The ICAI removed a chartered accountant’s name from the register for one year for failing to report ₹1,150 crore fund diversion and ignoring going concern risks in audit.
The Institute of Chartered Accountants of India (ICAI) has removed the name of a practicing CA from the register for one year for serious audit failures involving non-reporting of ₹1,150 crore fund siphoning and overlooking critical going concern uncertainties in a listed company’s financial statements.
Breach of Auditing Standards and Ethics
The Disciplinary Committee found that the CA failed to exercise due professional care under SA 570 (Going Concern) and SA 240 (Audit Considerations Relating to Fraud). Despite clear red flags—such as disproportionate inter-corporate investments and lack of collateral—the auditor gave a clean opinion without disclosing material financial irregularities or qualifying the report.
The removal, under Section 21 of the Chartered Accountants Act, 1949, reflects ICAI’s tightened oversight in corporate fraud cases. The decision signals that auditors cannot remain passive when confronted with indicators of financial mismanagement or fund diversion, especially in cases involving public funds.
Practising CAs must strengthen risk assessment procedures and document professional scepticism in high-exposure audits to avoid regulatory action.
Citations
- Chartered Accountants Act, 1949, Section 21; SA 570, SA 240
