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Code of Ethics:Ready Reckoner

New Disciplinary Mechanism at a glanceDisciplinary Directorate

Opinion on alleged professional or

other misconduct

First Schedule

Misconduct

First Schedule and/ orSecond Schedule

Misconduct

Case referred to Boardof Discipline

Case referred to DisciplinaryCommittee

Order Issuedu/s 21(A) or (21B)

If aggrieved with the order,appeal to Appellate Authority u/s 22G

within 90 days

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SCHEDULES TO THE CHARTERED ACCOUNTANTS ACT, 1949

There are two schedules to the Chartered Accountants Act, 1949 (as amended by the Chartered

Accountants (Amendment) Act, 2006) viz.

1. the First Schedule; and

2. the Second Schedule

THE FIRST SCHEDULE - The First Schedule has four parts [Including part IV inserted by

Chartered Accountants (Amendment) Act, 2006].

Part Iof First Schedule deals with the professional misconduct in relation to CharteredAccountant in practice.

Part II deals with the professional misconduct in relation to members of the Institute inservice.

Part III deals with the professional misconduct in relation to members of the Institutegenerally.

Part IV deals with other misconduct in relation to members of the institute generally.

THE SECOND SCHEDULE - The Second Schedule has three parts [Including Part III insertedby Chartered Accountants (Amendment) Act, 2006].

Part I of Second Schedule deals with the professional misconduct in relation toChartered Accountants in practice.

Part II deals with the professional misconduct in relation to member of the Institutegenerally.

Part III deals with the other misconduct in relation to members of the Institutegenerally.

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Note: Clause 5 should be read along with Clause 6 & Clause 7

Clause 1

Misconduct

Allowing any other

person to practice in his

own name

Exceptions

1. Other person CA inpractice, and

2. Is in partnership, or3. Is in his employment

Clause 5

Misconduct Open/Authorized Means

Securing professional business

through unauthorized Means

1. Employee,2. His partner,3. Other means under Clause 6 & 7

First Schedule

Part I

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Clause 6

Misconduct Exceptions

Solicitation of clients

or professional work

Work from

other CA in

practice

Responding

to tenders

or enquiries

Solicitation can be

direct or indirect

through:

1. Circular;

2. Advertisement

3. Personal

communication

4. Interview, etc.

ICAI Guidelines:

1. Advertisements and notes in press;

2. Application for empanelment;

3. Publication of firm name in telephone directory etc;

4. Issuing hand bills;

5. Publication of books, etc.

6. Issuing greeting cards, invitations, etc;

7. Roving enquiries;

8. Sec. 225(3) representation;

9. Acceptance of original professional work;

10.Public interviews

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Clause 7

Misconduct Exceptions

Advertising

attainments

or services

Using unapproved

or wrong

designations

Advertising through write up

permitted

Q: ICAI Guidelines for write-up??

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Clause 8

Misconduct Exceptions

If no written communication with previous auditor

before accepting the position as an auditor

Nil

Q: ICAI Clarifications??

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Clause 9

Misconduct

If does not ascertain the compliance of Sec. 224 & 225 in

respect of his appointment

Clause 10

Misconduct Exceptions under

Reg. 192

Fees on

1. % of profits; or

2. Contingent findings

1. Liquidator/ Receiver;2. Audit of cooperative society;3. D.T. valuation

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Clause 11

MisconductExceptions

Engaging in other business/

occupation1. ICAI permission;

2. Director simplicitor;

3. Employment in CA firm

4. Sec. 2(2) (iv) & Reg. 190A

Full time COP (+) salary

Clause 12

Misconduct Exceptions

Allowing non-members to

sign F.S.

Signing documents not

containing expression

of opinion

Sec. 26 also states so

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Clause 1

Misconduct

Paying/allowing to any person share inemployment

emoluments

Clause 2

Misconduct

Accepting any remuneration/ commission/ gratification from

counsels/ customers of the company/ firm

Clauses

Misconduct

First Schedule

Part II

First Schedule

Part III

Clause 1 Clause 2 Clause 3

Not FCA but acts as

FCA

Does not supply info

to ICAI/ comply

requirements asked

for by ICAI

Violation of Clause 6/ 7

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Second Schedule

Part I

Clause 1

Misconduct Exceptions

1. Clients consent;

2. Law Requirement

Disclosure of

information acquired

during professional

engagement

Same principle also in

SA 200

Clause 2

Misconduct Exceptions

Certification/

submission of report

on F.S. without

examination

1. Examination under his

supervision;

2. Examination by other CA in

practice.

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Clause 3

Misconduct

Vouching

the accuracy

of forecasts

Exception

Follow AAS35/

SAE 3400

Clause 4

Misconduct Substantial

Interest

Expression of opinion on F.S. of an

entity with presence of substantial

Interest (either himself/ his firm/

his partner)

1. Company > 20%voting power

2. Others > 20%profits

Relatives of CA also to be covered for adjudging substantial interest

(w.r.t. Guidance Note on Independence of Auditors)

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Clause 8

Misconduct

Fails to obtain information for

expression of opinion

In a way, its about violation

of SA 500/ SA 501

Clause 9

Misconduct

Failure to invite attention to any material

departure to generally accepted audit procedure

Clause 10

Misconduct Exceptions

1. Failure to keep clients money inseparate bank a/c; or

2. Use such money withinreasonable time

1. Fees/ remuneration(even advance)

2. Reasonable time usage

Even money recd in capacity as

trustee/ liquidator etc. also

covered under this clause

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Clauses

Clause 5

Misconduct

Clause 6

Failure to disclose

Material Fact

Failure to report

Material Mis-stmt

Follow SA 320

for Materiality

Clause 7

Misconduct

Grossly negligent of his duties

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Misconducts

Clause 1 Clause 2 Clause 3 Clause 4

Contravention of

Act/its provisions

Being employee discloses

confidential information without

consent/ legal requirement

Submits false

info to ICAI/ its

constituents

Defalcates or

Embezzles

money recd in

professional

capacity

Second Schedule Part I

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