Under the Chartered Accountants Act, 1949 SECOND SCHEDULE Part I, a CA in practice is GUILTY of Professional Misconduct under CLAUSE 5 when they:
AFails to renew their certificate of practice on time
BEngages in any business other than chartered accountancy
CFail to disclose a material fact known to them which is not disclosed in the FS, where the disclosure is necessary and the CA is concerned with the FS in a professional capacity
DCharges a fee below the ICAI minimum scale of fees
Answer & Solution
Correct answer: C. Fail to disclose a material fact known to them which is not disclosed in the FS, where the disclosure is necessary and the CA is concerned with the FS in a professional capacity
Clause 5 Part I Second Schedule — specifically targets failure to disclose material facts in financial statements where disclosure is necessary and the CA is professionally engaged with those FS. (Clause 6 = failure to report material misstatements; Clause 7 = failure to exercise due diligence / gross negligence.) These three clauses are the bedrock of CA accountability for audit/attestation work.
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