The profession of Chartered Accountants is regulated by the Chartered Accountants Act, 1949. Section 30 of such Act authorise the Council to make regulations for the purpose of carrying out the objects of such Act. Further u/s 30A even the Central Government may direct regulations to be made or may direct an amendment in the existing regulations. In either case such regulations are notified and gazetted in the Gazette of India after approval of the Central Government. Chartered Accountants Regulations, 1988 thus contain various regulations to regulate the profession of accountancy.
Part II of Second Schedule provides that a member of the Institute, whether in practice or not, shall be deemed to be guilty of professional misconduct, if he contravenes any of the provisions of this Act or the regulations made there under or any guidelines issued by the Council. For instance Article191 of regulations prevents a Chartered Accountant to engage in any business or occupation other than the field of accountancy. Clause 11 of Part I of First Schedule to the Act therefore name it as misconduct if he engages in any business or occupation other than the profession of Chartered Accountant without seeking permission of the Council.
Also Article 190A of such regulations provide as under:
190A. Chartered accountant in practice not to engage in any other business or occupation
A chartered accountant in practice shall not engage in any business or occupation other than the profession of accountancy, except with the permission granted in accordance with a resolution of the Council.
Article191 of the Chartered Accountants Regulations, 1988 further provide for select acceptance of part-time employment by a Chartered Accountant in practice. Such regulation provide as under:
“191. Part-time employments a chartered accountant in practice may accept
Notwithstanding anything contained in regulation 190A but subject to the control of the Council, a Chartered Accountant in practice may act as a liquidator, trustee, executor, administrator, arbitrator, receiver, adviser or representative for costing, financial or taxation matter, or may take up an appointment that may be made by the Central Government or a court of law or any other legal authority or may act as a Secretary in his professional capacity, provided his employment is not on a salary-cum-full-time basis.”
In other words the Chartered Accountants are even expected to venture into areas other than the accountancy and audit routine and also quite naturally as they are considered to have rich professional skills and knowledge. Article 191 in particular obliges a Chartered Accountant to accept any of such assignment in his professional capacity meaning in his capacity as a Chartered Accountant.
Further Chapter V of the ICAI Act, 1949 deal with the subject of misconduct of various types. Generally speaking u/s 22 professional or other misconduct shall be deemed to include any act or omission provided in any of two Schedules appended to the Act being split up in Parts depending on the category in which a Chartered Accountant falls.
In particular Clause 7 of Part I of Second Schedule holds a CA of professional misconduct if he does not exercise due diligence, or is grossly negligent in the conduct of his professional duties. Here is a case of Council of the ICAI, New Delhi Vs. Dipak Kumar De Sarkar (2011) 12Taxmann.com 476 (Cal.) in which the Chartered Accountant while holding position of auditor of a company consented to act as an arbitrator in transactions of shares of such company which was regarded as professional misconduct on the basis of charges in a complaint alleging that he acted in negligence in the conduct of his professional duties. This was challenged by the Chartered Accountant on the basis that the acts of holding of the share and