Page 386 - CA Final PARAM Digital Book.
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professional throughout the term of office and also indicated his willingness to continue as an
auditor if reappointed by the shareholders of the Company
Answer Part I -- Relevant Laws
▪ Clause (6) of Part I of First Schedule to the Chartered Accountants Act, 1949
Part II -- Requirements of Relevant Laws
➢ A Chartered Accountant in practice is deemed to be guilty of professional misconduct if he solicits
clients or professional work either directly or indirectly by circular, advertisement, personal
communication or interview or by any other means except applying or requesting for or inviting or
securing professional work from another chartered accountant in practice and responding to
tenders.
Further, section 140(4)(iii) of the Companies Act, 2013, provides a right, to the retiring auditor, to
make representation in writing to the company. The retiring auditor has the right for his
representation to be circulated among the members of the company and to be read out at the
meeting. However, the content of letter should be set out in a dignified manner how he has been
acting independently and conscientiously through the term of his office and may, in addition,
indicate, if he so chooses, his willingness to continue as auditor, if re- appointed by the shareholders.
Part III – Case Discussion
➢ CA. Smart submitted a representation in writing to the company as provided under section 140(4)(iii)
of the Companies Act, 2013. In the representation, CA. Smart incorporated his independent working
as a professional throughout the term of office and also indicated his willingness to continue as an
auditor if reappointed by the shareholders of the Company.
Part IV – Conclusion
➢ Thus, the incorporation as an independent professional, made by CA. Smart, while submitting
representation under section 140(4)(iii) of the Companies Act, 2013 and indication of willingness to
continue as an auditor if reappointed by shareholders, does not leads to solicitation.
Therefore, CA. Smart will not be held guilty for professional misconduct under Clause (6) of Part I of
First Schedule to the Chartered Accountants Act, 1949.
Author’s Note
If any question is related to clarification of Clause 6, you have to apply Clause 6. Don’t make word by word
interpretation like we do in Tax or Companies Act. Professional Ethics cases are solved by pattern and not
by interpretation. This pattern is very simple i.e. if it is related to clarification of clause 6 apply clause 6
and if it is related to clarification of clause 7 apply clause 7.
First Schedule, Part I, Cl,6 Clarification (Representation by CA Under Old Course – (N19E)
QNO
676.000 Company Act seeking publicity)
TITANIUM CNO – PE.1140
Comment with reference to the Chartered Accountants Act, 1949 and schedules thereto:
A special notice has been issued for a resolution at 3rd annual general meeting of LED Ltd., providing
expressly that CA. Anoop shall not be re-appointed as an auditor of the company. Consequently, CA.
Anoop submitted a representation in writing to the company with a request to circulate to the members.
In the detailed representation, CA. Anoop included the contributions made by him in strengthening
the control procedures of the company during his association with the company and also indicated
his willingness to continue as an auditor if reappointed by the shareholders of the company.
Answer Part I -- Relevant Laws
▪ Clause (6) of Part I of First Schedule to the Chartered Accountants Act, 1949
Part II -- Requirements of Relevant Laws
➢ A Chartered Accountant in practice is deemed to be guilty of professional misconduct if he solicits
clients or professional work either directly or indirectly by circular, advertisement, personal
communication or interview or by any other means except applying or requesting for or inviting or
securing professional work from another chartered accountant in practice and responding to
tenders.
Further, section 140(4)(iii) of the Companies Act, 2013, provides a right, to the retiring auditor, to
make representation in writing to the company. The retiring auditor has the right for his
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