Expression of Opinion in Audit Report Without Sufficient Information is Professional Misconduct: ICAI Reprimands CA along with Fine of Rs 50,000 [Read Order]

The Institute of Chartered Accountants of India (ICAI) reprimanded a Chartered Accountant (CA), imposed a fine of Rupees 50,000 and observed that expression of opinion in audit report without sufficient information is professional misconduct.

In the investigation report, it was held that the Respondent who was the statutory auditor of Vamshi Chemicals Ltd. for the FY 2008-09 did not take the necessary steps and follow the required instructions and failed to point out possible irregularities in his audit report. It is also reported that the Respondent appeared.

The respondent solely relied on the banking transactions and did not obtain other appropriate evidence to examine whether all the transactions were routed through the banking channel or otherwise were appropriately recorded. In view of the significant value of transactions involved, the Committee viewed that, being a prudent professional, the Respondent should have sought direct confirmation from the parties.

The Committee further observed that, as per Para 3 of AAS 5 (Audit Evidence), the auditor should evaluate whether he has obtained sufficient, appropriate audit evidence before drawing his conclusions therefrom. The audit evidence should, in total, enable the auditor to form an opinion on the financial information.

In forming such an opinion, the auditor may obtain audit evidence on a selective basis by way of judgmental or statistical sampling procedures. The Committee noted that no such procedure had been followed by the Respondent rather he merely relied on the statements provided by the client.

The Board of CA Dr Debashis Mitra, Presiding Officer, Rani Nair, I.R.S. (Retd.), Government Nominee, Arun Kumar, I.A.S. (Retd.), Government Nominee and CA. Cotha S Srinivas, Member observed that “The Respondent did not obtain sufficient information to express his opinion in the audit report, and the opinion expressed also indicates that the Respondent failed to act diligently in the absence of such information.”

“Therefore, keeping in view the facts and circumstances of the case, material on record, and submissions of the Respondent before it, the Committee ordered that the Respondent, CA. Shekhar Bhargava, be reprimanded along with a fine of Rs. 50,000/- (Rupees Fifty Thousand Only)” the Board noted.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates