deviation
(i) CARO, 2003 (now not
advocacy threat. This subsection includes requirements that prohibit
duty to make adequate
firms and network firms from providing certain tax services to audit
disclosure
clients in some circumstances because the threats created cannot be
(b) If a member has not been
relevant)
(ii) Statement of reporting under
section 143 (1) of Companies
addressed by applying safeguards. Tax services comprise a broad range of
able to perform an audit
services and if provided to audit clients create following threats and are
in accordance with such
hence either prohibited or restricted.
‘Statements’ his report should
Amendments to Schedule III
draw attention to the material
under Co.13
departures there from.
Act, 13
(iii) Statement on the
(iv) Statement on Peer Review
(v) Statement on CPE.
CA FINAL AUDIT BY CA. SJ
229
CHAPTER 19 : PROFESSIONAL ETHICS
Chapter 2 – The Chartered Accountants Act & Regulations
Guidance Notes
Guidance notes designed to provide guidance to number of matters on which
A.
Section 2(2) -
Member Deemed to be in practice
one may desire assistance which may pose difficulty and confusion.
B.
Section 6
-
Certificate of Practice
C.
Section 4
-
Member of ICAI i.e. Register of Members
D.
Section 7
-
Members to be known as Chartered Accountants
a disclosure in his report is
E.
Section 8
-
How to become a member, removal,
necessary
suspension and restoration of membership
 Following guidance notes are
F.
Section 27
-
Branch Office
considered as mandatory
G.
Section 5
-
Follow and Associates Members of ICAI
 Guidance note on treatment of
H.
KYC Norms for CA in Practice (New)
I.
Section 21
-
Disciplinary Proceeding
J.
Section 22
-
Professional and Other Misconduct
A
Section 2 (2): Member deemed to be in Practice (CAiP)

A member of the institute shall be deemed, “to be in practice”, when
GUIDANCE NOTES
NON-COMPLIANCE
 They are recommendatory
 Member should consider whether
 Member should ordinarily follow
recommendations except where he is
satisfied that in the circumstances,
it may not be necessary to do so.
 Guidance
notes
are
given
on
accounting matters also
 While attesting, examine whether
interest on deferred payments.
 Provision for depreciation in
recommendations in a guidance
respect of extra or multiple
note have been followed or not
shift allowance
Standards
individually or;
STANDARDS
CONFLICTS
 Have to be complied with to ensure  Authority - 1st Standard
that financial statements are pre-
2nd Statements
pared in accordance GAAP and au-
3rd Guidance Notes

in partnership with CAiP or members of recognized profession;

in consideration of remuneration received or to be received;

Performs specified services (See deeming services)
TEASER
ditors carry out their audits in ac-  LATER THE BETTER
cordance with the GAAP.
 They are mandatory.
 A new standard shall prevail
1.
Can a CAiP enter into partnership with a CA not in practice? (Hint: No)
OVER OLDER in case of conflict
2.
Will a member providing accounting related services for consideration, be
deemed to be in practice? (Hint: Yes)
230
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
3.
4.
A CA providing accounting services as a director of the company, whether

Organization and Business Management
deemed to be in practice? (Hint: No)

System Management
What are the various modes of practice for CA? (Hint: As an individual, sole
System analysis and design, and computer related services including
proprietorship firm or partnership firm)
selection of hardware and development of software in all areas of services
which can otherwise be rendered by a Chartered Accountant in practice and
DEEMING SERVICE : Member Deemed to be in Practice (CAiP)
also to carry out other professional services relating to EDP.
i.
engages himself in the practice of accountancy;

Investment advice but not PORTFOLIO MANAGEMENT
ii.
offers to perform or performs services involving –

Management and operational audits
a.
the auditing or verification of financial transactions, books, accounts, or

Inventory management related
records;

HR management
b.
c.
the preparation, verification or certification of financial accounting and
Organisation structure and behaviour, development of human resources
related statements or
including design and conduct of training programmes, work study, job
holds himself out to the public as an accountant; or
description, job evaluation and evaluation of workloads.
iii. renders professional services or assistance in or about matters of
iv.

Valuations of shares and business, Market research, other management
principle or detail relating to accounting procedures or the recording, presen-
decision making advisor to consultant to an issue, Registrar to issue but not
tation or certification of financial fact / data;
MERCHANT BANKING
renders such other services as, in the opinion of council, are rendered or may

Quality Audit, Environment Audit, Energy Audit
be rendered by a CAiP. (Notified Services)

Acting as Recovery Consultant in the Banking Sector

Insurance Financial Advisory Services (not Brokerage)

Acting as advisor or consultant to issue, including such matter as:
CAiP – NOTIFIED SERVICES
A. Management consultancy service :
(a) Drafting of prospectus, Drafting and filling of listing agreement, and
(SJ Tip: covers all aspects of management except marketing and sales)
completing formalities with Stock Exchanges, Registrar of Companies

Financial management related
and SEBI.

Cost management related
(b) Preparation of publicity budget, advice regarding selection of
CA FINAL AUDIT BY CA. SJ
231
CHAPTER 19 : PROFESSIONAL ETHICS
i)
ad-media,
•
Monitoring statutory filing dates, and advising an audit client of those dates.
For example, the functions of a GST practitioner
ii) centres for holding conferences of brokers, investors, etc.,
iii) bankers to issue,
iv) collection centres,
B. Representation and other notified service
v) brokers to issue,
CA Deemed to be in practice if he :
vi) underwriters and the underwriting arrangement, distribution of

In professional capacity and neither in his personal capacity nor as an
publicity and issue material including application form, prospectus
employee; acts as a liquidator, trustee, executor, administrator, arbitrator,
and brochure
receiver, advisor or representative for costing / financial / taxation
(c) Advice regarding selection Registrars to Issue, printers and advertising
agencies.
matters; or

(d) Advice on the post issue activities, e.g., listing of instruments, dispatch
of certificates and refunds, with the various agencies connected with the
Takes appointment of CG / SG or a court of law or any other legal authority or acts
as a secretary unless his employment is on a salary cum – full time basis

work.
However a member opting to practice under sister concerns (CMA/CS) not
deemed to be in practice under CA Act.
Explanation - For removal of doubts, it is hereby clarified that the activities

practice during the period he renders ‘service with armed forces’.
of broking, underwriting and portfolio management are not permitted.

Acting as Insolvency Professional, Registered Valuer under CA, 2013.

Administrative Services
It may also be noted that a member of the Institute is deemed to be in
CAiP – PROHIBITED SERVICES
Administrative services involve assisting clients with their routine or

Portfolio Management Services
mechanical tasks within the normal course of operations. Such services require

Merchant Banking Involving Broking or underwriting services
little to no professional judgment and are clerical in nature. Examples of
TEASER
administrative services include:
232
•
Word processing services.
1.
A CA who is also a CS / CMA and holding COP of CS/CMA Institute, whether
•
Preparing administrative or statutory forms for client approval.
deemed to be in practice under CA Act if his work is covered u/s 2(2)?
•
Submitting such forms as instructed by the client.
(Hint: Special Exemption)
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
2. A CAiS is deemed to be in practice if engaged in deeming services?

(Hint: No if provided on behalf of employer)
exceed ` 6000.
3. Can a CA provide service of a recovery agent? (Hint: No)

4. Is dual COP permitted for a CA with
a. CS
b. CMA
c. Advocate
Council may exceed fees with the prior approval of the CG, but shall not
COP may be cancelled by the Council under such circumstances as may be
prescribed.
d. Any other profession?
(Hint: ICAI does not prohibits)
How to become member of ICAI
C
Section 4 – Person entitled to enter his name as member
(Cleared CA Exams + Completed Practical Training & IT & communication
course)
Requirement for registering
name in the register of members
Removal / Cancellation / Restoration
Pass Final
Examination of
the CA course
Completing practical
training as an article
/ audit assistant
Complete GMCS course
or any other course as
specified by the council
Submit application in prescribed form with evidence of eligibility and fees
i)
Who is dead; or
ii) Suo – moto by member; or
iii) Who has not paid any prescribed fee, however will be restored on
payment of arrears and making an application; or
to secretary
B
Removal of Name from Register - Section 20
iv) Disabilities mentioned in section 8, or who for any other reason has
CERTIFICATE OF PRACTICE
ceased to be entitled to have his name borne on the register.

Section 6 – CAiP to hold certificate of practice

Significance of COP – If COP suspended, then too they can’t appear in
Cancellation and Restoration of Certificate of Practice
other capacity (eg. Advocates, tax consultants) Case of A.C. Kaher
Regulation 10 - Incorrect details, application by member, non-payment of fees.

Cannot practice unless COP obtained, not even when applied
Regulation 11 - Restoration of membership on payment of prescribed fees with

CAiP shall pay annual fee for his COP, which shall not exceed ` 3000,
application in prescribed form, as may be determined by notification by the
payable on or before 1st April in each year:
Council, which shall not exceed ` 2000
CA FINAL AUDIT BY CA. SJ
233
CHAPTER 19 : PROFESSIONAL ETHICS
D
SECTION 7 – DESIGNATION
Bankers’, i.e. to act only as Advisor or Consultant to an Issue.
NO!
EITHER Chartered Accountant or other
designation (but not both)
CAiP
Yes!
ONLY CA
w CA/firms - permitted to register only as category IV ‘Merchant No Restriction on :
Prefix/ Suffix Degree abbrevation of
Recognised Universities / Inst.
CA/firms should not use this designations in their own letter heads,
visiting cards, professional documents, etc.
Designation (Sample):
PREFIX CA. CS. Anushka Kohli Padmashree

Special Provision for office bearers of ICAI (See below)
Designation Chartered Accountant

Provision for using description / letters to indicate membership of other
Description Director - Men in Blue Ltd.
approved Institute – No restrictions
Letter word to

Use of CA. Prefix – No Restrictions
denote DEGREES

Use of Merchant Banker/ Advisor to an issue, Tax consultants, Directors of
SUFFIX
(B.Com., A.C.A., A.C.S., M.Com., LLB)
Companies, Members of political parties, position in clubs, Cost Accountant etc. not
CA holding office position with ICAI
permitted. Permitted to use Insolvency Professional & Registered Valuer (See C7P1S1)
1.
Visiting Cards – Printed by ICAI

DISA - ISA (ICAI)
2.
Content:

Members are permitted to mention membership of a foreign Institute of
a)
Name
Accountancy, subject to MoU /MRA.
b)
Chartered Accountant PREFIX
Merchant Banker / Advisor to an issue: -
c)
Office Bearer Designation (Central Council, Regional Councils)
w The members may apply for and obtain registration under the SEBI’s rules
d)
Personal Contact Address - Back Side of Card
e)
Firm Name – Prohibited

and regulations and act.
w In client Co’s’ offer docs and advertisements, name & address of the CA or
firm acting as Advisor or Consultant to the issue could be indicated .
3.
Letter Heads
a)
Name + Chartered Accountant + President / Vice – President
w However, the name and address should not appear prominently.
w CAs or firms - should ensure that the description ‘Merchant Banker’ is not
associated with their names in the offer documents and/or advertisements
234
President and Vice-President of ICAI
b)
Chairman – Designation (no name)
c)
Others – ICAI general letter heads
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
SECTION 8: DISABILITIES FOR MEMBERSHIP
MEMBER INCHARGE

