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Chartered Accountants Act,1949

Chartered Accountants Act,1949 (PDF File)

Chartered Accountants Act,1949
Chartered Accountants Act,1949

Chartered Accountants Act 1949

An Act to make provision for the regulation of the [profession of chartered accountants].

WHEREAS it is expedient to make provision for the regulation of the profession of chartered accountants and for that purpose to establish an Institute of Chartered Accountants;

It is hereby enacted as follows :-

LEGISLATIVE HISTORY 6

 

·  Extended by Act 59 of 1949.

·  Extended by Act 30 of 1950.

·  Adapted by Adaptation of Laws Order, 1950.

·  Amended by Act 03 of 1951.

·  Repealed in Part by Act 48 of 1952.

·  Amended by Act 40 of 1955.

·  Amended by Act 15 of 1959.

·  Amended by Act 52 of 1964.

·  Amended by Act 25 of 1968.

·  Amended by Act 20 of 1983.

·  Amended by Act 09 of 2006.

·  Amended by Act 03 of 2012.

 

FACT SHEET 6

 

Extended to Dadra and Nagar Haveli by Regn. 6 of 1963, Section 2 and Sch.I;Pondicherry by Regn.7 of 1963, Section 3 and and Sch.I, Goa, Daman and Diy by Regn. 11 of 1963, Section 3 and Sch. and laccadive, Minicoy and Amindivi Islands by Regn. 8 of 1965, Section 3 and Sch.

Brought into force on 1.7.1949, vide Noti. No. 10-A($)/49, dated 1.6.1949.

CHAPTER I

Preliminary

  1. Short title, extent and commencement-(1) This Act may be called the Chartered Accountants Act, 1949.
[(2) It extends to the whole of India [* * *]

(3) It shall come into force on such date as the Central Governmentmay, by notification in the official Gazette, appoint in this behalf.

Object & Reasons6
  1. Interpretation.-(1) In this Act, unless there is anything repugnant in the subject or context,—

(a) “associate” means an associate member of the Institute;

[(aa) “Authority” means the Appellate Authority constituted under section 22A;

(aaa) “Board” means the Quality Review Board constituted under section 28A;].

(b) “chartered accountant” means a person who is a member of the Institute [* * *];

(c) “Council” means the Council of the Institute;

[(ca) “firm” shall have the meaning assigned to it in section 4 of the Indian Partnership Act, 1932 (9 of 1932), and includes,— (i) the limited liability partnership as defined in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009); or (ii) the sole proprietorship, registered with the Institute;]

(d) “holder of a restricted certificate” means a person holding a permanent or temporary restricted certificate granted by a Provincial Government under the Restricted Certificates Rules, 1932;

(e) “Institute” means the Institute of Chartered Accountants of India constituted under this Act;

[(ea) “notification” means a notification published in the Official Gazette;’].

[(eb) “partner” shall have the meaning assigned to it in section 4 of the Indian Partnership Act, 1932 (9 of 1932) or in clause (q) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), as the case may be;

(ec) “partnership” means—

(A) a partnership as defined in section 4 of the Indian Partnership Act, 1932 (9 of 1932); or (B) a limited liability partnership which has no company as its partner;]

(f) “prescribed” means prescribed by regulations made under this Act;

(g) “Register” means the Register of Members maintained under this Act;

(h) “registered accountant” means any person who has been enrolled on the Register of Accountants maintained by the Central Government under the Auditor’s Certificates Rules, 1932;

[(ha) “specified” means specified by rules made by the Central Government under this Act;

[(haa) “sole proprietorship” means an individual who engages himself in the practice of accountancy or offers to perform services referred to in clauses (ii) to (iv) of sub-section (2);]

(hb) “Tribunal” means a Tribunal established under sub-section (1) of section 10B;]

(i) ”year” means the period commencing on the 1st day of April of any year and ending on the 31st day of March of the succeeding year.

(2) A member of the Institute shall be deemed “to be in practice”,when individually or in partnership with chartered accountants [in practice] [or in partnership with members of such other recognised professions as may be prescribed],he, in consideration of remuneration received or to be received—

(i) engages himself in the practice of accountancy; or

(ii) offers to perform or performs services involving the auditingor verification of financial transactions, books, accounts or records, or thepreparation, verification or certification of financial accounting and relatedstatements or holds himself out to the public as an accountant; or

(iii) renders professional services or assistance in or about matters ofprinciple or detail relating to accounting procedure or the recording, presentationor certification of financial facts or data; or]

(iv) renders such other services as, in the opinion of the Council, are ormay be rendered by a chartered accountant [in practice]; and the words “to bein practice” with their grammatical variations and cognate expressions shall beconstrued accordingly.

Explanation:— An associate or a fellow of the Institute who is a salaried employeeof a chartered accountant [in practice] or [a firm of such chartered accountants or firm consisting of one or more chartered accountants and members of any other professional body having prescribed qualifications] shall, notwithstanding such employment, be deemed to be [in practice] shall the limited purpose of the [training of articled assistants].

CHAPTER II

The Institute Of Chartered Accountants Of India

  1. Incorporation of the Institute.-(1) All persons whose names are entered in the Register at the commencement of this Act and all persons who may hereafter have their names entered in the Register under the provisions of this Act, so long as they continue to have their names borne on the said Register, are hereby constituted a body corporate by the name of the Institute of Chartered Accountants of India, and all such persons shall, be known as members of the Institute.

(2) The Institute shall have perpetual succession and a common seal and shall have power to acquire, hold and dispose of property, both movable and immovable, and shall by it’s name sue or be sued.

  1. Entry of Names in the Register.-(1) Any of the following persons shall be entitled to have his name entered in the Register, namely:-

(i) any person who is a registered accountant or a holder of a restricted certificate at the commencement of this Act;

(ii) any person who has passed such examination and completed such training as may be prescribed for members of the Institute;

(iii) any person who has passed the examination for the Government Diploma in Accountancy or an examination recognised as equivalent thereto by the rules for the award of the Government Diploma in Accountancy before the commencement of this Act, and who, although not duly qualified to be registered as an accountant under the Auditor’s Certificates Rules, 1932, fulfils such conditions as the Central Government may specify in this behalf;

(iv) any person who, at the commencement of this Act, is engaged in the practice of accountancy in any [Part B State] and who, 4 although; not possessing the requisite qualifications to be registered as an accountant under the Auditor’s Certificates Rules, 1932, fulfils such conditions as the Central Government may specify in this behalf;

[(v) any person who has passed such other examination and completed such other training without India as is recognised by the Central Government or the Council as being equivalent to the examination and training prescribed for members of the Institute:Provided that in the case of any person who is not permanently residing in India, the Central Government or the Council, as the case may be, may impose such further conditions as it may deem fit;]

(vi) any person domiciled in India who at the commencement of this Act is studying for any foreign examination and is at the same timeundergoing training, whether within or without India, or, who,having passed such foreign examination, is at thecommencement of this Act undergoing training, whether within orwithout India:

Provided that any such examination or training wasrecognised before the commencement of this Act for the purposeof conferring the right to be registered as an accountant underAuditor’s Certificates Rules, 1932, and provided further that suchperson passes the examination or completes the training withinfive years after the commencement of this Act.

