Book is made as per FAST EXCLUSIVE PATH BREAKING SUCCESS STRATEGY CODE OF ETHICS COMPANY AUDIT Lala NALS CUSTOM oe Drone Chartsa Cove Or Eruics Index PART A os PART B a THE CHARTERED ACCOUNTANT ACT & REGULATIONS a Deeming Services 06 CAP — Notified Services 06 CAiP-Prohibited Services o7 CAiP ~ Other Points 09 Designation " Branch office 14 Penalty for Mis-representation is Miscellaneous Provisions 16 a is-42 SCHEDULES TO CA ACT 1949 a Schedule - 1 Part | 19 Part I 349 Part Ill 34 Part IV 40 Schedule - 11 Part! 40 Part I! 4? Part Ill 42 c 49 COUNCIL GENERAL GUIDELINES 2008 a sO RECENT DECISIONS OF ETHICAL STANDARDS BOARD a CA FINAL AUDIT FASTER BY CA SARTHAK JAIN piINDEX - THE SCHEMA work of others CA FINAL AUDIT FASTER BY CA SARTHAK JAINa Part B — Professional Accountant in Public Practice A,___ Threats a financial interest with a client. jew discovert signifi wri Advocacy : E.g. Promoting shares in a listed entity when that entity is a financial statement audit client assurance client >___Intimidation : Eg, Being threatened with litigation 2 Safeguards created by profession, legislation or regulations; and safeguards in the work environment. Part € - Professional Accountant in Business / Service This is part of the code illustrates the application of fr rh ined in PART-, ional Accounts in Business, UNIT B ICAL PART A - Applicability of Various pronouncement in relation to Auditor Statements Guidance Note ___| __» Accounting Standards Quality control and Engagement Standard — Conflicts Between statement and standard Conflicts between old and a new standard. Part B - The Chartered Accountant Act, 1949and CA Regulations 198 and council General Guidelines 2008 _______| _>__The Chartered Accountants Act,1949 Other Important provision of the Act CA Regulation: CA FINAL AUDIT FASTER BY CA SARTHAK JAIN Eytatements are Mandatory Bue Oa A list of statements issued mm , departures there from. (a)_In the event of any deviation duty to| itatement on CPE. _______| Guidance Notes __ 7 it i —______| GUIDANCE NOTES anna 2\__Member should consider whether a They are recommendatory Member should ordinarily follots recommendations except where he is | atisfied that in the circumstan disclosure in his report is necessary as mandatory it may not be necessary to do so. _ | Guidance notes given on accounting | matters also | > Guidance note on treatment of | Provision for depreciation in re- recommendations in a guidance note | have been followed or not f iple shift CA FINAL AUDIT FASTER BY CA SARTHAK JAIN | Following guidance note is considered| |____interest.on deferred payments. | ____ | allowanceoa, Standards > Have to be complied with to ensure > Authority - Ist Standard that financial statements are 2nd Statement: |} AAP rd Guidance Notes and auditors carry out their > LATER THE BETTER audits in accordance the GAAP, > A new standard shall prevail OVER > They are mandatory, OLDER in case of conflict {Part B - The Chartered Accounts Act & Regulations tion 2 (i) Cb) = Definition of Chartered Accountant ion 20 _ ;, ‘ Section = Member of ICAI i.e. Register of Members Section S = Fallow and Associates Members of ICAI ion 6 _ ificate of Practi Section 7 - Members to be known as Chartered Accountants Section 3 - Hows to become @ member, removal, suspension and restoration of membership Section 2 (2): Member Demand to be in Practice (CAiP) A f the insti i individually or; > in partnership with CAiP or members of recognized profession in consideration of remuneration received or to be received > Performs specified services (See deeming services) HELICOPTER VIEW: ion 202); , in practice (CAiP) ‘A___- Member As a_- Individually or in partnership with CAiP or specified professionals For __- For a consideration received or to be received ee , CA FINAL AUDIT FASTER BY CA SARTHAK JAIN hlFAST, a deemed to be in practice? deemed to be in practice? 