Page 453 - CA Final PARAM Digital Book.

keep money of his clients in separate banking account or to use such money for the purpose for
which they are intended.”
Part III – Case Discussion
➢ Mr. Ram received the money on 15th December 2014 which is to be paid to the client only on
March 31, 2015. Hence, it should be deposited in a separate bank account.
Part IV – Conclusion
➢ Since in this case Mr. Ram have failed to keep the sum of `15 lakhs in a separate Bank Account and
utilised the part money for personal purpose on birthday occasion, it amounts to professional
misconduct under Clause (10) of Part I of Second Schedule.

QNO Second Schedule, Part II, Cl,1 –Loan for Article ship Old Course-- (M05E, N14E, PM17)
765.000 TITANIUM CNO – PE.1660
M/s. ABC, a firm of Chartered Accountants has taken a loan for acquiring computers, from a company

whose Managing Directors’ son is an Articled Trainee with A, a partner of M/s ABC.
Answer Part I -- Relevant Standards & Laws
▪ Clause (1) of Part II of the Second Schedule to the Chartered Accountants Act, 1949
▪ Regulation 47 of the Chartered Accountant’s Regulations, 1988
Part II -- Requirements of Relevant Standards & Laws
➢ Clause (1) of Part II of the Second Schedule
A chartered accountant is deemed to be guilty of professional misconduct if he contravenes any of
the provisions of Chartered Accountants Act, 1949 or Regulations made thereunder.

➢ Regulation 47 of the Chartered Accountant’s Regulations, 1988
Regulation 47 of the Chartered Accountant’s Regulations, 1988, prohibits a member from
accepting any premiums or loans or any deposit in any form from an articled clerk directly or
indirectly.
Part III – Case Discussion
➢ M/s ABC has taken loan from a company whose Managing Director happens to be father of
articled clerk with Mr. A, a partner of M/s ABC.
Part IV – Conclusion
➢ In this case, the articled trainee has no direct interest in that company. There has been a case
wherein a chartered accountant was held guilty of professional misconduct because he took a loan
from a firm in which the articled clerk and his father were both interested. But, in this case as
per the facts, the articled trainee has no direct interest in the company. However, if
relationship, direct or indirect, can be established in view of relationship of articled trainee with
MD of the company, Mr. A of M/s ABC would be held liable for professional misconduct.

Thus, M/s ABC would be guilty of professional misconduct under this clause if it is proved
that the loan was related to the engagement of the articled clerk.
Author’s Note

# Mistake point
➢ Direct Interest -CA will be Guilty
• If loan taken from article
• If loan is taken from proprietorship or partnership firm in which article is proprietor or
partner
• If loan is taken from company in which article has substantial shareholding

➢ Indirect Interest (Due to relationship) -CA will be Guilty
• If loan is taken from proprietorship or partnership firm in which article’s father is
proprietor or partner
• If loan is taken from company in which article’s father has substantial shareholding.

➢ However, if there is some connection as given in this question but indirect interest cannot be
proved, write conditional answer taking assumptions regarding interest of article. If assumed
that:

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