Professional misconduct in concurrent audit upheld where gross negligence and due diligence failures were proved in bank audit duties.

A concurrent auditor's failure to exercise due diligence in bank audit work, including escrow account operations, cheque purchases, temporary overdrafts, audit reporting and margin requirements, was treated as gross negligence in the discharge of professional duties. On the evidence collected in inquiry, the disciplinary findings were treated as concurrent findings of fact and were not to be disturbed absent proof that they were unjust, unwarranted or contrary to law. The conduct was held to amount to professional misconduct under the Chartered Accountants Act, and the recommended penalty of removal from the register for six months was accepted.

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Issues: Whether the respondent, while acting as concurrent auditor of the bank, committed professional misconduct falling within Clauses (7), (8) and (9) of Part I of the Second Schedule to the Chartered Accountants Act, 1949, and whether the recommended penalty of removal from membership for six months should be accepted.

Analysis: The material on record showed that the respondent failed to exercise due diligence in performing the assigned concurrent audit functions. The lapses related to escrow account operations, cheque purchases, temporary overdrafts, audit reporting and margin requirements. The disciplinary findings and the Council's conclusion were based on the evidence collected in inquiry and were treated as concurrent findings of fact. In disciplinary matters involving members of a professional body, such findings are not to be disturbed unless they are shown to be unjust, unwarranted or contrary to law. The conduct was assessed as gross negligence in discharge of professional duties and therefore amounted to professional misconduct under the relevant schedule provisions.

Conclusion: The respondent was rightly held guilty of professional misconduct, and the recommendation that his membership be suspended by removal from the register for six months was accepted.

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