4._What are the various modes of practice for CA? ii. offers to perform or performs services involving — its ification of fnanci i records ion, verificati ification of fnanciz , . ‘ ‘ £ pri il relati , , i if cation or final fact / data, rendered by a CAiP, (Notified Services) > Financial management related > Cost management related » ystem Management Pe 10 MA, nm CA FINAL AUDIT FASTER BY CA SARTHAK JAINa » » » » Inventory management related HR management consult ant to an issue, resistor to issue but not MERCHANT BANKING Quality Audit , Energy Audit Acting as Recovery Consultant in the Banking Sector » » B, Representation and other notified service in practice if he : In professional capacity and neither in his personal capacity nor as an employee; Acts as a liquidator, trustee, executor, administrator, arbitrator, receiver, advisor or representative for casting / financial taxation matters; or Takes appointment of Ci SG or a court of law or any other legal authorit or acts as a secretary unless his employment is on a salary cum - full time basis i ‘ ; r to be in practice under CA Act. » » CAiP - PROHIBITED SERVICES Portfolio Management Services Merchant Banking Involving Broking or under writing servic HELICOPTER VIEW : ction 2(2): Specified services — Regulation 191 Capacity: In professional capacity (not on salary cum FT basis) Not in personal capacity or as on employee lidator, arbitre Takes Appointment: CG / SG / Court / legal authors appointment Acts as a: Acting os a secretary CA FINAL AUDIT FASTER BY CA SARTHAK JAIN EnPass Final Complete GMCS course or -xamination of the C ‘any other course as course, specified by the council lication hi il “sh evi ‘aibili n CA FINAL AUDIT FASTER BY CA SARTHAK JAINAST, oa, CAP — OTHER POINTS Section 4 - Person Entitled to Enter his name as member (Cleared CA Exams + Completed Practical Training & GCMS course) Section 20 - Removal of Name from the Register > __0n death > __On Request > __Non-payment of Fees (Regulation 19 - Can be restored on application and payment of arrears) 5 isabilith ‘ R ion 1R , Removal of Name from Register - Section 20 2d Who is dead; or ji)___Suo = moto by member; or iti i i will be re arrears and making an application; or iv) Disabilities mentioned in section 8, or who for any other reason has ceased to be entitled to have his name bore on the register, Cancellation and Restoration of Certificate of Practice Re ion 10 - h il licatic -} if _ ion of membershit £ prescribed fees wit application in prescribed form HELICOPTER VIEW: Section 2(2): Member deemed to be in practice Deemed CAiP — When? Member > Individual Remuneration > Partner of CAiP CA FINAL AUDIT FASTER BY CA SARTHAK JAINnancial facts) (e)__Council Specified Servic “offer 1 ___| council specified Service | __ Mgt, Consultancy service (MGT) _______|2.__ Specified service Cother than MGT) = Prohibited Management consultancy service > Financial Management v1. > Management Accounting > Advisory Consultant > HR management > Investment Counselling > M&0A > Issue Management > VAT > other > Policy Making > Recovery > Trainings > IRDA 10 | CA FINAL AUDIT FASTER BY CA SARTHAK JAINoa, What a CAiP can do and what not > Insurance financial advisory services > Insurance Agent including insurance Brokerage) > Recovery Agent | > other Categories == =} > Category IV - Merchant Banker > Underwriting or broker to issue > Advisory / Consultant to issue DESIGNATION Cu | a Meee tone designation Cbut not both) aber ONLY CA |_| ie a oe hr Ley eR Ae > Special Provision for office Breavers of ICAI > Provision for using description / letters to indicate membership of other ‘tite — i > __Use of CA Prefix - No Restrictions > Use of Merchant Banker/ Advisor to an issue, Tax consultants, etc, Not permitted > DISA - ISA (ICAL) Designation Csample): PREFIX = CA. CS. Anushka Kohli Padmashree<— SUFFIX Deisgnation - Chartered Accountant Description = Director - Kingfisher Airlines Ltd. ___| Letter word to denote DEGREES - (B.Com., A.C.A., ACS. Mom, LLB) CA FINAL AUDIT FASTER BY CA SARTHAK JAINb) chartered Accountant PREFL )___ office Bearer Designation )__Firm Name = Prohibited | 3, better Heads a President and Vice-President of ICAL + + Presi ice - b, Chairman — Designation (no name) Others — ICAI general Letter head: accountancy, ete. as - i i ion 26 - td . Miscellaneous Provision KYC NORM: SECTION 8: DISABILITIES FOR MEMBERSHIP >_< at years ______| > _bnsound mind and adjudged so by a competent.court > __Un-discharged insolvent CA FINAL AUDIT FASTER BY CA SARTHAK JAINAST, a, transportation (Kaala Poni) or imprisonment or of an offence, not of technical nature it im _in his professit ‘ity unl it > Guilty by an Institute on inguiry of professional / other misconduct > Where CA in practice or a firm of such chartered accountants has more that one office in India, ___|> _Each one of such offices shall be in the separate charge of 2 member of the institute: > PROVIDED that the council nay exempt any CAiP or from CA to send the list of offices to including persons in charge > Definition of BRANCH OFFICE: Office where name boared affixed or advertised, designated as branch in professional stationary ete. _______|> Provision of Member in Charge > Eligibility Criteria: CA+ Partner/ Full Time Employee ‘ 182 days Test: Resides in city of branch/ visits the branch EXEMPTIONS: > __Second Office in same Premises / City / 50 km radius of cit > Temporary office in case of Hilly Areas MEMBER INCHARGE ligible = + je iner Incharge _- Visits or Resides = in the city of Branch for atleast 182 days in a year specifi = One Member — One Brach = __One Year = One Member only except causalities CA FINAL AUDIT FASTER BY CA SARTHAK JAINFAST, a |SECTION 27 : BRANCH OFFICE x (1) Name board fixed office —> Place wher: or — busin ‘ ati , ithin 30 > - ___| Branch office Exemption Hilly Area > other office — in plains for 3m in winter: > __No mention as POB |» Regular office needn’t be closed, but no business _______|» _Inform ICAI before commencement of winter and close of temporary office Other Exemption tuated in — » same premises > same city CA FINAL AUDIT FASTER BY CA SARTHAK JAINCity x City ¥ and office ranch office) ) +35 x 15 ken 10 km | Section 24 : Falsely Claiming to be CA / CAIP > Not being a member designates / represents as CA > Not being in Practice exhibits to be in Practice » Penalty — = First Conviction - Upto 1000 ~ Subsequent - Upto $000 & / or imprisonment < = 6 month Section 24 A : Uses Council Name / CA Degree » Uses name / common seal or awards degree as of ICAI » ks to regulate CA profession » Penalty Fist Conviction - Upto 1000 + - s000/— impris 6 Section 26: Refer Clause 11 of Part | of Schedule | » Pe for allowir ified Me sign i = First Conviction - S000/- to | lac ‘Subsequent - 10000/- to 2 lacs and / or imprisonment upto one year | OTHER MISCONDUCT - Illustrative example i) Where a chartered accountant retains the books of account any documents of ie il the the clit i re cause,its members) ic 0 B (cA CAmendment) Act - For 30 days, then deemed) CA FINAL AUDIT FASTER BY CA SARTHAK JAINALA. (Associate CA) Continuous 5 To apply to FCA ‘will’ be 7 ears of Practic. Ical awarded lon becoming CA| whether in practice or not. Experience equivalent to To apply to FCA ‘may’ be that of CAiP of | “eel awarded continuous 5 years KYC Norms for CA in Practice (New, Name of the Entit > Name of ultimate parent compan Type of Entit > Name of parent compan z iptic » i Company PAN No. > Type of Engagement I ificati Director's Name & Addresses ames an of co which above person in director :Pr r Mis Shall be deemed to include any act or omission provided in any of the schedules refe ip de of a CA FINAL AUDIT FASTER BY CA SARTHAK JAINsecond schedule Mukherjee Vs ICAl - SC SCHEDULES TO CA ACT, 1949 } ro Part ee Cra hedule | Part | Ain Practice 2. (Mid Misconduct) Part I CA in Servic (re = 1,00,000 x. Part Ul All Members. 3 3m_suspension) Part 1V CoM") _| all Member: hedule IL Part | ‘Ain Practic 10 (Serious Misconduct) Part I All Members 4 Cenalty - 3,00,000) Part ii CoM") _| All Member: L 7 ' z fessi , Princi , > Reference - Clouse ‘n’ of Part ‘x’ of Schedule ‘y’ to CA Act, 1949 CA FINAL AUDIT FASTER BY CA SARTHAK JAINSCHEDULE | - PART -1 > CAP. > Professional Misconduct CLAUSE |; ALLOWS TO PRACTICE IN OWN NAME Al rractice in hii Cr > __Is in partnership with or > Employed by him CLAUSE 2 : SHARING OF FEES > Pays or allows or agrees to pay or allow, > __ Directly or indirectly, > Any share, commission or brokerage in the fees or profits > Of his professional busines: >To any person other than: Allowing @ partner/employee to share fees shall make all other payments wuilty too Ld re » Only sharing under professional conduct covered, Sharing of fees personally unrelated to profession not covered ing prohibited from professional fees/profi £ personal i CA FINAL AUDIT FASTER BY CA SARTHAK JAIN hiFAST, a like rent, interest, et | SALE OF GOODWILL: ihen permitted _- Death of Proprietor = Death of all partner Condition: - ale to CAIP. . fe toratic = No sharing of fees Timeli - re r isic r i | ___ = After | year name released to new member on first come basis FESSI t lation 53 Es f Regulations, 1982 i)___Company Secretary ji)___Cost Accountant iii)__Actuary _________|iv) Bachelor in Engineering Bachelor in Technology Bachelor in Architectur Master in Business Administration from Universities or AILTE approved Institutions CA FINAL AUDIT FASTER BY CA SARTHAK JAIN( TEASER | centage of profits to be paid whether permitted? entitled to receive a percentage share in profits comment. ta consideration of a fixed amount whether he will be guilty of sharing of fees? whether he will be guilty of misconduct? Would answer differ if sharing was _________| 4 Ifa CA takes an assignment and shares fees with an Engineer anda Lawyer made with a doctor? S._CAip bribes a CAis to secure assignment from the company where Cais is under employment by sharing a part of fees, Whether misconduct under clause 21? 6._If.a CA enters into a referral arrangement with a Tax Consultant where there is an agreement to refer clients to each other without sharing fees, whether he will guilty of misconduct under Clause 2? 2._If.a CA allows sharing of his share of profits with another person to secure work will it hold partners guilty as well? 8._CA has entered into an agreement to share his share of profits with his wife and an NGO, Will this be treated as a professional misconduct? 4._CA has entered into an agreement to share profits of his professional business ver 1) sharing of fe 2 10,_CA has entered into an agreement to share his rental income with an agent, Will he be held guilty or misconduct for sharing his fees? CA FINAL AUDIT FASTER BY CA SARTHAK JAIN| CLAUSE 4 : PARTNERSHIP > Enters into partnership, > In or outside India > With any person other than: i i, , . + of fessi . ifcati | : f 5 ; as a member under Section 4 Ci) (v) or England ond Wal Vietnam ‘> Canada Cexpired) + Saudi Organisation ~ Australia (CPA & ICAA)for CPA (till 2017) reland New Zealand (N2IRA) f ‘ ition Aor ft - ; follow ‘ £ ‘ can enter into partnership with CA in India and vice-versa, CA FINAL AUDIT FASTER BY CA SARTHAK JAINa > Not necessary to enter into partnership in business in India and outside India mandatory. 1,_If a CA shares fees with a CA of England and Wales whether he be guilty of. misconduct? CLAUSE S : PROHIBITION IN SECURING WORK > Secures either through; > Who is not his partners; or > By means which are not open to a chartered accountant, fessi j > Provided that nothing herein contained shall be construed as prohibiting any arrangement permitted in terms of items (2), (3) and (4) of this part Diagnosis: > Secures either through; > The seices of a person who, >_Is not an employee of CA; > Who is not his partner; _____| > By means which are not open to a chartered accountant. >_Any professional busine: > Provided that nothing herein contained shall be construed as prohibiting any arrangement permitted in terms of items (2), (3) and (4) of this part. CLAUSE 6 : SOLICITS CLIENT OR WORK > Solicits client or professional work either view or by any other means > Provi thin i i I! be constr venting or - hibiting - CA FINAL AUDIT FASTER BY CA SARTHAK JAINonsequen. any sewice like recruitment services, as a liquidator, et ___| > Staff Recruitment (Clause 2) 5 . fs iting office staff > Advertisement under P.O, Box Number Prohibited. li - j ‘ ‘ ils of ‘ in Clause 7 of this part] | 1h_£mpanelment. for allatment.of audit. professional woth Permitted features: », ie “tai ations (Like Erne > Provided he is aware about empanelment under proce: SE CA FINAL AUDIT FASTER BY CA SARTHAK JAINAST, oa, > Raving enquiries cannot be made > Cannot demand work once empanelled Permitted features: They can have their name included in telephone/trade directories if following are satisfied: b,_Entry in normal types of letters (Not Bold) ¢,_It should appear in the local directory of the city in which concerned CA/firm, branch is situated d. Entries should be in logical alphabetical) order 2, Payment for entries should be for basic listing (Cheap paid listing) _______| f_ Entries should be open to all CA’s, Prohibited Items: a,_No impression of publicity or advertisement re i | IV, Tenders or Inquiries and others eee eee ea eed Minimum Fees Prescribed | Not Prescribed | Non-CAs too Can Apply Cannot Apply Can Apply V__Publication of books or articles Permitted ‘ ; ‘ ms > No firm name and no solicitation of work Vi_Greeting Cards or Invitations > CA can indicate name of firm and address on greeting cards or Invitation meant for a. Marriagé b, Religious ceremonies c, Inauguration of of fi ition : Provided it i ‘ ‘ friends (not def CA FINAL AUDIT FASTER BY CA SARTHAK JAIN EyFAST, a Prohibited > Professional Designation: > Qualification: Vil A, Issuing handbill: permitted: _ - ( Budget