Professional Misconduct of Cost Accountants

After reading this article you will learn about Professional Misconduct of Cost Accountants Requiring Action by High Court.

Professional Misconduct of Cost Accountants in Practice Requiring Action by a High Court:

THE SECOND SCHEDULE [See section 21(5) and 22]

Part I:

Professional Misconduct in relation to Cost Accountant in Practice Requiring Action by a High Court.

A cost accountant in practice shall be deemed to be guilty of professional misconduct, if he:

(1) Discloses information acquired in the course of his professional engagement to any person other than the client so engaging him, without the consent of such client, or otherwise than as required by any law for the time being in force;

(2) Certifies or submits in his name or in the name of his firm a report of an examination of cost accounting and related statements unless the examination of such statements has been made by him or by a partner or an employee in his firm or by another cost accountant in practice;

(3) Permits his name or the name of his firm to be used in connection with an estimate of cost or earnings contingent upon future transactions in a manner which may lead to the belief that he vouches for the accuracy of the forecast;

(4) Express his opinion on cost or pricing statement of any business or any enterprise in which he, his firm or a partner in his firm has substantial interest, unless he discloses the interest also in his report;

(5) Fails to disclose in a cost or pricing statement a material fact known to him, which is not disclosed in a cost or pricing statement, but disclosure of which is necessary to make such statement not misleading;

(6) Fails to report a material misstatement known to him to appear in a cost or pricing statement with which he is concerned in a professional capacity;

(7) Is grossly negligent in the conduct of his professional duties;

(8) Fails to obtain sufficient information to warrant the expression of an opinion or makes exceptions which are sufficiently material to negate the expression of an opinion;

(9) Fails to invite attention to any material departure from the generally accepted procedure of costing and pricing applicable to the circumstances;

(10) Fails to keep moneys of his client in a separate banking account or to use such moneys for purposes for which they are intended.

Professional Misconduct of Members Requiring Action by a High Court:

Part II:

Professional Misconduct in relation to Members of the Institute Generally Requiring Action by a High Court

A member of the Institute, whether in practice or not, shall be deemed to be guilty of professional misconduct, if he:

(1) Contravenes any of the provisions of this Act or the regulations made thereunder;

(2) Is guilty of such other act or omission as may be specified by the Council in this behalf, by notification in the Gazette of India.

Section 21 of the Cost & Works Accountants Act spells out the actions to be taken by the Institute on receipt of any complaint of misconduct by any member. The Disciplinary Committee of the Council enquires into the matter and furnishes its recommendations.

The Council, after affording an opportunity of being heard, may either:

(a) Reprimand the member; or

(b) Remove the name of the member from the register for a period not exceeding five years.

In cases where it considers that the removal should be for a period of more than five years, or where the misconduct requires action by High Court, the Council shall forward the case to the High Court along with its recommendation.

After hearing the member concerned, Council and the Central Government, the High Court may:

(a) Direct that the proceedings be filed, dismiss the complaint, as the case may be;

(b) Reprimand the member;

(c) Remove him from membership of the Institute either permanently or for such period as the High Court thinks fit;

(d) Refer the case to the Council for further inquiry and report.

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