Citizens' Issues
Ethics for the auditors and CAs

Here is an imaginary dialogue between a confused CA—Arjuna and Lord Krishna—which makes for an interesting reading, more particularly in these days, when questions are raised on the integrity of the members of the once an extremely honourable accountancy profession

The editors of The Bombay Chartered Accountant Journal ought to be complimented for publishing a very timely spoof “Ethics and U” in the April 2013 issue. This is an imaginary Q&A dialogue between a confused CA—Arjuna and Lord Krishna— a brilliant attempt at demystifying what really constitutes “bringing disrepute to the profession” as enunciated in the provisions of Clauses 1 and 2 of Part IV of the First Schedule and Part III of the Second Schedule to the Chartered Accountants Act, 1949.

The dialogue makes for an interesting reading, more particularly in these days, when questions are raised on the integrity of the members of the once an extremely honourable accountancy profession.

The auditing and accounting profession is under the scanner for misdemenours and transgressions abroad in the audits of BCCI, Tyson, Palmart and Enron also here in India—the Global Trust Bank and Satyam, considered the biggest financial frauds to date. Recently there have been reports of negligence in Wipro, SBI, Sesa Goa, Reliance InfoTech and Reebook.

Quote and Unquote, suitably modified, appropriate questions and answers:

  • Question: A few of my CA friends are doing only this ‘entry’ business. They are minting money and I have to slog like this
  • Answer: I had already told you—you have a right, only the performance of your duty; not in the fruits. Those unscrupulous CAs are getting fruits of their deeds!
  • Q: I agree. But the harassment of the tax office is unbearable. Their demands are astronomical.
  • A: are you also involved in settling the cases?

What to do? There is no alternative. I don’t do it myself. That is why my cases remain pending.

  • Q: But the profession has generated into business.
  • A: Let the profession degenerate; but not a professional like you. Your thoughts are confused; but fortunately, your upbringing has held you from acting in that manner.
  • Q: Where in ‘Misconduct’ is it stated?
  • A: See, bribery is a crime. If you are a party to it, it is abetment—that again is a crime.
  • Q. But that is only if one is caught! It is a secret deal between the client and the officer. The CA is just a middleman.
  • A. Remember, apart from the specific items of misconduct in the Schedules, Section22 of the CA Act covers “other misconduct” also. It is very wide. If you are involved as a middleman, both the officer as well as your client discounts your value. They are happy because they are benefited; but your image is tarnished. 
  • Q: You mean, it is not only professional misconduct.
  • A: No. So if you are caught, you are directly covered by clause (1) of Part IV and also Part III... That means conviction of a punishable crime. Clause (2) of Part IV is very wide—if your action brings disrepute to the profession that also is misconduct.
  • Q: Clients treat us as agents only.
  • A: You should be careful as to how the society perceives your profession. In many scandals the role of your colleagues is exposed.

There are cases of even CAs demanding dowries.

Does the public really respect you? Three CAs formed a company for some business, it did not pick up, and so they neglected compliances totally. The company was transferred to someone… the buyer filed a complaint. Such negligence brings disrespect to the profession. They were held guilty, though left on reprimand.

  • Q: Oh! Then it will cover traffic rules also.
  • A: Yes. Even the indiscipline in behaviour, indecency and so many things! There are complaints of ill treatment of articles, misbehaviour with lady staff and what not!  Any professional is expected to have exemplary behaviour—punctuality, courtesy, proper communication and personal habits.
  • Q: I have seen professionals with irritating personal habits and mannerisms—they can’t even speak properly; even in conferences they rush for lunch—acts not befitting a professional.
  • A: Good! You have understood it. Take care of public image, you will command respect. Council is concerned with that.

Many thanks to the author CA Mr Vaze, chairman and the Journal Committee of BCAJ for this enlightening dialogue.

(Nagesh Kini is a Mumbai-based chartered accountant turned activist).