highlights) Prohibi r i of any claus ili i itor i i Prohibition licit . ra CA FINAL AUDIT FASTER BY CA SARTHAK JAINAST, a b,_No derogatory, unsubstantial remarks against the management of Co. ie righlic ibutic A XI, Public interview snsure intervi i embers or their firm: > _Not given in a manner highlighting their professional attainments > Advised to abstain from advertising their association with coaching / teachin activities through hoardings, posters, banners, etc, Xill__Website Guidelines for permitting to post their particulars Permitted features: > Free to create website website > Any format / color ____| > Can mention website address on professional stationery = > Pull mode not in push mode prohibited information: C1 1» provh ite) > Name of clients and fee charged > Logo Cother than that prescribed by ICA1) ___| > Ne photograph Cother than passport size photo of member) > No advertisement Permitted information within CA’s Websit > _Name of member / firm > Member's / firms address / telephone no. / fax / e-mail id > Partner's name and their qualifications, year of qualification, home address, — iL id. Cie. Bio- ft , > Employee’s names and their qualifications de ies including article shi _____| > Passport - size - photograph of members CA FINAL AUDIT FASTER BY CA SARTHAK JAIN Ea> Bulletin Board maintained. becoming a CA >_ Year of Establishment. __| Within website specific pull request for | > Nature of service rendered > Nature of assignment handled _______| > Area of experience and qualifications of partners _______| > Area of experience and qualifications of employees f articled tra Address of website > Website address should be in the name of CA/CA firm ___| > It may be different from firm | CA name but should be as near as possible to their __ navn > Address should not be such as results in soli the client website Search Engine it should be on criteria su ‘A, Indian CPA or any rel fiel Hyper Links >In CA's website, link/reference of only ICAI related or govt, related website is allowed, _________| _No other link is permitted. = Ea CA FINAL AUDIT FASTER BY CA SARTHAK JAINAST, a, > _No advertisements are permitted in CA’s / Firm’s website |_Intimation - ICAL While submitting annual membership from website address is to be provided > Provided contact address, firm name with suffix chartered accountant & profes- ‘ional achievement of CA is not given > Uses any designation, or > Expressions other than chartered accountant on professional document: - , , > Unless it be a degree or a University established by law in India or recognised by the Central Government or a title indicating membership of the ICAL or if an instituti be recognised by the council. > Provided that the member in practice may advertise through a write-up, setting si ie ip nis fir Ne f hi to such guidelines as may be issued by the council. Designation , i oo of a Chartered Accountant (Also discussed in S.2) IMPROPER to state on his profes- > Income - tax consultant or a cost consultant or a management consultant > Member of Parliament, Municipal Councilor any other functionary in addition to that of Chartered Accountant f setti 5 ; f the fi > Members otherwise eligible to practice as advocates (subject to the permission cil) shoul ‘ignation “Chartered accountant” and “advo- » CA FINAL AUDIT FASTER BY CA SARTHAK JAIN bsAccepted- aE CA FINAL AUDIT FASTER BY CA SARTHAK JAINa, > Voilate the provision of the ‘Act’ rules made there under and ‘The CAs regulations, 1988 > Be of front size exceeding 14, > contaii informatie i in Pave in above Important Points: refer guidelines for advertisement for members in practice. a. They may appear b, May describe themselves as CA ¢._But no reference as to name | address services of firm d._ Should not say anything to promote him / his firms, Whatever he says, must be professional and objectivi Iti Te refe thing (proactive compliance) iii, Photograph & brief particulars of CA in magazin: a. no payments is made for such publication and b_ no mention of professional attainments. A CA holding training courses, seminars etc, for his staff may also invite the ff sional lie v._Publicity for appointment of position of local / national importance permitted: r ; ip of ICAL b, But no mentions as to firm namec, Eg. MP, MLA, Clearing an exams, etc. CA FINAL AUDIT FASTER BY CA SARTHAK JAINb, But no firm nam: ix Date of establishment of firm — Can’t provide on letter head, visiting