Page 375 - CA Final PARAM Digital Book.

to use the name is also allowed in terms of the above decision of the Council. Therefore, the above
act of the widow of the Chartered Accountant is permissible.

First Schedule, Part I,Cl,2 –Sharing with Old Course – (M12E, N13E, M16E, PM17, N17M, SM17, N19M,
QNO of Fees N19E, SM21, N22M,)
662.000
TITANIUM CNO – PE.1040 New Course – (SM23)
Mr. X who passed his CA examination of ICAI on 18th July 2015 and started his practice from August 15,
2015. On 16th August 2015, one female candidate approached him for article ship. In addition to monthly
stipend, Mr. X also offered her 1 % profits of his CA firm. She agreed to take both 1 % profits of the CA
firm and stipend as per the rate prescribed by the ICAI. The Institute of Chartered Accountants of India
sent a letter to Mr. X objecting the payment of 1 % profits. Mr. X replies to the ICAI stating that he is paying
1 % profits of his firm over and above the stipend to help the articled clerk as the financial position of the
articled clerk is very weak. Is Mr. X Liable to professional misconduct?
OR

CA Ciya, a practicing Chartered Accountant gave 60% of the audit fees received by her to Mr. Suhas, who
was not a Chartered Accountant, under the nomenclature of office allowances.
OR
CA. P is a newly qualified Chartered Accountant in practice and in order to increase his professional
practice and client base, entered into an agreement with Mr. A, a qualified and experienced registered
valuer to share 20% professional fees for all cases of valuation referred to him by CA. P. Based on
this, CA. P received? 1,20,000 during the year 2018-19 from Mr. A. Is' CA. P guilty of misconduct under the
Chartered Accountants’ Act, 1949?
Answer Part I -- Relevant Laws
▪ Clause (2) of Part I of First Schedule to the Chartered Accountants Act 1949

Part II -- Requirements of Relevant Laws
➢ A Chartered Accountant in practice shall be deemed to be guilty of professional misconduct if he
pays or allows or agrees to pay or allow, directly or indirectly, any share, commission or brokerage
in the fees or profits of his professional business, to any person other than
• a member of the Institute or
• a partner or
• a retired partner or
• the legal representative of a deceased partner, or
• a member of any other professional body or
with such other persons having such qualification as may be prescribed, for the purpose of rendering
such professional services from time to time in or outside India.

Part III – Case Discussion
➢ In view of the above, the objections of the Institute of Chartered Accountants of India, as given in
the case, are correct and reply of Mr. X, stating that he is paying 1 % profits of his firm over and
above the stipend to help the articled clerk as the position of the articled clerk is weak is not tenable.

Part IV – Conclusion
➢ Hence, Mr. X is guilty of professional misconduct in terms of Clause (2) of Part I of First Schedule to
the Chartered Accountants Act 1949.

QNO First Schedule, Part I,Cl,2 --Sharing with Digital Marketer Old Course – (M22R, N23M)
662.005 TITANIUM CNO – PE.1040 New Course – (SM23)
Mr. Avi, a newly qualified Chartered Accountant, started his practice and sought clients through telephone
calls from his family and friends, almost all of them employed in one or the other retail trade business.
One of his friends Mr. Ravi gave him an idea to start online services and give stock certifications to traders
with Cash Credit Limits in Banks. Mr. Avi started a website with colourful catchy designs and shared the
website address on his all social media posts and stories and tagged 40 traders of his local community with
the caption “Simple Online Stock Certification Services”. Besides, Mr. Avi entered into an agreement with
a Digital Marketer to give him 8% commission on each service procured through him. Discuss if the
actions of Mr. Avi are valid in the light of the Professional Ethics and various pronouncements and
guidelines issued by ICAI.

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