Lecture - 1

Chapter – 5 “Professional Ethics”

(1) Overview of Code of Ethics:

(a) Relevant Sections of (b) Schedules of (c) Miscellaneous

CA Act, 1949 CA Act, 1949

Sec. 2(2) First Schedule - Fundamental Principles

Sec. 6,7,8 and 20 and - Council General Guidelines, 2008

Sec. 21 and 22 Second Schedule - KYC Norms

Sec. 24,25 and 26 - Self Regulatory Measures

Sec. 27 - Decisions of ESB

- Guidelines for Networking

- Guidelines for Advertisement

(2) Schedules to Chartered Accountants Act, 1949:

(a) First Schedule (b) Second Schedule

Part I: Professional Misconduct Part I: Professional Misconduct

(Members in Practice - 12 Clauses) (Members in Practice - 10 Clauses)

Part II : Professional Misconduct Part II : Professional Misconduct

(Members in Service – 2 Clauses) (Members Generally – 4 Clauses)

Part III: Professional Misconduct Part III: Other Misconduct

(Members Generally – 3 Clauses) (Members Generally – 1 Clause)

Part IV: Other Misconduct

(Members Generally – 2 Clauses)

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(3) Relevant Sections of Chartered Accountants Act, 1949:

(i) Sec. 2(2): Members Deemed to be in Practice:

Member holding COP = Practicing CA

Member without holding COP = Deemed to be in practice if he renders

the services as covered u/s 2(2)

A Member of the Institute shall be deemed to be in practice,

when individually or in partnership with another Chartered Accountant in Practice or

other Persons (members of recognised Professional Bodies)

for a consideration, engages himself into the prescribed activities*.

*Prescribed Activities: (i) Accountancy Work

(ii) Auditing / Verification / Certification

(iii) Assistance in Accounting Practices

(iv) Management and Other Consultancy Services

NOTES:

- Sec. 2(2)(iv) provides that a member will be deemed to be in practice if he renders

such other services, as in the opinion of the Council of ICAI, can be rendered by CA

in practice.

- Council of ICAI, passed a resolution mentioning therein the entire range of services

which a CA in practice can render.

- As per that list of Management Consultancy and Other Services, a CA in practice

can render multiple services as prescribed in the resolution, including:

(a) Personnel recruitment and Selection; and

(b) Acting as Advisor or Consultant to an Issue of Securities

(c) Acting as Registered Valuer under the Companies Act, 2013

(d) Acting as Insolvency Professional in terms of IBC, 2016.

(e) Administrative Services. (Assisting clients with their routine tasks)

Note: Read the entire list of services from the main book.

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- However, it is specifically mentioned that a CA in practice cannot render services

of:

(a) Broking

(b) Underwriting; and

(c) Portfolio Management

DO Practice – Questions on Sec. 2(2)

(ii) Sec. 6: Certificate of Practice:

No member of ICAI, whether in India or Outside India

shall be entitled to practice

unless he has obtained Certificate of Practice

NOTES:

- A member of ICAI, cannot accept any work prescribed for practicing CA in his

capacity as a Chartered Accountant (i.e. Member of ICAI), unless he holds COP.

- If a member surrenders his CoP for any period due to any misconduct, he cannot

accept any work in his capacity as a CA, for the period for which COP has been

cancelled.

However, he can accept the work in any other capacity, for example, in capacity as

an advocate, GST Practitioner or Insolvency Professional etc.

Cancellation of COP (Regulation 10): Reading from Main Book

Restoration of COP (Regulation 11): Reading from Main Book

DO Practice – Questions on Sec. 6

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(iii) Sec. 7: Members to be known as “Chartered Accountants”

- Every member of ICAI in practice shall use the designation “Chartered

Accountant”.

- Any other designation in addition thereto or substitution thereof is not allowed.

(For Example: Tax expert, Corporate Law Advisor, Management Consultant etc.)

- Members who are not in practice may use the designation “Chartered Accountant”.

- Recognised degrees or qualifications and memberships of professional bodies –

allowed to be mentioned on visiting cards, letter heads etc.

- Prefix ‘CA’ is allowed to be used by any member.

(iv) Sec. 8: Disability to become a member: Reading from Main Book

(v) Sec. 20: Removal of Name from Register of Members: Reading from Main Book

Restoration of Membership (Regulation 19): Reading from Main Book

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