cards, etc, Lebel i x,_Photograph: sip oblection to a ion of icf particulars of members ii tisement of professional attainment: CA FINAL AUDIT FASTER BY CA SARTHAK JAINoa, members of Income Tax Appellate Tribunal, When CA concerned is a member of ITAT. xii, Logo A logo is prescribed by ICAL, CA conno logo xiii, Audit reports and certificates issued by CA icity an mn ticulars usually in audit reports/certificates xiv. Sponsorship culars 2, Whether a CA is prohibited from seeking work from professional colleagues? ‘A is prohibited fr ‘intip r Visitin cards? | CLAUSE 8: COMMUNICATION WITH PREVIOUS AUDITORS > Accepts a position as auditor > Previously held by another chartered accountant ithout fi cating swith him in writh NOC Diagnosis: > Apply to all types of audit > Communication mandatorily where previous auditor is a Chartered Accountant > Assignments done by other professionals also be a healthy practice to commu- nicate f audit of 5 A ‘nati be complied with before accepting the audit ver, ti is is no tiv it fe reply ip - CA FINAL AUDIT FASTER BY CA SARTHAK JAINMode of Communication: >In writing r the requirements of section 140 of the componies Act, 2013 in respect of such appoint- Diagnosis: ___| Auditor to proactively check whether CA FINAL AUDIT FASTER BY CA SARTHAK JAINAST, oa, > Removal of previous auditor proper > His appointment as per provisions of law Clause relevant in case of > First Auditor Appointment > Removal of existing auditor > Joint Auditor Appointment CLAUSE 10 ; CONTINGENT FEES > Charges or offers to charges, accepts or offers to accept _______| > In vespect of any professional employment > Fees which are based on a percentage of profits > Or which are contingent upon the findings, or results of such employment, 6 ; lati . Diagnosis : Exceptions - sidator li assets > Auditor of co-operative society, percentage of the paid up share capital or working capital or gross or net income or profits ___| > A valuer for any purpose of direct taxes and duties as percentage of value of property valued, ‘ ; a > Debt recovery consultation services > Cost optimization services >Other Services Prescribed by Council Other Exceptions If contin fees is so fixed or public thority fe ran re CA FINAL AUDIT FASTER BY CA SARTHAK JAINtime director) (birecrorsue | General permission to be a director provided: = i itor ( ) is (speci vec ired) OY (non: ive) ‘ > Employee under Chip | > Part time tutorship of the institute > Private Tution 7 a * | > Life insurance Agency > Attending classes appearing for Examination ___| > editorship of professional journals = > Surveyor Loss Assessor di ic elective MLA CA FINAL AUDIT FASTER BY CA SARTHAK JAINAST, a, Permission Granted Specifically ft ini i ie ile relative not held substantial interest in concerns >In non-business concer: tial interest > Interest in family business acquired as a result of relationship and in the man- f vohic iy > Interest in an educational institution > Part - time full time lectureship for courses other than those relating to the itute’s examinati ices of the Insti > Part - time of Full time tutorship under educational institution other than coach- ing organization of the Institute, af or it > Any other business or occupation for which the executive committee considers that permission may be granted. Special Permission Note > “Relative”, means husband, wife, brother or sister or lineal ascendant or de- endant > “substantial interest” means holding 20% of voting power / 20% share of prof- its beneficially > Holdings to be at any time, during the relevant year: Permission Granted Generally it rf functi trai ticles) if permit engage in any activity UNDERLINED Before Permitted to engage in attestation if engaged as lecturer in University, affiliated, education institution, coaching organi ‘ion, private tutorship provided direct teaching hours taken together do not exceec S hours a week CA FINAL AUDIT FASTER BY CA SARTHAK JAIN> Ora member not being his partner ______| > To sign on his behalf or behalf of his firm ____| > Any balance sheet, profit and loss account, report of financial statements Signature: only an: > Eligible member; or p Pea hi fof the firm, is el j following: | > Balance Sheet, P&L Account, or > Financial Statement, or CA FINAL AUDIT FASTER BY CA SARTHAK JAINa, > Report sional capacity, SCHEDULE | — PART II > Chis > Professional Misconduct CLAUSE I: SHARING OF FEE: ‘ ‘ ji emoluments of the employment undertaken