(2) Every person belonging to the class mentioned in clause (i) ofsub-section (1) shall have his name entered in the Register without the payment ofany entrance fee.

[(3) Every person belonging to any of the classes mentioned in clauses(ii), (iii), (iv), (v) and (vi) of sub-section (1) shall have his name entered in the Register on application being made and granted in the prescribed manner and on payment of such fees, as may be determined, by notification, by the Council,which shall not exceed rupees three thousand:

Provided that the Council may, with the prior approval of the Central Government, determine the fee exceeding rupees three thousand, which shallnot in any case exceed rupees six thousand.]

(4) The Central Government shall take such steps as may be necessaryfor the purpose of having the names of all persons belonging to the classmentioned in clause (i) of sub-section (1) entered in the Register.5

  1. Fellows And Associates.-(1) The members of the Institute shall be divided into two classesdesignated respectively as associates and fellows.

(2) Any person shall, on his name being entered in the Register, bedeemed to have become an associate member of the Institute and be entitledto use the letters A.C.A. after his name to indicate that he is an associatemember of the Institute of Chartered Accountants.

[(3) A member, being an associate who has been in continuous practicein India for at least five years, whether before or after the commencement of this Act, or whether partly before and partly after the commencement of this Act, anda member who has been an associate for a continuous period of not less than fiveyears and who possesses such qualifications as the Council may prescribe with aview to ensuring that he has experience equivalent to the experience normallyacquired as a result of continuous practice for a period of five years as achartered accountant shall, on payment of such fees, as may be determined, bynotification, by the Council, which shall not exceed rupees five thousand and onapplication made and granted in the prescribed manner, be entered in the Registeras a fellow of the Institute and shall be entitled to use the letters F. C. A. after hisname to indicate that he is a fellow of the Institute of Chartered Accountants:

Provided that the Council may with the prior approval of the Central Government, determine the fee exceeding rupees five thousand, which shall notin any case exceed rupees ten thousand.]

  1. Certificate of Practice.-(1) No member of the Institute shall be entitled to practise [whether in India or elsewhere]unless he has obtained from the Council a certificate ofpractice:
[(2) Every such member shall pay such annual fee for his certificateas may be determined, by notification, by the Council, which shall notexceed rupees three thousand, and such fee shall be payable on or before the 1st day of April in each year:

Provided that the Council may with the prior approval of the Central Government, determine the fee exceeding rupees three thousand, which shallnot in any case exceed rupees six thousand.] [(3) The certificate of practice obtained under sub-section (1) may be cancelled by the Council under such circumstances as may be prescribed.]

  1. Members to be known as CharteredAccountants.-[Every member of the Institute in practice shall, and any other membermay, use the designation of a chartered accountant and no member using suchdesignation shall use any other description, whether in addition thereto or insubstitution therefor:]

Provided that nothing contained in this section shall be deemed to prohibitany such person from adding any other description or letters to his name, ifentitled thereto, to indicate membership of such other Institute ofaccountancy, whether in India or elsewhere, as may be recognised in thisbehalf by the Council, or any other qualification that he may possess, or toprohibit a firm, all the partners of which are members of the Institute and inpractice, from being known by its firm name as Chartered Accountants.

  1. Disabilities.-Notwithstanding anything contained in Section 4, a person shall not beentitled to have his name entered in or borne on the Register if he —

(i) has not attained the age of twenty-one years at the time of his applicationfor the entry of his name in the Register; or

[(ii) is of unsound mind and stands so adjudged by a competent Court; or]

(iii) is an undischarged insolvent; or

(iv) being a discharged insolvent, has not obtained from the Court acertificate stating that his insolvency was caused by misfortune without anymisconduct on his part; or

(v) has been convicted by a competent Court whether within or without India,of an offence involving moral turpitude and punishable with transportation orimprisonment or of an offence, not of a technical nature, committed by him in hisprofessional capacity unless in respect of the offence committed he has eitherbeengranted a pardon or, on an application made by him in this behalf, the Central Government has, by an order in writing, removed the disability; or

[(vi) has been removed from membership of the Institute on being found oninquiry to have been guilty of professional or other misconduct:

Provided that a person who has been removed from membership for aspecified period, shall not be entitled to have his name entered in the Registeruntil the expiry of such period.]

CHAPTER III

Council Of The Institute

  1. Constitution of the Council of the Institute.-(1) There shall be a Council of the Institute for the management of theaffairs of the Institute and for discharging the functions assigned to it under thisAct.
[(2) The Council shall be composed of the following persons, namely:-

(a) not more than thirty-two persons elected by the members of the Institute from amongst the fellows of the Institute chosen in such manner andfrom such regional constituencies as may be specified:

Provided that a fellow of the Institute, who has been found guilty of anyprofessional or other misconduct and whose name is removed from the Register orhas been awarded penalty of fine, shall not be eligible to contest the election,-

(i) In case of misconduct falling under the First Schedule of this Act, fora period of three years;

(ii) in case if misconduct falling under the Second Schedule of this Act,for a period of six years,from the completion of the period of removal of name from the Register orpayment of fine, as the case may be;

(b) not more than eight persons to be nominated in the specifiedmanner, by the Central Government.] [[3) No person holding a post under the Central Government or a State Government shall be eligible for election to the Council under clause (a) of subsection(2).

(4) No person who has been auditor of the Institute shall be eligiblefor election to the Council under clause (a) of sub-section (2), for a period ofthree years after he ceases to be an auditor.]

[10. Re-electionor re-nominationto Council.-A member of the Council, elected or nominated under sub-section (2) of8section 9, shall be eligible for re-election or, as the case may be, re-nomination:

Provided that no member shall hold the office for more than threeconsecutive terms:

Provided further that a member of the Council, who is or has been electedas President under sub-section (1) of section 12, shall not be eligible for electionor nomination as a member of the Council.]

[10-A. Settlement of dispute regarding election.-In case of any dispute regarding any election under clause (a) of subsection(2) of section 9, the aggrieved person may make an application withinthirty days from the date of declaration of the result of election to the Secretary of the Institute, who shall forward the same to the CentralGovernment.

10-B. Establishment of Tribunal..-(1) On receipt of any application under section 10A, the Central Government shall, by notification, establish a Tribunal consisting of a Presiding Officer and two other Members to decide such dispute and the decision of such Tribunal shall be final.

