Page 429 - CA Final PARAM Digital Book.

First Schedule, Part IV,Cl,2 --Disrepute to the Institute Old Course – (N11E, PM17, N17M)
QNO (Quid Pro Quo)
735.000
TITANIUM CNO – PE.940
CA. X, a practicing Chartered Accountant, failed to return the books of account and other documents of
ABC Ltd. despite many reminders from the company. The company had settled his entire fees dues also.
OR
CA Raj, a Chartered Accountant in practice approached Manager of a Nationalised Bank for a loan of Rs.
36 lakhs. He has also informed the Manager that if the loan is sanctioned, the Income Tax return of
the Manager and Manager’s wife will be filed for free of cost, as quid Pro quo for the loan

sanctioned.
Answer Part I -- Relevant Laws
▪ Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949

Part II -- Requirements of Relevant Laws
➢ A member of the Institute, whether in practice or not, shall be deemed to be guilty of other
misconduct, if he, in the opinion of the Council, brings disrepute to the profession or to the Institute
as a result of his action whether or not related to his professional work.

Accordingly, a Chartered Accountant is also expected to maintain the highest standards and integrity
even in his personal affairs and any deviation from these standards calls for disciplinary action.

Part III – Case Discussion
➢ In the given case, CA Raj, a Chartered Accountant in practice approached Manager of a Nationalised
Bank for a loan and offered for filing Income tax Returns without any fees.

Part IV – Conclusion
➢ This approach of CA Raj brings disrepute to the profession of a Chartered Accountant. Hence, CA Raj
will be held guilty of other misconduct under Clause (2) of Part IV of the First Schedule of the
Chartered Accountants Act, 1949.

First Schedule, Part IV,Cl,2 --Disrepute to the Institute Old Course – (PM17, N20M, M23M)
QNO (RCM Misappropriation)
736.000
TITANIUM CNO – PE.1440
Mr. R, a Chartered Accountant in practice has been elected as the treasurer of a Regional Council of the
Institute. The Regional Council had organized an international tour through a tour operator during the

year for its members. During the audit of the Regional Council, it was found that Mr. R had received a
personal benefit of ` 50,000 from the tour operator.
Answer Part I -- Relevant Laws
▪ Section 21 & 22 of CA Act.

Part II -- Requirements of Relevant Laws
➢ Section 21 of the Chartered Accountants Act, 1949
It provides that a member is liable for disciplinary action if he is guilty of any professional or “Other
Misconduct.” Though the term “Other Misconduct” has not been defined in the said Act, this
provision enables the Council to enquire into any misconduct of a member even if it does not arise
out of his professional work. This is considered necessary because a chartered accountant is
expected to maintain the highest standards of integrity even in his personal affairs and any deviation
from these standards even in his non-professional work, would expose him to disciplinary action.

The Council has also laid down that among other things “misappropriation by an office-bearer of a
Regional Council of the Institute of a large amount and utilization thereof for his personal use” would
amount to “other misconduct”.
Part III – Case Discussion
➢ In the present case, Mr. R, Treasurer of Regional Council participated in an international tour and
received personal benefit of INR 50000 from the tour operator.
Part IV – Conclusion
➢ Thus, in the instant case, Mr. R would be liable for disciplinary action.
Author’s Note
In case where there is a other misconduct always mentioned section 21 & 22 of CA Act. These sections
nd
st
explain that Institute has right to go beyond defined misconduct of 1 and 2 schedule and its process.
www.auditguru.in PARAM 19.71 | P a g e