Reliance On The Sanctity Of Audited Balance Sheet And Safeguarding The Country’s Financial Ecosystem: A Letter To The President, ICAI

Posted on 14/03/2021


The President,

Institute of Chartered Accountants, India

ICAI Bhawan, Indraprastha Marg

Post Box no: 7100

New Delhi – 110 002

Sub: Reliance on the Sanctity of Audited Balance Sheet and safeguarding the Country’s Financial Ecosystem

Dear Sir/Madam,

It is redundant to state to you that the sections 224, 225 and 226 of the Companies Act, 1956, compel an auditor for diligent scrutinization of the respective company’s audit-books’ fair and true value in an unambiguous manner.  Mentioning the right to inspectduty to report and liabilities of an auditor, according to section 227 of the Companies Act, 1956, is just carrying coal to Newcastle.

However, it is a matter of regret to inform you that in the context of contemporary scenario, in many cases, auditors’ reports have cut a sorry figure to execute proper surveillance and vigilance. The “Statement of Accounting Principles” of The Institute of Chartered Accountants (ICAI) states that an auditor must discharge his/her professional responsibility with high ethical standards.

According to Clause (6) Part I, Second Schedule of the Chartered Accountants Act, 1949, failure of an auditor to report a known material misstatement in the financial statements of a company, with which s/he is concerned in a professional capacity, shall be deemed to be a ‘professional misconduct’ on his/her part.

At present, most of the listed Companies holding Public Deposits in one form or another are getting defaulted, bankrupted and facing rapid insolvencies. It has been observed that the ‘Loss Reporting’ begins only after they are completely exposed by the fourth pillar of democracy, viz., mass media. Until that the Auditor of that respective company remains in sleeping mode. It is well surprising that even 100% of the net worth has been eroded but the Auditor is signing the Balance Sheet with the remarks “True & Fair View” and a “ going concern “. It is only after the bomb get blasted that Auditor comes to know, “Oh no, it’s a Loss Balance Sheet!”  

It is embarrassing to note that such a deviation in the Assets of the Company is not known to the Auditors, and yet they are misguiding the public at large and ‘dishonestly’ conducting their profession. If an Auditor claims that it is not a willful mistake and s/he is unaware of such erosion in Assets, I am sorry to say that in this case his/her competency to act as an Auditor need to be reviewed. A serious action should be taken against such Auditors so that a message is crystal clear to the chartered Accountant Association “That Audit means confirming/certifying the Books of Accounts based on which the Funds are being raised and misconduct should lead to pecuniary penalty in form of repaying to the sufferer either by the ICAI as an regulatory body or the member himself”

I request such an esteemed institution commanding the highest Authority in Accounts and Audit to seriously take some action on these Auditors due to which lakhs of tax-payers are being looted in crores. Else a day will come when ICAI may lose its importance / recognition as an Audit Authority.

Please and please save the Country’s Financial Ecosystem which is being regulated by you.

Yours Sincerely, 

Dr. Debaprasad Bandyopadhyay

Mrs. Rupa Bandyopadhyay

Mr. Akhar Bandyopadhyay


Copy to:

1. The Vice – President,

Institute of Chartered Accountants, India

ICAI Bhawan, Indraprastha Marg

Post Box no: 7100

New Delhi – 110 002

2. The Secretary,

Institute of Chartered Accountants, India

ICAI Bhawan, Indraprastha Marg

Post Box no: 7100

New Delhi – 110 002


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