An incoming auditor was accused of skipping the predecessor's no-objection. That predecessor never completed an audit.

A residents' welfare association changed statutory auditors when the firm auditing it resigned.¹ The auditor who took over was accused of never seeking that firm's no-objection before accepting the audit years it had left behind.

What happened#

Of the thirteen allegations, twelve turned on matters the case never reached — audit quality, verification of the society's governing body under Haryana's societies law, the personal email address — and the Director (Discipline) screened all of them out before the Board's hearing (para 21).²

The predecessor firm's resignation was the pivot. It had been appointed to audit the society, cited a conflict of interest arising from its own role in maintaining the society's books, and resigned on 4th October 2016 without ever completing that audit or issuing a report for any of the three years in question (para 23).

The clause#

• Item (8) of Part I of the First Schedule requires an incoming chartered accountant to communicate with the auditor being replaced, in writing, before accepting an audit assignment that auditor previously held.³

The duty only exists where a "previous auditor" exists in the sense the clause means: someone who actually held the assignment before the incoming auditor did, not merely someone who was once appointed to it. The Board found that no audit report bearing the predecessor firm's signature, for any of the three years in dispute, was ever placed on record — and that the incoming auditor had, in effect, become the first person to complete an audit of the society (para 24). Since no previous auditor within that meaning ever existed, the duty to communicate never attached, and she was found not guilty.

What the respondent said#

She raised a procedural objection first: the same complainant had raised substantially similar allegations over the same audit years before, and the Institute had already examined and closed them in her favour in March 2021.

On the surviving allegation, her account was that she had spoken to the predecessor firm's proprietor by telephone before accepting the assignment, and that he told her he was resigning over the conflict of interest. Email correspondence afterward, she said, confirmed the resignation, raised no objection to her appointment, and showed no outstanding fees owed to him. She also pointed to how she had carried out the audit itself — qualifying her reports where the documentation fell short, and declining to sign a report for a later year when the information available was not enough.

What the Board held#

The Board started with the definition, not the facts. Item (8) applies only where a previous auditor exists in the sense the clause means — someone who had held the same or a similar assignment immediately before the incoming auditor (para 23).

On that test, the predecessor never crossed the line. It had been considered for the audit and had resigned before completing it; no statutory audit report signed by it, for any of the three years, was ever produced (para 23). Even the complainant's own submission supported this: he acknowledged that the predecessor firm had accepted the assignment but had not completed it or reached the stage of issuing any report. The Board recorded plainly:

the Respondent was, in effect, the first auditor who undertook and completed the statutory audit of the Society (para 24)

That finding did the rest of the work. Whether a phone call and forwarded emails amounted to enough communication was a question the Board never had to reach —

the primary issue in the present matter is whether there existed a previous auditor within the meaning of the Code of Ethics (para 25)

— and on the record, there did not. The Board added, separately, that the purpose of Item (8) — a smooth and ethical transition between two auditors of the same engagement — presupposes an engagement to transition out of in the first place (para 26), and noted that the predecessor firm itself had never complained about being left uncommunicated with (para 26).

The order#

the Respondent is 'Not Guilty' of Professional Misconduct falling within the meaning of Item (8) of Part I of First Schedule to the Chartered Accountants Act, 1949 (para 29)

The Board ordered the case closed under Rule 15(2) of the 2007 Rules (para 29–30).⁴ No charge had been framed, so there was no punishment stage to follow it. The matter had taken a single hearing.⁵

Why it matters#

This section is ours, not the Board's.

Item (8) has a threshold question the clause text does not spell out. A firm appointed and then resigned before finishing a single audit or signing a single report never became a "previous auditor" in the sense the clause protects. Check whether your predecessor actually completed an audit before assuming the duty applies to you.

Do not read this as licence to telephone instead of write. The Board said the sufficiency of a communication arises only once Item (8) is shown to apply at all. Where the duty does apply, write to the predecessor directly rather than relaying a message through the client.

A predecessor's own silence counts in your favour. The Board noted that the firm being replaced had never itself complained of a missed communication. If you can show that, put it on record.

Answer every allegation, not only the serious-looking ones. Twelve of the thirteen here were closed at the screening stage, and you cannot know in advance which one survives it.

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