Page 411 - CA Final PARAM Digital Book.

However, CA Regulation allow the Chartered Accountant in practice to charge the fees in respect of
any professional work which are based on a percentage of profits, or which are contingent upon the
findings or results of such work, in the case of a receiver or a liquidator, and the fees may be based
on a percentage of the realization or disbursement of the assets.

Part III – Case Discussion
➢ In the given case, CA. M, a practicing Chartered Accountant, has acted as liquidator of XYZ & Co. and
charged his professional fees on percentage of the realisation of assets.

Part IV – Conclusion
➢ Therefore, CA. M shall not be held guilty of professional misconduct as he is allowed to charge fees
on percentage of the realisation of assets being a liquidator.

First Schedule, Part I, Clause 11 Accepting Directorship Where Partner is Old Course – (N10E, PM17)
QNO Auditor
711.000
TITANIUM CNO – PE.1280
Mr. B is a practising Chartered Accountant holding a valid certificate of practice. He accepted the
appointment as Director of the Green WorId Co. Ltd. Mr. C, a partner of Mr. B is statutory auditor of

the said company.
Answer Part I -- Relevant Laws
▪ Clause (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949

▪ Council Guidelines
▪ Clause (4) of Part I of the Second Schedule to the Chartered Accountants Act, 1949
▪ Section 141(3)(c) of the Companies Act, 2013
▪ Section 141(4) of the Companies Act, 2013
Part II -- Requirements of Relevant Laws
➢ Clause (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949
The clause prohibits a member to engage in any business or occupation other than the profession
of chartered accountants so to engage. It does not prohibit a Chartered Accountant from being a
director of a company, except managing director or a whole time director. But if any of the
partners is interested in such company as an auditor then he cannot be director of the said
company.

➢ Council Guidelines
Further, the Council of the Institute of Chartered Accountants of India has categorically stated that
in cases where a member is a director of a company, the firm, in which the said member is
a partner, should not express any opinion on its financial statements.
➢ Clause (4) of Part I of the Second Schedule to the Chartered Accountants Act, 1949
The clause states that expressing an opinion on financial statements of any business or enterprise
in which he, his firm or a partner of his firm has a substantial interest would constitute
misconduct.

➢ Section 141(3)(c) & 141(4) of the Companies Act, 2013
Additionally, Section 141(3)(c) of the Companies Act, 2013 also disqualifies a person to be
appointed as an auditor if he is a partner of an officer of the company. Furthermore, section
141(4) of the Companies Act, 2013 requires the appointed auditor to vacate his office if he
incurs any of the disqualifications mentioned under sub-section (3).
Part III – Case Discussion
➢ In the present case Mr. B has accepted the directorship in a Company, where his partner Mr. C is an
auditor, without obtaining specific permission of the council.

Part IV – Conclusion
➢ Hence, Mr. B will be held guilty for professional misconduct under Clause (11) of Part I of First
Schedule to the Chartered Accountants Act, 1949.
Also, in cases, where a member of the Institute is a director of a company ,the firm in which said
member is a partner should not express any opinion on its financial statements. Hence Mr. C, a
partner of Mr. B, should vacate the office.

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