< 21 years
Eligible

Unsound mind and adjudged so by a competent court
Incharge -

Un-discharged insolvent

Discharged insolvent other than due to misfortune without any misconduct

Convicted of an offence involving moral turpitude and punishable with
OTHER PROVISIONS
transportation (Kaala Pani) or imprisonment or of an offence, not of

Intimation on Opening / Closing of Branch Office within 30 days to ICAI
technical nature, committed by him in his professional capacity unless has

‘Khud Ka Name Board’ can be placed before residence but not firm’s
E
-
either been granted a pardon or, the Central Government has removed the

F


-
Member + Partner / FT Paid Employee (Not Retainer / PT)
Visits or Resides
In the city of Branch for atleast 182 days in a year
name board
disability; or

General Rule – One Person – One Branch for a Firm
Guilty by an Institute on inquiry of professional / other misconduct

Change in member – Only in case of Casual Vacancy

No mandatory requirement to maintain a Register
SECTION 27 : MAINTENANCE OF BRANCH OFFICES
Where CA in practice or a firm of such chartered accountants has more
EXEMPTIONS:
than one office in India.
(I) Temporary office in case of Hilly Areas
Each one of such offices shall be in the separate charge of a member of the
(II) Second Office in same Premises / City / 50 km radius of city
institute;



Provided that the Council may exempt any CAiP or from CA to send the list
Branch Office Exemption
of offices to including persons in charge
(I) Hilly Area
Definition of BRANCH OFFICE: Office where name board affixed or
 Other office – in plains for 3m in winters
advertised / designated as branch in professional stationary etc.
 No mention as POB
Provision of Member in Charge
 Regular office needn’t be closed, but no business
 Eligibility Criteria: CA+ Partner/ Full Time Employee
 Inform ICAI before commencement of winter and close of temporary office
 182 days Test: Resides in city of branch/ visits the branch
CA FINAL AUDIT BY CA. SJ
235
CHAPTER 19 : PROFESSIONAL ETHICS
G Fellow & Associate members
(II) Second Office Exemption
Situated in –
C.A.
 Same premises
A.C.A.
(Associate CA)
 Same city
 50 km radius from municipal limits of city of main office
On becoming
CA whether in
practice or not.
Eg.
i)
F.C.A.
The second office is located in the same city, in which the first office is
located or.
City X
1st office
Continuous
5 years of
Practice
To apply to
ICAI
FCA ‘will’ be
awarded
Experience equivalent to that of
CAiP of continuous 5 years
To apply to
ICAI
FCA ‘may’ be
awarded
2nd office
H KYC Norms for CA in Practice (New)
ii)
The second office is located within a distance of 50 km from the municipal
limits of a city, in which the first office is located
City X
1st office 15 km
Municipal Limit
(Head office)
A. General Information
 Name of the Entity
City Y

10 km 2nd office
(Branch office)
35 km
45 km
Effective distance from 1st office = 35 km + 10 km = 45 km
ENTITY INFORMATION
Type of Entity
 Business Description
C. Regulatory Information

Company PAN No.

Company Identification No.

Director’s Identification No.

Director’s Name & Addresses

Names and address of companies
in which above person in director
236
CA FINAL AUDIT BY CA. SJ
B. Corporate Structure
 Name of ultimate parent company
 Name of parent company
 Name of Affiliates
D. Engagement Information
 Type of Engagement
CHAPTER 19 : PROFESSIONAL ETHICS
I
J
Section 21: Disciplinary Proceeding
SI
Board of Discipline
General Principles to Study Misconduct: SJ Tips

Reference – Clause ‘n’ of Part ‘x’ of Schedule ‘y’ to CA Act, 1949

Clause provide misconduct and not code of conducts

Clause to be interpreted in letter as well as spirit
Professional Misconduct

In event of contravention of law and clauses, law shall prevail
Shall be deemed to include any act or omission provided in any of the

If misconduct covered under then disciplinary proceedings under clause with
SII Disciplinary Committee
Section 22 : Professional and Other Misconduct
schedules (referred in the Schedule I and II of CA Act, 1949)
maximum penalty to be initiated multiple clauses
Other Misconduct
SCHEDULE I – PART – I
Other Misconduct has been defined in Part IV of the First Schedule and Part
III of the Second Schedule

CAiP
Mukherjee Vs ICAI – SC

Professional Misconduct
Held if a member of the Institute is found guilty of conduct, which renders him
unfit to be a member of the Institute, even though such conduct may not attract
CLAUSE 1 : ALLOWS TO PRACTICE IN OWN NAME
any of the provision of the schedules, it would still be open to the council.
 Allows any person to practice in his name as a chartered accountant
 Unless such person is also a chartered accountant in practice and
SCHEDULES TO CA ACT, 1949
 Is in partnership with or
Schedule
Schedule I
Part
Part I
Applies to
Clauses
CA in Practice
12
(Mild Misconduct)
Part II
CA in Service
2
(Penalty – upto 1,00,000 or Max
Part III
All Members
3
3m suspension)
Schedule II
Part IV (OM*) All Members
Part I
CA in Practice
2
10
(Serious Misconduct)
Part II
All Members
4
 Any share, commission or brokerage in the fees or profits
(Penalty – upto 5,00,000 or cessation) Part III (OM*) All Members
1
 Of his professional business
OM* - Other misconduct, rest are professional misconduct
 Employed by him
CLAUSE 2 : SHARING OF FEES
 Pays or allows or agrees to pay or allow.
 Directly or indirectly,
 To any person other than:
CA FINAL AUDIT BY CA. SJ
237
CHAPTER 19 : PROFESSIONAL ETHICS
 A member of the Institute or
Retried Partner
-
Whether or not he continues to be a member
 A partner or
LR of a deceased partner
-
Provided already mentioned in deed
 A retired partner or
Member of any prescribed
-
As prescribed under Regulation 53A(3)/B
 The LR of a deceased partner (provided already mentioned in deed)
body
professional body or qualifications
 Member of any other professional body or with such other persons having
SALE OF GOODWILL:
such qualifications as prescribed
When permitted
-
Death of Proprietor
Diagnosis:
-
Death of all partner

Agreement to share fees is also a misconduct
Conditions
-
Sale to CAiP

Allowing a partner/employee to share fees shall make all other payments guilty too
-
Sale for lump sum consideration

Clause prohibits sharing of fees irrespective of whether it is to secure any work
-
No sharing of fees

Sharing may be in cash or kind
Timeline
-
1 year from date or death or from

Only sharing under professional conduct covered. Sharing of fees personally
decision on disputed LR, if any
unrelated to profession not covered
After 1 year name released to new 

Sharing prohibited from professional fees/profits and not of personal
member on first come basis
incomes like rent, interest, etc.
OTHER PROFESSIONALS :
In case of joint assignment requiring services of various professionals,
Regulation 53A (3) of the Chartered Accountants Regulations, 1988
assignment can be undertaken jointly but billing to be separate and
i)
Company Secretary
payment to be received individually.
ii)
Cost Accountant
iii)
Actuary
iv)
Bachelor in Engineering
Exceptions:
Member
-
CA whether or not in practice
v)
Bachelor in Technology
Partner
-
Sharing with employee CA permitted
vi)
Bachelor in Architecture
-
Whether CA or any other professional
vii)
Bachelor in Law
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-
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
viii)
Master in Business Administration from Universities or AICTE approved
8.
Institutions
and an NGO. Will this be treated as a professional misconduct? [Hint: No]
9.
TEASER
1.
CA has entered into an agreement to share profits of his professional
business with an automobile engineer, However no actual sharing of fees
If a CA takes loan for opening a office and repayment terms require a
percentage of profits to be paid whether permitted? [Hint: No]
2.
CA has entered into an agreement to share his share of profits with his wife
was made? [Hint: Not Guilty]
10. CA has entered into an agreement to share his rental income with an agent.
CA firm has an employee performance incentive fees where employees are
Will he be held guilty or misconduct for sharing his fees? [Hint: No]
entitled to receive a percentage share in profits comment.
3.
4.
5.
[Hint: Not permitted]
CLAUSE 3 : ACCEPTS SHARE IN FEES
If a CA avails services of a tax consultant for execution of his work in

Accepts or agrees to accept
consideration of a fixed amount whether he will be guilty of sharing of fees?

Any part of the profits of the professional work of a person
[Hint: No]

Who is not a member of the Institute
If a CA takes an assignment and shares fees with an Engineer and a

Provided that nothing herein contained shall be construed as prohibiting a
Lawyer whether he will be guilty of misconduct? Would answer differ if
member from entering into profit sharing or other similar arrangements,
sharing was made with a doctor? [Hint: No, Yes]
including receiving any share commission or brokerage in the fees, with a
CAiP bribes a CAiS to secure assignment from the company where CAiS is
member of such professional body or other person having qualification, as is
under employment by sharing a part of fees. Whether misconduct under
referred to in clause 2 of this part
clause 2? [Hint: No]
6.

If a CA enters into a referral arrangement with a Tax Consultant where there
Referral fees amongst members (in practice) for referring a client- Not
prohibited
is an agreement to refer clients to each other without sharing fees, whether
7.
he will e guilty of misconduct under Clause 2?
CLAUSE 4 : PARTNERSHIP
[Hint: No, but under clause 5]

Enters into partnership,
If a CA allows sharing of his share of profits with another person to secure

In or outside India
work will it hold partners guilty as well? [Hint: Yes]

With any person other than;
CA FINAL AUDIT BY CA. SJ
239
CHAPTER 19 : PROFESSIONAL ETHICS

A chartered accountant in practice or CAiP;

Such other persons who is a member of any other professional body
SJ Tips
having such qualifications as may be prescribed,

Partnership for other business with non-CAiP,
Including a resident who but for his residence abroad would be entitled to be
Clause-1I, Part-1, Schedule-I is relevant.
registered as a member under Section 4 (i) (v); or


Whose qualifications are recognised by the Central Government or the Council
for the purpose of permitting such partnerships
CLAUSE 5 : PROHIBITION IN SECURING WORK
Members can now form Multi-Disciplinary partnerships, subject to

Secures either through;
other professional regulators permit. ICAI has revised its Form 18 to permit such

The services of a person who is not a employee of such chartered
partnership. Currently CS, CMA, Architect, Engineers, Actuaries not in practice

accountant; or
are permitted by their Institutes to enter into MDP. ICAI has also

Who is not his partners; or
issued MDP guidelines and FAQs in this behalf.

