CA. Suman, the auditor of KEY Pvt. Ltd. has delegated following works to his articles and staff: i. Raising of bills and issuing acknowledgements…

As per Clause (12) of Part I of the First Schedule of the Chartered Accountants Act, 1949, a Chartered Accountant in practice is deemed to be guilty of professional misconduct if he 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. The Council has clarified that the power to sign routine documents on which a professional opinion or authentication is not required to be expressed may be delegated in the following instances and such delegation will not attract provisions of this clause: (i) Issue of audit queries during the course of audit. (ii) Asking for information or issue of questionnaire. (iii) Letter forwarding draft observations/financial statements. (iv) Initiating and stamping of vouchers and of schedules prepared for the purpose of audit. (v) Acknowledging and carrying on routine correspondence with clients. (vi) Issue of memorandum of cash verification and other physical verification or recording the results thereof in the books of the clients. (vii) Issuing acknowledgements for records produced. Raising of bills and issuing acknowledgements for money receipts. (ix) Attending to routine matters in tax practice, subject to provisions of Section 288 of Income Tax Act. (x) Any other matter incidental to the office administration and routine work involved in practice of accountancy. In the instant case, CA. Suman, the auditor of KEY Pvt. Ltd. has delegated certain task to her articles and staff such as raising of bills and issuing acknowledgements for money receipts, initiating and stamping of vouchers and of schedules prepared for the purpose of audit and signing financial statements of the company. Therefore, CA. Suman is correct in allowing first two tasks i.e. raising of bills and issuing acknowledgements for money receipts, initiating and stamping of vouchers and of schedules prepared for the purpose of audit to her staff and articles. However, if the person signing the financial statements on her behalf is not a member of the institute in practice or a member not being her partner to sign on her behalf or on behalf of her firm, CA. Suman is wrong in delegating signing of financial statements to her staff. In view of this, CA. Suman would be held guilty of professional misconduct for allowing the person to sign the financial statements on her behalf to her articles and staff under Clause 12 of Part 1 of First Schedule of the Chartered Accountants Act, 1949.