Arun Mehta

4 years ago

The way comments are coming up makes one feel that the otherwise presumed dedicated protectors of investors/stakeholders wealth seems to be more interested in lining up their own pockets.Brings back the ultimate eternal issue,who will audit the auditors ?

Dayananda Kamath k

4 years ago

rbi has mandated and devised so many audits for the banks such as concurrent audit,income audit, tax audit, internal audit, statutory audit,stock audit.but their quality of audit is so poor. as an internal auditor( employee not a chartered accountant) of a nationalised bank i have found so many basic principles are not followed by them. i have filed a complaint with disciplinery authority of institute of chartered accountants almost 3 years back. i would give some of the examples. amount paid for purchase of right shares of SWIFT debited to general expenses. the original shares also were not shown as foriegn investment in banks balance sheet for years. only when i raised the issue in annual general body meeting as shareholder it is being shown now. bank opend l/c for its own import of y2k software. without paying the amount used the software. amd amount about .rs. 50 lakhs kept in suspence for more than 3 years. none of them objected. accounting of interest on gold deposits was being done wrongly and actually short charged to profit and loss account for more than 3 years. excess interest charging on staff as well as general housing loans. refunding only to those who claim, some times amount involved is in lakhs. it may also lead to getting income tax benefit which is not due. even these is fudging of accounts.



In Reply to Dayananda Kamath k 4 years ago

Mr. Kamath,
I agree with you 110 %. I have also worked in Banks and headed Audit department of two Banks. The performance of CAs under Concurrent / statutory / revenue audit is pathetic. In fact, I made it a point to give Con. audits only to CAs who came from Banks or people who had good SVRS employees. In fact, I can boldly say that CAs are mostly responsible for NPAs in Banks. I would like to have your Email ID. I can share a lot with you.


4 years ago

No wonder in many places, CAs are called Cheater Accountants, Corruption Advisors and Convenient Accountants. The last one was by US consulate when they found that CAs certify financial papers without verification.


4 years ago

Good one. Must read for all CA in private organization who manipulate the Books of Accounts.
ADAG group has been maniupulating their accounts since a long time but nothing's happened.

Arun Mehta

4 years ago

The eternal question who will audit the auditors ?have we learnt lessons from Satyam scandal?Why can't we have an act like Oxley -Saxby act in India too.


nagesh kini

In Reply to Arun Mehta 4 years ago

It is very much possible.
The SEC in the US and the European Commission are very much at it.
The Cos. Bill has many new provisions that need to be implemented and enforced.
Only alert stake holders like shareholders, lenders, financial institutions, financial analysts and investigative journalists can do it. Get ready to act!

shanti Patel

4 years ago

Nagesh has done a very good job.
Nagesh please give your mobile no./email address. I have something for you with proof.



nagesh kini

In Reply to shanti Patel 4 years ago

Thanks for your comment Shantibhai.
I'm allergic to mobiles.
My land line is 022 2437 3052.
Email - [email protected] or
[email protected]
Look forward to hear from you.
At first I thought it was Dr. Shanti Patel, former Mayor and MP.
I know him too. Now you are Shanti Patel II!

nagesh kini

In Reply to shanti Patel 4 years ago

CAShanti Patel spoke to me today.

Vaibhav Dhoka

4 years ago

All professions were HONORABLE few decades back.Now most lack professionalism . Unscrupulous elements have invaded in most of them.In medical profession when corp-orates entered in hospital business it became free for all and downfall started in once Noble Medical profession.

RTI Judgement Series: Govt departments enter into PPP without the capability of proper monitoring

The CIC expressed concern over unpreparedness and incapability of the transport department of GNCTD in monitoring revenue collections by private dealers under the PPP agreement. This is the 74th in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application

The Central Information Commission (CIC), while disposing an appeal, expressed concern over the unpreparedness and incapability of the Transport Department’s Operation Branch, at the Government of National Capital Territory of Delhi (GNCTD) in monitoring revenue collections by private dealers under the public-private partnership (PPP) agreements.


