Page 402 - CA Final PARAM Digital Book.

QNO First Schedule ,Part I,Cl,8 Communication Over Phone Old Course – (M16M, M18M)
696.100 TITANIUM CNO – PE.1220

M/s CD & Co., a firm of Chartered Accountants, accepted an assignment for audit under GST Law and
communicated the same over phone to the previous auditor, M/s AB & Co., Chartered Accountants.
Comment.

Answer Part I -- Relevant Laws
▪ Clause (8) of Part I of the 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 accepts a
position as auditor previously held by another chartered accountant or a certified auditor who has
been issued certificate under the Restricted Certificates Rules 1932, without first communicating
with him in writing.
It is provided that incoming auditor is required to send his communication by Registered post
Acknowledgement Due or by hand against an acknowledgement in writing.

Part III – Case Discussion
➢ In the instant case, M/s CD & Co. accepted the audit under GST Law, carried out by M/s AB & Co.,
another firm of chartered accountants, in the previous year. The current auditor communicated
their appointment over phone i.e. no written communication held.

Part IV – Conclusion
➢ A communication in writing is mandatory requirement for all types of audit, if the previous auditor
is a chartered accountant. Hence, the firm would be held guilty of professional misconduct
under Clause (8) of Part I of First Schedule to the Chartered Accountants Act, 1949.

QNO First Schedule, Part I,Cl,8 --Communication (Certificate of Posting) Old Course – (N16R, PM17)
698.000 TITANIUM CNO – PE.1220 New Course – (SM23)
W, a Chartered Accountant has sent letters under certificate of posting to the previous auditor

informing him his appointment as an auditor before the commencement of audit by him.
Answer Part I -- Relevant Laws
▪ Clause (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949

Part II -- Requirements of Relevant Laws
➢ The clause requires communication by the incoming auditor with the previous auditor before
accepting a position by him.

The Council of the Institute has taken the view that a mere posting of a letter “under certificate of
posting” is not sufficient to establish communication with the retiring auditor unless there is some
evidence to show that the letter has in fact reached the person communicated with. A Chartered
Accountant who relies solely upon a letter posted “under certificate of posting” therefore does so
at his own risk. Since the letters were sent by “W” to the previous auditor informing him of his
appointment as an auditor before the commencement of audit by him under Certificate of Posting
is not sufficient to prove communication with the retiring auditor.

In the opinion of the Council, communication by a letter sent “Registered Acknowledgement Due”
or by hand against a written acknowledgement would in the normal course provide positive
evidence.

Part III – Case Discussion
➢ In the given case, W, a Chartered Accountant has sent letters under certificate of posting to the
previous auditor informing him his appointment as an auditor before the commencement of audit
by him.

Part IV – Conclusion
➢ Hence “W” was guilty of professional misconduct under Clause (8) of Part I of First Schedule to the
Chartered Accountants Act, 1949.
Author’s Note
Certificate of posting means simple post which is not allowed. Registered post acknowledgement due
(RPAD) is allowed

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