ICAI penalises 2 Chartered Accountants Rs.1 Lakh each for failure to detect irregularities in Bank Audit

The Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) has taken action against two Chartered Accountants in connection with lapses observed during a bank concurrent audit assignment. The Committee observed that the auditors failed to exercise the required level of professional skepticism and due diligence while conducting the audit of loan accounts, which resulted in serious irregularities and fraud-related issues not being reported in the audit reports. 

During the proceedings, the Committee examined the audit documentation, submissions made by the respondents, and other material available on record. It was noted that concurrent audits are intended to identify irregularities at an early stage, particularly in loan accounts and banking transactions. However, in this case, the auditors had submitted clean audit reports despite the existence of significant irregularities that should have been detected and reported during the course of the audit.

After considering the facts and evidence on record, the Disciplinary Committee concluded that the auditors had failed to perform their professional duties with adequate diligence and care, thereby amounting to professional misconduct under the provisions of the Chartered Accountants Act, 1949. Accordingly, the Committee ordered that both Chartered Accountants be reprimanded and imposed a monetary penalty of ₹1,00,000 each, payable within the prescribed time period.