Certifying e-forms without Proper Verification: ICAI Finds CA Not Guilty of Misconduct

The Institute of Chartered Accountants of India ( ICAI ) found the Chartered Accountant ( CA ) is not guilty of certifying e-forms. The Committee noted that the matter is of 2006 and adequate time has elapsed since filing of the said form. The Committee also noted that the MCA approved e-form-32 and this issue has never been raised ever and the said Director has also never raised any concern on this aspect.

It had come to the knowledge of the Central Government that certain directors with the correspondent Companies had registered such Companies with the Registrar of Companies, West Bengal by using forged documents. M/S Pioneer Financial & Management Services Limited ( 'Company' ), being one of such companies, was found to be engaged in illegal/suspicious activities, Micro Instant Loan App Scams, tax evasion and non-compliance with various provisions of laws.

It was stated that the Professionals ( CA ) were duty bound to discharge their duties as per applicable law(s) and certify/verify documents / e-forms or give certificate/report after due diligence to ensure compliance with the provisions of law, however, they had failed to discharge their duties and alleged to have wilfully connived with Directors / Company / Shareholders / Chinese Individuals in certifying E-forms knowingly with false information/documents / false declaration / omitting material facts or information in the said Company.

The Company, not being a small company, was required to attach a cash flow statement to its financial statements but had failed to do so during FY 2019-20. The auditors and professionals who were engaged for certifying e-forms ( i.e., Respondent ) filed concerning financial statements, had certified these forms without adequate disclosures and proper verifications, thereby leading to the omission of material facts, knowing them to be material, thereby misleading the public and the regulators.

The Complainant has also alleged that the Respondent had certified e-form 32 ( for appointment of the Director and his consent to act as such ). It was observed that the consent letter of one of the directors, namely Ms. Madhu Kedia was not signed but was only marked as 'Sd/-'. Thus, it is alleged that the Respondent has certified forged documents to suppress material information from the Complainant's department.

The Committee observed that the consent letter of Ms. Madhu Kedia ( Director ) was not signed and was only marked as 'Sd' and the said e-form-32 was certified by the Respondent. The Committee noted that the matter is of 2006 and adequate time has elapsed since filing of the said form. The Committee also noted that the MCA approved e-form-32 and this issue has never been raised ever and the said Director has also never raised any concern on this aspect. Hence, the Committee held Respondent Not Guilty of Professional Misconduct falling within the meaning of Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949.

The Coram is comprised of CA. Aniket Sunil Talati, Shri Prabhash Shankar, CA and (Dr). Rajkumar Satyanarayan Adukia and CA. Gyan Chandra Misra observed the Respondent is not guilty of Professional and Other Misconduct falling within the meaning of Item (2) Part IV of the First Schedule and Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949.

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