Page 6 - NEWSLETTER DECEMBER 2014

NEWSLETTER The Institute of Chartered Accountants of Pakistan December 2014 Members News 5. Violation of Section 208 of the Companies Ordinance, 1984 was made by the Company by making investments in shares of its group Professional Misconduct companies without the approval/authority of  The Investigation Committee of the Institute (the its shareholders and Musharaka ventures were entered into with its associated company, the Committee) noted that a member Mr. Muhammad whole amount of which was also not shown Amer, FCA [R-3311] the then partner and practicing in the published financial statements of the member of erstwhile Syed Husain & Company, Company. Further, the Musharaka transactions Chartered Accountants failed to address the entered into with the associated company for following irregularities in the audit/review reports investment in real estate resulted in violation issued by him on the audited/reviewed financial of Section 282C of the Companies Ordinance, statements of a public limited Non-Banking Finance 1984 as the Company did not possess a housing Company (the Company) for the year ended finance license as was required for this business. December 31, 2004 and for the half year ended June 30, 2005, in accordance with the requirements 6. The relevant provisions of the Prudential of the International Standards on Auditing and Regulations issued by the Securities & Exchange Commission of Pakistan (SECP) were violated by relevant laws/regulations: the Company by making investments in shares of group companies and as a result of providing 1. The Company maintained parallel books financing facilities to its associated company separate from the books of accounts maintained which were not in accordance with the aforesaid for preparing financial statements. regulations. 2. A number of transactions were entered into by 7. The Chief Executive Officer of the Company the Company in violation of various provisions approved and granted financing facilities which of the Companies Ordinance, 1984, the Non- were in excess of his authority delegated by the Banking Finance Companies (Establishment & Board of Directors (BoD) of the Company. Regulation) Rules, 2003 (NBFC Rules) and the regulations made thereunder. In view of the above, the Investigation Committee of the Institute concluded that Mr. Muhammad Amer, FCA was guilty of professional misconduct in 3. Proper books of accounts were not maintained terms of: by the Company in violation of Sections 230 and 234 of the Companies Ordinance, 1984 and the a. Clause (3) of Part 4 of Schedule I of the Chartered NBFC Rules. Amounts relating to investments Accountants Ordinance, 1961 for not complying and Musharaka ventures made by the Company with the Council’s directives contained in were not reported in the published financial Fundamental Principle 11.6 (Technical Standards) statements and a significant amount of assets of the Code of Ethics, according to which, a was hidden in parallel books and records Chartered Accountant in practice is required to maintained by the Company. carry out professional services in accordance with the requirements of International Accounting Standards, International Standards 4. Investments were made with the money raised on Auditing, ICAP Directives and relevant through borrowings from financial institutions legislation, i.e. Companies Ordinance 1984. and general public which were not recorded in the books of accounts and the general ledger b. Clause (7) of Part 1 of Schedule II of the Chartered balances were mis-stated and were not correctly Accountants Ordinance, 1961 for being grossly reported in the published financial statements negligent in the conduct of his professional of the Company. duties. 6