(2) A person shall not be qualified for appointment,-

(a) as a Presiding Officer of the Tribunal unless he has been a memberof the Indian Legal Service and has held a post in Grade 1 of the servicefor at least three years;

(b) as a Member unless he has been a member of the Council for atleast one full term and who is not a sitting member of the Council or whohas not been a candidate in the election under dispute; or

(c) as a Member unless he holds the post of a Joint Secretary to the Government of India or any other post under the Central Governmentcarrying a scale of pay which is not less than that of a Joint Secretary to the Government of India.

(3) The terms and conditions of service of the Presiding Officer and Members of the Tribunal, their place of meetings and allowances shall be such asmay be specified.

(4) The expenses of the Tribunal shall be borne by the Council.]

  1. Nomination in default of election or nomination.-If any body of persons referred to in Section 9 fails to elect any of themembers of the Council which it is empowered under that section to elect, the Central Government may nominate a person duly qualified to fill the vacancy,and any person so nominated shall be deemed to be a member of the Councilas if he had been duly elected.
  2. President and Vice-President.-(1) The Council at its first meeting shall elect two of its members to berespectively the President and the Vice-President thereof, and so often as the officeof the President or the Vice-President becomes vacant the Council shall chooseanother person to be the President or the Vice-President as the case may be:

Provided that on the first constitution of the Council a member of the Council nominated in this behalf by the Central Government shall discharge thefunctions of the President, until such time as a President is elected under theprovisions of the sub-section.

(2) The President shall be the Chief Executive Authority of the Council.

(3) The President or the Vice-President shall hold office for a period of oneyear from the date on which he is chosen but so as not to extend beyond his termof office as a member of the Council, and, subject to his being a member of the Council at the relevant time, he shall be eligible for re-election [under sub-section(1).]

(4) [On the expiration of the duration of the Council, the [President and the Vice-President] of the Council at the time of such expiration] shall continue tohold office and discharge such administrative and other duties as may be prescribed until such time as a new [President and the Vice-President] shall have been elected and shall have taken over [charge of their duties].

  1. Resignation of membership and casual vacancies.-(1) Any member of the Council may at any time resign his membershipby writing under his hand addressed to the President, and the seat of suchmember shall become vacant when such resignation is notified in the OfficialGazette.

(2) A member of the Council shall be deemed to have vacated his seatif he is declared by the Council to have been absent without sufficient10excuse from three consecutive meetings of the Council [or he has been foundguilty of any professional or other misconduct and awarded penalty of fine,] orif his name is, for any cause, removed from the Register under the provisionsof Section 20.

(3) A casual vacancy in the Council shall be filled by freshelection from the constituency concerned or by nomination by the Central Government, as the case may be, and the person elected or nominated to fill the vacancy shall hold office until the dissolution of the Council:

[Provided that no election shall be held to fill a casual vacancy occurringwithin [one year] prior to the date of the expiration of the duration of the Council,but such a vacancy may be filled by nomination by the Central Government afterconsultation with the President of the Council.]

(4) No act done by the Council shall be called in question on theground merely of the existence of any vacancy in, or defect in the constitution of,the Council.

  1. Duration and dissolution of Council.-[(1)]The duration of any Council constituted under this Act shall be threeyears from the date of its first meeting, on the expiry of which it shall standdissolved and a new Council constituted in accordance with the provisionsof this Act.
[(2) Notwithstanding the expiration of the duration of a Council(hereinafter referred to as the former Council), the former Council shall continueto exercise its functions until a new Council is constituted in accordance with theprovisions of this Act, and on such constitution, the former Council shall standdissolved.]

[15. Functions of Council.-(1) The Institute shall function under the overall control, guidance andsupervision of the Council and the duty of carrying out the provisions of this Actshall be vested in the Council.

(2) In particular, and without prejudice to the generality of theforegoing powers, the duties of the Council shall include —

(a) to approve academic courses and their contents;

(b) the examination of candidates for enrolment and the prescribing offees therefor;

(c) the regulation of the engagement and training of articled and11audit assistants

(d) the prescribing of qualifications for entry in the Register;

(e) the recognition of foreign qualifications and training for the purposesof enrolment;

(f) the granting or refusal of certificates of practice under this Act;

(g) the maintenance and publication of a Register of persons qualifiedto practice as chartered accountants;

(h) the levy and collection of fees from members, examinees andother persons;

(i) subject to the orders of the appropriate authorities under the Act, theremoval of names from the Register and the restoration to the Register ofnames which have been removed;

(j) the regulation and maintenance of the status and standard ofprofessional qualifications of members of the Institute;

(k) the carrying out, by granting financial assistance to persons otherthan members of the Council or in any other manner, of research inaccountancy;

(l) the maintenance of a library and publication of books andperiodicals relating to accountancy;

(m) to enable functioning of the Director (Discipline), the Board of Discipline, the Disciplinary Committee and the Appellate Authority constituted under the provisions of this Act;

(n) to enable functioning of the Quality Review Board;

(o) consideration of the recommendations of the Quality Review Boardmade under clause (a) of section 28B and the details of action taken thereonin its annual report; and

(p) to ensure the functioning of the Institute in accordance with theprovisions of this Act and in performance of other statutory duties as may beentrusted to the Institute from time to time.]

[15A. Imparting education by Universities and other bodies.-(1) Subject to the provisions of this Act, any University established bylaw or any body affiliated to the Institute, may impart education on the subjectscovered by the academic courses of the Institute.12

(2) The Universities or bodies referred to in sub-section (1) shall,while awarding degree, diploma or certificate or bestowing any designation,ensure that the award or designation do not resemble or is not identical to oneawarded by the Institute.

(3) Nothing contained in this section shall enable a University or abody to adopt a name or nomenclature which is in any way similar to that of the Institute.]

[16. Officers and employees, salary, allowances etc.-(1) For the efficient performance of its duties, the Council shall —

(a) appoint a Secretary to perform such duties as may be prescribed;

(b) appoint a Director (Discipline) to perform such functions as areassigned to him under this Act and the rules and regulations framed thereunder;

(2) The Council may also—

(a) appoint such other officers and employees as it considers necessary;

(b) require and take from the Secretary or from any other officer oremployee such security for the due performance of his duties, as the Councilconsiders necessary;

(c) prescribe the salaries, fees, allowances of the officers andemployees and their terms and conditions of service;

(d) with the previous sanction of the Central Government, fix theallowances of the President, Vice-President and other members of the Council andmembers of its Committees;

(3) The Secretary of the Council shall be entitled to participate in themeetings of the Council but shall not be entitled to vote thereat.]

