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TMI Blog2014 (9) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... f accounts of a company, by name South India Mercantile Private Limited. In the audited accounts for the year 1988-89, one of the shareholders by name Smt. Urmila G. Bhupta submitted a complaint to the Council of the Institute of Chartered Accountants, New Delhi, petitioner herein, pointing out six acts of alleged irregularities. Since the work of auditing in the firm was undertaken by the respondent herein, a show cause notice was issued to him on 24.07.1991. On receipt of the same, the respondent submitted a reply on 04.12.1991. The complainant filed her rejoinder. The Council referred the matter to its Disciplinary Committee. The Committee, in turn, conducted a detailed enquiry, duly giving opportunity to both the parties and submitted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the matter had not been reported by the auditors in their report, which showed their negligence towards their duties. 4. Valuation of closing stock had not been reported by the auditors and they had not associated themselves with the stock verification and these mattes were not reported or qualified, which was not as per the norms. Further, quantitative details of each class of goods traded by the Company had not been given in the accounts which was also against Schedule VI requirements. 5. Auditors' fee had not been shown under different heads as the auditors had given different services to the Company, as statutory auditors, tax auditors, Income-tax representation and Company Law matters which was also against the Schedule VI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt may kindly be condoned, in view of my mental condition at that time due to ill health of my mother. In this connection I would also like to state that the Fixed Assets Schedule for the years ended 31.03.88 and 31.03.90 were in accordance with the requirements of the Companies Act, 1956. 3. The Schedule XIV of the Companies Act came into force in the middle of the year 1988-89 and there was controversy regarding applicability of the rates for the part of the year. I honestly considered that the rates of depreciation prescribed under Schedule XIV would be applicable for the accounting year ended 31.03.1990 and onwards. 4. That the allegation of the petitioner that the Auditors were not associated with the Stock Verification is far from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at differences have arisen among certain groups and the distrust against each other has been, in a way, ventilated against the Chartered Accountant. The reason for the complainant, who submitted the complaint, was that the company was posting losses year after year, though according to her, profits were being earned. 8. In the Annual General Body Meetings of any company, the audited accounts constitute an important part. The very purpose of placing the audited accounts of the company in the General Body Meeting is to enable the shareholders to get acquainted with the state of affairs and to raise their doubts or to seek clarifications, if any. A Chartered Accountant is required to deal with the various aspects of accountancy and at the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be issued and he kept them in view while certifying the accounts of the company in question. Assuming that the understanding of the respondent was not proper, he cannot be said to have resorted to the act of indiscipline. As regards other allegations, the explanation offered by the respondent is acceptable and we do not find any malice on his part. 11. The record does not disclose that the complainant made any effort to question the persons in management of the company, such as Managing Director or other Directors about the state of affairs. Unfortunately, the respondent is being made scapegoat in the family disputes of the owners of the company. On a perusal of the report of the Disciplinary Committee and the resolution of the Council, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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