An outgoing auditor lost a 36-year audit to a former article, then asked the client for it back

A firm had audited the same group of colleges for thirty-six years, and then lost the work to a chartered accountant who had trained inside that very firm.¹ What took the losing auditor to the Board of Discipline was not the lost audit, but the letter he wrote afterwards.²

What happened#

The incoming auditor had done nothing wrong. He sent the letter Item (8) requires of him, and the duty was discharged.³ Everything that followed was the response to it.

Three passages in the reply did the damage. The letter went to the principals of the client colleges rather than to the auditor who had written.⁴

your accounts are very complicated, and an inexperienced person cannot handle it properly

It is pertinent to note that [the incoming auditor] is not authorized to conduct any audit on behalf of [the respondent's firm]⁵

It is the privilege of your governing body to appoint auditors and hence I hereby request you to please arrange to issue a letter of appointment for the financial year 2018-19 at your earliest possible

He also pressed his thirty-six-year record and claimed his was the only firm empanelled for the work.⁶

The two clauses#

Both sit in the First Schedule to the Chartered Accountants Act, 1949, which is why the Board of Discipline heard the case rather than the Disciplinary Committee.⁷

• Item (6) of Part I — soliciting professional work, directly or indirectly.⁸
• Item (2) of Part IV — conduct which brings disrepute to the profession.⁹

Neither concerns the quality of an audit. Both concern how a member behaved when he lost one. The Board found him guilty under both and reprimanded him.

What the respondent said#

Three arguments, and they are the three anyone in his position would reach for.

That the removal itself was irregular under the state societies legislation, and he was entitled to ask about it. That "experience" referred to the complexity of the accounts, not to the other man's competence. And that the letters went only to existing clients, privately and one to one — not circulars, not advertisements, and therefore not solicitation.

He also challenged the opinion that had let the complaint through screening as a breach of natural justice, cited a long unblemished record, and said he regretted any part of the letter that had been misread.

What the Board held#

He admitted writing the letters and did not dispute a word of their contents. That left only the question of what the letters were.

The Board found the language went beyond protest or clarification: the letters were "clearly intended to influence the client authorities to reconsider or reverse the appointment of the Complainant and to secure the audit work for the Respondent" (para 20). That is solicitation.

Separately, unsubstantiated remarks about a fellow member's competence and authorisation — a member who had trained at his own firm — failed the courtesy the profession expects, and brought it into disrepute (para 21).

Two lines dispose of the defences most likely to be tried again:

personal circumstances, past association, or emotional considerations cannot justify conduct that is otherwise inconsistent with the standards of professional ethics expected from a Chartered Accountant

the issue before it is not the legality of appointment, but the propriety of the Respondent's conduct and the manner in which he chose to address the situation

On the second, the Board added that he had never gone to court about the appointment — so his remedy plainly "did not lie in issuing letters containing solicitous and disparaging statements" (para 22).

There is a quieter point at para 19. He had alleged the incoming auditor improperly approached the client, then said he did not wish to prove it and produced nothing for it. An allegation raised and dropped is worth less than one never made.

The order#

the Board decided to REPRIMAND him.

A reprimand is the lightest punishment the Board can impose.¹⁰ No suspension, no fine. Guilt was decided by one Board and the punishment set months later by a differently constituted one.¹¹ The complaint had been with the Institute for close to seven years by then.¹²

Why it matters#

This section is ours, not the Board's.

The incoming auditor's letter has one correct reply, and it goes to him. The moment your answer is addressed to the client instead, its purpose stops being clarification — and the Board reads purpose off the contents, not off your description of them.

"Only my existing clients" is not a defence to solicitation. Item (6) does not turn on whether the reader was a stranger; it turns on whether you asked for the work. This letter closed by requesting an appointment letter for the year.

Disparaging the incoming auditor is a second charge, not part of the first. The remarks about competence and authorisation attracted their own clause in their own Part. One letter that both asks for work and belittles the person holding it ordinarily produces two findings.

Seven years, for a letter. The reprimand is mild; the process was not, and that gap never appears in the operative paragraph.

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