--- title: An incoming auditor claimed to have written to the outgoing auditor. No proof of delivery ever surfaced. description: A chartered accountant resigned an audit over unpaid dues and found a new firm had taken it over unannounced. The new auditor claimed to have written first but never proved it, and was fined ₹25,000. case_number: BOD 744/2024 file_number: PR/197/2021/DD/274/2021/BOD/744/2024 forum: board-of-discipline institute: icai decided_on: 2024-12-14 punished_on: 2025-01-10 outcome: Fine clauses: Item (8) of Part I of the First Schedule order_pdf: https://disc.icai.org/wp-content/uploads/2025/02/31.-BOD-744-2024.pdf published: 2026-09-09 author: Jainam Shah keywords: bod 744 2024, item 8 part i first schedule, no objection certificate audit, outgoing auditor communication, code of ethics 2009, board of discipline fine source: /icai/board-of-discipline/bod-744-2024 --- # An incoming auditor claimed to have written to the outgoing auditor. No proof of delivery ever surfaced. A chartered accountant resigned as a company's statutory auditor after a year of little cooperation, and expected whoever came next to ask him about it first. Nobody did, and he learned of the change only when he checked the company's own filings on the government's records portal.[^parties] ## What happened ```timeline A chartered accountant audits a private company for several years as its statutory auditor. He resigns partway through one year's assignment, citing the company's lack of cooperation, and formally exits by filing his resignation with the registrar of companies. The company still owes him money. A company director asks him to issue a no-objection certificate to the incoming auditor, but the new firm's own communication to him lacks proper credentials, and his repeated requests to verify who they are go unanswered. Checking the registrar's own public filings, he discovers that the new auditor has already signed off on two years of the company's financial statements — without ever producing proof of having written to him about taking over the assignment. He raises the outstanding dues and the irregular appointment by email. No reply comes, and he takes the matter to the Institute, alleging several violations at once. A Board of Discipline examines the one allegation that survives screening. It finds that the incoming auditor never proved he had communicated with his predecessor, and later fines him for it. ``` One thing decided the case: not whether a letter was sent, but whether anyone could prove it had arrived. The Institute's Code of Ethics does not treat a claim of having written as enough. It says so directly: > Members should therefore communicate with a retiring auditor in such a manner as to retain in > their hands positive evidence of the delivery of the communication to the addressee. In the > opinion of the Council, communication by a letter sent "Registered Acknowledgment due" or by hand > against a written acknowledgment would in the normal course provide such evidence. (para 8) The incoming auditor said he had sent a letter asking for a no-objection certificate. He never produced a delivery report, a signed acknowledgment, or anything else to show the letter had reached his predecessor (para 8–9). ## The charge - **Item (8) of Part I of the First Schedule** — accepting a statutory audit that another chartered accountant already holds, without first writing to them.[^item8] The clause is not concerned with what the incoming auditor did with the audit once he had it, only with whether he told the outgoing auditor he was taking it. The Board found him guilty under this one item, and this alone is why the Board of Discipline heard the case rather than the Disciplinary Committee.[^forum] The original complaint alleged more. Four further violations, under Part I of the Second Schedule, were dropped before any hearing began, for want of documentary evidence.[^screening] A separate allegation — that the incoming auditor had also failed to ensure the outgoing auditor's fees were paid — was examined and dismissed as unsubstantiated (para 9). ## What the respondent said He did not appear at the hearing on the merits; only the complainant did, over video conference (para 4). What defence is on record comes from his earlier submissions: that he had, in fact, sent a letter to the complainant asking for a no-objection certificate before taking on the audit (para 8). He offered no delivery report, no postal receipt and no acknowledgment to support that claim. ## What the Board held The Board explained what Item (8) is for: it lets an incoming auditor understand why the previous one left, and it protects both the public interest and the profession's independence (para 7). The record showed the incoming auditor had received his