Auditor appointment compliance duty: chartered accountants must verify statutory requirements before accepting office, or face misconduct findings.

Before accepting appointment as auditor, a chartered accountant must verify that the statutory requirements for auditor appointment have been complied with; failure to do so may amount to professional misconduct. The text treats a company's failure to appoint an auditor at its annual general meeting as not a mere casual vacancy that directors could fill under the temporary-vacancy provision. The respondent's mistaken reliance on that provision did not defeat the charge, although youth and inexperience were relevant in assessing discipline. The misconduct was proved, but the circumstances were considered insufficient to justify a finding that he was unfit to remain a member of the Institute, so a warning was regarded as an adequate consequence.

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Issues: Whether the respondent chartered accountant was guilty of professional misconduct for accepting appointment as auditor without first ascertaining compliance with section 144 of the Companies Act, 1913, and, if so, what order should follow.

Analysis: A chartered accountant is bound by the disciplinary code to verify that the statutory requirements governing appointment of company auditors have been complied with before accepting office. The company had failed to appoint an auditor at its annual general meeting, and that omission could not be treated as a casual vacancy within the meaning of the provision allowing directors to fill temporary vacancies during the currency of the year. The respondent's assumption that the appointment fell under the casual-vacancy provision did not answer the charge, although his youth and inexperience were relevant in assessing the gravity of the lapse.

Conclusion: The charge was proved, but the conduct was not of such gravity as to justify a finding that the respondent was unfit to be a member of the Institute. A warning was held sufficient.

Ratio Decidendi: Before accepting appointment as auditor, a chartered accountant must ascertain compliance with the statutory requirements for appointment of auditors, and a failure to do so may constitute misconduct, though the disciplinary consequence may be mitigated by the circumstances of the case.

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