PART I : Professional misconduct in relation to
chartered accountants in practice
A chartered accountant in practice shall be deemed
to be guilty of professional misconduct, if he −
(1) allows any person to practice in his name as a
chartered accountant unless such person is
also a chartered accountant in practice and is
in partnership with or employed by him;
(2) pays or allows or agrees to pay or allow,
directly or indirectly, any share, commission
or brokerage in the fees or profits of his
professional business, to any person other
than a member of the Institute or a partner or
a retired partner or the legal representative of
a deceased partner, or a member of any
other professional body or with such other
persons having such qualifications as may be
prescribed, for the purpose of rendering such
professional services from time to time in or
outside India.
Explanation − In this item, “partner” includes
a person residing outside India with whom a
chartered accountant in practice has entered
into partnership which is not in contravention
of item (4) of this Part;
(3) accepts or agrees to accept any part of the
profits of the professional work of a person
who is not a member of the Institute:
Provided that nothing herein contained shall
be construed as prohibiting a member from
entering into profit sharing or other similar
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arrangements, including receiving any share
commission or brokerage in the fees, with a
member of such professional body or other
person having qualifications, as is referred to
in item (2) of this Part;
(4) enters into partnership, in or outside India,
with any person other than a chartered
accountant in practice or such other person
who is a member of any other professional
body having such qualifications as may be
prescribed, including a resident who but for his
residence abroad would be entitled to be
registered as a member under clause (v) of
sub-section (1) of Section 4 or whose
qualifications are recognised by the Central
Government or the Council for the purpose of
permitting such partnerships;
(5) secures, either through the services of a
person who is not an employee of such
chartered accountant or who is not his
partner or by means which are not open to a
chartered accountant, any professional
business:
Provided that nothing herein contained shall
be construed as prohibiting any arrangement
permitted in terms of items (2), (3) and (4) of
this Part;
(6) solicits clients or professional work either
directly or indirectly by circular,
advertisement, personal communication or
interview or by any other means:
Provided that nothing herein contained shall
be construed as preventing or prohibiting−
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(i) any chartered accountant from applying
or requesting for or inviting or securing
professional work from another
chartered accountant in practice; or
(ii) a member from responding to tenders
or enquiries issued by various users of
professional services or organisations
from time to time and securing
professional work as a consequence;
(7) advertises his professional attainments or
services, or uses any designation or
expressions other than chartered accountant
on professional documents, visiting cards,
letter heads or sign boards, unless it be a
degree of a University established by law in
India or recognised by the Central
Government or a title indicating membership
of the Institute of Chartered Accountants of
India or of any other institution that has
been recognised by the Central Government
or may be recognised by the Council:
Provided that a member in practice may
advertise through a write up setting out the
services provided by him or his firm and
particulars of his firm subject to such
guidelines2
as may be issued by the Council;
(8) accepts a position as auditor previously held by
another chartered accountant or a certified
auditor who has been issued certificate under
the Restricted Certificate Rules, 1932 without
first communicating with him in writing;
(9) accepts an appointment as auditor of a
company without first ascertaining from it
whether the requirements of Section 225 of
77
the Companies Act, 1956* in respect of such
appointment have been duly complied with;
(10) charges or offers to charge, accepts or offers
to accept in respect of any professional
employment, fees which are based on a
percentage of profits or which are contingent
upon the findings, or results of such
employment, except as permitted under any
regulation made under this Act;
(11) engages in any business or occupation other
than the profession of chartered accountant
unless permitted by the Council so to engage:
Provided that nothing contained herein shall
disentitle a chartered accountant from being a
director of a company (not being a managing
director or a whole time director) unless he or
any of his partners is interested in such
company as an auditor;
(12) allows a person not being a member of the
Institute in practice, or a member not being
his partner to sign on his behalf or on behalf
of his firm, any balance-sheet, profit and loss
account, report or financial statements.
PART II : Professional misconduct in relation to
members of the Institute in service
A member of the Institute (other than a member in
practice) shall be deemed to be guilty of professional
misconduct, if he being an employee of any company, firm
or person−
(1) pays or allows or agrees to pay directly or
indirectly to any person any share in the
*
No. 1 of 1956
78
emoluments of the employment undertaken
by him;
(2) accepts or agrees to accept any part of fees,
profits or gains from a lawyer, a chartered
accountant or broker engaged by such
company, firm or person or agent or customer
of such company, firm or person by way of
commission or gratification.
PART III : Professional misconduct in relation to
members of the Institute generally
A member of the Institute, whether in practice or
not, shall be deemed to be guilty of professional
misconduct, if he−
(1) not being a fellow of the Institute, acts as a
fellow of the Institute;
(2) does not supply the information called for, or
does not comply with the requirements asked
for, by the Institute, Council or any of its
Committees, Director (Discipline), Board of
Discipline, Disciplinary Committee, Quality
Review Board or the Appellate Authority;
(3) while inviting professional work from another
chartered accountant or while responding to
tenders or enquiries or while advertising
through a write up, or anything as provided for
in items (6) and (7) of Part I of this Schedule,
gives information knowing it to be false.
PART IV : Other misconduct in relation to members
of the Institute generally
A member of the Institute, whether in practice or
not, shall be deemed to be guilty of other misconduct, if
he−
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(1) is held guilty by any civil or criminal court for
an offence which is punishable with
imprisonment for a term not exceeding six
months;
(2) in the opinion of the Council, brings disrepute
to the profession or the Institute as a result of
his action whether or not related to his
professional work.