Page 424 - CA Final PARAM Digital Book.

• Whenever a particular section is involved with no other clause Schedule 2 , Part2 ,Clause 1 can be
referred
• Students can write this standard answer in all question of Clause (12) of Part I of the First Schedule
to the Chartered Accountants Act, 1949

QNO First Schedule, Part I,Cl,12 – Delegation of works to his articles and staff Old Course – (SM21, N21M)
724.500 TITANIUM CNO – PE.1300 New Course – (SM23)
Mr. S, the auditor of ABC Pvt. Ltd. has delegated following works to his articles and staff:
i. Issue of audit queries during the course of audit.
ii. Issue of memorandum of cash verification and other physical verification.
iii. Letter forwarding draft observations/financial statements.
iv. Issuing acknowledgements for records produced.
v. Signing financial statements of the company.
Is this correct as per the Professional Ethics and ICAI’s guidelines and pronouncements?
Part I -- Relevant Laws
▪ Clause (12) of Part I of the First Schedule to the Chartered Accountants Act, 1949
▪ Council Clarification
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.

➢ Council Clarification
The Council has clarified that the power to sign routine documents on which a professional opinion
or authentication is not required to be expressed may be delegated in the following instances and
such delegation will not attract provisions of this clause:
• Issue of audit queries during the course of audit.
• Asking for information or issue of questionnaire.
• Letter forwarding draft observations/financial statements.
• Initiating and stamping of vouchers and of schedules prepared for the purpose of audit.
• Acknowledging and carrying on routine correspondence with clients.
• Issue of memorandum of cash verification and other physical verification or recording the
results thereof in the books of the clients.
• Issuing acknowledgements for records produced. Raising of bills and issuing
acknowledgements for money receipts.
• Attending to routine matters in tax practice, subject to provisions of Section 288 of Income
Tax Act.
• Any other matter incidental to the office administration and routine work involved in
practice of accountancy.

Part III – Case Discussion
➢ In the instant case, Mr. S, the auditor of ABC Pvt. Ltd. has delegated certain task to his articles and
staff such as issue of audit queries during the course of audit, issue of memorandum of cash
verification and other physical verification, letter forwarding draft observations/financial
statements, issuing acknowledgements for records produced and signing financial statements of the
company.
Part IV – Conclusion
➢ Therefore, Mr. S is correct in allowing first four tasks i.e. issue of audit queries during the
course of audit, issue of memorandum of cash verification and other physical verification, letter
forwarding draft observations/financial statements, issuing acknowledgements for records
produced to his staff and articles.

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