Page 430 - CA Final PARAM Digital Book.

One should also mention Clause 2, Part 4, Schedule 1 which covers act involving disrepute to the Institute.
ICAI has been inconsistent, sometimes they mention section 21 & 22 and sometimes clause 2 . So, both
should be always mentioned.

First Schedule, Part IV,Cl,2 --Disrepute to the Institute Old Course – (N10E, PM17, SM17, M19M)
QNO (Use of Influence on Get Loans) New Course – (SM23)
737.000
TITANIUM CNO – PE.1440
YKS & Co., a proprietary firm of Chartered Accountants was appointed as concurrent auditor of a bank.
YKS used his influence for getting some cheques purchased and thereafter failed to repay the
loan/overdraft.
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
➢ As per Clause (2) of Part IV of First Schedule to the Chartered Accountants Act, 1949, 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 the Institute as a result of his action
whether or not related to his professional work.

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

Part III – Case Discussion
➢ In the present case, YKS & Co, being a concurrent auditor used his position to obtain the funds and
failed to repay the same to the bank.

Part IV – Conclusion
➢ This brings disrepute to the profession of a Chartered Accountant. This act of YKS & Co is not
pardonable. Therefore, YKS & Co will be held guilty of other misconduct under Clause (2) of Part IV
of First Schedule to the Chartered Accountants Act, 1949.

First Schedule, Part IV,Cl,2 --Disrepute to the Institute
QNO (Other Work by Article) Old Course –(N18R,N19R, M22R)
737.010
TITANIUM CNO – PE.1440
CA Kumar who is contesting Central Council Elections of Institute, engages his Articled Assistant for his
election campaigning promising him that he will come in contact with influential people which will
help to enhance his career after completion of his training period.
Answer Part I -- Relevant Laws
▪ Part IV of the First Schedule to the Chartered Accountants Act, 1949
▪ Part III of the Second Schedule to the Chartered Accountants Act, 1949
Part II -- Requirements of Relevant Laws
➢ ‘Other Misconduct’ which has been defined in Part IV of the First Schedule and Part III of the Second
Schedule. These provisions empower the Council 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.
Part III – Case Discussion
➢ CA Kumar has engaged his Articled Assistant for his own election campaigning for the central Council
elections of ICAI.
Part IV – Conclusion
➢ Thus, when a Chartered Accountant uses the services of his Articled Assistant for purposes other
than professional practice, he is found guilty under ‘Other Misconduct’. Hence, CA Kumar is guilty of
'Other Misconduct'.
Author’s Note
ICAI has answered this question differently. All the cases which are of other misconduct, generally ICAI
refers to Sec 21 / 22 and Clause 2, Part IV, First Schedule.
But here they have in general referred to other misconduct of BOTH SCHEDULES, I would suggest this
approach if same question is asked and if you remember it. Else give standard answer of other misconduct.

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