--- title: A member's Facebook posts on a new fee-sharing rule drew ICAI's own Legal Section. The Board found no misconduct. description: ICAI's Legal Section flagged a chartered accountant's Facebook posts on the Code of Ethics' fee-sharing rule as misleading. The Board found no intent to mislead and closed the case without punishment. case_number: BOD 701/2023 file_number: PPR/125/2020/DD/14/INF/2020/BOD/701/2023 forum: board-of-discipline institute: icai decided_on: 2024-05-07 outcome: Not guilty clauses: Item (2) of Part IV of the First Schedule order_pdf: https://disc.icai.org/wp-content/uploads/2024/05/10.-BOD-701-2023.pdf published: 2026-09-09 author: Jainam Shah keywords: bod 701 2023, item 2 part iv first schedule, other misconduct, section 22, revised code of ethics, facebook post chartered accountant, r410.4 fee cap, freedom of speech chartered accountant, board of discipline not guilty source: /icai/board-of-discipline/bod-701-2023 --- # A member's Facebook posts on a new fee-sharing rule drew ICAI's own Legal Section. The Board found no misconduct. A chartered accountant used his Facebook page to warn other members about a new fee rule in the Revised Code of Ethics. The Institute's own Legal Section decided the warning was itself misleading, and referred him for discipline.[^parties] ## What happened ```timeline A revised Code of Ethics is weeks away from taking effect, and it changes how much of a firm's fee income can come from a single client. A member posts about the change on his personal Facebook page, telling other practitioners what he thinks it means for them. The Institute's Legal Section is watching. It decides the posts contain false and misleading information about the new rule, and that they are creating panic, anxiety, confusion and chaos among chartered accountants. It sends the member a notice. He replies within a week, defending what he wrote. The Legal Section forwards the matter to the Director (Discipline) for action. A prima facie case follows, and the file reaches the Board of Discipline as an allegation of Other Misconduct. A hearing is adjourned once, at the member's own request. Close to four years after the first notice, the Board hears the member in person. He repeats his defence: that his posts explained the rule rather than misrepresented it, and that he meant to start a debate, not to mislead anyone. ``` There was no complainant in the ordinary sense. The file is headed "PPR" and "INF" — a reference the Institute opened against one of its own members off the back of what he had posted, not a complaint brought by another chartered accountant or a client.[^ppr] The matter took close to four years to move from that first notice to a hearing.[^timeline] The post that triggered the reference concerned a single provision: Section 410.4 of the Revised Code of Ethics, on what a firm must do once a client's fees run past 15% of the firm's total fee income for two years running. In his written statement, the respondent described his own post of 10 May 2020 as stating that "CA. Firms cannot have more than 15% of its total fees from one client group as per the New Code of Ethics applicable w.e.f 01.07.2020." The Board went on to reproduce the provision itself in full (para 4). It does not say a firm "cannot" cross 15% — it requires the firm to disclose the position to those charged with governance and to apply one of two safeguards, and it does not apply at all below ₹5 lakh in fees or to government and public-sector audits.[^r4104] ## The charge - **Item (2) of Part IV of the First Schedule, read with Section 22** — a residual clause for conduct, whether or not connected to professional practice, that does not fit any of the specifically numbered items elsewhere in the Schedules but that the Institute considers brings disrepute to the profession.[^item2] The allegation was not that any client had been misled or any engagement had gone wrong. It was that public commentary about the profession's own ethics rules, posted to Facebook, had itself caused confusion within the profession. The Board found the charge not made out: the respondent was held **NOT GUILTY**, and the case was closed under Rule 15(2) without a separate punishment hearing. ## What the respondent said His written statement, filed in August 2020, ran on three points. First, that his posts were not false. They gave the substance of the new provision in brief and pointed readers to the New Code of Ethics itself, so that anyone who thought the situation applied to them would go and check the actual rule rather than rely on his summary. Second, on the specific 10 May 2020 post about the 15% threshold, that it clarified the substance of the provision rather than distorting it, again by referring readers onward to the Code itself. He added that a firm outside the safeguard the Code allows cannot take the assignment at all, since the Code has to be followed regardless. Third, that he had never intended to confuse anyone. He called the new provision "a big deterrent for small, medium and new practitioners," and said that was his honest reading of its effect, not a false one. The rule was, in his view, difficult to follow even on a plain reading, and his aim was only to make