The Institute of Chartered Accountants of India (ICAI) has reprimanded the Chartered Accountant guilty of providing certificate of expenditure without mentioning the addressee’s name.
The Board viewed that the act of the Respondent- CA of issuing a Certificate, addressed to unidentified users indicates that the same had been issued by him in collusion with the other directors of the company.
The Complainant had worked as an Additional and First Director of M/s. Robust Materials Technology Pvt. Ltd. for the period from 2010 until October 2016 during which he was handling finance, accounts, administration, business development and maintaining the day-to-day financial affairs Of the Company.
It was stated by the Complainant that he was coerced to resign from his post as a director of the Company when he allegedly highlighted various instances of mismanagement by the Company including failure to conduct AGM as required by the Companies Act. The Complainant has also informed that an unsecured loan was given by him to the Company amounting to Rs. which was only partly repaid and a balance of Rs. 52,38,123/- was yet to be paid by the Company.
The Complainant has alleged that the Respondent- CA, Lingaraj M. Pujari has issued a Certificate of expenditure at the behest and in connivance with other directors of the Company to report expenditures made during financial year 2011-12 to 2016-17 in respect of which, as per the Certificate, no supporting and approvals were found.
The Complainant has stated that in order to cover up the mismanagement unrooted by him and avoid repaying the outstanding loan amount owed to him, other directors of the Company made several attempts to oust him from the directorship of thc Company. The above said Certificate of expenditure was one of those attempts to harass him.
Further, he alleged that the Certificate of expenditure issued by the Respondent was not
addressed to the Directors but was addressed “To whom so ever it may concern” which
mean that the firm intended it to be produced before various third parties.
The Board further noted that the Respondent had been appointed by the company to issue the said Certificate. However, the Certificate issued by him was not addressed to the company but addressed to “To Whomsoever It May Concern” and the purpose for which the same had been issued was not specified therein.
The Board viewed that Guidance Note issued by the Institute (ICAi) i.e. “Guidance Note on Reports or Certificates for Special Purposes” clearly states that there is no standardized format for reporting on such engagements.
Instead, certain basic elements were identified which include to identify addressee. However, it is also mentioned that in some cases such Certificate or report could be for other intended users hence, could be issued to such other unidentifiable users.
However, since in the instant case, the Respondent had been appointed by the company and the Certificate was not addressed to the company but to unidentified users by usage of phrase “To Whomsoever It May Concern”, the Board was of the view that the very purpose for which the Certificate had been issued by the Respondent becomes questionable and misleading.
Further noted that the Certificate issued by the Respondent was dated 31st January 2017, whereas in the said Certificate he has purported to present the expenditures/payments for the whole period 2016-17 which is generally perceived to be a period of financial year from April 2016 to March 2017. Thus, it was viewed that presentation of such information in Certificate is misleading when the date of the limited period up to 31st January 2017 was not explicitly mentioned.
The Board was of the view that it was the duty of the Respondent to perform a thorough and careful examination of the fact/data and issue an unbiased certificate which in the instant case was lacking.
The said compromising conduct of the Respondent shows his malafide intention of acting in collusion with the other directors of the company which is clearly unbecoming of a Chartered Accountant and thus, has brought disrepute to the profession.
Thus, in conclusion, in the considered opinion of the Board, the Respondent is guilty of Other Misconduct falling within the meaning of Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with section 22 of the said Act.
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