  1. Committees of the Council.-(1) The Council shall constitute from amongst its members thefollowing Standing Committees, namely:-

(i) an Executive Committee,

(ii) an Examination Committee, and

[(iii) a Finance Committee.] [(2) The Council may also form such other committees from amongst itsmembers as it consider necessary for the purpose of carrying out the provisions of13this Act, and any Committee so formed may, with the sanction of the Council,co-opt such other members of the Institute not exceeding one-third of themembers of the committee as it thinks fit, and any member so co-opted shall beentitled to exercise all the rights of a member of the committee.

(3) Each of the Standing Committees shall consist of the Presidentand the Vice-President ex officio, and minimum of three and maximum of fivemembers to be elected by the Council from amongst its members.]

(4) The President and the Vice-President of the Council shall be the Chairman and Vice-Chairman respectively of each of the Standing Committees.

(5) Every member of the Standing Committee other than the Chairman and the Vice-Chairman shall hold office for one year from the date of hiselection, but, subject to being a member of the Council, he shall be eligible for reelection.

(6) The Standing Committees shall exercise such functions and besubject to such conditions in the exercise thereof as may be prescribed.

  1. Finances of the Council.-(1) There shall be established a fund under the management andcontrol of the Council into which shall be paid all moneys received by the Counciland out of which shall be met all expenses and liabilities properly incurred by the Council.

(2) The Council may invest any money for the time being standing to the credit of the fund in any Government security or in any other securityapproved by the Central Government.

[(3) The Council shall keep proper accounts of the fund distinguishingcapital from revenue in the manner prescribed.

(4) The Council shall prepare in the manner prescribed and approve,prior to the start of the financial year, an annual financial statement (thebudget) indicating all its anticipated revenues as well as all proposedexpenditures for the forthcoming year.

(5) The annual accounts of the Council shall be prepared in suchmanner as may be prescribed and be subject to audit by a chartered accountantin practice to be appointed annually by the Council:

Provided that no member of the Council or a person who has been amember of the Council during the last four years or a person who is inpartnership with such member shall be eligible for appointment as an auditorunder this sub-section:

Provided further that, in the event it is brought to the notice of the Council that the accounts of the Council do not represent a true and fair view ofits finances, then the Council may itself cause a special audit to be conducted:

Provided also that, if such information, that the accounts of the Council do not represent a true and fair view of its finances, is sent to the Council by the Central Government, then, the Council may, whereverappropriate cause a special audit or take such other action as it considersnecessary and shall furnish an action taken report on it to the CentralGovernment. ] [(5-A) As soon as may be practicable at the end of each year, the Councilshall circulate the audited accounts to its members at least fifteen days inadvance and consider and approve these accounts in a special meetingconvened for the purpose.

(5-B) The Council shall cause to be published in the Gazette of Indianot later than the 30th day of September of the year next following, a copy of the audited accounts and the Report of the Council for that year duly approvedby the Council and copies of the said accounts and Report shall be forwarded to the Central Government and to all the members of the Institute.]

(6) The Council may borrow from a scheduled bank, as defined in the Reserve Bank of India Act, 1934, (II of 1934) or from the CentralGovernment—

(a) any money required for meeting its liabilities on capital account on the security of the fund or on the security of any other assets for the time beingbelonging to it; or

(b) for the purpose of meeting current liabilities pending the receipt ofincome, by way of temporary loan or overdraft.

CHAPTER IV

Register Of Members

  1. Register.-(1) The Council shall maintain, in the prescribed manner, a Register of the Members of the Institute.

(2) The Register shall include the following particulars about everymember of the Institute, namely:-

(a) his full name, date of birth, domicile, residential and professionaladdress;

(b) the date on which his name is entered in the Register;

(c) his qualifications;

(d) whether he holds a certificate of practice; and

(e) any other particulars which may be prescribed.

[(3) The Council shall cause to be published in such manner as may beprescribed, a list of members of the Institute as on the 1st day of April of eachyear, and shall, if requested to do so by any such member, send to him a copy ofsuch list [on payment of such amount as may be prescribed].] [(4) Every member of the Institute shall, on his name being entered in the Register, pay such annual membership fee as may be determined, bynotification, by the Council, which shall not exceed rupees five thousand:Provided that the Council may with the prior approval of the Central Government, determine the fee exceeding rupees five thousand, which shallnot in any case exceed rupees ten thousand.]

[20. Removal from the Register.-(1) The Council may remove from the Register the name of anymember of the Institute —

(a) who is dead; or

(b) from whom a request has been received to that effect; or

(c) who has not paid any prescribed fee required to be paid by him; or

(d) who is found to have been subject at the time when his name wasentered in the Register, or who at any time thereafter has becomesubject, to any of the disabilities mentioned in Section 8, or who forany other reason has ceased to be entitled to have his name borneon the Register.

(2) The Council shall remove from the Register the name of anymember in respect of whom an order has been passed under this Act removinghim from membership of the Institute.] [(3) If the name of any member has been removed from the Registerunder clause (c) of sub-section (1), on receipt of an application, his name may beentered again in the Register on payment of the arrears of annual fee andentrance fee along with such additional fee, as may be determined, bynotification, by the Council which shall not exceed rupees two thousand:

Provided that the Council may with the prior approval of the Central Government, determine the fee exceeding rupees two thousand, which shall notin any case exceed rupees four thousand.]

[CHAPTER V

Misconduct

[21. Disciplinary Directorate.-(1) The Council shall, by notification, establish a Disciplinary Directorate headed by an officer of the Institute designated as Director(Discipline) and such other employees for making investigations in respect ofany information or complaint received by it.

(2) On receipt of any information or complaint along with theprescribed fee, the Director (Discipline) shall arrive at a prima facie opinion on the occurrence of the alleged misconduct.

(3) Where the Director (Discipline) is of the opinion that a member isguilty of any professional or other misconduct mentioned in the First Schedule,he shall place the matter before the Board of Discipline and where the Director(Discipline) is of the opinion that a member is guilty of any professional or othermisconduct mentioned in the Second Schedule or in both the Schedules, heshall place the matter before the Disciplinary Committee.

(4) In order to make investigations under the provisions of this Act,the Disciplinary Directorate shall follow such procedure as may be specified.

(5) Where a complainant withdraws the complaint, the Director(Discipline) shall place such withdrawal before the Board of Discipline or, as the case may be, the Disciplinary Committee, and the said Board or Committeemay, if it is of the view that the circumstances so warrant, permit the withdrawalat any stage.]

[21-A. Board of Discipline.-(1) The Council shall constitute a Board of Discipline consisting of–

(a) a person with experience in law and having knowledge ofdisciplinary matters and the profession, to be its presiding officer;

(b) two members one of whom shall be a member of the Councilelected by the Council and the other member shall be nominated by the Central Government from amongst the persons of eminence having experience in thefield of law, economics, business, finance or accountancy;

(c) the Director (Discipline) shall function as the Secretary of the Board.

