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June 28, 2022

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CA, who created fake accounts of 15 years of registered charitable trust in just 2 days, guilty of professional misconduct

CA, who created fake accounts of 15 years of registered charitable trust in just 2 days, guilty of professional misconduct

The Disciplinary Directorate of the Institute of Chartered Accountants of India (ICAI) has convicted a Chartered Accountant, who held 15 years of fake accounts of a Registered Charitable Trust, in just 2 days. professional misconduct.

With regard to the financial statements, the complainant sent a letter dated 24 September 2015 to the respondent seeking clarification on the following issues on the financial statements prepared by the respondent:

I. There was no indication of any concerned trustee of the trust on the financial statements.

ii. All the financial statements for the years 2010 to 2012 were prepared on 22.10.2013 and the financial statements for the years 2013 to 2015 were prepared on 13.09.2015 and the same question was raised whether the books of accounts were prepared regularly .

iii. What was the request to Mr. Ashok Lohani to prepare these financial statements of this trust in one day.

iv. Why did the respondent not approach the Chairman/Executive Trustee before preparing these financial statements in accordance with the Registration Order and the Trust Deed?

v. Whether the respondent has obtained any copy of the resolution passed unanimously from the Board of Trust for preparation of the above mentioned financial statements.

vi. Whether the respondent has received any authorized appointment jetter granted by this Registered Charitable Trust-Board to act as an auditor.

vii. Which of the trustees of the Board of Trust approached the respondent for preparation of these financial statements.

viii. Whether any resolution was passed by the Trust Board regarding letting out the shops of this registered Trust.

ix. Whether any audit reports were prepared in respect of these financial statements.

X. Whether these accounts of the Trust are submitted to the Income Tax Department for IT returns.

xi. Is there any pan card number of this trust available

xii. Are there any pre-2000 financial statements/audit reports available?

xiii. Please provide explanation in the financial statements prepared by the respondent regarding worship expenses, food expenses and flour expenses in this religious and charitable trust.

xiv. Please also mention the puja expenditure in the financial statements. What is the meaning of (-58) in year 2004 and (-284) in year 2005?

The respondent submitted that:

1. The true fact of the matter is that he was appointed to examine and confirm the accounts and to prepare the Income and Expenditure Account and Balance Sheet of Smt. Kalavati Lakhani Religious and Charitable Trust by Shri Ashok Lohani, who was said to be one of the Trustees of the above named Trust.

2. Further, in this regard Mr. Ashok Lohani has given a trust deed and a written application to the Respondent in which the Respondent has examined and confirmed that Mr. Ashok Lohani is the Trustee of the Trust. After accepting the work, he was provided with a copy of the accounts of the Trust which he has to examine.

3. Income and Expenditure Account and its Balance Sheet were prepared on the basis of data provided by Mr. Ashok Lohani. According to the respondent, the audit report or income tax return was neither prepared nor filed for him.

4. Respondent confirmed that the prescribed procedure was followed at the time of scrutiny of accounts. No complaint has ever been made by Mr. Ashok Lohani or any legal authority regarding his work including the complainant Mr. SD Khetani.

5. Further, the respondent submitted that he did not know the complainant and had never done any work for the complainant. Their first objection in this regard is that the third party i.e. the complainant has no right to call upon a client to answer any query regarding the professional work done by him.

6. As regards the question of the complainant, the respondent stated that none of the questions pertained to his work and all the questions pertained to the internal disputes between the complainant and his client Mr. Ashok Lohani, which were not of his concern. Is. ,

7. Further, the Respondent brought on record a copy of the Balance Sheet and Profit and Loss Account prepared by Tally, signed by Mr. Ashok Kumar, on the basis of which the certificates were issued by the Respondent.

8. Further, during the hearing, he admitted his mistake that he signed the financial statements without approval from the trustee of the auditee trust.

9. Thereafter, the respondent made his final submission and after recording the submissions of both the parties. The committee concluded hearing on the above matter.

Committee Comments

The Committee was of the view that the use of the Respondent’s letter-heads and stationery to prepare the accounts of the Trust proved that the Respondent himself prepared the accounts of the Trust and then audited the same. Therefore, he has not acted independently while auditing the accounts of the Trust.

Further, the Committee noted that the accounts of the Trust have not been signed by any of the Trustees of the Trust. When the Committee questioned the respondent, he replied that it has been substantiated on the basis of tally figures which were signed by Mr. Ashok Kumar.

However, he acknowledged the mistake and admitted that he has realized the mistake now and will not repeat it in future.

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