ICAI Suspends CA for Simultaneously Holding Full-Time Job and Running Own Firm, Slaps ₹50k Fine [Read Order]

The Institute of Chartered Accountants of India (ICAI) recently suspended a CharteredAccountant (CA) from the Register of Members for six months after the Disciplinary Committee of the Institute found him guilty of professional and other misconduct for holding full-time employment while running his own firm, among other charges.

The action was taken by the institute following the registration of a complaint filed by the CEO of a private company that engaged the professional as General Manager-Accounts & Finance in June 2021.

As per the complainant, the CA had concealed material facts relating to his practice, misrepresented his employment history, and continued to conduct audits and certification work during the period of full-time employment. The complaint also included documentary evidence such as Form 16, email correspondence from the CA seeking unpaid salary and copies of the Employment Data Form furnished at the time of appointment.

Before the disciplinary board, the arraigned CA filed a Written Statement, multiple written submissions and verbal representations during proceedings. In his defence, he claimed he had disclosed his practice status in the Employment Application Form, argued that he signed the form with the intent of continuing only if he found it suitable after a few months, and submitted that his employment was taken only during the COVID-19 period due to financial distress.

He further alleged unethical practices within the employer-company, including misappropriation of cash sales and receipt of unauthorized commissions from buyers.

After reviewing all the material on record, the disciplinary Committee comprising Presiding Officer CA Charanjot Singh Nanda, Government Nominees CMA Chandra Wadhwa and CA Mahesh Shah, Members CA Pramod Jain and CA Ravi Kumar Patwa framed two primary charges.

The first charge pertained to providing incorrect information in the Employment Data Form and violating Term No. 9 of the Appointment Letter, which expressly prohibited engagement in any trade, business, or employment - be it full-time or part-time during service.

The Committee noted that ICAI Member records showed the professional had been in full-time practice since 17 April 2012, contrary to his declaration of being in self-practice only since May 2019. The Unique Document Identification Number (UDIN) Directorate confirmed that he generated 10 UDINs for statutory audits, concurrent audits and certificates during the employment period, affirming that he was continuing practice despite being in full-time service.

The second charge concerned failure to inform the ICAI of his full-time employment while holding a Certificate of Practice.

The Committee found that the professional not only omitted disclosure but also failed to report his salary of ₹6,16,022 in his Income Tax Return for AY 2022-23, despite the employer having deducted tax at source (TDS). He also did not obtain prior permission from the Council for undertaking full-time employment, in violation of Regulation 190A of the Chartered Accountants Regulations, 1988.

Accordingly, the committee concluded the CA’s acts to be professional misconduct under Item (1) of Part II of the Second Schedule and other misconduct under Item (2) of Part IV of the First Schedule of the Chartered Accountants Act, 1949.

Noting that the conduct of the arraigned CA undermined the integrity of the profession and constituted clear breaches of ethical and statutory obligations, the Committee ordered removal of the Chartered Accountant’s name from the Register of Members for six months and imposed a fine of ₹50,000, made payable within 60 days.

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