The Institute of Chartered Accountants of India (ICAI) recently issued orders against auditing major EY's three affiliates and a retired partner, as well as S V Ghatalia & Associates, LLP, and its partner for what is deemed professional misconduct. The disciplinary committee's decision, dated April 25, requires the firms and individuals involved to immediately cease their arrangements with multinational entities, as allowing such affiliations was seen as circumventing the provisions of the Chartered Accountants Act, 1949.
After receiving the order, SRBC & Co LLP expressed disappointment regarding the actions taken against their former retired partners. The firm stated that they have always adhered to rules and laws, and are currently reviewing the order to determine the necessary actions to take, including legal remedies. The disciplinary committee ruled for the removal of Raj Kumar Agrawal's name from the institute's register of members for three years, along with a fine imposed on him for each case, while a similar decision was made for removing Tridibes Basu's name from the register for three years, with a fine, in the case of S V Ghatalia & Associates, LLP.
According to the committee, one of the reasons for considering the actions as professional misconduct was the firms' engagement with international entities and the agreement to provide referral work in exchange for payment. The committee noted that by displaying information on their visiting cards and using email addresses closely associated with Ernst & Young (EYG), the firms failed to establish their independence. The order emphasized that such practices, aimed at leveraging the affiliation with EYG to influence clients, were a violation of the Chartered Accountants Act, 1949.