By means which are not open to a chartered accountant,
Members may be Director Simplicitor.(However partner/designated partner is

Any professional business,
different) Therefore, as of now, a member in practice cannot become a part-

Provided that nothing herein contained shall be construed as prohibiting any
ner/designated partner (non-working and non-remuneration drawing) in an


LLP not carrying out professional work. However, partnership between mem-
Diagnosis:
bers of the Institute and

Secures either through;
Partnership between members of ICAI & members of foreign professional bodies

The services of a person who;
are permissible provided they are eligible for the membership. Post 8 Dec. 1997, no

Is not an employee of CA;
fresh enrolment of persons with the qualifications of institutions, organisations,

Who is not his partner;
etc. earlier permitted by the Council is permissible. Hence partnership with such

By means which are not open to a chartered accountant
foreign body professionals is now not permitted.

Any professional business
Prohibition on entering into partnership with non-CAs is confined to the

Provided that nothing herein contained shall be construed as prohibiting any
practice of the profession of CAs.
240
arrangement permitted in terms of items (2), (3) and (4) of this part
arrangement permitted in terms of items (2), (3) and (4) of this part.
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
CLAUSE 6 : SOLICITS CLIENT OR WORK

Classified advertisement in ICAI Journal / News Letter

Solicits client or professional work either
For sharing / seeking professional work on assignment /

Directly or indirectly, by circular, advertisement, personal communication, or
partnership basis or salaried employment. Allowed, provided it only contains
inter view or by any other means
accountant’s name, address, telephone, fax number and email address and
Provided that nothing herein contained shall be construed as preventing or
address(es) of social networking sites of members. Firm name not
prohibiting –
permitted. However, mere factual position of experience and area of
Any chartered accountant from applying or requesting for or inviting or
specialization, relevant to seek response to the advertisement, are
securing professional work from another chartered accountant in practice; or
permissible



A member from responding to tenders or enquires issued by various users
 Client’s Behalf (Clause 7)
of professional services or organizations from time to time and securing
Member may also advertise on behalf of details of client in the course of
professional work as a consequence.
provision of any service like recruitment services, as a liquidator, etc.

I.
Advertisement and Notes in the press
Permitted to issue advertisements for recruiting office staff
Not permitted to canvass for work through advertisements except in

Staff Recruitment (Clause 7)

Advertisement under P.O. Box Number
following cases:
Prohibited [Advertise through a write up in a print / electronic media
From another CA
Details of these are provided in Clause 7 of this part]
A member may request another Chartered Accountant in practice for

professional work.
II.
A member may advertise change
Permitted features:

In partnership or dissolution of a firm, or

 Change in the address of practice and telephone numbers – only
Empanelment for allotment of audit professional work
CA’s can apply for having their name on panel maintained by
organizations (Like Empanelment by RBI for Banks)
informative with appropriate circulation area of media, size and

Provided he is aware about empanelment under process
number of insertions.

Once empanelled he can INQUIRE about work allotted to him
CA FINAL AUDIT BY CA. SJ
241
CHAPTER 19 : PROFESSIONAL ETHICS
Prohibited Items:
IV. Tenders or Inquiries and others

Roving (Unsolicited Random Inquiries) enquiries cannot be made
Whether CA can respond?

Cannot demand work once empanelled
Ans.
III. Publication in telephone / other directories (Also refer XXI)
s No minimum fees prescribed
 Area of service exclusively reserved for CAs g Cannot apply
 Service open to non CAs too g Can apply
The CAs & CA Firms may have entries made in a Telephone Directory (in
s Minimum fes prescribed g Can apply
printed and electronic form) either by making a special request or by means
[Also refer Council General Guidelines 2008]
of an additional payment subject to the council general guidelines.
The “minimum fee” for this purpose should be such that it commensurates
Permitted features: They can have their name included in telephone/trade
with size, value, volume, manpower requirement and nature of work as decided
directories if following are satisfied:
by Council (However presently this requirement applicability is deferred)
a.
Entry in separate section of CA
b.
It should appear in the local directory of the city in which concerned CA/firm/
V. Publication of books or articles or presentations
branch is situated
Permitted
c.
Entries should be in logical (alphabetical) order
a.
CA in practice can write books etc. and get them published.
d.
Should not be made in a differential or prominent manner
b.
Can mention his name & his personal / academic details.
e.
Entries should be open to all CA’s.

No solicitation of work on the name of member & firm name
f.
Members can also include their names in trade/ social directories.

[NEW] He may indicate designation “Chartered Accountant” as well
as the name of the firm.
Prohibited Items:
a.

No highlighting of professional attaintments of member or firm.
No impression of publicity or advertisement
VI. Greeting Cards or Invitations

CA can indicate name of firm and address on greeting cards or Invitation
meant for :
242
CA FINAL AUDIT BY CA. SJ
a.
Marriage
CHAPTER 19 : PROFESSIONAL ETHICS
b.
c.
Religious ceremonies
IX.
Roving inquiries
Inauguration of office, etc.
Prohibited as these are solicitation of work covers:
Condition : Provided it is sent only to clients, relatives and close friends (not

Tele – marketing
defined)

Door – to – door marketing
Permitted - ‘Chartered Accountant’

Mass level Distribution of Mails, SMS, etc.
Prohibited

Professional Designations

Qualifications

Work solicitation in any form
IX A.
Issuing handbills
Permitted: Can distribute hand bills containing their name to his clients
(for e.g. Budget highlights)
Prohibited: Cannot issue to person other than client
VII.
Advertisement for Silver, Golden, Platinum or Centenary celebrations

Normally It is not permitted to advertise the events organised by a Firm.

However, advertisement for Silver, Golden, Diamond, Platinum or Centenary
No restriction to seek professional work from CAiP provided it does not lead
celebrations of the CAs Firms may be published in newspaper/ newsletters.
to violation of any clause
X.
XI
VIII. Sponsoring Activities
Seeking work from Professional Colleagues
Acceptance of professional work emanating from a client introduced by
another CA

CAiP or CAs firm - not permitted to sponsor an event.

However, member or Firm may sponsor an event conducted by a PoU

Member should not accept the original professional work;
(program organising unit) of the ICAI, provided such event has the prior

emanating from a client introduced to him by another member .
approval of CPE

If any professional work comes to him directly, it should be his duty to ask

Members sponsoring CSR activities -
the client;
(i) Permitted individual name & “CA” prefix. 
that he should come through the other member dealing generally with his
(ii) Firm name or CA Logo is not permitted.
original work (original professional work includes work originally done by
the CA who introduced the client)
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243
CHAPTER 19 : PROFESSIONAL ETHICS
Scope of representation u/s 140
XVI. Television or Movie Credits
Representation when
It must be taken care of that exhibition of name (CA/firm) is not made
a.
The auditor who is being removed in GM, has rights of representation.
differently as compared to others.
b.
He may indicate in his letter his willingness to continue as auditor if share-
XII.
holders in AGM decide so, but this should not be in the nature of solicitation.
XVII. Educational Videos
Prohibition

May be uploaded on the internet by members, no reference should be made
to the CA’s firm, where member is a partner/ proprietor. a.
But there should not be any extra publicity therein.
b.
No derogatory, unsubstantiated remarks against the management of Co.
c.
It should not highlight contribution made by CA to the company.

It should not contain any contact details or website address.
XVIII. Website
XIII.
Public Interview
Council General Guidelines for permitting to post their particulars at website

Due care to ensure that such interviews or details about the members or their firms
Permitted features:

Not given in a manner highlighting their professional attainments

Free to create website

Any format / color
Member engaged in Coaching and Teaching

Can mention website address on professional stationery
Advised to abstain from advertising their association with coaching /

Pull mode not in push mode
XIV.

teaching activities through hoardings, posters, banners, etc.

Subject to the above prohibition, such members may put, outside their coach-
Prohibited information: (They can’t provide on website)
ing /teaching premises, sign board - name of coaching/teaching institute,

a regulator and only till such period as required
contact details and subjects taught therein only.

XV.
Name of clients and fee charged permissible only where it is required by
For size and type of, sign board, Council Guidelines apply.
Sharing Firm Profile with prospective Client

Logo (other than that prescribed by ICAI)

No photograph (other than passport style photo of member)

No advertisement
Not permitted unless it is in response to a proposed client’s specific query
244
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
Permitted information within CA’s Website
Within website specific pull request for

Name of member / firm

Nature of service rendered

Member’s / firms address / telephone no. / fax / e-mail id

Nature of assignment handled

Partner’s name and their qualifications, year of qualification, home address,

Area of experience and qualifications of partners
telephone number. email id. (i.e. Bio-data of Partner)

Area of experience and qualifications of employees

Employee’s names and their qualifications

No. of articled trainee

Job vacancies including article ship

Passport – style – photograph of members
Address of website

Reference about ICAI/govt. related website

Website address should be in the name of CA/CA firm

Articles etc. of professional interest such as budget highlights but not to have

It may be different from firm / CA name but should be as near as possible
non-professional related information like Health Tips.
to their name.

Bulletin Board

Address should not be such as results in soliciting the client

Chat rooms between client & CA or among CA’s. However confidentiality

Website address may be given on stationery without on solicitation for
should be maintained.
clients to visit website

Date upto which website is updated.

Common logo prescribed by ICAI
Search Engine

Not to have any information contradicting with ICAI, or any information that
 Listing of CA’s website on search engine is allowed.
is unbecoming a CA

But it should be on criteria such as CA, Indian CPA or any related field
Year of Establishment
 Educational videos on topics of professional relevance are permissible

The Firm can provide link of its page on Social Networking site. But can not
Hyper Links

solicit people to visit or like
In CA’s website, link/reference of only ICAI related or govt. related website
is allowed. No other link is permitted.

No advertisements are permitted in CA’s / Firm’s website

Links of other professional body websites are permitted
CA FINAL AUDIT BY CA. SJ
245
CHAPTER 19 : PROFESSIONAL ETHICS
Intimation - ICAI


Presently CA is not separately required to inform website address to ICAI
While submitting annual membership form website address is to be provided
ants” would not be permitted. (Please also refer Guideline for Advertisment)
XX. Application based Service Provider Aggregators(SPAs)



The name of Chartered Accountants’ firm with suffix “Chartered Account-
Not permissible for members to list themselves with online application
Services through other websites is allowed
based SPAs wherein other categories like businessmen, technicians event
Provided contact address, firm name with suffix chartered accountant &
organisers etc. are also listed.
professional achievement of CA is not given
XVI. Specialised Directories for limited circulation
Only CA’s name with designation ‘CA’ is allowed.
The CAs and Firms may print specialised directories for limited circulation
subject to the council general guidelines
XIX.

Online Third Party Platforms

A number of non-CAs’ firms, corporate including banks etc. have set up their own website may request CAs or CAs’ firms to provide consultation and advice through
listed alphabetically.

their Websites.

This would be permitted subject to the council general guidelines on advertise-

Council General Guideline
websites.
This would be permitted subject to the condition that on the Website, contact
address of the Chartered Accountant concerned is not provided nor such Website will contain any material which advertises professional achievements or
status of such Chartered Accountant except making a statement that they are
246
He should not give - the names of any of his clients
Professional’s or Firm’s Account in Social Networking Websites (SNW)
No other service, besides consultancy and advice can be rendered through such
Chartered Accountants.
In addition a member may give where appropriate -directorships/ personal
details/ outside interests.


