--- title: An incoming auditor was accused of skipping the predecessor's no-objection. That predecessor never completed an audit. description: An incoming auditor accused of never seeking her predecessor's no-objection was cleared — the predecessor had resigned before completing a single audit, so the duty never attached. case_number: BOD 843/2025 file_number: PR/249/2021-DD/212/2021/BOD/843/2025 forum: board-of-discipline institute: icai decided_on: 2026-07-27 outcome: Not guilty clauses: Item (8) of Part I of the First Schedule order_pdf: https://disc.icai.org/wp-content/uploads/2026/08/10.-BOD-843-2025.pdf published: 2026-08-29 author: Jainam Shah keywords: bod 843 2025, item 8 part i first schedule, no objection certificate, previous auditor requirement, communication with retiring auditor, board of discipline not guilty, residents welfare association audit source: /icai/board-of-discipline/bod-843-2025 --- # 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.[^parties] 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 ```timeline A residents' welfare association engages a chartered accountancy firm to audit its books for three financial years. That firm gets no further than the appointment: citing a conflict of interest arising out of its own role in maintaining the society's accounts, it resigns without completing a single year's audit or signing a single report. The society brings in a new auditor for the year ahead. She ends up also taking on the three years her predecessor never finished, and goes on to complete and sign statutory audit reports for all three. Years later, a complaint reaches the Institute running to thirteen allegations — about the audit's quality, about whether the society's governing body was properly constituted, about a personal email address used for correspondence, and about the missing no-objection from the firm she had replaced. The Director (Discipline) examines the complaint and lets only the no-objection allegation through. The other twelve are closed before the Board ever sits, and the Board agrees with that screening. At the hearing, the predecessor's own history decides the case: it had been appointed, but had never completed an audit before it resigned. The Board finds that made the incoming auditor, in effect, the first person to audit the society at all — and holds that a firm which never audited cannot be the "previous auditor" the clause is about. It finds her not guilty and closes the case. ``` 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).[^screening] 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.[^item8] 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).[^rule] No charge had been framed, so there was no punishment stage to follow it. The matter had taken a single hearing.[^coram] ## 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. [^parties]: *Mr. Jitin Rai Khanna*, of Gurugram, was the complainant. *CA. Sunita Maheshwari (M. No. 058216)*, proprietor of *M/s Sunita Maheshwari & Co.*, also of Gurugram, was the respondent. The predecessor firm named in the complaint is *M/s Agarwal Varun & Co., Chartered Accountants*; its proprietor is named in the order as *CA Varun Aggarwal*. [^item8]: Item (8) of Part I of the First Schedule requires an incoming chartered accountant to communicate with the retiring auditor, in writing, before accepting a position previously held by that auditor. The question here was whether a "retiring auditor," in the sense the clause requires, ever existed. [^screening]: The complaint listed thirteen allegations, touching audit quality, verification of the society's governing body under Haryana's societies legislation, and use of a personal email address for correspondence. The Director (Discipline)'s Prima Facie Opinion, dated 3rd September 2025, found a prima facie case only on the first allegation; the Board of Discipline concurred and confined the proceedings to that allegation alone (para 21). [^rule]: Rule 15(2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 — where the Board finds a member not guilty, it records that finding and orders the complaint closed. There is no punishment hearing. [^coram]: CA. Babu Abraham Kallivayalil (Presiding Officer, in person), Dolly Chakrabarty, Government Nominee (in person), and CA. Pankaj Shah, Member (through video conference). Final hearing 20th May 2026, both parties appearing through video conference; judgment pronounced 27th July 2026.