by him. __|] CLAUSE 2 ; ACCEPTS SHARE INFEES Accepts or agrees to accepts any part of fees, profits, or gains from a lawyer, a char- ered accountant or broker engaged such employee or agent or customer of such ____| company, firm or person by way of commission or gratification = > Lawyer > cA > Broker > Agent > Customer >All members > Professional Misconduct CA FINAL AUDIT FASTER BY CA SARTHAK JAINAuthority. ives ink . he SCHEDULE | — PART IV — >_ all Members > other Misconduct. CLAUSE | & 2 ; OTHER MISCONDUCT F . fe H - . ra CA FINAL AUDIT FASTER BY CA SARTHAK JAINAST, a Diagnosis ; Confidentiality diagnosis > _disclo: > Professional engagement > To any person > Otherwise than as required by any law for the time being inforce : wp > Clause applies to information which is already publicly known > Clause applies on information obtained during the current course of audit or even in past year: > Clouse applies to financial or non-financial information > Clause attracts even if staff makes an unauthorized disclosure i i fo | benefit > _lhether applies on previous auditor communication with incoming auditor > If client refuses but loi demands information, whether to disclose Confidentiality : Client Frauds > _No duty to inform about taxation frauds by client ie 6 of vie or barred fr lisele with the express consent) any communication made in the course of and for the purpose of his employment > je th if r ele sient fro = quences of tax frauds , ie > _If fraud relates to past year (s) The member may, continue in respect of current matters and report only if it affects current year or if he was auditor in previous year > Fraud relates to the accounts or tax assessment it mi or cli 1 ji ke comple lisclo- CA FINAL AUDIT FASTER BY CA SARTHAK JAINretum > _1f there’s fraud n related return: or 2 Ir i i Laith supervision) sh ie isi i > Partner >_Employe CA FINAL AUDIT FASTER BY CA SARTHAK JAINAST, a, > Signing by other than member Clause 12 Pl, SI rson Cl. 5 le of earnings contingent upon future transactions in a manner which may lead to the belief that he vouches for the accuracy of the forecast. Diagnosis: > _A CA may participate in the preparation of forecasts or review “vouch” f f the for vocti > Indicates clearly in report > Source of info Basis of forecast ‘= And major assumptions > SAE 3400 prescribes the guidelines CLAUSE 4 : SUBSTANTIAL INTEREST Expresses his opinion on financial statement of any business or enterprise in which is firm, or is fi ial is 1,_CA, Partner, Firm 2, Substantial interest - Throughout holding the office if i invoh ‘ified relatic ip ip i ji 5 fected - Gi eh Diagnosis: Opinion ~ Only assurance assignments FS = Includes all financial information Substantial interest - CA / Partner / Firm CA FINAL AUDIT FASTER BY CA SARTHAK JAIN rr)aE &. Assurance: Includes ~ Excludes ~ Audit + + Audit of projected E: Compilation of F: Audit Speciali . 4 Review of Fs Internal Audit . . . ‘ ‘ + Statutory Audit: at any time > owned beneficially y such member or - = one or more relatives of the member; one or more partners and / or their relat . ohn é h val inter. est | > Liquidator of a company | > Intemal Auditor > Person maintaining books or internal control: > PTIFT Faculty > Trust | > Director in that company | > isqualified u/s gtof cos > One partner disqualified — then complete firm disqualific ___| Wot disqualified to provide opinion: <= > Relative is a director but with no substantial interest CA FINAL AUDIT FASTER BY CA SARTHAK JAINAST, oa, Whether auditor of a subsidiary company be Director of its Holding Company? CLAUSE S ; FAILS TO DISCLOSE A MATERIAL FACT KNOWN TO HIM he rial wn ip rich is isch in financial isleadh j , a professional capacity bs Fails to disclose a material fact / material misstatement known to him to appear in a financial statement which he is concerned in professional capacity Diagnosis ; Clause 5 & 6 : Substantial Interest > Known to CA ____|> Covers all assignments on FS not just audit. > Clause S on failure to DISCLOSE > Clause 6 on failure to REPORT CLAUSE 7 : DUE DILIGENCE / GROSSLY NEGILIGENT > Does not exercise due diligence or is grossly negligent in the conduct of his pro- fessional duti Diagnosis: Due Diligenc Negligence expected from, and ordinarily covers a wide field and ___| exercised by a person who seeks to__extendss from the frontiers of fraud = satisfy a legal requirement or to collateral minor negligence to discharge on