For a specialised directory such as a “Who’s Who” - a member should use
his discretion in supplying information
ments

May appear in any directory or list of members in which the names are
Social Networking
Websites
Whether can have account /
page on SNW like Facebook,
LinkedIn etc?
Whether can give link of
his website or webpage in
the SNW?
Whether can give link of
his SNW on his website?
CA FINAL AUDIT BY CA. SJ
CA
FIRM
CAiP representing
himself as a
proprietor or
partner of a firm
Y
Y
Y
Y
N
NA
Name and Content
permitted
Name permitted. Other
content as per Advertisement Guidelines, 2008
As per Website Guidelines
CHAPTER 19 : PROFESSIONAL ETHICS
Personal account in SNW:

Provided that the member in practice may advertise through a write-up,
•
No reference of firm name permitted
setting out the services provided by him or his firm and particulars of his
•
Education Videos permitted (without firm name but can use CA as a prefix)
firm subject to such guidelines as may be issued by the council.
•
Value adding content to help the profession grow is also permitted (can use CA
Designation
prefix)
•
Designation / Prefix - Using CA or Chartered Accountant with name
Clause restrains members from using any designation or expression other than
on personal SNW – Exercise discretion, maintain dignity. Do not post
that of a Chartered Accountant (Also discussed in S.7) IMPROPER to state on
derogatory or with negative portrayal of the profession. Hence advised
his professional documents, letter heads, visiting cards etc.
strictly to avoid posting such content with CA prefix or Chartered

Income – tax consultant or a cost consultant or a management consultant
Accountant designation

Member of Parliament, Municipal Councilor any other functionary in addi-
Recall ICAI’s Ambit – There are No limits to ICAI’s limits –
tion to that of Chartered Accountant
A CA can be held guilty of misconduct under Clause (2) of Part-IV of First

The date of setting up the practice/date of establishment of the firm
Schedule to The Chartered Accountants Act, 1949 relating to misconduct of

Members otherwise eligible to practice as advocates (subject to the
a member resulting from their action, whether or not related to professional
permission of Bar Council) should not use designation “Chartered
work, bringing disrepute to the profession.
accountant” and “advocate” simultaneously. Same rule applies for CS, CMA.

It is not proper for firm of Chartered Accountants to use the designation “Char-
CLAUSE 7: ADVERTISES PROFESSIONAL ATTAINMENTS OR SERVICES
tered Accountant” except on professional documents, visiting cards, letter

Advertises his professional attainments or services, or
heads or sign boards and under the circumstances clarified under clause (6).

Uses any designation, or
However, an individual member may use the prefix “CA” with his name.

Expressions other than chartered accountant on professional documents,

mention “Insolvency Professional” or “Registered Valuer”respectively.
visiting cards, letter heads or sign boards,

A member empanelled as Insolvency Professional or Registered Valuer can
Unless it be a degree or a University established by law in India or recognised by the Cen-

Members are permitted - to mention a title on their visiting cards to indi-
tral Government or a title indicating membership of the ICAI or of any other institution,
cate membership of a foreign Institute of Accountancy , which has been
that has been recognised by the Central Government or may be recognised by the council.
recognised by the Council e.g. SAICA, CPA Ireland,ICAEW.
CA FINAL AUDIT BY CA. SJ
247
CHAPTER 19 : PROFESSIONAL ETHICS
Guidelines – For Advertisement For the Members in Practice (for Print or Electronic media)

It should not be of a nature that may bring the profession into disrepute.
The write-up may include only the following information:

It should not contain testimonials or endorsements concerning Member(s)/
(Now definiton includes social networking websites also)
names of clients/ fees charged.
For Members:- Name, Membership No., Age, Date of becoming ACA, Date of

becoming FCA, Date which COP held, Recognised qualifications, Languages
It should not contain any info. about achievements /awards (except CG or SG or
Reg.bodies) or any other position /accreditation/ granted by any organistion.
known, Telephone/Mobile/Fax No., Professional / Address Web, E-mail, CA logo,

Monogram of any kind or use of any kind of catch words is not permissible.
Passport Style Photograph, Services provided Names and details of the employ-

The Membership No./FRN is mandatory to be mentioned.
ees and their particulars on the lines allowed for a member as stated a. CA’s b.

It should not be of font size exceeding 14.
Other professional c. Articles/Audit Assistants, d. Other Employees.

It must not be violative of any provisions of CAs Act, 1949,CA Reg’s, 1988,
CoE, 2020 or any Guideline of the Council
Position held as Dir.or MD in a Mgmt Cons.Co. registered with the ICAI.
For Firms:- Name of the Firm, Firm Registration No., Year of Establishment Profes-
The ICAI may issue a reasoned directive for removal or withdrawal of the whole
sional Address, Working hours, Telephone No. (s) / Mobile No. / Fax No., Web Ad-
write-up or of any part(s) thereof
dress, E-mail, No. of partners, CA logo, Passport Style Photograph, Services Pro-
Important Points:
vided, Name of the proprietor / partners and their particulars on the lines allowed
i)
for a member as stated above, Names and details of the employees and their
ii) Appearance on TV/films/internet/radio/press/seminars
Advertisement in press- refer guidelines for advertisement for members in practice.
particulars on the lines allowed for a member as started a. CAs b. Other Profes-
a.
They may appear & may describe themselves as CA
sionals c. Articles / Audit Assistants d. Other Employees. Affiliation with a Network
b.
Special qualifications or specialised knowledge directly relevant to the
subject matter of the programme may also be given.
registered with the ICAI
Other Conditions:
c.
The write-up shall comply with the following conditions: -
or any kind of comparison is not permissible.
d.
 It shall be honest and truthful.
248
What he may say or write must not be promotional of him or his firm but
must be an objective professional view of the topic under consideration.

There shall be no exaggerated claims for the services offered

It must not make any disparaging referencesor unsubstantiated comparisons to
the work of others.
Firm name may also be mentioned, however, any exaggerated claim
iii) Photograph & brief particulars of CA in magazine
Provision deleted.
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
iv) Members giving talks or lectures or attending conference
ix) Sign Board
Member may describe themselves as Chartered Accountant only when they are
a.
Can’t use glow sign board or large sized sign boards
acting in their capacity as Chartered Accountants. However, reference to the
b.
At residence, name board of himself is allowed but not that of firm
x) Date of establishment of firm – Can’t provide on letter head, visiting cards, etc.
professional firm of the member should not be given.
v) Training Courses and Seminars for his staff
Exceptions – Website, Advertisment via write-ups
A CA holding training courses, seminars etc. for his staff may also invite the xi) Photographs
staff other professional accountants and clients to attend the same.
No objection to the publication of photographs and brief particulars of
However, undue prominence should not be given to the name of the CA in any
members in
booklet or document issued in connection therewith.
a.
vi) Publicity for appointment of position of local / national importance permitted
a. They may mention membership of ICAI i.e. CA
PROHIBITED Photograph on visiting cards.
b.
b. But no mention as to firm name. Eg. MP, MLA, Clearing an exams, etc.
vii) Prospectus of Company in which CA is director
Passport size photo in website permitted.
Passport size photo is permitted in advertisement in print or
electronic media.
xii) Listing in directory or list of members of particular body
a. CA’s name address in the capacity of director is allowed in prospectus.
a.
Allowed
b. But no firm name.
b.
It may contain his/his firm name and address
c. No expression like “Associate of ……..”
c.
Names of members in such directory should be in logical order
d. No advertisement of professional achievement.
d.
He may provide directorships held, reasonable personal details and outside
e. Update company about code of Ethics too
interest
viii) Press note on success of a candidate in Exams – Permitted
e.
But can’t provide name of clients and services offered by his firm For
a.
His name & address his local background
e.g. In list of members of Income Tax Appellate Tribunal, When CA con-
b.
His success details-school /examination passed/ prize or place gained
cerned is a member of ITAT
c.
Name & firm of his principal and town may be given but there should not xiii) Common CA Logo
be any undesirable publicity of Article / Principal / Firm.
The Council has decided that use of CA logo is permissible, subject to CA
logo guidelines:
CA FINAL AUDIT BY CA. SJ
249
CHAPTER 19 : PROFESSIONAL ETHICS
xvi) Photo and QR Codes on Visiting Card
(i) The logo consists of the letters ‘CA’ with a tick mark
(ii) (Upside down) inside a rounded rectangle with white background.
It is not permissible for the chartered accountants in practice to print their
(iii) The letters ‘CA’ have been put in Blue.
photograph on their visiting cards. However, they are allowed to print QR
(iv) Do not change the design and colours, including the white background.
Code on the visiting Card provided that it has not contain information that
(v) Refrain from rotating or tilting the logo
is not otherwise permissible to be printed on a visiting Card.
xiv) Audit reports and certificates issued by CA
xvii)Guidelines for elected Members of the Council/ Office Bearers of the
Ensure that no needles publicity and firm name and particulars to be given
Regional Council
as usually in audit reports/certificates
The guidelines/directions laid down by the Council as revised by the Council
The members may however note that they should use letterhead of their Firm
from time to time for use of designation etc. and manner of printing let-
for issuing reports and certificates.
terheads and visiting cards of the President, VP, Members of the Council
etc. (also refer Section-7)
xv) Network Firms and Networking Guidelines
TEASER
a.
The Council has permitted Network amongst the Firms registered with the Institute.
b.
A member of the Network may advertise to the extent permitted by the
Guidelines issued by Institute.
c.
Whether a CA is prohibited from responding to tenders, advertisements and
circulars [Hint: Clause 6]
2.
The firms constituting a Network are permitted to use the words “Network Firms” on their professional stationery.
d.
1.
Whether a CA is prohibited from seeking work from professional colleagues?
[Hint : Not Prohibited]
3.
Once the relationship of network arises, it will be necessary for such a
Whether a CA is prohibited from printing photographs / QR Codes on
Visiting cards? [Hint: Photo- Prohibited, QR Code: Not prohibited ]
network to comply with all applicable ethical requirements.
e.
It is not permissible for the Firms to join Networks not registered with the CLAUSE 8: COMMUNICATION WITH PREVIOUS AUDITORS
Institute. [Also refer Council General Guidelines 2008]
250

Accepts a position as auditor

Previously held by another chartered accountant

Without first communicating with him in writing
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
Objective:

Not applicable on Investigation, Certifications etc. (recommendatory)

member may have an opportunity to know the reasons for the change

Applicable only when previous auditor was a CA

able to safeguard his own interest, public interest and the independence of

Communication with previous auditor not necessarily PY auditor
the existing accountant.

In case of joint auditor communication required if any previous auditor not

It is important to remember that every client has an inherent right to choose
appointed or a new joint auditor appointed
his accountant;
Sick Unit:
Grounds for non-Acceptance of Audit:
Shall mean a unit registered for not less than five years, which has at the end of
The professional reasons for not accepting an audit would be:
any financial year accumulated losses equal to or exceeding its entire net worth.

