Chartered Accountant Professional Negligence and Financial Disclosure Violation Case Under Companies Act, 2013

Court : National Company Law Tribunal (NCLT), Mumbai Bench

Brief :

Case relating to professional negligence and non-compliance by a Chartered Accountant in auditing financial statements, resulting in inaccurate disclosures and violation of statutory provisions under the Companies Act, 2013.

Citation : 2024 NCLT Mum 458

Judgement :

Judgment

The National Company Law Tribunal (NCLT), Mumbai Bench, held that the Chartered Accountant failed to exercise proper professional diligence and violated statutory auditing responsibilities under the Companies Act, 2013. The tribunal observed that the auditor certified financial statements without conducting adequate verification and ignored material discrepancies in the company’s accounts.

The court further stated that auditors are expected to maintain transparency, integrity, and accountability while performing audit functions. Failure to detect or disclose significant financial irregularities amounts to professional negligence and adversely affects shareholders, investors, and public confidence in corporate governance.

Accordingly, the tribunal passed the following orders:

1. The respondent Chartered Accountant was held liable for professional negligence.

2. Monetary penalties were imposed under relevant provisions of the Companies Act, 2013.

3. The matter was directed to be referred to the concerned professional regulatory authority for disciplinary proceedings.

4. The company was instructed to revise and restate inaccurate financial statements.

5. The tribunal warned that repeated violations may attract stricter legal and professional consequences, including suspension of practice rights.

The petition was partly allowed, and directions were issued for strict compliance with auditing standards, financial disclosure norms, and corporate governance requirements under the Companies Act, 2013.http://www.casansaar.com

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