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BOD 709/2023Not guilty

A widow's longtime auditor was accused of exorbitant fees and a blocked handover. Neither charge was proved.

8 min readJainam Shah

A widow accused her late husband's cousin, the hospital's longtime auditor, of inflating his bills and blocking a change of auditor. The Board found neither allegation made out.

Held
Not guiltyThe charge was not made out
Forum
Board of Discipline (First Schedule)
Clauses
Item (8) of Part I of the First Schedule · Item (9) of Part I of the First Schedule
Decided
File no.
PR/229/2021/DD/259/2021/BOD/709/2023
Source
Original order (PDF)

A chartered accountant had audited a Punjab hospital for over a decade and was a cousin of the family that ran it.1 After the founding partner died, his widow took seven allegations against the accountant to the Institute — accusing him of inflating his bills and blocking a change of auditor, among other things — and only two of them ever reached a hearing.

What happened#

A chartered accountant has audited a family-run hospital in Punjab since the late 2000s. He is also a cousin of the woman who co-owns it with her husband, and over the years he comes to know the couple's financial affairs well.
The husband dies. The widow later says that in the years that follow, the accountant threatens to harm the hospital unless she signs a family property settlement, and that he wants her land sold. She says she has stayed silent about it for years.
She replaces him as the hospital's auditor. Around the same time, invoices arrive from him for several years of past work, adding up to tens of lakhs of rupees, on top of what her own accounts already show as paid in full. Her new auditor also finds the handover held up: no clearance comes through from the outgoing accountant to let the change take effect.
She takes seven allegations to the Institute of Chartered Accountants of India — threats, overbilling, withheld property papers, a leaked affidavit, forgery, a blocked handover and poor prior work. A screening review finds five of the seven have no case to answer, and forwards only the billing and handover allegations to a hearing.
A two-member Board of Discipline hears both sides and finds neither of the two surviving allegations proved. It closes the case without any finding of guilt.

Two things in the record narrow what was actually at stake by the time it reached a hearing.

The first is what fell away before anyone argued it. Five of the widow's seven allegations — including the threats and the property dispute that opened her original complaint — were screened out by the Director (Discipline) as not made out, and the Board agreed without revisiting them (para 3). What survived to a hearing was only the billing and the handover.

The second is what the accountant's own side conceded once it counted. By the time of the hearing, his counsel told the Board that all the disputed invoices had been withdrawn and that no fee remained outstanding from the widow (para 9).

The two clauses#

  • Item (8) of Part I of the First Schedule — accepting a position as auditor previously held by another chartered accountant without first communicating with them in writing.2
  • Item (9) of Part I of the First Schedule — accepting an audit appointment without first checking that the statutory requirements around the outgoing auditor had been complied with.3

The findings never say which of the two surviving allegations maps to which item; the closing paragraph invokes both together over both charges (para 11). Both charges were closed at the same time, without a finding of guilt on either.

What the respondent said#

On the fees, his case was that the invoices covered more than audit work. He said the bills, which ran across services from 2007-08 to 2018-19, included fees for arbitration and other agreed work alongside audit fees already accounted for in the widow's own books, and that no audit fee remained outstanding. The arbitration charges, he said, matched what courts customarily sanction for that kind of work, and the Director (Discipline)'s opinion had failed to separate the two kinds of fee (para 5).

On the handover, he argued he had a right to withhold clearance over pending fees under the Act and the Code of Ethics, and that he had in fact replied to the incoming auditor's request the very next day. He said it was the incoming auditor who had fallen short of proper procedure — starting audit work before giving him a reasonable window to respond, and proceeding without waiting on the communication he was owed as the outgoing auditor.4 He also said he had sought the Ethical Standards Board's own guidance on the objection (para 6).