Non-compliance of the provisions of Sections 139 and 140 of the
Companies Act, 2013 and
NOC Diagnosis:

Non-payment of undisputed audit fees by auditees other than in case of

Apply to all types of audit

Communication mandatorily where previous auditor is a Chartered Accountant

Assignments done by other professionals also be a healthy practice to communicate

In case of audit of government companies/banks or their branch obligation
Recourse in case of Qualified Audit Report:
must be complied with before accepting the audit
Accept if attitude of the retiring auditor was not proper and justified.

Sick Units ; and

Issuance of a qualified report.
However, time schedule is such that there is no time to wait for the reply incoming auditor may give a conditional acceptance and commence the work (but do
Fees pending due to non-availability of Previous Auditor:
not give report till communication established)

Accept if previous auditor is not available for accepting payment of
undisputed audit fees.
Applicability of Clause:


All or any audit assignment whether internal or external, FS or FA or Stock or else

Applies to government audit, bank audits, branch audits, GST audits, internal
audit, as well
Incoming auditor may accept the Audit assignment after verifying the DD
for undisputed audit fees of retiring auditor is purchased by the client and

It will be the duty of the Incoming auditor to ensure the payment of
undisputed audit fees at the earliest possibility.
CA FINAL AUDIT BY CA. SJ
251
CHAPTER 19 : PROFESSIONAL ETHICS
Course of action in case of change of Auditorship:

Ask him the reason for the proposed change- If there is no valid reason

Mode of such that provides a proof of Delivery

Like Reg. Post with Acknowledgement Due (Reg-AD), Courier with POD, By
for a change, it would be healthy practice not to accept the audit.
hand delivery, E-communication (email) through his email ID registered
 If he decides to accept he should address a communication to the retiring auditor.
with ICAI or last known official email ID, (UDIN) generated on UDIN portal
(seperate guidelines for this to be issued), if proof of delivery obtained
Certificate of Posting not a conclusive proof of communication –


The Council has taken the view that a mere posting not sufficient 
Need some evidence to show that the letter has in fact reached the per-
In case of emergency provide conditional acceptance of audit subjected to
receipt of NOC.
Response:
son communicated with.

Previous auditor also responsible to respond in time
Premises found Locked:

Else incoming auditor free to accept
The communication received back -written on the Ack-Due shall be deemed

No responsibility of incoming auditor to check (except as given in clause 9)
as having been delivered

If response is:
• Undisputed Audit Fees not paid – Do not accept audit
Firm not found at the given Registered address –
• Removal of previous auditor improper – Do not accept audit
 If the Communication received back with remarks “No such office exists
• Modified report by previous auditor – May accept
at this address”, and


• Undercutting – No compulsion to accept
The address of communication is the same as registered with the ICAI,
the letter will be deemed to be delivered,
CLAUSE 9: CHECKING COMPLIANCE WITH SECTION 140 (& 139)
Unless the retiring auditor proves that it was not really served and that he
Accepts an appointment as auditor of a company without first ascertaining
was not responsible for such non-service.
from it whether the requirements of section 140 of the Companies Act, 2013 in
respect of such appointment have been duly complied with
Mode of Communication:

252
In writing
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
Diagnosis:
(vii) Whether the Company has complied with the provisions of Section 140:-
Auditor to proactively ascertain (find out of certain) whether

Auditor should verify the following matters:-
Removal of previous auditor proper
a. Whether a member of the Co. has given special notice. Notice shall be
Eg. Notice of removal, AGM, representation rights, resolution etc.

sent by members to the Co. not earlier than 3 months, but at least 14
His appointment as per provisions of law
days before date of AGM
Eg. Resolution by appropriate authority passed, etc.
b. Whether notice sent to all the members, at least 7 days before the date
Clause relevant in case of
of the GM.

First Auditor Appointment
c. Whether copy of the special notice has been sent to the retiring auditor

Appointment in case of casual vacancy including resignation
d. Representation received from the retiring auditor has been sent to the members

Removal of existing auditor
e. Whether the representation received from the retiring auditor has been

Joint Auditor Appointment
considered at the GM
It is suggested that the incoming auditor should verify the following records of
the Company:-
(viii) A copy of the relevant minutes of the GM verified by the Chairman should
also be obtained
(i) First time appointment : - Whether the BoD have passed the resolution
within 30 days
(ix) Sometimes the AGM is adjourned without conducting any business or after
conducting business .
(ii) BoDs have not appointed the first auditor being made by GM of the Company
(iii) Casual vacancy: - Whether the BoDs have powers to fill & have passed the
resolution
(x) The items in respect of which the business is conducted may or may not
include the item relating to appointment of auditors u/s 139(1) the retiring
auditor holds office till the conclusion of every sixth AGM.
(iv) Vacancy due to resignation: - Whether a proper resolution filling the vacancy has been passed at GM
(xi) Therefore, when the AGM is adjourned in the circumstances stated above, the retiring auditor will continue to hold the office of auditor till the adjourned meeting
(v) Removal of the auditor: - See that SR has been passed and previous approval of the CG obtained
is held and the business listed in the agenda of the meeting is concluded.
(xii) In case a new auditor is appointed at the original meeting (which is
(vi) Auditor other than the retiring auditor is proposed to be appointed: - Ascertain provisions of Sec. 139 & 140 have been complied with.
adjourned) such auditor can assume office only after the conclusion of such
adjourned meeting.
CA FINAL AUDIT BY CA. SJ
253
CHAPTER 19 : PROFESSIONAL ETHICS
(xiii) If any AGM is adjourned without appointing an auditor, no special notice

for removal or replacement of the retiring auditor received after the adjournment can be taken note of and acted upon by the Co., since in terms
A valuer for any purpose of direct taxes and duties as percentage of value of
property valued.

Certain Management Consultancy Services as may be prescribed
of Sec. 115 of the Co. Act, special notice should be given to the Co. at least
(a) Debt recovery consultation services may be based on % of debt recovered
14 clear days before the meeting
(b) Cost optimization services
(c) In the case of certain fund raising services, the fees may be based on
CLAUSE 10 : CONTINGENT FEES
a Percentage of fund raised (further refer last point)

Charges or offers to charges, accepts or offers to accept

In respect of any professional employment

Fees which are based on a percentage of profits

Or which are contingent upon the findings, or results of such employment,
(i) Acting as Insolvency Professional

Except as permitted under any regulation made under this act.
(ii) Non-Assurance Services to Non-Audit Clients
(d) In the case of services related to cost optimisation, the fees may be
based on a percentage of the benefit derived. 
Diagnosis : Exceptions – (Regulation 192)


Other Exceptions
Receiver / Liquidator based on a percentage realization or disbursement of
 If contingent fees is so fixed by court or public authority
assets
 Fee under any statute where statute prescribes contingent fee.
Auditor of co-operative society, percentage of the paid up share capital or
CLAUSE 11 : ENGAGES IN OTHER BUSINESS / OCCUPATION
working capital or gross or net income or profits

Permitted Payments / Contingent Fees


Engages in any business or occupation other than the profession of
chartered accountant unless permitted by the council so to engage
Audit fee payable to concerned SG - the auditor has to deposit a % of his

Provided that nothing contained herein shall disentitle a chartered accountant
audit fee in the State Treasury
from being a director of a company (not being a managing director or a whole
Assignment wherein a % of professional fee is deducted by the Govt. to
time director)
meet the administrative and other expenditure.
254
Council has allowed contingent fees on other services

Unless he or any of his partners is interested in such company as an auditor
CA FINAL AUDIT BY CA. SJ
Directorship
CHAPTER 19 : PROFESSIONAL ETHICS
 Holding Honary Position in any educational / Charitable institutions.
General permission to be a director provided:
For honour & no fees except honorarium (gratuitous /insignificant) or sitting fees.

He / Partner not interested as an auditor (S11, P1, SI)
 Authorship of books, articles

Not being a MD or WTD (Special Permission Required)

Can be a simple director (non-executive) even with substantial interest
Member in Practice in a HUF doing business
A member of the Institute can acquire interest in family business in any of the
Permission Granted Generally (Regulation 190A)
following manner:

Employee under CAiP
(i)
as a proprietary firm

Part time tutorship of the Institute
(ii)
as a partnership firm

Private Tution
(iii)
HUF as its Karta or a member.
 Valuation of papers, paper – setter, head – examiner or moderator
It would be necessary for the members to provide evidence that :

Life Insurance Agency for renewal commission.

Attending classes appearing for Examination

Editorship of professional journals
 He is not actively engaged in business, and

Surveyor Loss Assessor


Holding public elective offices MP MLA & MLC

Owning agricultural land and carrying out agricultural activity

Honorary office charitable educational Other non-commercial organizations
within the limit prescribed by Council if he makes investments from the funds

Acting as Notary public, Justice of the peace, Special Executive Magistrate
pertaining to HUF only, provided, he is not actively engaged in the management

Acting as Recovery consultant in the Banking Sector.
of the said business.

Any coaching assignment organized by the Institute/Regional Councils /Branches

Engagement as Lecturer in an University, affiliated college, educational
Permission Granted Specifically
institution etc.

After obtaining the specific and prior approval of the council:

Full - time or part – time employment in business concern. Members and /

Interest in the family business concern devolved on him as a result of
inheritance/succession/partition of the family business.
Furnish a declaration in the prescribed format and the documents
evidencing above
 A member in practice engaged as Karta of a HUF doing family business, will be
CA FINAL AUDIT BY CA. SJ
255
CHAPTER 19 : PROFESSIONAL ETHICS
engage in any activity UNDERLINED above, except that CAiP is permitted to
or relative not to hold substantial interest in such concerns

In non-business concerns : FT/PT employment
engage in attestation, if engaged as lecturer in University, affiliated, education

Office of managing director or a whole time director provided he or his
institution, coaching organization, private tutorship provided direct teaching
relative does not hold substantial interest
hours taken together do not exceed 25 hours a week
Interest in family business acquired as a result of relationship and in the
Special Note on Accepting Directorship by member in practice
management of which no active part is taken.
a.
‘Director Simplicitor’ means on ordinary / simple director

Interest in an educational institution
b.
Member in practice is permitted generally to be a Director Simplicitor

Part – time or full time lectureship for courses other than those relating
Specific permission not required, irrespective or whether he and / or his
to the Institute’s examination under auspices of the Institute
relatives hold substantial interest in that company (except MD/WTD)


Part – time or full time tutorship under educational institution other than
c.
coaching organization of the Institute.
No bar for a member to be a promoter / signatory to the Memorandum and
Articles of Association of any company

Editorship of journals other than professional journals
d.
A member in practice is permitted generally to be a Promoter/Promoter Director

Any other business or occupation for which the executive committee con-
e.
Specific permission of the Council / is required in every case for holding the
siders that permission may be granted.
office of MD or a WTD of a Body Corporate
f.
Special Permission Note



A person is deemed to be a MD or WTD if he is entrusted with the wholly or
substantially the whole of the management of the affairs of the company.
“Relative”, means husband, wife, brother or sister or lineal ascendant or