obligation Fails to obtain sufficient information which is necessary for expansion of an opinion orit rions are sufficientl i rression o' ini CA FINAL AUDIT FASTER BY CA SARTHAK JAIN P45FAST, a Diagnosis: incorrect opinion Knowingly Wrong Opinion > Without checking = Clause 2 > Fails to Disclose = Clause S Type of Opinion: Modified opinion: are intended within a reasonable tim 1_An advance received by a Charted Accountant against services to be rendered whether fall under Clause (10) or Part | of the Second Schedule? Nr rch af or ich inten: to ther deposited in separate bank account? CA FINAL AUDIT FASTER BY CA SARTHAK JAINoa, 3,_Moneys received by a CA in his capacity as a liquidator must be put in a sepa- rate bank account immediately Comment. 4. Can a CA adjust Client’s money meant to be spent for paying taxes against his outstanding fees? S._Client paid advance for out of Packet expense to auditor, for which auditor mis- appropriated the amount y inflatin nds vouchers, Under which clause th A will be held guilty? nnn ene EOE >_all members > Professional Misconduct | CLAUSE | : CONTRAVENES PROVISION OF THE ACT ETC, Contravenes any of the provision of this Act or the regulations made there under or any guidelines issued by the Council Articles Related Regulations: CA Regulations 1982 Particulars ______| Regulation 43 ________————_—sEngagement of Articled Assistant. = Regulation 46 Registration of Articled Assistant Regulation 47 Premium from Articled Assistant Regulation 48 stipend to Articled Assistant ‘ ‘ fart Regulation 65 Article Assistant not to engage in Regulation 67 int agai 7 from Artie Regulation 68 to 0 Audit Assistant Regulation 190 Register of offices and firms CA FINAL AUDIT FASTER BY CA SARTHAK JAINDefalcation of Money _ . ing_of ey ICAL, etc. a JO — Pr = Clie leatic ip will e covere Clause 10, Pl, S2 |_> other Misconduct - only professional capacity defalcation cover > Other Misconduct CA FINAL AUDIT FASTER BY CA SARTHAK JAINCOUNCIL GENERAL GUIDELINES 2008 Chapter! = Preliminary Chapter il - Conduct if a Member Being on Employee > (CAIS not be grossly negligent & exercise due diligent) > (Not relevant anymore) = Opinion on Financial Statement when there is Substantial Interest as per ASIB ChapterV - Maintenance of Books of Accounts > Maintain Cash Book and Ledger Chapter VI - Tax Audit Assignments u/s 44 AB of income tax Act > Maximum 60 audits per AY per partner who is a CAIP. In cluding branch Audit, Chapter Vil - Appointment of an Auditor in case of Non Payment of undisputed fees re liabilities > Chapter Vill - Specified Number of Audit Assignments > Max 30 Company Audit assignments at any point of time per partner who is Chip. Branch Audit Included Chapter IX - Appointment as Statutory Auditor > Not to accept if fees > audit fees > Covers CA firm as well as netioork firm ; it of li Companies with tumover > 2 S0 Crores _ j f auditor vi > Limit > 10,000 unless other limit prescribed under law > Covers debt as well as guarantees given Chapter X!_- Directions in case of Unjustified Removal of Auditors > _Not to accept Audit Chapter Xil_- Minimum Audit Fee in respect of Audit (Deleted Now) CA FINAL AUDIT FASTER BY CA SARTHAK JAINa T]2.§ (eTOCs Appointment & Removal of Auditor {Section 139,140) Qualification, Disqualification of Auditor (Section 141,142) Powers & Duties of Auditor, Other Services of Auditor, Penalty & Cost Audit (Section 143,144,145, 146,147 & 148) Books of Accounts & Financial Statements (Section 128,129,130,131,132 &133) Board’s Report, Filing and circulation of F.S. and Internal Audit (Section 134,135,136, 137,138,141,142) Dividends (Section 123 to 128) ICARO 2016 Audit of Consolidated Financial Statements Audit Committee & Corporate Governance acknowledgement for Co-Author “Susheem BajpaiAuthor's Note We here at FAST always working hard to make the Audit Easy, Attractive and Concise and this book is the result of those efforts. This book contains all the legislative amendments and designed keeping in mind the simplicity along with attractiveness so that you can revise the whole topic with ease in lesser time. All the best for your Exams!! “Audit Hoga Ab Sabse Scoring” Allthe efforts have been made to make this book error free but there may chances that some errors remain undetected. In case you find any error or you have any suggestion then we welcome your valuable feedback /suggestion. 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