(2) The Board of Discipline shall follow summary disposal procedurein dealing with all cases before it.

(3) Where the Board of Discipline is of the opinion that a member isguilty of a professional or other misconduct mentioned in the First Schedule, itshall afford to the member an opportunity of being heard before making anyorder against him and may thereafter take any one or more of the followingactions, namely:-

(a) reprimand the member;

(b) remove the name of the member from the Register up to a period ofthree months;

(c) impose such fine as it may thinks fit which may extend to rupeesone lakh.

(4) The Director (Discipline) shall submit before the Board of Discipline all information and complaints where he is of the opinion that there isno prima-facie case; and the Board of Discipline may, if it agrees with theopinion of the Director (Discipline), close the matter or in case ofdisagreement, may advise the Director (Discipline) to further investigate thematter.

21-B. Disciplinary Committee..-(1) The Council shall constitute a Disciplinary Committee consistingof the President or the Vice-President of the Council as the Presiding Officerand two members to be elected from amongst the members of the Council andtwo members to be nominated by the Central Government from amongst thepersons of eminence having experience in the field of law, economics,business, finance or accountancy:

Provided that the Council may constitute more Disciplinary Committeesas and when it considers necessary.

(2) The Disciplinary Committee, while considering the cases placedbefore it shall follow such procedure as may be specified.

(3) Where the Disciplinary Committee is of the opinion that a memberis guilty of a professional or other misconduct mentioned in the Second Scheduleor both the First Schedule and the Second Schedule, it shall afford to themember an opportunity of being heard before making any order against himand may thereafter take any one or more of the following actions, namely: –

(a) reprimand the member;

(b) remove the name of the member from the Register permanently18or for such period, as it thinks fit;

(c) impose such fine as it may think fit, which may extend to rupeesfive lakhs.

(4) The allowances payable to the members nominated by the Central Government shall be such as may be specified.

21-C. Authority, Disciplinary Committee, Board of Discipline and Director (Discipline) to have powers of civil court.-For the purposes of an inquiry under the provisions of this Act, the Authority, the Disciplinary Committee, Board of Discipline and the Director(Discipline) shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, in respect of the following matters, namely:-

(a) summoning and enforcing the attendance of any person and examining him on oath;

(b) the discovery and production of any document; and

(c) receiving evidence on affidavit.

Explanation.– For the purposes of sections 21, 21A, 21B, 21C and 22, “memberof the Institute” includes a person who was a member of the Institute on thedate of the alleged misconduct although he has ceased to be a member of the Institute at the time of the inquiry.

21-D. Transitional Provisions.-All complaints pending before the Council or any inquiry initiated by the Disciplinary Committee or any reference or appeal made to a High Court prior to the commencement of the Chartered Accountants (Amendment) Act, 2006, shallcontinue to be governed by the provisions of this Act, as if this Act had not beenamended by the Chartered Accountants (Amendment) Act, 2006.]

[22. Professional or other misconduct defined.-For the purposes of this Act, the expression “professional or othermisconduct” shall be deemed to include any act or omission provided in any of the Schedules, but nothing in this section shall be construed to limit or abridgein any way the power conferred or duty cast on the Director (Discipline)under sub-section (1) of section 21 to inquire into the conduct of anymember of the Institute under any other circumstances.]

[22-A. Constitution of AppellateAuthority.(1) The Central Government shall, by notification, constitute an Appellate Authority consisting of —

(a) a person who is or has been a judge of a High Court, to be itsChairperson;

(b) two members to be appointed from amongst the persons who havebeen members of the Council for at least one full term and who is not a sittingmember of the Council;

(c) two members to be nominated by the Central Government fromamongst persons having knowledge and practical experience in the field of law,economics, business, finance or accountancy.

(2) The Chairperson and other members shall be part-time members.]

22B. Term of office of Chairperson and members of Authority.-(1) A person appointed as the Chairperson shall hold office for a termof three years from the date on which he enters upon his office or until he attains the age of sixty-five years, whichever is earlier,

(2) A person appointed as a member shall hold office for a term ofthree years from the date on which he enters upon his office or until he attains the age of sixty-two years, whichever is earlier.

22-C. Allowances and conditions of service of Chairperson and Members of Authority.-(1) The allowances payable to, and other terms and conditions ofservice of, the Chairperson and members and the manner of meeting expenditureof the Authority by the Council and such other authorities shall be such as maybe specified.

22-D. Procedure to be regulated by Authority.-(1) The office of the Authority shall be at Delhi.

(2) The Authority shall regulate its own procedure.

(3) All orders and decisions of the Authority shall be authenticated byan officer duly authorised by the Chairperson in this behalf.

22-E. Officers and other staff of Authority.-(1) The Council shall make available to the Authority such officers andother staff members as may be necessary for the efficient performance of thefunctions of the Authority.

(2) The salaries and allowances and conditions of service of the officersand other staff members of the Authority shall be such as may be prescribed.

22-F. Resignation and removal of Chairperson and members.-(1) The Chairperson or a member may, by notice in writing underhis hand addressed to the Central Government, resign his office:

Provided that the Chairperson or a member shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until aperson duly appointed as his successor enters upon his office or until the expiryof term of office, whichever is earlier.(2) The Chairperson or a member shall not be removed from his officeexcept by an order of the Central Government on the ground of provedmisbehavior or incapacity after an inquiry made by such person as the Central Government may appoint for this purpose in which the Chairperson or amember concerned has been informed of the charges against him and given areasonable opportunity of being heard in respect of such charges.

22-G. Appeal to Authority.-(1) Any member of the Institute aggrieved by any order of the Board of Discipline or the Disciplinary Committee imposing on him any of thepenalties referred to in sub-section (3) of section 21A and sub-section (3) ofsection 21B, may within ninety days from the date on which the order iscommunicated to him, prefer an appeal to the Authority:

Provided that the Director (Discipline) may also appeal against thedecision of the Board of Discipline or the Disciplinary Committee to the Authority,if so authorised by the Council, within ninety days:

Provided further that the Authority may entertain any such appeal after the expiry of the said period of ninety days, if it is satisfied that there wassufficient cause for not filing the appeal in time.

(2) The Authority may, after calling for the records of any case, reviseany order made by the Board of Discipline or the Disciplinary Committee under21sub-section (3) of section 21A and sub-section (3) of section 21B and may –

(a) confirm, modify or set aside the order;

(b) impose any penalty or set aside, reduce, or enhance the penaltyimposed by the order;

(c) remit the case to the Board of Discipline or Disciplinary Committeefor such further enquiry as the Authority considers proper in the circumstances of the case; or

(d) pass such other order as the Authority thinks fit:

Provided that the Authority shall give an opportunity of being heard to theparties concerned before passing any order.]

