Code of Ethics - ICAI

8/10/2019 Code of Ethics - ICAI

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Code of Ethics for Members Recent Decisions of the Ethical Standards Board

CA K.Raghu Vice Chairman-

Ethical Standards Board

Issue

Whether an auditor of a Subsidiary Company can be a Director of its Holding Company

Decision

The auditor of a Subsidiary Company cannot be a Director of its Holding Company, as it will affect the independence of an auditor

Issue

Whether a practicing member can print ISO mark in his professional letterheads and other papers.

Decision

A member can get ISO 9001:2000 certification, but he cannot use the expression ISOcertified on his professional documents.

Issue

Whether a practicing member can form an HUF.

Decision

A practicing member cannot form an HUF to carry out business activities.

Issue

What is the meaning of expression Director Simplicitor?

Decision

Director Simplicitor shall be constructed as ordinary / non-executive Director.


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Issue

Whether members of ICAI practicing as an Advocate, can use CA Logo on his professional stationary.

Decision

It is not permissible, as it appears to be unethical.

Issue

Whether a member in industry can print his letterhead for communication with ICAI or any other person.

Decision

It is permissible, however such member using the designation of Chartered Accountant cannot use any other designation, whether in addition or in substitution thereof.

Issue

Whether a CA Director of a Company should participate in a Board Meeting when theitem relating to his client(s) is being considered by the Board.

Decision

Based on an ethical point of view, the member should withdraw himself from such ameeting.

Issue

Whether a member holding Certificate of Practice can own Agricultural Land and continue agricultural activity.

Decision

Owning Agricultural Land and carrying out Agricultural activities by a member holdingCertificate of Practice is covered under activities Permission Generally Granted under

Appendix (9) of the Chartered Accountants Regulations, 1988, and is, therefore permitted.

Issue

Whether a Chartered Accountant firm can accept Branch Audit of a Bank when a partner has taken a loan from any other Branch of the same bank.


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Decision

Independence of Auditors can neither be diluted nor any scope be left for dilution in the perception of stakeholders. The term indebtedness must continue to be a qua an entityand not qua branch.

Issue

Whether a firm of Chartered Accountant can print special words celebrating 75 years in profession on the letter heads and envelopes.

Decision

No, as it will lead to the solicitation of professional work and result in violation of clause(6) & (7) of Part 1 of First Schedule to the CA Act, 1949.

IssueWhether the CA Logo can be used on professional letter head as header for the

presentation material put before the prospective investors.

Decision

It is not permissible as it amounts to solicitation of professional work.

Issue

Printing of Rotary visiting card and the use of the designation (District Governor)therein.

Decision

The member who is in practice cannot use the designation of District Governor in his Rotary visiting card along with the term Chartered Accountant .

Issue

Whether a member can take up the membership of Association of Mutual Funds in India(AMFI).

Decision

The member may pursue such course and become a member of the Association but hecannot register with it. This restriction will be applicable to the members who areholding COP, whether part-time or full- time.


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Issue

Whether a Member or firm is allowed to design its own Logo? If not, can the name of

the firm/ 1st

initial of the name of the firm be written in a different style.

Decision

This kind of stylish Initials is prohibitive as it will deem to be a logo, since the logos havealready been prohibited by the Council.

Issue

Whether a Member can get his firm listed with a telephonic service provider, if theservice provider is not charging anything for the listing.

Decision

Members may avail the Just Dial services within the guidelines laid down by theCouncil.

Issue

Whether a member while conducting an Internal Audit of a client can also do accounting for the same client.

Decision

It is prohibitive to undertake the assignments of Internal Audit of a client and accountingsimultaneously, being violative of the provisions of the Guidance Note on Independenceof Auditors.

Issue

Whether concurrent auditor of a bank can also undertake quarterly review of the same Bank.

Decision

The Concurrent Audit and the assignment of Quarterly review of the same entity cannot be taken simultaneously, since Concurrent Audit is in the nature of an internal audit and the Quarterly review is in the nature of a Statutory Audit. A member cannot undertake


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simultaneously since it is prohibited under the provisions of Guidance Note on Independence of Auditors.

Issue

What role can a Statutory auditor and Internal auditor undertake from amongst:- Tax Audit, Tax representation, Consulting, Advisory, IFRS conversion, Sox Certification,designing of system, resource raising, day to day support to sourced business processes.

Decision

Tax Audit and Sox Certification can be done only by the Statutory auditor Designing of internal control systems and day to day support to outsourced

business processes can be done only by internal auditor. Tax Representation, Consultancy, Advisory, IFRS Conversion and resource

raising can be done by both.

Issue

Can the Institute ban the Quotations/Bids invited from Chartered Accountants regardingempanelment for Audit work by Govt. Companies/Organizations/ PSUs/ Corporation s.

Decision

Institute cannot interfere as the C A Amendment Act, 2006, has specifically allowed Chartered Accountants in practice to respond to the tenders vide proviso(ii) to clause 6 of Part I of schedule to the Chartered Accountants Act, 1949.

Issue

Whether Concurrent audit of one of the branches of a nationalized bank can be accepted by an auditor who has conducted statutory audit of 3 different branches of the same bank.

Decision

In line with the principle of strict independence as adopted in the earlier decisions, it isnot permissible to accept Concurrent audit of one of the branches of a nationalized bank

who has conducted Statutory audit of 3 different branches of the same bank.

Issue

Whether internal auditor of an entity can be appointed as Tax Consultant of the sameentity for a particular year.


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Code of Ethics - ICAI

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