appointment letter well before the resigning auditor's own exit was formalised with the registrar, and that the paperwork for his own appointment was filed only much later still (para 8). Against that gap, his claim to have written first carried nothing to back it — no delivery report, no acknowledgment (para 8). The Board went on: > Besides above, the Board noted that the Respondent has not placed on record any documentary > evidence to indicate the delivery of the NOC letter to the Complainant Firm. Thus, the Charge > against the Respondent of non-communication to the Complainant prior to acceptance of statutory > audit assignment of the Company for the financial year 2017-18 remains unrebutted. (para 9) And concluded: > the Respondent, by failing to ensure documented communication with the Complainant, committed a > breach of Professional Misconduct under Item (8) of Part-I of the First Schedule to the > Chartered Accountants Act, 1949. Accordingly, the Respondent is found 'Guilty' of Professional > Misconduct in this regard. (para 9) ## The order At the punishment hearing, the incoming auditor appeared over video conference and confirmed receipt of the Board's findings (para 2 of the Section 21A(3) order). The Board then held: > Thus, upon consideration of the facts of the case, the consequent misconduct of [the Respondent] > and keeping in view of his representation before it, the Board decided to impose a Fine of > Rs.25,000/- (Rs. Twenty-Five Thousand only) upon [the Respondent]. (para 3)[^bracket] A fine sits in the middle of the Board's punishment scale — heavier than a reprimand, lighter than removal from the Register.[^fine] The findings were signed under a month before the fine was imposed, once he had been given the chance to be heard on punishment.[^coram] ## Why it matters *This section is ours, not the Board's.* **A claim that you wrote is not evidence that you communicated.** The Code of Ethics asks specifically for proof of delivery — registered post with acknowledgment due, or hand delivery against a signed receipt. Keep that proof on file, not just a copy of the letter you sent. **Staying away from the hearing does not stop it from proceeding against you.** The incoming auditor did not appear when the merits were heard, and the case went ahead on the complainant's evidence alone. Respond, even to contest the claim. **An allegation without documents behind it does not survive screening.** Four of the five clause violations first alleged here were dropped before any hearing began, for lack of supporting evidence. The Board acts on what is filed, not on the strength of an accusation. This summarises a public order and links the primary source. It is general information, not legal or professional advice. [^parties]: The complainant was *CA. Jai Kumar Mansharamani (M. No. 073450)*, partner of *M/s Khandelwal Khare & Associates*, New Delhi. The respondent was *CA. Dinesh Kumar Ahuja (M. No. 080757)*, of Karol Bagh, New Delhi. [^item8]: 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. [^forum]: First Schedule matters go to the Board of Discipline; Second Schedule matters, and matters falling under both, go to the Disciplinary Committee. Once the Second Schedule allegations here were dropped, only the First Schedule item remained. [^screening]: The complaint as originally filed alleged violations of Items (5), (6), (7) and (9) of Part I of the Second Schedule, alongside Item (8) of Part I of the First Schedule. The Director (Discipline)'s Prima Facie Opinion found that the complainant "has not placed on record any documentary evidence in support of the allegations related to the violation of the provisions of Items (5), (6), (7) and (9) of Part I of the Second Schedule", calling them "unsubstantiated and bald allegations", and dropped all four before any hearing on them began (para 6). [^bracket]: The order's operative paragraph names the respondent, and gives his membership number, twice. This page substitutes "[the Respondent]" both times to keep the same anonymisation used throughout; nothing else in the quotation is altered. [^fine]: Section 21A(3) gives the Board of Discipline a graduated set of punishments — reprimand, removal of the member's name from the Register for a limited period, and a fine — of which this order used the fine. Check the current sub-section before relying on any figure; the amounts have been amended over time. [^coram]: The findings, dated 14th December 2024, were signed by CA. Rajendra Kumar P (Presiding Officer) and Ms. Dolly Chakrabarty (Government Nominee, IAAS retd.). The same two members, sitting through video conference, passed the punishment order on 10th January 2025, after notice was issued to the respondent on 2nd January 2025 giving him the opportunity to be heard.