Deepak Korah GeorgeDeepak Korah George asked 7 months ago
3 Answers
RaviRavi Staff answered 7 months ago

Auditor is liable for professional misconduct in doing audit of partnership firm under clause 5 / 6.
Both partners of business ram and shyam will be liable for financial obligations jointly & severally.  
Question
Ashok Mittal is the auditor of partnership firm consisting of Ram and Shyam as partners In his audit report to the firm, he did not refer certain materially irregular transactions found in the books of the firm for the reason that Ram, the senior partner approved all such transactions
Answer
As the transactions passed through the books of accounts are materially irregular, their non-disclosure makes the financial statements misleading. Clauses 5 and 6 of Part I of Second Schedule of The Chartered Accountant Act, 1949, states that a chartered accountant would be deemed to be held guilty of misconduct in case he fails to disclose a material fact known to him which is not disclosed in the financial statements or fails to report on a material misstatement known to him to appear in a
financial statement with which he is concerned in a professional capacity. Therefore as per both these clauses, the auditors would be deemed to be guilty of professional misconduct. In case of partnership firm partners are jointly and individually liable hence Ram and Shyam both are responsible.

Deepak Korah GeorgeDeepak Korah George answered 7 months ago

Is the the auditor who was a CA but not a partner guilty?

RaviRavi Staff answered 7 months ago

didnt understand your query , please elaborate and is it in reference to this case ?

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