The director (discipline) of the Institute of Chartered Accountants of India (ICAI), the apex body of chartered accountants, has formed a prima-facie opinion, finding the auditor of the National Spot Exchange (NSEL) guilty of professional misconduct.
The matter has now been taken up by the institute™s disciplinary committee and an enquiry is scheduled next month in respect of the complaint filed against the auditors of National Spot Exchange under the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases), Rules, 2007 and the director (discipline) has formed a prima-facie opinion holding the respondent guilty of professional misconduct falling within the meaning of Clauses (5), (6) and (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949.
The disciplinary committee of ICAI has considered the prima-facie opinion in its meeting held on October 19 and agreed to the same, the spokesperson added. Accordingly, it has been decided to proceed further under chapter V of the aforesaid rules for an enquiry by the disciplinary committee. The parties to the complaint have also been informed of the decision of the committee and the enquiry is now scheduled in the middle of December, 2015.
The role of auditors in the payment crisis, which blew up after the discovery that there were not enough goods at NSEL godowns across the country to back the contracts traded on its platform, has come under the scanner of various agencies.
A high-level government team under the then economic affairs secretary Arvind Mayaram, set up by the finance minister in August 2013 to probe the NSEL crisis, had reported possible violations by entities such as auditors in due-diligence. The panel, which gave its recommendations on September 20, 2013.
On September 24, a day before the scheduled annual general meeting (AGM), FTIL informed the exchanges of these developments. It, then, had to withdraw certain resolutions related to the approval of accounts and re-appointment of Deloitte as auditor, from the AGM.
Business Standard had on Monday reported that IGL Finance, an investor aggrieved by the NSEL crisis, had moved the Delhi High Court alleging contempt of court by the institute. It had alleged the institute was not following the court orders of May 5 in the matter.
In respect of the contempt petition filed in the matter, it may be stated that in terms of the decision of the high court at Delhi on a petition filed by IGL Finance against the ICAI, necessary compliance in terms of the order of the high court has been made as above and there is no scope for contempt of court.
Further, since the contempt petition alleged to have been filed has not been listed yet before the court and as and when the same is listed, the correct facts shall be brought to the notice of the court and the ICAI shall press for dismissal of the contempt petition, the ICAI spokesperson added.
However, an IGL Finance executive said the details were shared by the institute only after the contempt proceedings were initiated. The institute through its disciplinary mechanism is committed to expediting disciplinary cases involving its members in order to uphold the highest ethical standards conforming to the code of conduct, the ICAI spokesperson added.