Professional Ethics - An Introductory Course in Value Education

Ethics generally means the science of conduct or morality. Ethics are a blend of customs and cultures followed by people and are important in all kind of work we do, be it business or profession.

Equally it applies even to our profession and we cannot grow as professionals without having professional ethics. And thanks to the ICAI and the Parliament, we have our code of ethics in form of an Act.

Section 22 of the Chartered Accountants Act defines and describes what constitutes `professional misconduct'. Under Section 22 of the Act, the expression `professional misconduct' shall be deemed to include any act or omission specified in any of the schedules. However, during the last 50 years since the Act came into force, the members of the profession, which have enhanced, have voluntarily established certain conventions the respect and confidence enjoyed by the profession. The Council of the Institute has been adhering to these principles strictly and scrupulously in order to maintain the reputation of the profession.

Part I of Schedule I of CA Act, 1949 deals with professional ethics to be followed by CA, Member of Institute in Practice. This part contains 13 clauses. The following are the professional misconduct in relation to Chartered Accountants in Practice updated with the latest amendments that had taken place as per CA Amendment Act 2006.

Clause (1) - A CA will be guilty of professional misconduct, if he allows any person to practice in his own name or firms name provided such person is not his partner. This is intended to safeguard the public against unqualified accountant practicing under the cover of qualified accountant.

Clause (2) - A CA will be guilty of professional misconduct if he shares his fee with other professional who are not members of institute. However a CA can always share his income or profit with Partner, retired partner, any other member of institute, and the widow of deceased partner.

However, as per CA Amendment Act 2006 a CA can share his profits or professional income with certain notified professional as prescribed by central council. The CA is allowed to share with CS, CWA, and Lawyer etc.

Clause (3) - A chartered accountant is prohibited to accept or agree to accept any part of the profits of the professional work of a lawyer, auctioneer, broker or other agent who is not a member of the institute.

Whereas, as per CA Amendment Act 2006 a CA can accept profit or fee from lawyer, CS, CWA, or any other person notified by central council from time to time

Clause (4) - Any Practicing member is prohibited to enter into partnership with any person other than a Practicing Member or members of recognized foreign professional bodies

However, as per CA Amendment Act 2006 a CA can enter into partnership with non-members as notified by council. A CA is also given right to share his income either in India or outside India (as per agreement with Singapore government a practicing CA can also practice in Singapore)

Clause (5) - A practicing member is prohibited to secure either through the services of a person not qualified to be his partner or by means which are not open to a Chartered Accountant, any professional business. The CA must seek work through the respect he enjoys, professional skill and talent, his confidence etc and not through any agency. All forms of canvassing on that accounts are regarded unethical.

Clause (6)-A Practicing member is prohibited from soliciting clients or professional work by circular, advertisement, personal communication or interview or by any other means. This restraint must be practiced so that members may maintain their independence of judgment and may be able to command the respect of their prospective clients. It is only quality service, which attracts and retains clients.

Clause (7) -A Practicing member is prohibited from advertising his professional attainments or services or using any designation or expressions other than chartered accountant on professional documents, visiting cards or signboard, except permitted degree or title.

Clause (8) -A Practicing member is prohibited from accepting a position previously held by another chartered accountant without first communicating with him in writing.

Clause (9) -A Practicing member is prohibited from accepting an appointment as auditor of a company without first ascertaining from it whether the requirements of Section 225 of the Companies Act, 1956 in respect of such appointment have been duly complied with.

Clause (10) –A Practicing member is prohibited from charging or offering to charge, accepting or offering to accept in respect of any professional employment fees, which are based on a percentage of profits or contingent upon the findings, or results of such employment, except permitted by the regulations.

Clause (11) -A Practicing member is prohibited from engaging in any business or occupation other than the profession of chartered accountants unless permitted by the Council so to engage, except being a director of a company, unless he or any of his partners is interested in such company as an auditor.

Clause (12) -A Practicing member is prohibited from accepting a position as auditor previously held by some other chartered accountant in such conditions as to constitute under- cutting.

Clause (13) -A Practicing member is prohibited from allowing a person not being a member of the Institute or a member not being his partner to sign on his behalf or on behalf of his firm, any balance-sheet, profit and loss account, report or financial statements.

In the ultimate analysis we can say that we need to think of professional ethics if we want to tackle effectively the current challenges we face in our professional life. Ethics is not definable, is not implementable, because it is not conscious, it involves not only our thinking but also our feeling.