Professional Ethics

4.1 A Chartered Accountant in practice is Prohibited

  • To pay commission/brokerage or share of profits of his professional business to/with any person other than a member of the Institute.

  • From soliciting clients or professional work by circular, advertisements etc. except for advertisement as per the guidelines dt.14th May, 2008 issued by the Council.

  • From being Director of a Holding Company in whose subsidiary he is the auditor.

  • From expressing his opinion on financial statements of any business or enterprise in which one or more persons who are his relatives within the meaning of Accounting Standards -18 (AS-18) has/have, either by themselves or in conjunction with such member, a substantial interest in the said business or enterprise.

    • 4.2 A Chartered Accountant in practice cannot

  • Use any designation other than Chartered Accountant on professional documents, visiting cards, letterheads or signboard. The Council has decided that a member of the institute shall not be permitted to use initials CPA (standing for Certified Public Accountant) on his visiting card.

  • Charge fees on a percentage of profits or which are contingent upon the findings, or results of such work provided that.

    a. In the case of a receiver or a liquidator, the fees may be based on a percentage of the realisation or disbursement of the assets.

    b. In the case of an auditor of a co-operative society the fees may be based on a percentage of the paid-up capital or the working capital, etc.

    c. In the case of a valuer for the purposes of direct taxes and duties, the fees may be based on a percentage of the value of the property valued.

    d. In the case of certain management consultancy services as may be decided by the resolution of the Council from time to time, the fees may be based on percentage basis which may be contingent upon the findings, or results of such work.

    e. In the case of certain fund raising services, the fees may be based on a percentage of the fund raised.

    f. In the case of debt recovery services, the fees may be based on a percentage of the debt recovered.

    g. In the case of services related to cost optimisation, the fees may be based on a percentage of the benefit derived.

    h. Any other service or audit as may be decided by the Council.

  • Engage in any business other than the profession of chartered accountants unless permitted by the Council.

  • Accept position as auditor previously held by another chartered accountant without first communicating with him in writing.

  • Accept any other work/assignment/service on a remuneration, which exceeds the fees payable for statutory audit of the same undertaking. (Applicable only in respect of statutory audits of public sector undertaking/Govt. Companies/Listed companies/other public companies with turnover of ₹ 50 crores or more in a year for appointments after 1st April, 2002 Ref: Notification No. 1-CA(7)/60/2002 published in CA Journal-March, 2002 issue).

    • 4.3 A Chartered Accountant shall not

  • Accept appointments as an auditor of an entity in case the undisputed audit fees of outgoing auditor for carrying out statutory audit has remained unpaid. This is not applicable in case of sick units.

  • Accept in a financial year, more than forty-five tax audit assignments under Section 44AB of the Income-tax Act, 1961

  • Accept appointment as Tax Auditor of an entity where he is appointed as Internal Auditor

  • Accept appointment as auditor of a concern while indebted to the concern or has given a guarantee or provided any security in connection with the indebtedness of any third person to the concern, for limits fixed in the statute and in other cases amount exceeding Rs 10,000.

  • Accept the appointment as Cost Auditor of a company under Section 233B of the Companies Act, 1956 while he

    a. Is an auditor of a Company appointed under Section 224 of the Companies Act; or

    b. Is an officer or employee of the Company; or

    c. Is a partner of any employee or officer of the Company; or

    d. Is a partner or is in the employment of the Company’s auditor appointed under Section 224 of the Companies Act, 1956; or

    e. Is indebted to the Company for an amount exceeding one thousand rupees, or has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for an amount exceeding one thousand rupees.

    A member cannot accept appointment as Cost Auditor if after his appointment as Cost Auditor he becomes subject to any of the disqualifications stated in points (a) to (e) above.

  • Hold at anytime appointment of more than thirty audit assignments of companies under Section 224 and/or Section 228 of the Companies Act, 1956.

  • Accept the appointment as statutory auditor of Public Sector Undertaking(s)/Government Company(ies) having turnover of Rs. 50 crores or more in a year where he accepts any other work(s) or assignment(s) or service(s) in regard to the same undertaking(s)/Company(ies) on a remuneration which in total exceeds the fee payable carrying out the statutory audit of the same Undertaking/Company however in case appointing authority(ies)/regulatory body(ies) lay down more stringent condition(s) restriction(s), the same shall apply instead of the conditions/restrictions specified under these guidelines.
    The above restrictions shall apply in respect of fees for other work(s) or service(s) or assignment(s) payable to the statutory auditors and their associate concern(s) put together.

  • Without following the direction given by the Council or an appropriate committee or on behalf of any of them, accept the appointment as auditor(s), in the case of unjustified removal of the earlier auditor(s).

    • 4.4 A Chartered Accountant in practice can

    1.  Share profits of business or other similar arrangements with certain categories of non-members, to be prescribed, from time to time, in the regulations.

    2.  Enter in to multi-disciplinary partnership, in or outside India, with certain categories of non-members, to be prescribed, from time to time, in the regulations subject to the Council Guidelines.

    3.  The members can use the Logo (released by the Institute on 1st July, 2007) which consists of the letters CA and a tick mark upside down inside a rounded rectangle with white background. (members can use this Logo as per Institutes guideline available on its website/Refer The CA Journal July, 2007).

    4.  Advertise through a write up setting out their particulars of their firms and services provided by them subject to the guidelines No. 1 CA(7)/council guidelines/01/2008, dated 14th May, 2008 issued by the Council pursuant to Clause (7) of Part I of the First Schedule to the Chartered Accountants Act, 1949. (Refer The CA Journal July, 2008 for the detailed guidelines).

    5.  Give his name and his firms name under specified groups in telephone directory viz., Yellow Pages brought by telephone authorities, subject to the prescribed restrictions appearing in the Code of Ethics, 2009 at p. no. 138.

    6.  Use the designation C.A. as well as the name of the firm in greeting cards and invitation cards.

    7.  Be a director simpliciter in a company without permission of the Council.

    8.  Be a promoter director in a company without prior permission of the Council.

    9.  Render Management Consultancy and Other Services in Corporate form, subject to the guidelines issued by the institute in this regard. (Decision in the 261st Council meeting. Published on page 629 of October 2006 issue of C.A. Journal).

    10.  Create his own website subject to overall guidelines laid down by the Council and should ensure that their websites are run on a pull and not push method.

    11.  The members of ICAI who are also members of AICPA and are eligible to sign the financial statements as CPAs (i.e., as members of the AICPA), may do so. So far as ethical standards are concerned, the ICAI ethical standards will apply. When the ICAI members sign the financial documents as CPAs, they should indicate in an appropriate manner, that their firm is an Indian accounting firm registered with the Institute of Chartered Accountants of India under the Chartered Accountants Act, 1949. In other words, such a member should ensure to appropriately reflect the fact in the relevant document(s) that his firm falls within the preview of the ICAI. (Decision in the 257th Council meeting. Published on page 145 of July 2006 issue of C.A. Journal).

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