Facts of the Case

A complaint was filed by Shri K. Ramanathan, Coimbatore, against CA Govind M. Joshi, Proprietor of M/s G.M.J. & Associates, alleging that the Respondent violated the provisions of the Chartered Accountants Act, 1949 by taking up whole-time employment as Company Secretary and Compliance Officer of M/s CG-VAK Software & Exports Limited while holding a Full-Time Certificate of Practice (COP).

The Respondent was appointed as Company Secretary and Compliance Officer with effect from 18 December 2018, and such appointment was duly intimated by the company to the Bombay Stock Exchange on 18 December 2018, with further communication on 24 December 2018 and 26 December 2018 regarding KMP details. The Respondent continued to hold a Full-Time COP until 29 March 2019, when he formally intimated the Southern India Regional Council (SIRC) of ICAI for change of his COP status from Full-Time to Part-Time.

During the intervening period from 18 December 2018 to 29 March 2019, the Respondent’s proprietorship firm continued to exist, leading to the allegation that he was simultaneously engaged in employment and professional practice.

Issues Involved

Whether the Respondent, while holding a Full-Time Certificate of Practice, violated Regulation 190A of the Chartered Accountants Regulations, 1988 by taking up employment as Company Secretary and Compliance Officer, and whether such conduct amounted to Professional Misconduct under Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

Petitioner’s Arguments

The complainant contended that a Chartered Accountant holding a Full-Time COP is barred from taking up employment and that the Respondent’s appointment as Company Secretary and Compliance Officer during the subsistence of a Full-Time COP constituted professional misconduct. It was argued that mere subsequent intimation could not cure the violation and that continuance of the proprietorship firm indicated ongoing professional practice.

Respondent’s Arguments

The Respondent submitted that although there was a short delay in intimating ICAI regarding the change in employment status, the same was unintentional and was subsequently condoned by the Institute. He categorically stated that no professional or attestation assignment whatsoever was undertaken by him during the intervening period or thereafter during the tenure of employment.

The Respondent further placed on record a notarised affidavit dated 19 April 2023, affirming that he had not executed any professional assignment or attestation work during the period from 18 December 2018 to 29 March 2019, and even during the entire tenure of his employment which lasted till 30 September 2019.

Court / Authority Order and Findings

The Board of Discipline examined Regulation 190A of the Chartered Accountants Regulations, 1988, the Code of Ethics, ICAI membership records, submissions of the parties, and the notarised affidavit filed by the Respondent. The Board noted that although the Respondent initially held a Full-Time COP at the time of joining employment, he duly informed the Institute on 29 March 2019, and ICAI records reflected his status as Part-Time COP holder during the relevant employment period.

The Board further noted that the scope of examination was limited to whether the Respondent had executed any professional or attestation assignment during the intervening period. The Respondent consistently admitted that no such work was undertaken, and the complainant failed to bring on record any evidence to the contrary.

The Board also took note that the delay in intimation had already been condoned by the Institute, and there was no evidence of mala fide intent, undue advantage, or prejudice caused to any stakeholder.

Important Clarification

The Board clarified that mere delay in intimating ICAI about change in employment status, when subsequently condoned and not accompanied by execution of any professional or attestation work, does not amount to professional misconduct. What is material is whether a member actually undertook professional assignments while being in employment.

Final Outcome

The ICAI Board of Discipline held CA Govind M. Joshi (M. No. 200363) Not Guilty of Professional Misconduct under Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949. By order dated 03 November 2023, 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/1768895266_ShriKRamanathanvsCA.GovindMJoshiM.No.200363Coimbatore.pdf

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