Facts of the Case

The disciplinary proceedings arose from a complaint filed by CA Parmar Haresh Kumar Jivanlal (M. No. 046976), partner of M/s HJP & Co., Ahmedabad. The complainant firm had acted as tax auditor and statutory auditor of M/s Jas Fuels LLP for the Financial Year 2019-20. It was alleged that the respondent, CA Ketan Ganpatbhai Barevadia (M. No. 120258), accepted the position of statutory auditor of the same entity for Financial Year 2020-21 without first communicating in writing with the complainant firm and without obtaining a No Objection Certificate.

The matter was examined by the Board of Discipline, which issued findings dated 29.07.2025 holding the respondent guilty of professional misconduct. Thereafter, action under Section 21A(3) of the Chartered Accountants Act, 1949 was contemplated and the respondent was granted an opportunity of being heard on 12.12.2025 through video conferencing, which he availed.

Issues Involved

Whether acceptance of a statutory audit assignment without prior written communication with the outgoing auditor constitutes professional misconduct under Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

Petitioner’s Arguments

The complainant submitted that the respondent violated mandatory ethical requirements by accepting the statutory audit without prior written communication and without obtaining a No Objection Certificate from the outgoing auditor, thereby breaching professional discipline prescribed under the Chartered Accountants Act and the Code of Ethics.

Respondent’s Arguments

In his written statement dated 14.06.2022 and during the hearing, the respondent unequivocally admitted the charge levelled against him. He acknowledged the lapse, expressed regret, requested the Board to take a sympathetic view, and assured that such a mistake would not be repeated in future. The complainant also confirmed during the hearing that there were no outstanding professional fees.

Court Order / Findings

The Board of Discipline observed that the respondent had voluntarily and explicitly admitted his mistake both in writing and during oral submissions. The Board held that prior written communication with the outgoing auditor before accepting an audit assignment is a mandatory professional requirement intended to preserve transparency, continuity and ethical conduct in audit engagements.

In view of the clear admission of guilt and after examining the material on record, the Board concluded that no further inquiry was necessary and held that the respondent violated Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949 by undertaking the audit of M/s Jas Fuels LLP for Financial Year 2020-21 without first communicating with the complainant.

Important Clarification

The Board clarified that compliance with the requirement of prior written communication with the previous auditor is fundamental to professional ethics. Admission of guilt does not negate the misconduct but may be considered only for determining the quantum of penalty.

Final Outcome

The Board of Discipline, in exercise of powers under Section 21A(3) of the Chartered Accountants Act, 1949, imposed a fine of ₹25,000 (Rupees Twenty-Five Thousand only) on CA Ketan Ganpatbhai Barevadia (M. No. 120258) for professional misconduct.

Source Link- https://www.mytaxexpert.co.in/uploads/1768891017_Ms.PushpaD.PatilSataravsCA..pdf

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