AA confirms Punishment to Chartered Accountant for preparing fake Financial Statements [Read Order]

Refund scam - Chartered Accountant

The appellate authority under the Chartered Accountants Act,1949 has recently found a Chartered Accountant guilty for preparing false audit statements for his clients to obtain credit facilities from the Financial institutions.

In the instant case, CBI initiated proceedings against the appellant-CA for two different matters where the appellant allegedly prepared fake Audit Statements to secure financial facilities from the Banks/NBFCs. On the basis of the letters issued by the CBI, the ICAI has initiated disciplinary proceedings against the appellant.

After enquiry, the disciplinary committee of the ICAI found him guilty for professional misconduct and suggested to remove his name from the rolls for two years and imposed a fine of Rs. 75,000/-.

The appellate authority perused the working papers relating to the audits conducted by the Appellant which were filed before the Disciplinary Committee. The AA observed that “the working papers are very general and sketchy and do not contain the required information as mandated by the Auditing Standards i.e., AAS–3. In many cases even the year for which audit is done, name of person in-charge who carried out the examination and the details of his observations are not mentioned. Further, how the observations were satisfied is also not mentioned. When we asked about the Audit programme, even no proper audit programme was found in the working papers.”

“Additionally, we drew the attention of the Appellant towards the complaint that the financial statements certified by him were found to be fraudulent later on and huge losses were suffered by financial institutions/NBFC, therefore, there is more need on his part to establish that he carried out his duties diligently as per the Auditing Standards in vogue at that time. However, no convincing reply was given by the Appellant thereto,” the bench said.

Subscribe Taxscan Premium to view the Judgment

taxscan-loader