(c) M/s GSTR & Associates, Chartered Accountants, is an audit firm consisting of three partners. The partnership firm was formed in the year…

Clause (9) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 states that a Chartered Accountant in practice shall be deemed to be guilty of misconduct if he fails to invite attention to any material departure from the generally accepted procedure of audit applicable to the circumstances. This clause implies that the audit should be performed in accordance with "generally accepted procedure of audit applicable to the circumstances,” and if for any reason the auditor has not been able to perform the audit in accordance with such procedure, his report should draw attention to the material departures from such procedures. What constitutes “generally accepted audit procedure” would depend upon the facts and circumstances of each case, but guidance is available in general terms from the various pronouncements of the Institute is issued by way of Engagement and Quality Control Standards, Statements, General Clarifications, Guidance Notes Technical Guides, Practice Manuals, Studies and Other Papers. Audit of Listed Companies: Pursuant to SEBI Notification, statutory audit of listed companies under the Companies Act, 2013 shall be done by only those auditors who have subjected themselves to the Peer Review process of the Institute, and hold a valid certificate issued by the Peer Review Board of the ICAI. In the given case of M/s. GSTR & Associates, which appointed auditors of a listed entity, Ruby Limited, for the year ended 31.03.2025, CA Y, the proprietor, signed the balance sheet on 21.05.2025 but never subjected the firm to the Peer Review process of the Institute. CA Y would be held guilty of professional misconduct under clause (9) of Part I of the Second Schedule of the Chartered Accountants Act, 1949. Also, CA Y did not comply with the SEBI Notification, which was required to be complied with. Alternative Answer: (c) Clause (1) of Part II of the Second Schedule to the Chartered Accountants Act, 1949 states that a chartered accountant in practice shall be deemed to be guilty of misconduct if he contravenes any of the provisions of this Act or the regulations made thereunder or any guidelines issued by the Council. It requires every member of the institute to act within the framework of the Chartered Accountants Act, 1949, and the regulations and guidelines made by the Council thereunder. The Statement on Peer Review shall be deemed to be a guideline of the Council under Clause (1) of Part II of the Second Schedule to the Act, and it is obligatory for the Practice Unit to comply with the provisions contained in this Statement. As per the Statement, every Practice Unit, including its branches who has conducted Statutory Audit of Enterprises whose equity or debt securities are listed in India or abroad as defined under SEBI(LODR) regulations, 2015, will be subject to Peer Review in accordance with this statement. Audit of Listed Companies: Pursuant to SEBI Notification, Statutory Audit of Listed Companies under the Companies Act, 2013 shall be done by only those auditors who have subjected themselves to the Peer Review process of the Institute, and hold a valid certificate issued by the Peer Review Board of the ICAI. In the given case of M/s GSTR & Associates, which is appointed auditor of a listed entity, Ruby Limited, for the year ended 31.03.2025, Mr. Y, the engagement partner, signed the Balance sheet on 21.05.2025 but never subjected the firm to the Peer Review process of the Institute. Hence, CA Y would be held guilty of professional misconduct under clause (1) of Part II of the Second Schedule of the Chartered Accountants Act, 1949.