A member cannot accept and hold the office of a MD or a WTD in a company
descendant
if the member and / or his partners and relatives hold substantial interest in
“Substantial interest” means holding 20% of voting power / 20% share
such a company. Remember-CAiP can be MD / WTD in MCS company which is
of profits beneficially
registered with ICAI (corporate form of practice). Clause 11 will not apply here.
Holdings to be at any time, during the relevant years
Clause prohibits any member in practice to engage in any other engagement
Part Time Practice
without first seeking council’s permission
Not permitted to perform attest functions (or to train articles) if permitted to

Engagement by a member in practice, in the business of buying and selling
shares amount to be ‘any business’ within the meaning or Clause 11 hence the
256
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS


prior permission of the council is required. Now general permission(Amendment)
Institute shall sign documents on behalf of a CA or on behalf a firm of CA
ICAI FAQ - Booking & Selling domains, prior special permission required, as it is
in professional capacity.
engaging in buisness.
Signing in the name of the Firm:
Trading in shares and equity derivatives  generally permitted (However, trading in
(a) Statutorily required to disclose his name-
commodity or foreign currency or other derivatives need specific permission)
DERIVATIVE TRADING
CA
CAiP – For self
(not in firm’s
name)
CAiP – For
Clients
CA not in Practice
Disclose name while appending his signature on the report or document.
(b) No statutory requirement-
Equity & Currency
Derivatives
Commodity Derivatives
Generally permitted,
no permission required
Not permitted, hence
special permission required
Cannot manage client portfolio as prohibited to
provide PMS. Can offer advisory services
No restriction
No restriction
Member may sign in the name of the firm. (c) SA 700 mandates mentioningMembership No. /Firm Registration No. Also read UDIN Guidelines
Instances and delegation that will not attract the provisions of this clause:
a. Issue of audit queries /confirmation of third parties for Audit.
b. Asking for information or issue of questionnaire.
CLAUSE 12 : ALLOWS OTHER PERSON TO SIGN REPORTS
c. Letter forwarding draft observations/FSs.

Allows a person not being a CAiP
d. Initialing and stamping of vouchers & of schedules.

Or a member not being his partner
e. Acknowledging routine correspondence with clients.

To sign on his behalf or behalf of his firm
f. Issue of memorandum of cash verification & other physical verification.

Any balance sheet, profit and loss account, report of financial statements
g. Issuing acknowledgments for records produced.
Signature: Only an:
h. Raising of bills and issuing acknowledgements for money receipts.

Eligible member; or
i. Attending to routine matters in tax practice.

Partner of CA firm on behalf of the firm, is eligible to sign the following:
j Any other matter incidental to the office administration and routine work .
• Balance Sheet, P & L Account, or
Clarified that where the authority to sign documents given above is delegated
• Financial Statement, or
by CA or CA Firm, the fact that the docs have not been signed by a CA is not a
• Report
defence to him or to the firm in an enquiry relating to professional misconduct. Section 26 of the Act Stipulates that no person other that a member of the
[Also refer Council General Guidelines 2008]

CA FINAL AUDIT BY CA. SJ
257
CHAPTER 19 : PROFESSIONAL ETHICS
SCHEDULE I – PART II
ments asked for, by the Institute, Council or any of its Committees, Director

CAiS
(discipline), Board of Discipline, Disciplinary Committee, Quality Review Board
 Professional Misconduct
or the Appellate Authority.
CLAUSE 1: SHARING OF FEES
Pays or allows or agrees to pay directly or indirectly to any person any share in
CLAUSE 3 : SUPPLIES INCORRECT INFORMATION
the emoluments of the employment undertaken by him.

While inviting professional work from another chartered accountant, or,

While responding to tenders or enquiries or,
CLAUSE 2 : ACCEPTS SHARE IN FEES

While advertising through a write up or,
Accepts or agrees to accepts any part of fees, profits, or gains from a lawyer, a

Anything provided for in items (6) and (7) of Part I of this Schedule
chartered accountant or broker engaged by such company, firm or person or agent or
gives information knowing it to be false.
customer of such company, firm or person by way of commission or gratification
Accept / Agree + Commission / Gifts + Employer’s

Broker

Agent 

Customer

Lawyer

All Members

Other Misconduct
CA
CLAUSE 1 & 2 : OTHER MISCONDUCT
1.
SCHEDULE I – PART III
258
SCHEDULE I – PART IV

All Members

Professional Misconduct
Is held guilty by any civil or criminal court for an offence which is
punishable with imprisonment for a term not exceeding 6 months.
2.
In the opinion of the Council, brings disrepute to the profession or the Institute as a result of his action whether or not related to his professional work.
CLAUSE 1 : NOT BEING A FELLOW ACTS AS A FELLOW
Note:- Regarded as Other Misconduct:
Not being a fellow of the Institute; acts as a fellow of the Institute
Posting content on social networking websites (SNW) with CA prefix or CLAUSE 2 : DOES NOT SUPPLY INFORMATION CALLED BY ICAI
designation which is derogatory, against the dignity of profession or is
Does not supply the information called for, or does not comply with the require
a negative portrayal of the profession.
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
Post content on social networking websites which are

(a) derogatory
Company: - The Board of Directors (unless a resolution by the Co. in a GM
is required by the Act or by the MOA or AOA)
(b) against profession’s dignity
(c) negative potryal of profession with CA profit or designation may
be regarded as OM.
 Not required to provide it to the client or other auditors of same/related enterprise
SCHEDULE II – PART I

CAiP
Working Papers of the Auditor

 Main auditors -do not have right of access to WP of the branch auditors
Professional Misconduct
 However, the auditor may provide to client -at his discretion, as consid-
CLAUSE 1 : CONFIDENTIALITY
ered appropriate.

Discloses information acquired in the course of his professional engagement,

To any person other than his client so engaging him,
Confidentiality : Rate Yourself !!!

Without the consent of his client or,

Clause applies to information which is already publicly known? No

Otherwise than as required by any Law for the time being in force

Clause applies on information obtained during the current course of audit or
Diagnosis : Confidentiality diagnosis
even in past years? Even past years information.

Discloses;

Clause applies to financial or non-financial information? Both

Information acquired in the course of;

Clause attracts even if staff makes an unauthorized disclosure? Yes

Professional engagement;

If information not disclosed but used for personal benefit? Guilty

To any person;

Whether applies on previous auditor communication with incoming auditor?

Without the consent of his client; or

Otherwise than as required by any law for the time being inforce
Yes if details disclosed

If client refuses but law demands information, whether to disclose?
Yes, generally to disclose.
Person competent to accord consent
 Sole-proprietary concern: - The proprietor or his constituted attorney

Partnership firm: - Every partner
Confidentiality : Client Frauds

No duty to inform about taxation frauds by client
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CHAPTER 19 : PROFESSIONAL ETHICS

Under Section 126 of the Evidence Act, an advocate is barred from disclosing, (except with the express consent) any communication made in
the extent of immunity involve niceties of law and expert legal advice.

the disclosure made by a member may not be considered as a misconduct.
the course of and for the purpose of his employment as an advocate

Subject to the above, not the duty of a member to shield a client from
CLAUSE 2 : CERTIFIES / REPORTS WITHOUT EXAMINATION
consequences of tax frauds
Duty of CA relating to tax frauds of a client





However, if it is not legally permissible to claim privilege under the Evidence Act,
If fraud relates to past year (s)

Certifies or submits in his name, or in the name of his firm,

a report of an examination of financial statements

unless the examination of such statements and the related records has
The member may, continue in respect of current matters and report only
been made by him or by a partner or an employee in his firm or by another
if it affects current year or if he was auditor in previous year
chartered accountant in practice
Fraud relates to the accounts or tax assessment
Examined by the member, client should be advised to make a complete disclosure
The Clause applies in cases where report is issued without conducting any
If fraud relates to accounts or returns currently being prepared
examination either through himself or through:
Member should advise the client to make full disclosure and should the

Partner
client refuse, auditor to make full reservation in his report and should not

Employee
associate himself with his return

Another CAiP. Thereby a CA can rely on the work of a Joint Auditor or
On removal of auditor before completion of term
another auditor subject to such conditions & procedures being fulfilled as
No further duty regarding disclosure etc. rest on the members
given under SA 299(Revised) on “Joint Audit of Financial statements” and
If there’s fraud in related returns
SA 600 “Using the Work of Other Auditor”
Eg. – personal income / income from investment other than business
investments. Members may still continue but, is under no obligation so to do.
CLAUSE 3 : CERTIFIES ON ACCURACY OF FORECASTS
Permits his name or the name of his firm to be used in connection with an
Whether protection u/s 126 of Evidence Act available to CA?

260
estimate of earnings contingent upon future transactions in a manner which
Immunity from disclosure afforded by section 126 of the Evidence Act, and
may lead to the belief that he vouches for the accuracy of the forecast.
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
Diagnosis:
Diagnosis:

A CA may participate in the preparation of forecasts or review
Opinion – Only assurance assignments

So long as he does not “vouch” for the accuracy of the forecasts/projections
FS – Includes all financial information

Indicates clearly in report
Substantial Interest – CA / Partner / Firm
 Source of info
Not apply on - statement prepared by members in employment for employers
 Basis of forecast
and not meant to be submitted to any outside authority.
 And major assumptions

Assurance/Expression of opinion:
SAE 3400 prescribes the guidelines
Includes -Excludes “Guidance Note on Reports in Company Prospectuses (Revised 2019)”
 Audit of FS
 This Guidance Note provides guidance on compliance with the provisions
 Audit of projected FS
of the Co. Act, 2013 and
 The SEBI (ICDR) Regulations 2018 relating to the reports required to be
issued by CA
 Engagements to perform agreed
upon procedures
 Audit of Special purpose FS
 Compilation of FS
 Review of FS
 Management Consultancy Services
 Opinion on Internal Control
 Internal Audit
 Statutory Audits
 Liquidator, Arbitrator, Executor, etc.
CLAUSE 4 : SUBSTANTIAL INTEREST (S.I.)
 Tax Audits
Expresses his opinion on financial statement of any business or enterprise in
 Concurrent Audit
which he, his firm, or a partner in his firm has a substantial interest
 Audit of non-corporate bank borrowers
1.
CA, Partner, Firm
 Audit of stock exchange members/brokers
2.
Substantial interest – Throughout holding the office
3.
If the Question does not involves any specified relationship causing S.I. but
Substantial Interest Definition :
it appears that independence might be affected – Give Conditional ans.

