Facts of the Case

A complaint was filed by CA Parmar Haresh Kumar Jivanlal, Partner of M/s HJP & Co., Ahmedabad, against CA Ketan Ganpatbhai Barevadia. The complainant firm had been the tax auditor and statutory auditor of M/s Jas Fuels LLP for the Financial Year 2019–20. For the subsequent Financial Year 2020–21, the respondent accepted the position of statutory auditor of the same LLP.

It was alleged that the respondent accepted the audit assignment without first communicating in writing with the complainant firm and without obtaining a No Objection Certificate, as mandatorily required under the Chartered Accountants Act, 1949. Disciplinary proceedings were initiated and the matter was examined by the Board of Discipline.

Issues Involved

Whether the respondent accepted the statutory audit assignment of M/s Jas Fuels LLP for Financial Year 2020–21 without first communicating in writing with the outgoing auditor, in violation of Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949, and whether such conduct constituted professional misconduct warranting action under Section 21A.

Petitioner’s Arguments

The complainant contended that the respondent failed to comply with the mandatory requirement of written communication before accepting the statutory audit. It was submitted that such non-compliance undermines professional discipline and violates the ethical framework governing auditor transitions.

Respondent’s Arguments

In his written statement dated 14 June 2022 and during the final hearing, the respondent unequivocally admitted the charge levelled against him. He accepted that the audit assignment was taken up without prior written communication with the complainant. During the hearing, he requested the Board to take a sympathetic view and assured that such lapse would not be repeated in future. The complainant also confirmed that there were no outstanding audit fees pending.

Court / Authority Order and Findings

The Board of Discipline noted that the respondent had voluntarily and explicitly admitted to the violation of Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949. In view of this clear admission, the Board held that no further inquiry was necessary regarding the factual matrix or veracity of the allegation.

The Board observed that acceptance of a statutory audit without first communicating in writing with the outgoing auditor is a direct contravention of mandatory professional standards. Accordingly, the respondent was held guilty of professional misconduct.

Important Clarification

The Board clarified that written communication with the outgoing auditor before acceptance of an audit assignment is a mandatory ethical safeguard. Admission of guilt by the respondent obviates the need for further factual inquiry, but does not mitigate the seriousness of the violation of professional standards.

Final Outcome

The ICAI Board of Discipline held CA Ketan Ganpatbhai Barevadia (M. No. 120258) guilty of Professional Misconduct falling within the meaning of Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949. In exercise of powers under Section 21A(3) of the Act, by order dated 12 December 2025, the Board imposed a monetary fine of ₹25,000 (Rupees Twenty-Five Thousand only) on the Respondent.

Source Link- https://www.mytaxexpert.co.in/uploads/1768892384_CA.ParmarHareshKumarJivanlalM.No.046976vsCA.KetanGanpatbhaiBarevadiaM.No.120258Ahmedabad.pdf

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