IN THE HIGH COURT OF SINDH AT KARACHI
BEFORE:
Mr. Justice Muhammad Shafi Siddiqui
Miscellaneous Appeal No. 06 of 2005
Muhammad Basheer Juma
Versus
Institute of Chartered Accountants of Pakistan
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Date of Hearing: |
08.05.2018 |
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Appellant: |
Through Mr. Zahid F. Ebrahim Advocate. |
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Respondent: |
Through Mr. S. Irtaza H. Zaidi Advocate. |
Muhammad Shafi Siddiqui, J.- The appellant has impugned a decision of the respondent i.e. Institute of Chartered Accountants of Pakistan dated 31.01.2005 in terms whereof, relying on the investigation committee’s report, the appellant was reprimanded by name and his name was removed from the Register of Member for a period of one year from the date of the order. Such proceedings followed by the impugned order was initiated on the basis of a complaint to the effect that the appellant, being the auditor of Bankers Equity Limited is alleged to have not given its true picture of financial position while auditing for the period ending on 30.06.1998.
It is the case of the appellant, as argued by Mr. Zahid Ebrahim, appearing for appellant, that under no stretch of imagination the subject report for the year ending on 30.06.1998 be considered as a report prepared and signed by him (appellant). The subject unsigned report was sent to the Board of Directors of Bankers Equity Limited through a covering letter and the Board’s approval/assistance was required in relation to certain queries raised by the appellant. The Board of Directors was yet to approve the report/provide replies to certain queries and in fact it never responded to the queries and reliance, as made by the appellant towards tentative assessment of the financial report ending 30.06.1998.
Mr. I.H. Zaidi, appearing for respondent, submitted that the appellant has not challenged the investigation and the conclusion drawn by the Investigation Committee and since it has gone un-challenged and un-rebutted, the impugned decision of the respondent cannot be called in question without challenging the basis of their decision. Apart from this ground learned counsel has not responded to the alleged report being unsigned and the queries as inquired by the appellant through a covering letter.
I have heard the learned counsel appearing for the parties and perused the material available on record.
The Chartered Accountants Ordinance, 1961 provides a remedy of appeal in terms of Section 20K in respect of an order of the Council imposing him any of the penalties referred to in Section 20D of the ibid law. Even otherwise, insofar as investigation is concerned, there is neither any provision, which could impugn such investigation in appeal provided by the Ordinance, nor such investigation, which is only tentative report by the Council to act upon, is liable to be impugned. Such analysis was only a tentative reasoning for the Council to apply mind.
It is a matter of fact that the audit report for the period ending 30.06.1998 was never signed as it was sent to the Board of Directors of Bankers Equity Limited for certain queries and approval. No audit report in respect of Bankers Equity Limited accounts for the subject year was ever issued by the appellant or his firm. The subject report only appears to be at a draft stage as it was never signed by anyone and thus cannot be presumed to be an audited financial statement. The previous reports, as available as Annexure E/2 and E/3 etc. were qualified but in respect of the subject report the emphasis was not taken into consideration. It was thus required to be modified through a qualification or emphasis made in the covering letter.
In view of the above I consider the impugned order of reprimand and removal of the name of the appellant from the Register of Members, as being a harsh one. I am of the view that the appellant has been made guilty of professional misconduct under clause 5 of Part 4 of the Schedule of Chartered Accountants Ordinance, 1961, which reads as under:-
“Professional misconduct in relation to members of the Institute generally
A member of the Institute, whether in practice or not, shall be deemed to be guilty of professional misconduct, if he-
….
(5) has been guilty of any act or default discreditable to a member of the Institute; or”
I do not see any charge within the frame of clause 5 Part 4 of Schedule 1 of Chartered Accountants Ordinance, 1961 in the absence of any audit report duly signed by him (appellant). All that I could see is that the report was tentatively drafted, having certain queries which the Board of Bankers Equity Limited was supposed to furnish. At the most the auditor should have asked for such queries before even attempting to prepare a draft for the period ending on 30.06.1998 and this is perhaps not covered by the clause 5 of Part 4 of Chartered Accountants Ordinance, 1961 referred above.
In view of the above, I allow this appeal and the decision of reprimand and removal of the name of appellant from the Register of Member as such is set aside. However it was also expected from a professional Chartered Accountant to have included and obtained complete details before even a draft report could be prepared and the appellant as such be careful in future.
Above are the reasons of my short order dated 08.05.2018.
Dated: Judge