A member shall be deemed to have a substantial interest in a COMPANY

If its shares (other than preference shares);
services
Carrying not less than 20% of voting power (profits share in case of
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261
CHAPTER 19 : PROFESSIONAL ETHICS
(ii) Appointment is to be authorised by the regulatory authorities: -
non-corporate entity) at any time;

Owned beneficially by such members or partner or
Unless such regulatory authorities have authorised the managing
 One or more relatives of the member; or
committee for appointment of the auditors
 Any concern in which any of the persons referred to above has a substantial interest
(iii) Partnership or sole proprietary concerns: - Ensure that a letter of
engagement is given by the firm/sole proprietor before he accepts .
Disqualified to provide opinion:

Liquidator of a company
CLAUSE 5 : FAILS TO DISCLOSE A MATERIAL FACT KNOWN TO HIM

Internal Auditor for conducting statutory audit including Tax Audit, GST audit.
Fails to disclose a material fact known to him which is not disclosed in financial

Person maintaining books or internal controls of the entity
statement, but disclosure of which is necessary in making such financial state-

PT/FT Faculty of the institute, college etc.
ments (not misleading) where he is concerned with that financial statement in

Trustee in a Trust
a professional capacity

Director in that company

Disqualified u/s 141 of Companies Act, 2013
CLAUSE 6 : FAILS TO DISCLOSE MISSTATEMENT KNOW TO HIM

Clarified, Director in holding company to be disqualified in subsidiary
Fails to report a material misstatement known to him to appear in a financial
company as well
statement which he is concerned in professional capacity
One partner disqualified – then complete firm disqualified
Diagnosis : Clause 5 & 6 : Substantial Interest

Not disqualified to provide opinion:

Known to CA
Director in subsidiary appointed by holding company

Covers all assignments on FS not just audit
Cooling off period after completion of tenure as Director :

Clause 5 on failure to DISCLOSE
Two years from the date of completion or resignation as Director, till than

Clause 6 on failure to REPORT

should not accept audit of that company
Members to satisfy whether appointment is as per the statute:
CLAUSE 7 : DUE DILIGENCE / GROSSLY NEGILIGENT
(i) Entity constituted under a trust deed/instrument: -

Whether his appointment is valid as per instrument or deed constituting the entity
262
Does not exercise due diligence or is grossly negligent in the conduct of his
professional duties
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
Diagnosis:
Disclaimer
- No opinion on FS, if pervasive limitations an audit
Due DiligenceNegligence
Means the diligence reasonably
The expression negligence
For detailed consideration of the subject, including illustrative formats of
expected from, and ordinarily
covers a wide field and
auditor’s report in different circumstances, the members may refer to SA
exercised by a person who seeks to
extends from the frontiers
700(Revised), , SA 705(Revised) and SA 706(Revised).
satisfy a legal requirement or
of fraud to collateral, minor
to discharge an obligation
negligence
CLAUSE 9 : FAILS TO INVITE ATTENTION TO SAs
Fails to invite attention to any material departure from the generally accepted
CLAUSE 8 : FAILS TO OBTAIN SUFFICIENT INFO
procedure of audit applicable to the circumstances
Fails to obtain sufficient information which is necessary for expression of an opinion or his exceptions are sufficiently material to negate the expression of an opinion Diagnosis:
Diagnosis: Identifying the appropriate clause
Incorrect opinion
Clause applicable when RELEVANT SA not observed by auditor and such fact is
Knowingly Wrong Opinion
not reported in the report

Without Checking – Clause 2
 Fails to Disclose – Clause 5
Tips – Since SAs compliance is mandatory for auditor, any non-compliance to attract

Grossly Negligent Checking – Clause 7
 Fails to Report – Clause 6
this clause. Further CA 2013 S. 143 (9) & (10) also requires auditor to comply with SAs

Inadequate Checking – Clause 8
Certain generally accepted procedures for audit include:
Type of Opinion:
(i)
Unmodified opinion
-
Unqualified - True and fair view
Generally Accepted Audit Procedure (GAAP): - What constitutes “generally accepted audit procedure” would depend upon the facts and circumstances of each case for eg. SA’s
Modified opinion:
Qualified Adverse
(ii)
- T&F view with material but non-pervasive exceptions due to
limitations or misstatements
Audit of Listed Companies:- Shall be done by only those auditors who have:
•
subjected themselves to the Peer Review process of the Institute, and
•
hold a valid certificate issued by the Peer Review Board of the ICAI
- No true and fair view on account of pervasive misstatements
CA FINAL AUDIT BY CA. SJ
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CHAPTER 19 : PROFESSIONAL ETHICS
(iii) FRN and Membership No.:- The members are required to mention in all reports
issued pursuant to any attestation engagements, including certificates.
(iv) Unique Document Identification Number (UDIN):- The members may
note that UDIN is mandatory from 1st July, 2019 on all Corporate/
CLAUSE 10 : FAILS TO KEEP MONEY OF CLIENT SEPARATE IN BANK
Fails to keep moneys of his client other than fees or remuneration or money
meant to be expended in a separate banking account or to use such moneys
for purposes for which they are intended within a reasonable time.
Non- Corporate Audit, Attest and Assurance Functions.(Also refer
TEASER
Council General Guidelines, 2008)
(v)
Standards on Auditing(SA):- Formulated in the context of an audit of
1.
FSs by an independent auditor
An advance received by a Chartered Accountant against fees for
services to be rendered whether fall under Clause (10) of Part I of the
(vi) Statements on Auditing :- Issued with a view to securing compliance by
Second
professional accountants on matters which are critical to discharge hence mandatory.
Schedule? [Hint: Clause 10 not applicable]
2.
Moneys received for expenses to be incurred for example payment of
(vii) General Clarifications :- Issued with a view to clarify any issues.
prescribed statutory fees, purchase of stamp paper etc., which are
(viii) Guidance Notes: - Issued to assist professional accountants in
intended to be spent whether to be deposited in separate bank account?
implementing the Eng. Standards and the SQC issued by the AASB.
[Part of audit fees hence clause N.A.]
(ix)
Technical Guides, Practice Manuals, Studies and Other Papers Published by AASB
[Advance for audit or expense then separate Bank a/c not must, but
(x)
Special procedure: Two instances of an audit requiring a special
others keep in separate bank A/c]
procedure are given below:-
3.
(a) Certifying figures of circulation of Newspapers etc.:- Audit
Bureau of Circulations (ABC) Ltd. Members are normally
separate bank account immediately Comment. [Hint: Yes]
4.
supplied by the Rules and Regulations from ABC under which the
certification of circulation is to be carried out. (b) Verification on behalf of Banks:- Members are required to be very
familiar with the special procedure required in these matters and
Moneys received by a CA in his capacity as a liquidator must be put in a
Can a CA adjust Client’s money meant to be spent for paying taxes
against his outstanding fees? [Hint: No]
5.
Client paid advance for out of Pocket expense to auditor, for which
auditor misappropriated the amount inflating expense vouchers. Under
which clause the CA will be held guilty? [Hint: Other misconduct]
act accordingly.
264
CA FINAL AUDIT BY CA. SJ
SCHEDULE II – PART II

All members

CHAPTER 19 : PROFESSIONAL ETHICS
Authority any particulars knowing them to be false
Professional Misconduct
CLAUSE I : CONTRAVENES PROVISION OF THE ACT ETC.
Diagnosis
Contravenes any of the provision of this Act or the regulations made there
•
The clause applicable when ‘incorrect information’ is supplied to the Institute
under or any guidelines issued by the Council
•
In case of non – supply of information clause 2 of part 3 of Schedule I is applicable
Articles Related Regulations:
CA Regulations, 1988
Particulars
CLAUSE 4 : DEFALCATES OR EMBEZZELS MONEY
Regulation 43 Engagement of Articled Assistant
Defalcates or embezzles moneys received in his professional capacity
Regulation 46 Registration of Articled Assistant
Defalcation of Money
Regulation 47 Premium from Articled Assistant

Regulation 48 Stipend to Articled Assistant
Clause 4 – Part 2 Schedule 2 - Will cover CAiS, CA holding officer bearer
positions in ICAI, etc.
Regulation 56 Termination or assistant of Articles

Regulation 65 Article Assistant not to engage in
Clause 10 – Part 1 Schedule 2 - Client money defalcation by a CAiP will be
covered under Clause 10, P1, S2
Regulation 67 Complaint against the employer (from Articles)

Other Misconduct - Other than professional capacity defalcation.
Regulation 68 to 80 Audit Assistant
Regulation 190
SCHEDULE II – PART III
Register of offices and firms
CLAUSE 2 : CONFIDENTIALITY - CAiS

All members
Being an employee of any company, firm or person discloses confidential informa-

Other Misconduct
tion acquired in the course of his employment except as and when required by any
law for the time being in force or except as permitted by the employer
CLAUSE: OTHER MISCONDUCT
CLAUSE 3 : SUPPLIES INCORRECT INFO TO ICAI, ETC.
A member of the institute, whether in practice or not, shall be deemed to be
Includes in any information, statement, return or form to be submitted to
guilty of other misconduct, if he is held guilty by any civil or criminal court for an
the Institute, Council or any of its Committees, Director (Discipline), Board
offence which is punishable with imprisonment for a term exceeding 6 months
of Discipline, Disciplinary Committee, Quality Review Board or the Appellate
CA FINAL AUDIT BY CA. SJ
265
CHAPTER 19 : PROFESSIONAL ETHICS
Chapter 3: COUNCIL GENERAL GUIDELINES 2008
 Max 30 Company Audit assignments at any point of time per partner
Chapter I
Preliminary
Chapter II
Conduct if a Member Being on Employee

Chapter III
Appointment of Member as Cost Auditor (Deleted Now)
Chapter IV
Opinion on Financial Statement when there is Substantial Interest (Deleted Now)
Chapter V
Maintenance of Books of Accounts

Chapter VI
Tax Audit Assignments u/s 44 AB of income tax Act

Maximum 60 audits per AY per partner who is a CAiP. Including branch Audit.

It does not include audits conducted under Section 44AD, 44ADA, 44AE and
 Limit > 1,00,000 unless other limit prescribed under law
44AF of the Income Tax Act, 1961
 Covers debt as well as guarantees given & security provided
A CAiP shall maintain a record of the tax audit assignments accepted
 Co. law limit : -500,000/- for indebtness & 100,000/- for guarantee
by in each AY in the format as may be prescribed.
 Income-tax Audit : Limit discussed earlier


who is CAiP. Branch Audit included
 Exception:- One person companies and Dormant companies.
 The number of partners of a firm on the date of acceptance shall
(CAiS not be grossly negligent & exercise due diligence)
be taken into account.
Chapter IX -Appointment as Statutory Auditor for Other Services
 Not to accept other assignments if fees > audit fees
 Covers CA firm as well as network firms
Maintain Cash Book and Ledger
 Applies an audit of listed co., PSU, Companies with turnover >50Crores
Chapter X
- Appointment of Auditor when he or his relative is indebted to a concern
Chapter XI -Directions in case of Unjustified Removal of Auditors
This maximum limit of tax audit assignments may be
distributed between the partners in any manner whatsoever.

 Not to accept Audit
However, it should be in accordance with the Standard on Quality
Chapter XII - Minimum Audit Fee in respect of Audit (Deleted Now)
Control (SQC)1 . (Rotation of Partners)
Chapter XIII - Guidelines on Tenders Clarifications on the various issues-related to tender
Chapter VII Appointment of an Auditor in case of Non Payment of undisputed fees

 Not permitted except in Sick Units i.e. where a unit registered for ≥ 5 years
& at the end of any FY accumulated losses ≥ its entire net worth which are exclusively reserved for CA by statute

 Prov. for audit fee in FS signed by both parties, including other auditor ex- penses, if any, shall be considered as “undisputed” audit fee.
A member may respond where minimum fee prescribed in the tender document itself.

