The Institute of Chartered Accountants (ICAI) Disciplinary Committee found that the Chartered Accountant (CA) V. Kandasamy was guilty of professional misconduct during the bank audit. The CA failed to report the irregularities in the bank while sanctioning loans and other issues too. Thus, the ICAI reprimanded the CA.
The CA being a concurrent auditor of the UCO bank – Chennai Branch has failed to report serious irregularities committed in advance portfolio of Chennai Main Branch of UCO Bank during the period October 2014 to January 2015. The complaint was filed by the bank.
The allegations against the respondent-CA involved serious irregularities:
The Chartered Accountant – respondent argued that filing fake ITR/ financials/ income related documents with a Bank was a criminal act and as concurrent auditor he could not be expected to detect the same in the normal course of his duties.
As per the Chartered Accountant (CA), it was the responsibility of the bank or branch officials to evaluate the borrower’s ability and willingness to repay, as well as assess the value of the offered securities. If there were any errors or fraudulent practices in assessing the borrower’s ability or willingness, the concurrent auditor was not expected to take on the role of the recommending or sanctioning authority and verify the availability of necessary documents.
Regarding the reported cases of discrepancies, observations included loans sanctioned on the basis of fake ITR/partnership deeds/ sale deeds, the Committee noted that verifying the genuineness of ITR returns/partnership deeds/ sale deeds being produced with loan documents could not be expected to be identified by a concurrent Concurrent auditor. However, a concurrent auditor is expected to be vigilant while conducting an audit.
The committee also noted that the CA failed to report the gross irregularities committed by the branch officials by not creating EMTD/ MOTO, CERSAI/ PDIR etc. Alos, while sanctioning various loan proposals particularly Home Loans & Car Loans and also failed in verifying the CIBIL reports with respect to home loan as well as car loan or availability of PDCs (Post Dated Cheques).
Accordingly, it was noted that the allegations made against the Respondent primarily involve two kinds of reporting failures — reporting of loans sanctioned based on fake documents as well as those wherein the gross irregularities were committed by the branch officials by not creating EMTD MOTD, CERSAI PDIR etc. while sanctioning various loan proposals particularly Home Loans & Car Loans.
Thus, keeping in view, overall facts and circumstances of the case, the committee took a lenient view on the matter.
The Disciplinary Committee viewed that the misconduct on the part of the Respondent has been held and established within the meaning of Item (7) of Part-I of the Second Schedule as well as Item (2) of Part IV of First Schedule to the Chartered Accountants Act, 1949 and keeping in view the facts and circumstances of the case as aforesaid, ordered that the Respondent CA. V Kandaswamy (M. No. 207573) be reprimanded.
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