CHAPTER VI

Regional Councils

  1. Constitution and functions of Regional Councils.-(1) [For the purpose of advising and assisting it on matters concerningits functions, the Council may constitute such Regional Councils]as and when itdeems fit for one or more of the regional constituencies that may be specified by the Central Government under clause (a) of sub-section (2) of Section 9.

(2) The Regional Councils shall be constituted in such manner andexercise such functions as may be prescribed.

CHAPTER VII

Penalties

  1. Penalty for falsely claiming to be a member, etc.-Any person who —

(i) not being a member of the Institute —

(a) represents that he is a member of the Institute; or

(b) uses the designation Chartered Accountant; or

(ii) being a member of the Institute, but not having a certificate ofpractice, represents that he is in practice or practises as a chartered accountant,shall be punishable on first conviction with fine which may extend to onethousand rupees, and on any subsequent conviction with imprisonment whichmay extend to six months or with fine which may extend to five thousandrupees, or with both.

[24-A. Penalty for using name of the Council, awarding degree of chartered accountancy, etc.-(1) Save as otherwise provided in this Act, no person shall—

(i) use a name or the common seal which is identical with the nameor the common seal of the Institute or so nearly resembles it as to deceive or asis likely to deceive the public;

(ii) award any degree, diploma or certificate or bestow anydesignation which indicates or purports to indicate the position orattainment of any qualification or competence similar to that of a member of the Institute; or

(iii) seek to regulate in any manner whatsoever the professionof chartered accountants.

(2) Any person contravening the provisions of sub-section (1) shall,without prejudice to any other proceedings which may be taken against him, bepunishable with fine which may extend on first conviction to one thousandrupees, and on any subsequent conviction with imprisonment which may extend tosix months, or with fine which may extend to five thousand rupees, or with both.

[* * *]
  1. Companies not to engage in accountancy.-(1) No company, whether incorporated in India or elsewhere,shall practise as chartered accountants.

(2) If any company contravenes the provisions of sub-section (1),then, without prejudice to any other proceedings which may be taken against the company, every director, manager, secretary and any other officer thereofwho is knowingly a party to such contravention shall be punishable with finewhich may extend on first conviction to one thousand rupees, and on anysubsequent conviction to five thousand rupees.

[Explanation.— For the removal of doubts, it is hereby declared that the “company” shall include any limited liability partnership which has company as its partner for the purposes of this section.]

  1. Unqualified persons not to sign documents.-(1) No person other than a member of the Institute shall sign anydocument on behalf of a [chartered accountant in practice]or a [firm of suchchartered accountants]in his or its professional capacity.
[(2) Any person who contravenes the provisions of sub-section (1)shall, without prejudice to any other proceedings, which may be taken againsthim, be punishable on first conviction with a fine not less than five thousandrupees but which may extend to one lakh rupees, and in the event of a second orsubsequent conviction with imprisonment for a term which may extend to oneyear or with fine not less ten thousand rupees but which may extent to two lakhrupees or with both.]
  1. Maintenance of branch offices.-(1) Where a [chartered accountant in practice]or a [firm of suchchartered accountants]has more than one office in India, each one of suchoffices shall be in the separate charge of a member of the Institute:

Provided that the Council may in suitable cases exempt any[chartered accountant in practice] or a [firm of suchchartered accountants] from theoperation of this sub-section.

(2) Every [chartered accountant in practice] or a [firm of suchchartered accountants]] maintaining more than one office shall send to the Council a listof offices and the persons in charge thereof and shall keep the Council informedof any changes in relation thereto.

  1. Sanction to prosecute.-No person shall be prosecuted under this Act except on a complaintmade by or under the order of the Council or of the Central Government.

[CHAPTER VIIA

Quality Review Board

28-A. Establishment of Quality ReviewBoard.-(1) The Central Government shall, by notification, constitute a Quality Review Board consisting of a Chairperson and ten other members.

(2) The Chairperson and members of the Board shall be appointedfrom amongst the persons of eminence having experience in the field of law,economics, business, finance or accountancy.

(3) Five members of the Board shall be nominated by the Council andother five members shall be nominated by the Central Government.

28-B. Functions of Board.-The Board shall perform the following functions, namely:-

(a) to make recommendations to the Council with regard to the qualityof services provided by the members of the Institute;

(b) to review the quality of services provided by the members of the Institute including audit services; and

(c) to guide the members of the Institute to improve the quality ofservices and adherence to the various statutory and other regulatoryrequirements.

28-C. Procedure of Board.-The Board shall meet at such time and place and follow in its meetings suchprocedure as may be specified.

28-D. Terms and conditions of services of Chairperson and members of Board and its expenditure.-(1) The terms and conditions of service of the Chairperson and themembers of the Board, and their allowances shall be such as may be specified.

(2) The expenditure of the Board shall be borne by the Council.]

CHAPTER VIII

Miscellaneous

  1. Reciprocity.-(1) Where any country, specified by the Central Government inthis behalf by notification in the official Gazette, prevents persons of Indiandomicile from becoming members of any institution similar to the Institute of Chartered Accountants of India or from practising the profession of accountancyor subjects them to unfair discrimination in that country, no subject of any suchcountry shall be entitled to become a member of the Institute or practise theprofession of accountancy in India.

(2) Subject to the provisions of sub-section (1), the Council mayprescribe the conditions, if any, subject to which foreign qualifications relating toaccountancy shall be recognised for the purposes of entry in the Register.

[29-A. Power of Central Government to make rules.-(1) The Central Government may, by notification, make rules to carryout the provisions of this Act.

(2) In particular and without prejudice to the generality of theforegoing powers, such rules may provide for all or any of the following matters,namely:-

(a) the manner of election and nomination in respect of members to the Council under sub-section (2) of section 9;

(b) the terms and conditions of service of the Presiding Officer and Members of the tribunal, place of meetings and allowances to be paid tothem under sub-section (3) of section 10B;

(c) the procedure of investigation under sub-section (4) of section 21;

(d) the procedure while considering the cases by the Disciplinary Committee under sub-section (2), and the fixation of allowances of thenominated members under sub-section (4) of section 21B;

(e) the allowances and terms and conditions of service of the Chairperson and members of the Authority and the manner of meetingexpenditure by the Council under section 22C;

(f) the procedure to be followed by the Board in its meetings undersection 28C; and

(g) the terms and conditions of service of the Chairperson and membersof the Board under sub-section (1) of section 28-D.]