While giving this a judgement on 28 January 2011, Shailesh Gandhi, the then Central Information Commissioner said, “If the private dealers are honestly giving all the revenue it is only because of the grace of God and their honesty; the department appears to be incapable of doing this. If government departments enter into such PPP models without the capability of proper monitoring and regulating citizens will be short-changed completely.”


Delhi resident C Rajaram, on 17 August 2010, sought information under the Right to Information (RTI) Act from the Public Information Officer (PIO) of Transport Department at Operation Branch, in the GNCTD about the method and process by which collection of motor vehicle taxes and fees was outsourced to private vehicle dealers. Here is the information he sought and the reply given by the PIO...


1. Specify details as to the allotment of numbers by the Transport Department to car dealers having power to register car/four-wheelers.

PIO's reply: The numbers are allotted to the dealer by the manufacturer depending upon the amount of security deposit submitted by the dealer with the Transport Department. After sale when the road tax is deposited with the Department and certificate for the same by the dealer to the manufacturer, the further numbers are allotted to the dealer to the extent of its entitlement. When the dealer exhausts the series, the next new available series is allotted to the dealer upon his application.


2. Provide details regarding amount of security deposit taken from dealers of cars/four-wheelers before allotting numbers to register vehicles to self-registered dealers and also provide complete details regarding the amount to be fixed, its derivation and periodicity of allotment of numbers.

PIO's reply: Refer to para 6 and 7 of Terms and Conditions (copy enclosed).


3. Provide details regarding the policy framed by Transport Department governing the collection of security deposit from self-registered dealers before allotment of numbers and also provide information regarding such policy being uploaded in the web site of Transport Department.

PIO's reply: Same as above. Policy is not uploaded on the website. Hard copy enclosed.


4. Specify the procedure by which department ensures the amount deposited by self- registered dealers as correct and sufficient.

PIO's reply: Security amount is decided depending upon the quarterly trend of sale. If the sale increases, the dealers either approach themselves or are directed to enhance the security deposit.


5. Specify the steps taken by Department, more so after the powers of registration of vehicles have been delegated to dealers, in respect to compliance of Section 39 of the Motor Vehicles Act, 1988.

PIO's reply: Every self-registration dealer sends the files to the concerned MLO within stipulated time for issue of RC, who examines the files for any discrepancy with respect to compliance of section 39 of MV Act, 1988.


6. Details of date of inspection, audit and comments of audit and reply thereof shall be furnished if the necessary checks in compliance of section 39 of MV Act, 1988, is fulfilled.

PIO's reply: The dealers deposit the road tax every week in the account branch of the department which reflects the total sale of the dealer on weekly basis. Accordingly they are asked to maintain the security amount.


7. Specify details of action taken by the Department against self-registered dealers for non-compliance of section 39 of MV Act, 1988.

PIO's reply: No such case against self-registration dealers has been reported non-compliance of section 39 of MV Act, 1988.


8. Provide details of total number of cars sold by all self-registered dealers for the month of with the sale date and allotted number.

PIO's reply: A total of 9,078 vehicles have been sold during July 2010 by self-registration dealers. The applicant is free to inspect the related record in the concerned zonal office at any working day.


9. Furnish with the date of registration of vehicles as mentioned in point 7 and also the amount of registration fees and road tax, etc.

PIO's reply: As above


Rajaram, claiming that the PIO did not provide information within the time mandated in the RTI Act, filed his first appeal. In his order, the First Appellate Authority (FAA) said, “As regards question 1 and 2 Deputy Commissioner conveyed his no objection. As regards to question 3 Deputy Commissioner stated the policy shall be uploaded on website. As regards question 4 Deputy Commissioner stated 15 days tax of the last quarter is taken as norm for security deposit. As regard to question 6 and 7 Deputy Commissioner stated its duty of MLOs concerned to check such transactions and all information to be supplied u/s 39/192 within two weeks. As regards question 8 and 9 Deputy Commissioner stated that requisite details shall be obtained from the system analyst.”


Feeling aggrieved by the decision of the FAA, the applicant (Rajaram) then approached the CIC with his second appeal.