other members alert to how it would land on smaller practices. An opinion on how to interpret a provision could be wrong, he argued, but being wrong was not the same as being false or misleading — and treating it as misconduct ran up against his right to freedom of speech and expression (para 3). ## What the Board held The Board did not find that the post had misstated the rule. It went a different way, weighing intent instead. It first set out Section 410.4 in full, so as to have the actual provision alongside what the respondent was accused of saying about it (para 4). It then observed that the posts had "undoubtedly generated discussions amongst certain members of the profession" about how the revised fee provision should be read, and accepted the respondent's own account that he meant to start a debate, "rather than to defame or cast any negative remarks on the reputation of either the Council or the Institute" (para 5). The Board also noted that the provision was later modified, and that the respondent maintained throughout that his purpose had been to bring a live issue to the profession's attention (para 6). It went on to recognise a member's "right to Freedom of Speech and Expression" to engage in debate on matters relevant to the profession, while adding that this came with "the importance of responsible communication" where the profession's own reputation was at stake (para 7). Its conclusion turned on the absence of bad faith: > there was no evidence to suggest malicious intent or deliberate efforts on the part of the > Respondent to defame the Institute (para 8) ## The order > the Respondent is 'NOT GUILTY' of Other Misconduct falling within the meaning of Item (2) of Part > IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22 of the said > Act. A not-guilty finding under Section 21A(3) ends the matter at the Findings stage itself — there is no separate punishment hearing to follow, because there is nothing to punish. The Board ordered the case closed under Rule 15(2) of the 2007 Rules.[^coram] ## Why it matters *This section is ours, not the Board's.* **Commentary on the profession's own rules can itself become a disciplinary matter.** No client was involved and nothing had gone wrong on an engagement — the posts alone were enough to trigger a reference. Treat public commentary on regulatory provisions with the same care as commentary on a client's affairs. **Intent, not accuracy, decided this case.** The Board never ruled on whether the post correctly described Section 410.4. It asked whether the respondent meant to mislead, found that he did not, and stopped there. A wrong reading of a rule is not by itself professional misconduct. **Pointing readers back to the source text is a defence worth having.** The respondent's posts told readers to check the New Code of Ethics themselves rather than rely solely on his summary. That habit — stating a view and naming where the actual rule can be checked — is worth building into any public commentary on a regulatory change. This summarises a public order and links the primary source. It is general information, not legal or professional advice. [^parties]: The respondent was *CA. Manmohan Khemka (M. No. 092805)*, New Delhi. [^ppr]: The file number, PPR/125/2020/DD/14/INF/2020/BOD/701/2023, records that this began as an information item referred by the Institute's Legal Section through the then Acting Secretary (a note dated 2 June 2020), not as a complaint filed by another member or a client. The Legal Section had already put its concerns to the respondent directly, by a notice dated 16 May 2020, before referring the matter for disciplinary action. [^r4104]: Section 410.4 of the Revised Code of Ethics, as reproduced in the findings (para 4), applies where an audit client's fees exceed 15% of a firm's total fees for two consecutive years. It requires the firm to disclose that fact to those charged with the client's governance and to apply one of two safeguards — an engagement quality control review before or after the third year's audit opinion. It does not apply where the firm's total fees are ₹5 lakh or below, or to government companies, public undertakings, nationalised banks, public financial institutions, or audits where the government makes the appointment. [^item2]: Item (2) of Part IV of the First Schedule covers a member, in practice or not, found guilty of "other misconduct" — conduct the specifically numbered items elsewhere in the Schedules do not describe, but which the Institute considers brings disrepute to the profession. It operates together with Section 22 of the Chartered Accountants Act, 1949, which defines "professional or other misconduct" for the Act's purposes. [^timeline]: The Legal Section's notice was dated 16 May 2020; the respondent replied on 23 May 2020 and filed a written statement on 17 August 2020. A hearing listed for 22 August 2023 was adjourned at the respondent's request. The final hearing was held and concluded on 28 March 2024, with the respondent present in person. The findings were signed on 7 May 2024. [^coram]: The findings were signed by CA. Rajendra Kumar P (Presiding Officer), Ms. Dolly Chakraborty (I.A.A.S, Retd.), Government Nominee, and CA. Priti Savla, Member.