What the Board held#

The Board heard the widow in person and the accountant's counsel by video conference; the accountant himself did not appear, and his appearance was dispensed with (para 7).5

On the handover charge, the Board did not weigh either side's account of who was at fault. It held that the dispute belonged to the two chartered accountants involved, not to the widow who had complained about it:

the Board observed that this issue lies between the Respondent and the new Chartered Accountant, and thus falls outside the jurisdiction of the Complainant, as the matter is not within the scope of Professional Misconduct under the relevant legal framework (para 8)

On the fees, the Board treated the size and timing of the invoices as a private dispute rather than a professional-conduct question, and noted that the dispute itself had emptied out by the time of the hearing:

the Board noted that the timing and quantum of the invoices are a matter between the Respondent and the Complainant or the Complainant's deceased husband and are not within the immediate purview of the Board. The Counsel for the Respondent further clarified that all invoices had been withdrawn, and no outstanding dues remained payable by the complainant (para 9)

The order#

Thus, in conclusion, in the considered opinion of the Board the Respondent is Not Guilty of Professional Misconduct falling within the meaning of Clause (8) and Clause (9) of Part I of First Schedule to the Chartered Accountants Act, 1949. Accordingly, the Board passed an order for closure of the case in terms of the provisions of Rule 15 (2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 (para 11)

A not-guilty finding under Rule 15(2) ends the matter at the Board of Discipline itself — there is no punishment stage to follow, because there is no finding of guilt to punish.6

Why it matters#

This section is ours, not the Board's.

A fee dispute between an accountant and a client is not automatically professional misconduct. The Board treated the size and timing of the invoices as a private matter between the two of them, not a conduct question, once the fees themselves had been withdrawn. Settle a billing dispute on its own terms rather than assuming a complaint to the Institute will settle it.

A client generally cannot complain about what passes between two chartered accountants during a handover. The Board held that a dispute over a delayed clearance was a matter for the outgoing and incoming auditors to sort out between themselves, not a charge the client bringing the complaint could bring. If you are changing auditors and the handover stalls, that is a dispute your new accountant may need to pursue, not one you can bring yourself.

Allegations screened out early do not resurface later. Five of the seven allegations here never reached a hearing at all once the Director (Discipline) found no case to answer. Build your complaint, and your defence, around what has actually been referred for hearing — not the full original charge sheet.

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

Footnotes#

  1. The complainant was Dr. Sudha Thapar, of Gomti Thapar Hospital, Moga, Punjab. The respondent was CA. Ved Vrat Bhalla (M. No. 081941), of M/s V V Bhalla & Co. Chartered Accountants, Ferozpur, Punjab, described in the findings as having audited the complainant's hospital — M/s Gomti Parshad Thapar Hospital, in which the complainant was a partner alongside her late husband — since financial year 2007-08, and as a cousin of her late husband. ↩

  2. Item (8) of Part I of the First Schedule requires a chartered accountant to communicate with the retiring auditor, in writing, before accepting a position as auditor previously held by another member. ↩

  3. Item (9) of Part I of the First Schedule concerns accepting an audit appointment without first ascertaining that the statutory requirements around the outgoing auditor's removal or replacement had been complied with. ↩

  4. The findings name the incoming auditor as CA Vishal Mittal. He was not a party to this case. ↩

  5. The findings were signed by CA. Rajendra Kumar P (Presiding Officer) and Ms. Dolly Chakrabarty (Government Nominee), dated 25 January 2025. The final hearing was held on 27 December 2024 at ICAI Bhawan, Chandigarh; an earlier hearing had been adjourned at the respondent's request, though the record does not give that earlier date clearly. ↩

  6. First Schedule matters go to the Board of Discipline; Second Schedule matters, and matters falling under both, go to the Disciplinary Committee. The two carry very different punishment ceilings. ↩

Written by Jainam Shah. Found guilty under Item (8) of Part I of the First Schedule and Item (9) of Part I of the First Schedule; the Board ordered a not guilty. General information, not legal or professional advice — read the order itself before relying on it.

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