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A CA in practice charging fees on a percentage of profits computed in an audit engagement is:
AProfessional misconduct under Clause (10) of Part I of First Schedule
BPermitted with disclosure
CRecommended for transparency
DRequired by ICAI
Answer & Solution
Correct answer: A. Professional misconduct under Clause (10) of Part I of First Schedule
1. Clause (10) Part I First Schedule prohibits contingent / percentage fees for attest functions.
2. It compromises independence.
3. Permitted for non-attest engagements with specific exceptions.
_Source: ICAI BoS CA Final Paper 3, Ch 6 "Standards on Auditing and Professional Ethics"_
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