Lapse of Mandatory Written Communication with Previous Auditor: ICAI penalizes CA with Rs. 25,000 Fine for Professional Misconduct
Finding CA (Respondent) guilty under Item (8) of Part I of the First Schedule of the Chartered Accountants Act, 1949, the Board imposed a fine and sent a strong message to the profession about the importance of procedural compliance and respect for ethical norms.
The Institute of Chartered Accountants of India (ICAI) has imposed a monetary penalty of Rs. 25,000 on a CA for professional misconduct related to the appointment as tax auditor of a client without obtaining the mandatory written communication from the previous auditor. This decision, announced after a thorough inquiry by the Board of Discipline, underscores ICAI's commitment to enforcing ethical standards in the profession.
The case originated with a complaint filed by another CA, who had been the tax auditor of M/s Arora Tyres for the financial year (FY) 2015-16. For the subsequent year 2016-17, Respondent CA was appointed as the tax auditor of the entity without obtaining a No Objection Certificate (NOC) or any written communication from complainant CA, violating Item (8) of Part I of the First Schedule under the Chartered Accountants Act, 1949.
During the hearing conducted on 29th July 2025 via video conference, CA (Respondent) admitted that he did not secure formal written communication from the predecessor auditor before accepting the appointment. He explained that the client had approached him after the previous auditor declined to continue with the assignment. He also mentioned a longstanding personal relationship with CA (Complainant) , which influenced his belief that formal communication might not be necessary.
However, the ICAI Board of Discipline emphasized that written communication with the outgoing auditor is a mandatory pre-condition under the ICAI Code of Ethics to ensure transparency, fairness, and ethical compliance when changing auditors. The absence of such communication was held to be a clear violation of professional conduct and ethical guidelines prescribed for chartered accountants.
Finding the Chartered Accountant (CA) (Respondent) guilty under Item (8) of Part I of the First Schedule of the Chartered Accountants Act, 1949, the Board imposed a fine and sent a strong message to the profession about the importance of procedural compliance and respect for ethical norms. The ruling serves as a reminder that irrespective of informal understandings or relationships, chartered accountants must uphold formal protocols to preserve the integrity of audit appointments.
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