A chartered accountant changed a sworn statement to investigators. Years on, the accountant was reprimanded and fined.

A Chennai chartered accountant helped incorporate four private companies with the Registrar of Companies, and later gave a statement on oath to the Serious Fraud Investigation Office about them.¹ The accountant then changed that statement, and the Institute's Board of Discipline held that the change alone brought disrepute to the profession — regardless of what role, if any, the accountant had actually played in auditing the companies concerned.

What happened#

The finding did not turn on which company the accountant had audited. It turned on a single fact: the accountant told the Serious Fraud Investigation Office one thing and later told it something else. The Board treated that alone as conduct unbecoming of a chartered accountant (para 4(c)).

Four companies were named in the complaint,² but only one of them mattered to the charge — the company for whose financial year 2009-10 the accountant was said to have made contradictory statements. The Board itself recorded that there was no evidence the accountant had ever been its statutory auditor, and held that this made no difference to the finding (para 4(c)).

The charge#

The Board found the accountant guilty of "Other Misconduct" under Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949, read with Section 22 of the Act — a residual clause for conduct that brings disrepute to the profession, wider than any of the specific items listed elsewhere in the Schedule.³

What the respondent said#

The accountant raised five objections going to the legality of the proceedings themselves, and four more going to fairness and consequence.

On jurisdiction, the accountant argued that only the Council of the Institute — not the Board of Discipline — has the power to form an opinion under the disrepute clause, since the Act speaks of "the opinion of the Council". On composition, the accountant argued that the Findings had no legal force because they were signed by only two of the Board's members, when Section 21A of the Act contemplates a three-member Board.

On the statement itself, the accountant argued that it was a nullity: even the Serious Fraud Investigation Office, in the accountant's submission, had no power under Section 240 of the Companies Act, 1956 to record it, and in any event the accountant had derived no benefit and avoided no danger by giving it. The accountant also argued that the Findings were internally inconsistent — if the accountant was never the statutory auditor of the company in question, that undercut the very charge against the accountant — citing the Supreme Court's decision in Dhirajlal Girdharilal v. CIT, Bombay, (1954) 26 ITR 736, and disputing the proposition that changing a statement shows a person is hiding facts.

On consequence, the accountant pointed to twenty years of practice with no prior complaint, no prejudice caused to the investigation and no benefit gained from the acts alleged, and to being the sole earner for a family that included a spouse and three school-going children, whose livelihood depended entirely on the accountant's practice as a chartered accountant.

What the Board held#

On jurisdiction, the Board relied on an earlier ruling of the Appellate Authority, which had already held — in a batch of appeals against the Institute — that the Director (Discipline)'s Prima Facie Opinion is what sets the disciplinary machinery in motion, and that "the opinion of council" in the disrepute clause "has to be given a purposive meaning" rather than read as requiring a separate opinion from the Council itself (para 4(a)).⁴

On composition, the Board pointed to its own procedural rules:

The quorum for any meeting of the Board of Discipline shall be two members. (Rule 13(2), quoted at para 4(b))

and held that the Findings, signed by two members, suffered from no illegality.

On the merits, the Board accepted that there was no evidence the accountant had been the statutory auditor of the company for the year in question, but held that this did not matter:

the said fact does not in any way mitigate the misconduct on the part of the Respondent in respect of the charge alleged. The Respondent being a professional was expected to come clean before making any statement on oath to Government Authorities. Further changing of statement proves that a person is hiding facts and trying to mislead the Government authorities. (para 4(c))

and concluded:

it has already been conclusively proved that [the Respondent] is Guilty of Other Misconduct falling within the meaning of Clause (2) of Part IV of the First Schedule of the Chartered Accountants Act, 1949 read with Section 22 of the said Act.⁵ (para 4(c))

The order#

the Board decided to reprimand [the Respondent] and also imposed a fine of Rs.25,000/- (Rs. Twenty five thousand only) upon him payable within a period of 60 days from the date of receipt of the Order.⁵ (para 5)

That sanction was fixed by a Board sitting through video conferencing, after hearing the accountant in person on the question of punishment.⁶ A reprimand together with a fine sits above a reprimand on its own on the Board's punishment scale, and well short of removal from the Register. The Findings were recorded in January 2020 and the accountant was heard on punishment that September, but the order fixing the punishment itself was issued only in May 2024 — pursuant, the order records, to a Delhi High Court order made weeks earlier in a writ petition naming the accountant among its respondents.⁷

Why it matters#

This section is ours, not the Board's.

A changed statement can be the whole case. The Board did not need to decide what the accountant actually did at the company under investigation — only that the account given to investigators changed. Whatever you tell a government authority under oath, be prepared to stand by it without alteration.

A weak link in the underlying facts does not weaken the actual charge. The Board accepted the accountant was never the statutory auditor in question, and held that this changed nothing, because the charge was about the statement, not the audit. Answer the charge that was actually made, not the one that would be easiest to defend.

A procedural objection is only as good as its novelty. Both the jurisdiction argument and the composition argument here had already been settled by an appellate ruling and by the Board's own rules before the case was even heard. Check whether your objection has already been decided against you elsewhere before relying on it.

A finding of guilt does not go stale while punishment waits. Four years passed between the Findings and the order recording the punishment, and the fine still landed. Treat a pending disciplinary finding as live until an order actually disposes of it.

This summarises a public order and links the primary source. It is general information, not legal or professional advice.