  1. Power to make regulations.-(1) The Council may, by notification in the “Gazette of India”, makeregulations for the purpose of carrying out the objects of this Act. [***]

(2) In particular, and without prejudice to the generality of theforegoing power, such regulations may provide for all or any of the followingmatters:—

(a) the standard and conduct of examinations under this Act;

(b) the qualifications for the entry of the name of any person in the Register as a member of the Institute;

(c) the conditions under which any examination or training may betreated as equivalent to the examination and training prescribed formembers of the Institute;

(d) the conditions under which any foreign qualification may berecognised;

(e) the manner in which and the conditions subject to which applicationsfor entry in the Register may be made;

(f) the fees payable for membership of the Institute and the annualfees payable by associates and fellows of the Institute in respect of theircertificates;

(g) the manner in which elections to [* * *] the Regional Councilsmay be held;

(h) the particulars to be entered in the Register;

(i) the functions of Regional Councils;

[(j) the training of articled and audit [Assistants], the fixation of limitswithin which premia may be charged from articled [Assistants] and thecancellation of articles and termination of audit service for misconduct orfor any other sufficient cause;]

(k) the regulation and maintenance of the status and standard ofprofessional qualifications of members of the Institute;

(l) the carrying out of research in accountancy;

(m) the maintenance of a library and publication of books and periodicalson accountancy;

(n) the management of the property of the Council and the maintenanceand audit of its accounts;

(o) the summoning and holding of meetings of the Council, the times27and places of such meetings, the conduct of business thereat and thenumber of members necessary to form a quorum;

(p) the powers, duties and functions of the President and the Vice-President of the Council;

(q) the functions of the Standing and other Committees and theconditions subject to which such functions shall be discharged;

(r) the terms of office, and the powers, duties and functions of the Secretary and other officers and servants of the Council; [and]

(s) [***]

(t) any other matter which is required to be or may be prescribedunder this Act.

(3) All regulations made by the Council under this Act shall besubject to the condition of previous publication and to the approval of the CentralGovernment.

(4) Notwithstanding anything contained in sub-sections (1) and (2)the Central Government may frame the first regulations for the purposesmentioned in this section, and such regulations shall be deemed to have beenmade by the Council, and shall remain in force from the date of the coming intoforce of this Act, until they are amended, altered or revoked by the Council.

[30-A. Powers of Central Government to direct regulations to bemade or to make or amend regulations.-(1) Where the Central Government considers it expedient so to do, itmay, by order in writing, direct the Council to make any regulations or toamend or revoke any regulations already made within such period as it mayspecify in this behalf.

(2) If the Council fails or neglects to comply with such order within the specified period, the Central Government may make the regulations oramend or revoke the regulations made by the Council, as the case may be,either in the form specified in the order or with such modifications thereof as the Central Government thinks fit.]

[30-B. Rules, regulations and notifications to be laid before Parliament..-Every rule and every regulation made and every notification issued underthis Act shall be laid, as soon as may be after it is made or issued, beforeeach House of Parliament, while it is in session, for a total period of thirty dayswhich may be comprised in one session or in two or more successive sessions,and if, before the expiry of the session immediately following the session or the28successive sessions aforesaid, both Houses agree in making any modification in the rule, regulation or notification, or both Houses agree that the rule, regulationor notification should not be made or issued, the rule, regulation or notification,shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shallbe without prejudice to the validity of anything previously done under that rule,regulation or notification.]

[30-C. Power of Central Government to issue directions.-(1) In the event of non-compliance by the Council of any provisionsof this Act, the Central Government may give to the Council such general orspecial directions as it considers necessary to ensure compliance and the Council shall, in the discharge of its functions under this Act, comply with suchdirections.

(2) If, in the opinion of the Central Government, the Council haspersistently made default in giving effect to the directions issued under subsection(1), it may, after giving an opportunity of being heard to the Council, bynotification, dissolve the Council, whereafter a new Council shall be constituted inaccordance with the provisions of this Act with effect from such date as may bedecided by the Central Government:

Provided that the Central Government shall ensure constitution of a new Council in accordance with the provisions of this Act within a period of one yearfrom the date of its dissolution.

(3) Where the Central Government has issued a notification undersub-section (2) dissolving the Council, it shall, pending the constitution of a new Council in accordance with the provisions of this Act, nominate any person orbody of persons not exceeding five members to manage the affairs anddischarge all or any of the functions of the Council under this Act.]

[30-D. Protection of action takenin good faith.-No suit, prosecution or other legal proceeding shall lie against the Central Government or the Council or the Authority or the Disciplinary Committee or the Tribunal or the Board or the Board of Discipline or the Disciplinary Directorateor, any officer of that Government, Council, Authority, Disciplinary Committee,Tribunal, Board, Board of Discipline or the Disciplinary Directorate, for anything which is in good faith done or intended to be done under this Act or anyrule, regulation, notification, direction or order made thereunder.

30-E. Members, etc., to be public servants.-The Chairperson, Presiding Officer, Members and other officers andemployees of the Authority, Disciplinary Committee, Tribunal, Board, Board of Discipline or the Disciplinary Directorate shall be deemed to be public servantswithin the meaning of section 21 of the Indian Penal Code.]

[31. Construction of references.-Any reference to a chartered accountant or a registered accountant or acertified or qualified auditor in any other law or in any document whatsoever shallbe construed as a reference to a chartered accountant in practice within themeaning of this Act.]

  1. Act not to affect right of accountants to practise as such in Acceding States.-Nothing contained in this Act shall affect the right of any personwho, at the commencement of this Act, is entitled to engage himself in thepractice of accountancy in any [Part B State] under any law in force in that State, tocontinue to engage himself in the practice of accountancy in that State after thecommencement of this Act.
  2. Amendment of section 144, Indian Companies Act, 1913.-[Repealed by the Repealing and Amending Act, 1952 (48 of 1952), section 2 and Schedule I (w.e.f. 2.8.1952)

[THE FIRST SCHEDULE]

[ See sections 21(30, 21A(3) and 22]

PART I

PROFESSIONAL MISCONDUCT IN RELATION TO CHARTERED ACCOUNTANTSIN PRAFCTICE

A chartered accountant in practice shall be deemed to be guilty ofprofessional misconduct, if he —

(1) allows any person to practice in his name as a charteredaccountant unless such person is also a chartered accountant in practice and is inpartnership with or employed by him;

(2) pays or allows or agrees to pay or allow, directly orindirectly, any share, commission or brokerage in the fees or profits of hisprofessional business, to any person other than a member of the Institute or apartner or a retired partner or the legal representative of a deceased partner, ora member of any other professional body or with such other persons havingsuch qualifications as may be prescribed, for the purpose of rendering suchprofessional services from time to time in or outside India.

