Ex-auditor couldn’t complaint against new auditor if client found no discrepancy in audit report of new auditor

Facts:

a) 'A', auditor of the company, was replaced by ‘B’. A made a complaint against B
levying various allegations against him;

b) The Council, found B prima facie guilty of professional misconduct and, accordingly, referred the matter to the Disciplinary Committee;

c) Disciplinary Committee found B guilty of professional misconduct under sections 21 and 22. The Council made a reference seeking confirmation of removal of B’s name from the register of members of the ICAI.

The High Court held as under:

1) A had no locus standi to make a complaint as the company whose audit report was stated to have been prepared by B contrary to the prescribed norms, had not made any complaint against B;

2) The Disciplinary Committee had not referred to particular portions of the report which were found not in conformity with the prescribed norms;

3) B was not shown to have been served with a notice of hearing by the Disciplinary Committee. The entire proceeding of the Disciplinary Committee was contrary to the settled principles of natural justice;

4) A undisputedly was biased against B, because of his having been replaced as auditor of the aforesaid company. Therefore, case put forth by him could not be accepted in the absence of independent corroboration. Thus, the reference made by council was to be rejected - ICAI V. VIJAY KUMAR (2013) 37 taxmann.com 203 (HC-P&H)

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