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CA Ravi Taori
False Statements: In the case of K.S. Dugar (1987), a member of the Institute gave a false statement, which was
verified and given under oath, during a hearing before the Disciplinary Committee. This was found to be a
violation of the clause and the member was found guilty.
Non-communication: In the case of A. Umanath Rao (1965), a Chartered Accountant failed to respond to
repeated reminders from the Institute to confirm the date of leaving the services by the Paid Assistant. This was
deemed professional misconduct under the clause.
(CNO-PE.1720) CLAUSE 4
A member of the Institute, whether in practice or not, shall be deemed to be guilty of professional misconduct,
if he -
Clause (4) Defalcates or embezzles money received in his professional capacity
Analysis
Defalcation: Misappropriation of funds received in a professional capacity.
Embezzlement: The act of dishonestly withholding assets for the purpose of conversion (theft) of such assets.
Fraud: Defalcation and embezzlement amount to fraudulent activities, as covered under SA-240.
Misconduct: A member involved in such activities is deemed guilty of professional misconduct.
SA-240: The Standard on Auditing (SA) 240 covers the auditor's responsibilities relating to fraud in an audit of
financial statements.
(CNO-PE.1740) Part III - Other misconduct in relation to members of the Institute generally
A member of the Institute, whether in practice or not, shall be deemed to be guilty of other misconduct, if he is
held guilty by any civil or criminal court for an offence which is punishable with imprisonment for a term
exceeding six months.
COUNCIL GUIDELINES
(CNO-PE.1760) COUNCIL GENERAL GUIDELINES 2008. (Shortcut -Taken From CCM BULLETIN)
The relevant extracts of the Council General Guidelines, 2008 (issued under Clause (1) of Part-II of Second
Schedule to The Chartered Accountants Act, 1949) are given below:
T – Tax Audit | F – Fees | C – Company Audit | C - Corporate Form of Practice | M – Maximum Limit of Non
Audit Fees | B – Books of Accounts | U – UDIN | L – Logo | E – Employee | T – Tender | I – Indebtedness | N -
Network
Chapter I : Preliminary Short title, commencement, etc
Applicability: The guidelines are applicable to all Members of the Institute, whether in practice or not, as
required by the context.
Chapter II: Conduct of a Member being an Employee
Due Diligence: A member of the Institute, who is also an employee, is required to perform their duties with due
diligence and avoid any form of gross negligence.
Chapter III: Appointment of a Member as Cost auditor
Omitted: This Chapter is being omitted.
Chapter IV: Opinion on financial statements when there is substantial interest
Omitted: This Chapter is being omitted.
Chapter V: Maintenance of Books of account
Financial Records: They must maintain and preserve accurate and complete financial records for their
professional practice.
Cash Book & Ledger: This includes a Cash Book, which tracks all cash transactions. They must also maintain a
Ledger, providing a comprehensive overview of all financial accounts.
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