Facts of the Case

A complaint was filed by CA Ajay Bhargava against CA Vivek Beriwal, a former partner of M/s Bhargava Ajay & Associates. The Respondent was admitted as a partner of the complainant firm with effect from 01.01.2015 and was relieved from the firm with effect from 01.01.2019 pursuant to a unanimous resolution of the partners.

The complainant alleged that after his exit from the firm, the Respondent undertook audit assignments earlier handled by the firm without obtaining a No Objection Certificate, demanded money in connection with bank audit empanelment, retained unpaid audit fees, signed backdated consent letters and financial statements, and most importantly, took away important records and business documents of the firm without consent of the remaining partners.

The Director (Discipline), in the Prima Facie Opinion dated 21.05.2025, absolved the Respondent of allegations relating to appointment as auditor, signing of financial statements, audit fees and empanelment issues, and found a prima facie case only in respect of the allegation relating to removal of firm records. Accordingly, proceedings before the Board of Discipline were confined solely to the charge of alleged removal of important records and business documents.

Issues Involved

Whether the Respondent, after retirement from the partnership firm, took away important records and relevant business documents of the firm without consent of the remaining partners, amounting to “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

Petitioner’s Arguments

The complainant contended that the Respondent had partner-level access to firm records and that, upon his exit, essential documents relating to clients such as Alveo Healthcare Pvt. Ltd. and Signa Pharma Pvt. Ltd. for the period 2016–2019 were found missing. It was argued that although direct proof of removal was unavailable, the circumstances clearly indicated that the Respondent had taken away records, causing prejudice to the firm and breach of trust.

Respondent’s Arguments

The Respondent denied having taken away any records or documents from the firm. He submitted that the allegations were vague and unsupported by evidence. It was argued that the Director (Discipline) had wrongly equated “important records and business documents” with audit working papers and engagement documentation, which were never alleged to have been taken away in the complaint. The Respondent further submitted that audit working papers, if any, belonged to the signing auditor and not to the firm, and that the complainant failed to prove ownership or removal of any documents.

Court / Authority Order and Findings

The Board of Discipline confined its findings strictly to the surviving charge relating to alleged removal of records. The Board observed that the complainant failed to produce any evidence to establish that the Respondent had taken away documents of the company at the time of his departure. The Respondent categorically denied removal of any records, and the complainant could not substantiate the allegation beyond mere assertions.

The Board further noted that the financial statements of Alveo Healthcare Pvt. Ltd. bore the signature of the Respondent. Referring to Standard on Auditing (SA) 230 and Standard on Quality Control (SQC) 1, the Board held that audit working papers and related documents are the property of the auditor who has signed the audit report, unless otherwise specified by law. The complainant failed to adduce any evidence to establish that the documents allegedly taken belonged to the firm rather than to the Respondent in his capacity as signing auditor.

On a conjoint reading of facts and applicable auditing standards, the Board held that the allegation of removal of records and commission of fraud was not proved.

Important Clarification

The Board clarified that audit working papers are the property of the auditor who signs the financial statements, as per SA 230 and SQC 1. Allegations of misconduct based on removal of records must be supported by cogent evidence establishing both ownership of documents and their unauthorised removal.

Final Outcome

The ICAI Board of Discipline held CA Vivek Beriwal (M. No. 410205) not guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. By order dated 26 September 2025, the Board directed closure of the case under Rule 15(2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007.

Source Link- https://www.mytaxexpert.co.in/uploads/1768892112_CA.AjayBhargavaM.NO.075456vsCA.VivekBeriwalM.No.410205Kanpur.pdf

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