Notifications issued by the Institute of Chartered Accountants of India

In exercise of the powers contained in Clause (ii) of Part II of the Second Schedule to the Chartered Accountants Act, 1949, the Council has issued Notifications from time to time. A member of the Institute shall be deemed to be guilty of professional misconduct, if he:

• is willfully and grossly negligent in the conduct of his duties as an employee (No.1-CA(7)/65).
  
  

• accepts appointment as Cost auditor of company under Section 233B of the Companies Act, 1956 or continues to function as cost auditor in spite of fact that he is the auditor, employee, partner or employee of auditor, indebted for more than rupees one thousand to the company (No 1-CA(37)/70)..
  
  

• accepts the appointment as auditor of a company under Section 224, while he is an employee of the cost auditor of the company appointed under Section 233B of the Companies Act, 1956 (No.1-CA(39)/70).
  
  

• expresses his opinion on financial statements of any business or enterprise in which one or more persons who are his relatives within the meaning of Section VI to the Companies Act, 1956 have either by themselves or in conjunction with such member a substantial interest unless he discloses the interest also in his report (No.1-CA(44)/71).
  
  

• or the firm of Chartered Accountants of which he is a partner fails to maintain and keep in respect of his/its professional practice, proper books of account (No. 1-CA (153)/86).
  
  

• accepts, in a financial year, more than the specified number of tax audit assignments under Section 44AB of the Income-tax Act, 1961 ( No.1-CA(7)/3/88).
  
  

• becomes a member of the Institute of Chartered Financial Analysts of India on or after 1st January, 1990 (No.1-CA(7)/9/89).
  
  

• on behalf of the firm of chartered accountants in which he is a partner (a) consisting of 4 or more partners but less than 8 partners with at least one partner holding a certificate of practice for five years or more; or (b) consisting of 8 or more partners with at least one partner holding a certificate of practice for five years or more; accepts or carries out any audit work involving receipt of audit fees (excluding reimbursement of expenses, if any) for such work of an amount less than what is specified hereunder (No. 1-CA (7)/75/2004):

Provided that such restriction shall not apply in respect of the following:-

1. audit of accounts of charitable institutions, clubs, provident funds, etc. where the appointment is honorary i.e. without any fees;
   
   
2. statutory audit of branches of banks including regional rural banks;
   
   
3. audit of newly formed concerns relating to two accounting years from the date of commencement of their operations; and
   
   
4. certification or audit under Income-tax Act or other attestation work carried out by the Statutory Auditor.
   
   

For the purpose of this notification, the expression statutory auditor means and includes a chartered accountant appointed as an auditor under a Central/State or Provincial Act as well as an auditor appointed under any agreement. The Council has clarified that for the above purpose the audit of Provident Fund Trust, Gratuity Fund etc. carried out by the statutory auditor are to be considered as separate and distinct audit so that the above restrictions are applicable to it.

• or his firm undertakes issuance of Y2K compliance certificate while the member or the firm undertakes, whether directly or indirectly, the designing and conversion of the computer system for Y2K compliance (No. 1-CA(7)/43/99).
  
  
• accepts the appointment, as auditor of an entity in case the undisputed audit fee of another Chartered Accountant has not been paid. Provided that in the case of sick unit, the prohibition of acceptance of appointment shall not apply (No. 1-CA(7)/46/99).
  
  
• holds at any time appointment of more than the "specified number of audit assignments" of companies under Section 224 and/or Section 228 of the Companies Act, 1956 (No. 1-CA(7)/53/2001).
  
  
• accepts the appointment as statutory auditor of Public Sector Undertaking(s)/Government Company(ies)/ Listed company(ies) and other Public Company(ies) having turnover of Rs 50 crores or more in a year and accepts any other work(s) or assignement(s) or service(s) in regard to the same Undertaking(s)/Company(ies) on a remuneration which in total exceeds the fee payable for carrying out the statutory audit of the same Undertaking/Company (No 1-CA(7)/60/2002).
  
  
• accepts appointment as auditor of a concern while he is indebted to the concern or has given any guarantee or provided any security in connection with the indebtedness of any third person to the concern, for limits fixed in the statute and in other case for amount exceeding Rs 10,000 (No.1-CA(7)/63/2002).
  
  
• does not follow the direction given, by the Council or an appropriate Committee or on behalf of any of them, to the incoming auditors not to accept the appointment as auditors, in the case of unjustified removal of the earlier auditors (No. 1-CA(7)/67/2002).
  
  
• is grossly negligent in the conduct of his duties (No. 1-CA(15)/60).

• Branch Audits-The branch audits of a company should not be conducted by its statutory auditors consisting of ten or more members, but should be conducted by the local firms of auditors consisting of less than ten members.
  
• Joint Audit-In the case of large companies, the practice of associating a practising firm with less than five members as joint auditors should be encouraged.
  
• Ratio Between Qualified and Unqualified Staff-Chartered Accountants engaged in audit work should have at least one member for every five non-qualified members of the staff, excluding articled and audit clerks, typists, peons and other persons not engaged directly in such professional work.
  
• Disclosure of Interest by Auditors in other Firms-Auditors should make a disclosure of the payments received by them for other services through the medium of a different firm or firms in which the said auditor may be either a partner or proprietor.
  
• Ceiling on the Fees- A member should, as far as possible, take care to see that the professional fees for audit and other services received by the firm in which he is a partner, by him and his partners individually and by firm or firms in which he or his partner are partners from one or more clients or companies under the same management does not exceed 40% of the gross annual fees of the firm, firms and partners referred to above.
  
• Programmes under continuing Professional Education - The Council has advised the members in practice to attend, as a self-regulatory measure pending amendments in the Chartered Accountants Act programmes under Continuing Professional Education.
  
  In its task of reviewing how far the self-regulatory measures have been effective and how they can be made more effective, the Council welcomes suggestions from members.
  
• Recommended scale of fees chargeable for the work done by the members of the Institute - The Council of the Institute of Chartered Accountants of India recommends from time to time scale of fees chargeable for the work done by the members of the Institute. Such scale of fees were last revised effective from April 1, 1995. Keeping in view the overall increase in the cost of living since then, the Council at its meeting held in December 1999 has upwardly revised the existing recommended scale of fees. The revised recommended scale of fees effective from 1st April, 2000, are as under:
  

Revised

Between

And

Rs.

Rs.

1.

For giving expert evidence in

5,000

10,000

courts of law in the Union

[For each day or part

of India according to the

thereof, spent in

professional standing of

attendance and/or

the witness

travelling]

2.

Other Work:

(a) Statutory Audit, Tax Audit

Internal Audit, Accountancy

and Secretarial Work:

Principal

600

1,200

Qualified Assistants

300

600

Semi-Qualified/other Assistants

100

200

[Per Hour]

(b) Taxation Work:

Principal

1,000

2,000

Qualified Assistants

500

1,000

Semi-Qualified/other Assistants

200

400

[Per Hour]

(c) Investigation,

Management Services or

Special assignments:

Principal

1,500

3,000

Qualified Assistants

750

1,500

Semi-Qualified/other Assistants

250

500

[Per Hour]

Notes:

1. Office time spent in travelling would be chargeable. In case of outstation work, travelling and out-of-pocket expenses would also be chargeable.
   
2. The Council issues for general information the above revised recommended scale of fees which it considers reasonable under present conditions. It will be appreciated that the actual fees charged in individual cases will be a matter of agreement between the member and the client.