How to recognise which misconduct falls under part 4 and part 3 of schedules and which falls under any other miscinduct mebtioned in sec 21.

1 answer

Ravi Staff March 2, 2017

Hello Surendra
Well we need to understand little bit of history, prior to 17th Nov 2006 amendment of CA Act 1949, there were NO part III of First Schedule  & Part IV of Second Schedule, so basically other misconduct was mentioned in Sec 22 but not defined in schedules. In such scenario any act not covered in schedules but council feels that person doing such act is UNFIT to be member of ICAI was considered as OTHER MISCONDUCT. 
Now post amendment other misconduct is defined in part iii of first schedule and part iv of second schedule. but apart from these circumstances if council feels that person doing such act is unfit to be member of icai will be considered as “MISCONDUCT IN ANY OTHER CIRCUMSTANCES” which was earlier known as other misconduct.
So today we have 3 categories
Professional Misconduct (Defined in Part I , II , III of First Schedule & Part I, II of Second Schedule)
Other Misconduct (Defined in Part III of First Schedule & Part IV of Second Schedule)
Misconduct in any other circumstances (Not defined in schedules but act is such that person is unfit to be member)
Above interpretation is as per Code of Ethics 2009, which clearly distinguishes Other Misconduct & Misconduct in any other circumstances (earlier other misconduct).
But the fact is even after 7-8 years of icai issuing code of ethics book, this concept is not dealt in our modules & practice manual nor it is targeted in exams. module has taken very simplified view that there are only 2 types of misconduct professional & other misconduct. they have given list given below if anything is covered here they simply declare it other misconduct as per old provisions. 
So my final advice remember list given below or bigger list with shortcut i have specified in notes (if you are refereeing our notes) and if any thing similar comes declare it other misconduct under section 22 and also mention clause ii part iv of first schedule which deals with act bringing disrepute to icai which is close to concept of being “unfit to be member” (to be on safer side)
List as per module
Some illustrative examples, where a member may be found guilty of “Other Misconduct”, under the aforesaid provisions rendering, himself unfit to be member are:
(i) Where a chartered accountant retains the books of account and documents of the client and fails to return these to the client on request without a reasonable cause.
(ii) Where a chartered accountant makes a material misrepresentation.
(iii) Where a chartered accountant uses the services of his articled or audit clerk for purposes other than professional practice.
(iv) Conviction by a competent court of law for any offence under Section 8 (v) of the Chartered Accountants Act 1949.
(v) Misappropriation by office-bearer of a Regional Council of the Institute, of a large amount and utilisation thereof for his personal use.
(vi) Non-replying within a reasonable time and without a good cause to the letter of the public authorities.
(vii) Where certain assessment records of income tax department belonging to the client of Chartered Accountant were found in the almirah of the bed-room of the chartered accountant.
(viii) Where a chartered accountant had adopted coercive methods on a bank for having a loan sanctioned to him.


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