The Transport Department had authorised private vehicle dealers to collect registration taxes on behalf of the GNCTD and some advance payment has been taken by the department equal to fifteen days of taxes.


During the hearing, the Commission noted from the information provided to the appellant, it appeared that proper reconciliation for 2009-10 was not done and the Department constituted a committee to reconcile these accounts on 31 December 2010 prompted by the RTI application of the appellant.


Rajaram, the applicant, also pointed out that as per the agreement between the government and the private dealers, monthly returns were to be filed in floppies to the Department.


Mr Gandhi, the then CIC, observed that as per evidence, this clause was inserted to ensure that it would be possible to reconcile and tally the accounts on computer.


The PIO admitted that this condition had been breached and had not been followed so far. “Only hard copies have been obtained and as is evident from the statement of the Respondent reconciliation have not been done,” the CIC noted.


In November 2010 the FAA ordered that as per the agreement condition, soft copies of the accounts will be obtained from the dealers and provided to the appellant. “The Department has not been able to enforce this on the dealer so far. However, since the information itself is not available on a vital matter like revenue the PIO has not been able to provide the information so far,” the Commission said.


Expressing concern, Mr Gandhi noted how unprepared and incapable the Department appears to be in the process of handling over revenue collection to private dealers.


While disposing the appeal, the Commission stated that information available on the records had been provided.




Decision No. CIC/SG/A/2010/003465/11063

Appeal No. CIC/SG/A/2010/003465


Appellant                                  : C Rajaram,

                                                  Delhi 110054


Respondent                                        : Rajeet Singh

                                                  Deemed PIO & Dy. Commissioner (Operations),

                                                  Transport Department: Operation Branch

                                                  Government of National Capital Territory of Delhi

                                                  5/9, Underhill Road, Delhi - 54



nagesh kini

4 years ago

PPP is just a misnomer.
Narendra Modi has added another "P" for people as he feels neither "Public" nor "Private" represent the "Common People"!
There is no formal or informal policy as to what PPP really constitutes!
Mr. Shailesh Gandhi has exposed cases where in the garb of PPP public assets are grabbed.
PPP has to be properly regulated before matters go out of hand and goons and thugs grab public assets. Sooner the better.

SEBI passes consent order in Zensar Technologies case

A probe conducted by SEBI revealed that Pedriano Investments, one of the promoter entity of Zensar Technologies, had failed to disclose to the company information regarding its shareholding within the specified time-frame

The Securities and Exchange Board of India (SEBI) has settled allegations of insider trading charges against Pedriano Investments after it paid a little over Rs6 lakh towards settlement fees.


SEBI, in its consent order passed on 12th April, said the order will come into force immediately and that it has disposed of adjudication proceedings against the company.


A consent order enables settling administrative or civil proceedings between the regulator and the concerned party.


The regulator had conducted investigations into alleged irregularities in the scrip of Zensar Technologies as well as promoter's shareholding for the quarters ended March 2009 to March 2010.


The probe revealed that Pedriano Investments, one of the promoter entity of Zensar Technologies, had failed to disclose to the company information regarding its shareholding within the specified time-frame.


Pedriano Investments’ holding has fallen from 8.11% in December 2009 to 2.39% in March 2010 indicating a significant change of more than 2%, a level that would necessitate sharing of such information.


Consequently, SEBI had initiated adjudication proceedings against the company to inquire into alleged violations of insider trading norms. The regulator issued a show-cause notice to Pedriano Investments in May last year.


The company submitted a consent order application to SEBI in August 2012, while the adjudication proceedings were pending against it and proposed to pay Rs3.29 lakh towards settlement fees and in January this year revised the amount to Rs6.07 lakh.


After that, the revised consent terms were placed before the High Powered Advisory Committee of SEBI. The committee recommended that the "case may be settled on payment of Rs6.07 lakh." Accordingly, the applicant has remitted a sum of Rs6.07 lakh towards the settlement charges.


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