CHARTERED ACCOUNTANTS NOT BE ARRESTED UNLESS THEY ARE PARTY TO CRIME
The profession of Chartered Accountants is committed to the principles of excellence, independence and integrity. We are steadfast as a profession to punish all those who are guilty of gross negligence and other professional misconduct. The Chartered Accountants in their capacity as auditors are performing as watchdogs and cannot be expected to be bloodhounds. The frauds in the business entities, especially those which are perpetrated by the management, in connivance with third parties
could be so complex, concealed in a plethora of fabricated evidence that even with extensive checking, due diligence, excellence, independence and integrity, an auditor may not be able to detect or unearth a fraud. The society, the police, the regulator and the judiciary cannot presume or take for granted the collusion by the auditors, wherever a fraud happens. The auditors could be negligent or could be victim to the fraud. In all such circumstances an auditor cannot be considered as the one
who has abetted a criminal conspiracy till the time the truth is surfaced with logical, unbiased and apparently judicious inquiry by people who are in know of the modalities of limitations by which a profession is abound. The profession of Chartered Accountants will also support inquiry and investigation, and if necessary, also the criminal prosecution and ultimate arrest in all those cases where, may be as an exception or an aberration some chartered accountants may be involved as a party to the fraud or is privity to the crime concerned. This could be only very rare exception and cannot be concluded against the profession as a whole. The recent arrest of auditors of Satyam, without even establishing that they are guilty of gross negligence and without any apparent proof that they have abetted the crime. On a seemingly mere apprehension arrest is against the principles of natural justice, freedom and fair play. We strongly condemn such attitude and especially in the backdrop of unambiguously perceivable alleged political motives.
India is a democracy and professionals cannot be equated with dreaded criminals. The law has to take its own course by a proper inquiry, evidence and establishment of a crime. In case, on proper judicial, fair inquiry and evidence it is prima-facie clear that a chartered accountant is party to a crime, very strict punishment as per law should be given, including arrest if necessary, at that stage. The Chartered Accountants Act, 1949 in such cases provides for life time removal of the C A from membership without any discretion if moral turpitude is involved. What is the role of audit and the duties of auditors is best understood by experts and before any conclusion is drawn, expert independent opinion of ICAI Council is necessary. The withdrawal of an opinion by an auditor in terms of ICAI's stipulated Guidance Note cannot be assumed as confession or acceptance of audit
failure. Let us have a clear understanding of technicalities with the help of Audit experts. We as a democratic society cannot allow police, system and politicians to pre-judge an issue and even without
adequate evidence against a chartered accountant being a party to a crime, arrest cannot and should not be made. An arrest can be advisable only in those cases where evidences can be tempered with or the accused is not co-operating with the inquiry. In case an accused chartered accountant is fully co-operating, available in his office and residence, providing complete access to all the records to SEBI, Serious Fraud Investigation Office and other regulatory and investigative authorities, an arrest in
such circumstances cannot be supported by any reasonable member of the society. The Satyam fraud at the outset seems to be very large, complex and intertwined with multiple layers having impacted a very large number of people; including, casting aspersions on the credit ability of Indians as entrepreneurial promoters. It is, therefore, very necessary to go deep into the matter and to find out the real beneficiaries of the mammoth fraud to enable adequate punishments so that the same acts as a deterrent in the corporate world. The Chartered Accountants cannot be made scapegoats and those who are in- charge of legal machinery need to handle these issues more carefully and diligently. We would like to reiterate very strongly that chartered accountants community is resolute to fairness,
ethics and integrity and to punish those who are found guilty after a fair and judicial trial.
could be so complex, concealed in a plethora of fabricated evidence that even with extensive checking, due diligence, excellence, independence and integrity, an auditor may not be able to detect or unearth a fraud. The society, the police, the regulator and the judiciary cannot presume or take for granted the collusion by the auditors, wherever a fraud happens. The auditors could be negligent or could be victim to the fraud. In all such circumstances an auditor cannot be considered as the one
who has abetted a criminal conspiracy till the time the truth is surfaced with logical, unbiased and apparently judicious inquiry by people who are in know of the modalities of limitations by which a profession is abound. The profession of Chartered Accountants will also support inquiry and investigation, and if necessary, also the criminal prosecution and ultimate arrest in all those cases where, may be as an exception or an aberration some chartered accountants may be involved as a party to the fraud or is privity to the crime concerned. This could be only very rare exception and cannot be concluded against the profession as a whole. The recent arrest of auditors of Satyam, without even establishing that they are guilty of gross negligence and without any apparent proof that they have abetted the crime. On a seemingly mere apprehension arrest is against the principles of natural justice, freedom and fair play. We strongly condemn such attitude and especially in the backdrop of unambiguously perceivable alleged political motives.
India is a democracy and professionals cannot be equated with dreaded criminals. The law has to take its own course by a proper inquiry, evidence and establishment of a crime. In case, on proper judicial, fair inquiry and evidence it is prima-facie clear that a chartered accountant is party to a crime, very strict punishment as per law should be given, including arrest if necessary, at that stage. The Chartered Accountants Act, 1949 in such cases provides for life time removal of the C A from membership without any discretion if moral turpitude is involved. What is the role of audit and the duties of auditors is best understood by experts and before any conclusion is drawn, expert independent opinion of ICAI Council is necessary. The withdrawal of an opinion by an auditor in terms of ICAI's stipulated Guidance Note cannot be assumed as confession or acceptance of audit
failure. Let us have a clear understanding of technicalities with the help of Audit experts. We as a democratic society cannot allow police, system and politicians to pre-judge an issue and even without
adequate evidence against a chartered accountant being a party to a crime, arrest cannot and should not be made. An arrest can be advisable only in those cases where evidences can be tempered with or the accused is not co-operating with the inquiry. In case an accused chartered accountant is fully co-operating, available in his office and residence, providing complete access to all the records to SEBI, Serious Fraud Investigation Office and other regulatory and investigative authorities, an arrest in
such circumstances cannot be supported by any reasonable member of the society. The Satyam fraud at the outset seems to be very large, complex and intertwined with multiple layers having impacted a very large number of people; including, casting aspersions on the credit ability of Indians as entrepreneurial promoters. It is, therefore, very necessary to go deep into the matter and to find out the real beneficiaries of the mammoth fraud to enable adequate punishments so that the same acts as a deterrent in the corporate world. The Chartered Accountants cannot be made scapegoats and those who are in- charge of legal machinery need to handle these issues more carefully and diligently. We would like to reiterate very strongly that chartered accountants community is resolute to fairness,
ethics and integrity and to punish those who are found guilty after a fair and judicial trial.
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