Professional Ethics

Important compilation of FAQ’s on Chartered Accountants ethics as is given by Ethical Standards Board of ICAI

1. Can a member in practice render Management Consultancy and other services?

Yes, however, the areas covered under the Management Consultancy and other services have been summarized by the Council.

2. Can a Chartered Accountant provide `Portfolio Management Services' (PMS) as part of CA practice?

No, the Explanation to Clause (xix) of the definition of 'Management Consultancy and other Services' expressly bars the activities of broking, underwriting and Portfolio Management.

3. Whether a Chartered Accountant in practice is required to obtain any trade license for practicing?

No, a Chartered Accountant in practice is not required to obtain any trade licence for practicing as a professional. The certificate of practice issued by the Institute is the only requirement to practice as a Chartered Accountant.

4. Can a Chartered Accountant in practice work as a ‘Collection Agent/Recovery Agent'?

No, a Chartered Accountant in practice cannot work as a Collection Agent. However, he can act as a Recovery Consultant.

5. Whether a Chartered Accountant in practice can use expression like Income Tax Consultant, Cost Accountant, Company Secretary, Cost Consultant or a Management Consultant?

No, Council direction under Clause (7) of Part I of the First Schedule to the Act which is appearing at page 154 of the Code of Ethics, 2009 prescribes that it is improper for a Chartered Accountant to state on his professional documents that he is an Income-tax Consultant, Cost Accountant, Company Secretary, Cost Consultant or a Management Consultant, whereas it is permitted to mention his degrees.

6. Can a Chartered Accountant in practice also practice as an Advocate?

Yes, Cois given buncil direction under Clause (7) of Part I of the First Schedule to the Act prescribes that a Chartered Accountant in practice who is otherwise eligible may practice as Advocate subject to the permission of the Bar Council but in such cases, he should not use designation 'Chartered Accountant' in respect of the matters involving the practice as an Advocate. In respect of other matters he should use the designation 'Chartered Accountant' but he should not use the designation 'Chartered Accountant' and 'Advocate' simultaneously.

7. Whether a Chartered Accountant in practice can engage in any business or occupation other than the profession of Chartered Accountancy?

No, in terms of Clause (11) of Part I of First Schedule to the Act in general a Chartered Accountant in practice is not permitted to engage himself in any business or occupation other than the profession of Chartered Accountants.

However, there are following exceptions to it:-

(i) A Chartered Accountant can be a Director of a Company (not being a Managing Director or Whole-Time Director), unless he or any of his partners is interested in such company as an auditor. [Proviso to Clause (11)]

(ii) A Chartered Accountant in practice may engage in any business or occupation with the permitted granted in accordance with a Resolution of the Council. (Regulation 190A) Appendix-9 of the CARegulations contains the above resolutions under two heads (A) permission granted generally and (B) permission to be granted specifically.

8. Whether a member in practice can be a director of a company?

Yes. a member in practice is permitted generally to be a Director Simplicitor in a company provided he is not a Managing Director or Wholetime Director and is required only in the Board Meetings of the company and not paid any remuneration except for attending such meetings.

9. Whether a member in practice is allowed to become whole-time director of a company?

No, Members are not allowed to become whole-time Director of a company generally. However, a member in practice may become a Managing Director or a whole-time Director of a body corporate within the meaning of the Companies Act, 1956 subject to the Council Guidelines of Corporate Form of practice.

10. Can a member in practice be Promoter/Promoter Director of the Company?

Yes, there is no bar for a member to be a promoter/signatory to the Memorandum and Articles of Association of any company. There is also no bar for such a promoter/signatory to be a Director Simpliciter of that company irrespective of whether the objects of the company include areas, which fall within the scope of the profession of chartered accountants. Therefore members are not required to obtain specific permission of the Council in such cases. There is also no bar on holding any snumber/percentage of shares in the company.

11. Can a member in practice be a sleeping partner in family business concern?

Yes, a member in practice can be a sleeping partner in a family business concern provided he takes specific permission from the Council in terms of Regulation 190A of Chartered Accountants Regulations, 1988.

12. Whether a Chartered Accountant in practice is entitled to accept teaching assignment?

Yes, a Chartered Accountant in practice is allowed to accept teaching assignment in university, affiliated colleges, educational institution, coaching organization, private tutorship, provided the direct teaching hours devoted to such activities taken together do not exceed 25 hours a week with effect from 1.4.2005.

13. Can a Chartered Accountant working in a CA firm hold Certificate of Practice?

Yes, a Chartered Accountant working in a C.A. firm can hold CoP. However, w.e.f.1.4.2005, he is not entitled to do any attest function.

14. Can a member who is in part-time/full time employment apply for Certificate of Practice and do attest functions?

Yes, he can apply for Certificate of Practice but cannot do attest function. Please refer Regulation 190A of the CA Regulations.

15. Can an auditor write the books of accounts of the auditee?

No, Council directions under Clause (4) of Part I of the Second Schedule to the Act prescribes that an auditor is not permitted to write the books of accounts of his auditee clients.

16. Can a member holding Certificate of Practice is entitled to own Agricultural land and continue agricultural activity?

Yes, member holding Certificate of Practice can own and hold agricultural land and continue agricultural activity.

17. Whether a member holding Certificate of Practice can own Agricultural Land and continue Agricultural activity?

Owning Agricultural Land and carrying out Agricultural activities by a member holding Certificate of Practice is covered under activities “Permission Generally Granted” under (9) of the Chartered Accountants Regulations, 1988, and is, therefore permitted.

18. Whether a Chartered Accountant in practice accept a professional assignment of investigation given by Insurance Company?

It is permissible for Chartered Accountant in practice to accept such assignment as the work of investigation is akin to audit.

19. Whether Management Consultancy Companies floated by Practicing Chartered Accountants can receive remuneration from an employer based on percentage of the annual CTC of such candidate while providing recruitment or placement of such candidate(s)?

Practicing Chartered Accountants or Management Consultancy Companies floated by practicing Chartered Accountants can receive remuneration from an employer on percentage basis for providing the services of recruitment or placement of candidate(s), being the management consultancy services, a non exclusive area.