ICAI Imposes ₹20000 Penalty on CA for Non-Verification of Documents:
A Chartered Accountant (CA), has been found guilty of professional misconduct by the Institute of Chartered Accountants of India (ICAI). The Ministry of Corporate Affairs’ Registrar of Companies filed a complaint against him, alleging that his involvement in the company’s incorporation enabled illegal activities. The company, which had a Chinese national as a significant shareholder, operated a loan application that was not accessible on the Google Play Store. Upon conducting a physical verification, the complainant’s department discovered that there was no company located at the registered address.
The CA faced allegations of neglecting to exercise proper care while certifying the e-forms for incorporation. Specifically, it was claimed that he certified the e-forms based solely on scanned copies of documents, which were not certified as true copies of the originals. Additionally, he failed to provide a written engagement letter or verify copies of the company’s Memorandum and Articles of Association (MOA & AOA). The respondent argued that his assistant had verified the registered office and reviewed soft copies of documents received via email. Although the committee recognized that sending an assistant for verification was a common practice, they found his explanation regarding document verification to be insufficient.
The Chartered Accountant (CA) was unable to provide any proof to support his claim that he had verified the details from the original or certified copies of the documents, contradicting his statement on the e-form. The Committee concluded that he had violated Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949, which relates to gross negligence in the performance of professional responsibilities, resulting in disciplinary action being taken against him.
Sanctions will consist of being excluded from the Member Registry for a duration of 60 days, as well as a fine of Rs. 20,000 (Rupees Twenty Thousand only) that must be settled within 90 days. Failure to pay will result in an extension of the expulsion period by 30 days.
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