Chapter VIII Specified Number of Audit Assignments
266
A member shall not respond to any tender - where areas of services The fees quoted by the member shall not be less than the minimum
fee mentioned in the tender.
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CHAPTER 19 : PROFESSIONAL ETHICS

Can respond to tenders which are open to other Professionals; even
 Network : A larger structure :
though in tender doc only CAs invited to respond.
(a) That is aimed at co-operation; and (b) That is clearly aimed at:
Can respond to assignments where quotations have been called
profit or cost sharing or shares common ownership, control or management,
through individual letters.
common quality control policies & procedures, common business strategy, the

A member can respond to tenders where only technical bid has beenasked for
use of a common brand name, or a significant part of professional resources.

Institute can call for any papers/documents related to bid submitted

 Network Firm : Means a firm or entity that belongs to a network.
EMD/Security Deposit:- Ethical Standards Board may look into the matter
(B) CONCEPT OF NETWORK
on case to case basis.
(1) Facts and circumstances : Whether these larger structures create a net-
Cost Sheet:- A cost sheet be maintained by members responding to ten-
work -It depends on particular facts and circumstances and not on whether
ders, incorporating details of the costs
the firms and entities are legally separate and distinct.
(Also refer Clause (6) Part-I Schedule-I )
(2) Judgment : Whether a reasonable and informed third party would be likely
Chapter XIV
Unique Document Identification Number (UDIN) Guidelines
to conclude, weighing all the specific facts and circumstances, that the
 A CAiP shall generate UDIN for all kinds of the certification undertaken/
entities are associated in such a way that a network exists.
signed by him which is made mandatory from the following dates:
•
•
Chapter XV
For all Certificates w.e.f. 1st
February, 2019.
For all GST and Tax Audit
Reports w.e.f. 1st April, 2019.
•
For all other Audit, Assurance and
Attestation functions
w.e.f. 1st July, 2019. (Also Refer
Clause (12) Part-I Schedule-I and
Clause (9) Part-I Schedule-II)
- Guidelines for Networking (Also refer Clause (7) Part-I, Schedule-I Point -Network Firms and Networking Guidelines)
NETWORKING GUIDELINES
Revised Guidelines of Jan-2021 have not yet been notified for
(C) FORMS OF THE NETWORK
1. Mutual entity
 Which will act as a facilitator for
the constituents of the Network.
scribed by Institute for :
 Network itself will not carry out
(i) Corporate form of practice and
any professional practice.
(ii) Formation of management consultancy services company.
2. Partnership firm
5. Other entities
 Condition : Max. Partners - 20

exams hence existing (old) guidelines are given here
(A)
4. Company
 Subject to the guidelines pre-
MEANING OF NETWORK & NETWORK FIRM
CA FINAL AUDIT BY CA. SJ
Sole Practitioner/proprietor,
partnership or any such entity
as may be permitted by the Act.
267
CHAPTER 19 : PROFESSIONAL ETHICS
3. Limited Liability Partnership
 Subject to the provision of CA Act
and Rules and such other laws as
may be applicable.
(D)
Sj’s note:(i) A firm is allowed to join only
one network.
(i) Firms having common partners
shall join only one Network.
APPROVAL OF NAME OF NETWORK AMONGST FIRMS REGISTERED WITH INSTITUTE:
(1) Approval of name :
(E) REGISTRATION OF NETWORK WITH ENTITIES IN INDIA
(1)
Reservation of name :

After approval of name- Institute reserves such name for 3 months
from the date of approval.
(2) Registration : 
The Network shall get itself registered with the Institute
(i) Network may have distinct name-which should be approved by Institute (ICAI)

By applying in Form B within the period of 3 months
(ii) To distinguish from firms “ & Affiliates” word shall be used

It is mandatory in nature.
(3) Cancellation : (iii) “&Company, & Associates”- word shall not be used
Examples of names of Network- if network is a :

Mutual Entity or Partnership Firm: AB & Affiliates

LLP: AB Affiliates LLP

On the expiry of the said period.
(4) Deemed network :

(2) Application : Prescribed format of application- Form-A
If different Indian firms are networked with a common Multinational
Accounting Firm, they shall be considered as a part of a network.
(3) Approval/Rejection :
(F) LISTING OF NETWORK WITH ENTITIES OUTSIDE INDIA
(i) Filing of declaration with Institute

Limited Company: AB Affiliates P. Ltd/Limited

Institute shall approve/reject application and

Intimate the same to network within 30 days (from receipt of form) on
 By authorized representative (s) of the
address mentioned in Form A
Indian Member firm (s)
 Member constituting the Network
 In Form ‘D’ within 30 days from the date of arrangement.
(4) Withdrawal of name :
(ii) Can join only one network
 Regulation 190 applies on name of network

Entities as permitted by the Act Eg.Proprietary, partnership firms, LLP etc.
 ICAI may withdraw name at any time-if found undesirable

Provided they can join only one network; and
 Provisions of Companies Act 2013 applicable in spirit

Firms having common partners shall join only one such network.
(5) Entitelment to practice :
(G) CHANGE IN CONSTITUTION OF REGISTERED NETWORK
 Mere approval of name - not entitle to carry on practice in its own name
268

On account of any entry into or exit from the Network
CA FINAL AUDIT BY CA. SJ
CHAPTER 19 : PROFESSIONAL ETHICS
 Communicate the same to institute In Form ‘C’ within 30 days from the date Chapter XVII - Guidelines for Corporate Form of Practice
1.
of change.
The Council decided to allow members in practice to hold the office of
(H)
ETHICAL COMPLIANCE : Applicable ethical requirements prescribed by ICAI:
Managing Director, Wholetime Director or Manager of a body corporate
(1)
Independence : If one firm of the network is the statutory auditor of an entity:
within the meaning of the Companies Act provided that the body
 then associates or the said firm directly/indirectly
corporate is engaged exclusively in rendering Management Consultancy
 shall not accept the internal audit or book-keeping or such other professional
and Other Services permitted by the Council in pursuant to Section 2(2)
assignments which are prohibited for the statutory auditor firm.
(2)
(iv) of the Chartered Accountants Act, 1949 and complies with the
Guidelines of ceiling on Non-audit fees :- applicable as follows:
 Network firm who is doing statutory audit :- Same as mentioned in the
said notification
conditions(s) as specified by the Council from time to time in this regard.
2.
The members can retain full time Certificate of Practice
3.
There will be no restriction on the quantum of the equity holding of the
 For other firms of the same Network collectively:- 3 times of the fee payable
(3)
In case of Rotation of firms : Prescribed by regulatory authority:
members, either
4.
therefore can continue to do attest function
 No member of network can accept appointment In place of retiring auditor of network
(4)
5.
Advertisment by network :
(I)
The name of the Management Consultancy Company is required to be approved
by the Institute and such Company has to be registered with the Institute.
 May advertise as permitted by guidelines of Institute
(5)
Such members shall be regarded as being in full- time practice and
 May use “Network Firms” on their professional stationary
6.
Compliance of Ethical Standard :
(i)
Ethical Compliance:
Once Management Consultancy Company is Registered it needs to comply
 As prescribed by Council from time to time
with the following requirements: -
CONSENT OF CLIENT
(a) If the individual practitioner/sole-proprietorship firm/partnership firm is the
Effect of registration of network with Institute:
statutory auditor of an entity then the Management Consultancy Company
 deemed to be a public notice of the network; and
should not accept the internal audit or book-keeping or such other profes-
 therefore consent of client will be deemed to be obtained.
sional assignments, which are prohibited for the statutory auditor firm.
(b) The Notification No. 1-CA(7)/60/2002 dated 8th March, 2002 (en
Chapter XVI Logo Guidelines - Please refer in Clause (7) - Common CA Logo
CA FINAL AUDIT BY CA. SJ
closed) in respect of Ceiling on Non-audit fees is applicable in
269
relation to a Management Consultancy Company.
CHAPTER 19 : PROFESSIONAL ETHICS
RECENT ANNOUNCEMENTS OF ETHICAL STANDARDS BOARD
(c) The Management Consultancy Company shall comply with clauses (6) & (7)
of Part-I of the First Schedule to the Chartered Accountants Act, 1949 and
such other directives as may be issued by the Institute from time to time.
(ii) The Management Consultancy Company shall give an undertaking that it shall
FAQs on Books, Articles and Presentations by Members in Practice (COE 2020)
1.
a book or an article published by him, or a presentation made by him.
2. Member can also mention in books / articles / presentations, the name of Chartered
Accountants Firm, wherein he is a partner. The member may also choose to use
comply with clauses (6) & (7) of Part-I of the First Schedule and such other
7.
only his name, or only the name of the said Chartered Accountants Firm whether
directives as may be issued by the Institute from time to time.
it used at a platform of ICAI or else, whether presentation held in physical mode or
Object of Management Consultancy Company:
online mode. However, other details of the firm, other partners cannot be given.
(a) engage itself only in Management Consultancy & Other Services.
(b) shall give an undertaking that it shall render only Management
Consultancy & Other Services
3.
4.
The Member(s)/Firm(s) should ensure that the contents of the Write up
are true to the best of their knowledge and belief and are in conformity
with these Guidelines.
private company in a book, article or presentation contributed or published
by him, as it would be violative of Section 7 of Part-I of First Schedule to The
Chartered Accountants Act, 1949.
5.
The names of other partners of the Chartered Accountants Firm cannot
be mentioned on the Presentation.
6.
As per the revised Volume-II of Code of Ethics, 2020, videos of educational
nature uploaded on the internet by members, no reference should be
2.
Definitions
3.
The write-up may include:- Refer Clause 7 Part-1 Schedule-1
4.
The write-up shall comply the conditions :- Refer Clause 7 Part-1 Schedule-1
5.
Website Guidelines: - Refer Clause 6 Part-1 Schedule-1
6.
Online Third Party Platforms: - Refer Clause 6 Part-1 Schedule-1
7.
Telephone or other Directories:- Refer Clause 6 Part-1 Schedule-1
8.
Specialized Directories:- Refer Clause 6 Part-1 Schedule-1
Exemptions:- Refer Clause 6 Part-1 Schedule-1
It is not permissible for a member to indicate his designation (other than
“CA” like “Associate Director”, “coordinator” etc.), or his association with
(Issued Pursuant to Clause (6) & (7) of Part I of the First Schedule)
1.
It is not permitted for a member to use his photograph on the Book or
Article published by him, or a presentation made by him.
Chapter 4: COUNCIL GUIDELINES FOR ADVERTISEMENT, 2008
270
Member in practice may mention his name, along with the prefix “CA” in
made to the Chartered Accountants Firm wherein the member is a
partner/ proprietor. Accordingly, a presentation that is a part of an online
educational video should not depict the name of his Firm.
7.
Member in service, being an employee of a CA Firm, can make a
presentation, and mention his name along with prefix “CA”and name of
Firm of Chartered Accountants. However, the bar on mentioning professional
attainments or other details of own or the Firm will be the same as in case
of partner of the CA Firm.
CA FINAL AUDIT BY CA. SJ