Explanation. – In this item, “partner” includes a person residing outside Indiawith whom a chartered accountant in practice has entered into partnershipwhich is not in contravention of item (4) of this Part;

(3) accepts or agrees to accept any part of the profits of theprofessional work of a person who is not a member of the Institute:

Provided that nothing herein contained shall be construed as prohibiting amember from entering into profit sharing or other similar arrangements,including receiving any share commission or brokerage in the fees, with amember of such professional body or other person having qualifications, as isreferred to in item (2) of this Part;

(4) enters into partnership, in or outside India, with any person otherthan a chartered accountant in practice or such other person who is a member ofany other professional body having such qualifications as may be prescribed,including a resident who but for his residence abroad would be entitled to beregistered as a member under clause (v) of sub-section (1) of section 4 orwhose qualifications are recognised by the Central Government or the Councilfor the purpose of permitting such partnerships;

(5) secures, either through the services of a person who is not anemployee of such chartered accountant or who is not his partner or by meanswhich are not open to a chartered accountant, any professional business:31

Provided that nothing herein contained shall be construed asprohibiting any arrangement permitted in terms of items (2), (3) and (4) of thisPart;

(6) solicits clients or professional work either directly or indirectly bycircular, advertisement, personal communication or interview or by any othermeans:

Provided that nothing herein contained shall be construed aspreventing or prohibiting —

(i) any chartered accountant from applying or requesting for or invitingor securing professional work from another chartered accountantin practice ; or

(ii) a member from responding to tenders or enquiries issued byvarious users of professional services or organisations from time totime and securing professional work as a consequence;

(7) advertises his professional attainments or services, or uses anydesignation or expressions other than chartered accountant on professionaldocuments, visiting cards, letter heads or sign boards, unless it be a degree of aUniversity established by law in India or recognised by the Central Government ora title indicating membership of the Institute of Chartered Accountants of Indiaor of any other institution that has been recognised by the Central Governmentor may be recognised by the Council:

Provided that a member in practice may advertise through a write upsetting out the services provided by him or his firm and particulars of his firmsubject to such guidelines as may be issued by the Council;

(8) accepts a position as auditor previously held by another charteredaccountant or a certified auditor who has been issued certificate under the Restricted Certificate Rules, 1932 without first communicating with him in writing;

(9) accepts an appointment as auditor of a company without firstascertaining from it whether the requirements of section 225 of the Companies Act, 1956 9 1 of 1956] in respect of such appointment have been duly compliedwith;

(10) charges or offers to charge, accepts or offers to accept inrespect of any professionalemployment, fees which are based on a percentageof profits or which are contingent upon the findings, or results of suchemployment, except as permitted under any regulation made under this Act;

(11) engages in any business or occupation other than the professionof chartered accountant unless permitted by the Council so to engage:

Provided that nothing contained herein shall disentitle a charteredaccountant from being a director of a company (not being a managing director or32a whole time director) unless he or any of his partners is interested in suchcompany as an auditor;

(12) 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.

PART II

PROFESSIONAL MISCONDUCT IN RELATION TO MEMBERS OF THE INSTITUTE IN SERVICE

A member of the Institute (other than a member in practice) shall bedeemed to be guilty of professional misconduct, if he being an employee of anycompany, firm or person —

(1) pays or allows or agrees to pay directly or indirectly to any personany share in the emoluments of the employment undertaken by him;

(2) accepts or agrees to accept any part of fees, profits or gainsfrom a lawyer, a chartered accountant or broker engaged by such company,firm or person or agent or customer of such company, firm or person by way ofcommission or gratification.

PART III

PROFESSIONAL MISCONDUCT IN RELATION TO MEMBERS OF THEINSTITUTE GENERALLY

A member of the Institute, whether in practice or not, shall be deemed tobe guilty of professional misconduct, if he —

(1) not being a fellow of the Institute, acts as a fellow of the Institute;

(2) does not supply the information called for, or does notcomply with the requirements asked for, by the Institute, Council or any of its Committees, Director (Discipline), Board of Discipline, Disciplinary Committee,Quality Review Board or the Appellate Authority;

(3) while inviting professional work from another charteredaccountant or while responding to tenders or enquiries or while advertisingthrough a write up, or anything as provided for in items (6) and (7) of Part I of this Schedule, gives information knowing it to be false.

PART IV

OTHER MISCONDUCT IN RELATION TO MEMBERS OF THE INSTITUTE GENERALLY

A member of the Institute, whether in practice or not, shall be deemed tobe guilty of other misconduct, if he—

(1) is held guilty by any civil or criminal court for an offence which ispunishable with imprisonment for a term not exceeding six months;

(2) 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 professionalwork.]

THE SECOND SCHEDULE

[See sections 21(3), 21B(3) and 22 ]

PART I

PROFESSIONAL MISCONDUCT IN RELATION TO CHARTERED ACCOUNTANTS INPRACTICE

A chartered accountant in practice shall be deemed to be guilty of professional misconduct, if he -—

(1) discloses information acquired in the course of his professional engagement to any person other than his client so engaging him, without the consent of his client or otherwise than as required by any law for the time being in force;

(2) certifies or submits in his name, or in the name of his firm, a report of an examination of financial statements unless the examination of suchstatements and the related records has been made by him or by a partner or an employee in his firm or by another chartered accountant in practice;

(3) permits his name or the name of his firm to be used inconnection with an estimate of earnings contingent upon future transactions in amanner which may lead to the belief that he vouches for the accuracy of theforecast;

(4) expresses his opinion on financial statements of any business orenterprise in which he, his firm, or a partner in his firm has a substantial interest;

(5) fails to disclose a material fact known to him which is not disclosedin a financial statement, but disclosure of which is necessary in making suchfinancial statement where he is concerned with that financial statement in aprofessional capacity;

(6) fails to report a material misstatement known to him to appear ina financial statement with which he is concerned in a professional capacity;

(7) does not exercise due diligence, or is grossly negligent in the conduct of his professional duties;

(8) fails to obtain sufficient information which is necessary for expression of an opinion or its exceptions are sufficiently material to negate theexpression of an opinion;

(9) fails to invite attention to any material departure from thegenerally accepted procedure of audit applicable to the circumstances;

(10) fails to keep moneys of his client other than fees orremuneration or money meant to be expended in a separate banking account orto use such moneys for purposes for which they are intended within a reasonabletime.

PART II

PROFESSIONAL MISCONDUCT IN RELATION TO MEMBERS OF THEINSTITUTE GENERALLY

A member of the Institute, whether in practice or not, shall be deemed to be guilty of professional misconduct, if he—

(1) contravenes any of the provisions of this Act or the regulations made thereunder or any guidelines issued by the Council;

(2) being an employee of any company, firm or person,discloses confidential information acquired in the course of his employmentexcept as and when required by any law for the time being in force or except aspermitted by the employer;

(3) includes in any information, statement, return or form to be submitted to the Institute, Council or any of its Committees, Director (Discipline),Board of Discipline, Disciplinary Committee, Quality Review Board or the Appellate Authority any particulars knowing them to be false;

(4) defalcates or embezzles moneys received in his professional capacity.

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 foran offence which is punishable with imprisonment for a term exceeding six months.]

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