Page 423 - CA Final PARAM Digital Book.

➢ Issuance of production certificate to a client under Central Excise Act, 1944 by Mr. “Y” being an
employee of M/s A & Co. (an audit firm), is not a routine work and it is outside his authorities. Thus,
CA. ‘A’ is guilty of professional misconduct under Clause (12) of Part I of First Schedule of the
Chartered Accountants Act, 1949.
Part III – Case Discussion
➢ In this case CA. ‘A’ proprietor of M/s A & Co., went to abroad and delegated the authority to another
Chartered Accountant Mr. Y, his employee, for taking care of routine matters of his office who is not
a partner but a member of the Institute of Chartered Accountants of India. In this instance, Mr. “Y”,
CA employee of the audit firm M/s A & Co. has attended the Income tax proceedings for a client as
authorized representative before Income Tax Authorities.

Part IV – Conclusion
➢ Since the council has allowed the delegation of such work, the chartered accountant employee can
attend to routine matter in tax practice as decided by the council, subject to provisions of Section
288 of the Income Tax Act.

Therefore, there is no misconduct in this case as per Clause (12) of Part I of First schedule of the
Chartered Accountants Act, 1949.
Author’s Note

Refer Note of QNO 722.000 for better understanding of what does not falls under routine work.

First Schedule, Part I,Cl,12 --Signing (Power Old Course – (M07E, N08R, M09R, N13R, PM17, SM17)
QNO
724.000 of Attorney) New Course – (SM23)
TITANIUM CNO – PE.1300
S, a Practicing-Chartered accountant gives power of attorney to an employee chartered accountant to

sign reports and financial statements, on his behalf.
Answer Part I -- Relevant Laws
▪ Clause (12) of Part I of the First Schedule to the Chartered Accountants Act, 1949

▪ Section 26 of the Chartered Accountants Act, 1949
▪ Clause (1) of Part II of the Second Schedule to the Chartered Accountants Act, 1949
Part II -- Requirements of Relevant Laws
➢ Clause (12) of Part I of the First Schedule to the Chartered Accountants Act, 1949
A Chartered Accountant in practice is deemed to be guilty of professional misconduct if he allows a
person not being a member of the Institute in practice or a member not being his partner to sign on
his behalf or on behalf of his firm, any balance sheet, profit and loss account, report or financial
statements.

➢ Section 26 of the Chartered Accountants Act, 1949
This clause read in conjunction with Section 26 of the Chartered Accountants Act, 1949 stipulates
that no person other than the member of the institute shall sign any document on behalf of a
Chartered Accountant in practice or a firm of Chartered Accountants in his or its professional
capacity.

The term ‘Financial Statement’ for this purpose would cover an examination of the accounts or
financial statements given under a statutory enactment or otherwise.

➢ Clause (1) of Part II of the Second Schedule to the Chartered Accountants Act, 1949
It states that a member of the Institute, whether in practice or not, shall be deemed to be guilty of
professional misconduct, if he contravenes any of the provisions of this Act or the regulations made
there under or any guidelines issued by the Council.

Part III – Case Discussion
➢ In the given case, S, a Practicing Chartered accountant gives power of attorney to an employee-
chartered accountant to sign reports and financial statements, on his behalf.

Part IV – Conclusion
➢ Accordingly, S is guilty of professional misconduct under Clause (12) of Part I of First Schedule and
also under Clause (1) of Part II of Second Schedule for contravening Section 26.
Author’s Note

www.auditguru.in PARAM 19.65 | P a g e