Page 22 - newsletter-february-2019

Newsletter The Institute of Chartered Accountants of Pakistan member news Professional Misconduct 2. It was noted that a practicing member, Mr. Muhammad Kaleem Rathor, FCA [R-0487] failed Findings and Decision of the Council under Section to address the following irregularities during the 20I of the Chartered Accountants Ordinance, 1961 audit of financial statements of a limited company 1. A listed Company failed to write back the long resulting in non-compliance with the requirements term loan from related parties to its profit and loss of relevant laws/regulations including the account in accordance with the requirements of the International Standards on Auditing (ISAs): International Accounting Standard-8 (Accounting policies, Changes in Accounting Estimates and - The note relating to the Statement of Compliance Errors) and accordingly, the profit and loss and was not provided in the financial statements; balance sheet of the Company did not give true and fair view as liabilities were overstated by Rs. 225.885 - The Company did not annex the Profit and Loss million resulting in material and pervasive effect account, Cash Flow Statement and Statement of as these liabilities represented more than 82% of Changes in Equity with its financial statements; the total liabilities and equity of the Company. The provisions of paragraph 8 of ISA 705 (Modifications - Information about the basis of preparation of to the Opinion in the Independent Auditor’s financial statements and specific accounting policies Report) require the auditor to express an adverse selected and applied for significant transactions opinion where the misstatement in the financial and events were not presented in the financial statements is both material and pervasive. However, statements; Mohammad Aslam Tabussum, FCA [R-0818] issued audit report containing the paragraph which - Disclosure in respect of accounting policies for addresses the aspect of non-verification of such proper understanding of the financial statements loans, whereas, no modification in the audit report were not provided in the financial statements; was made by the member in respect of not writing back the said loans in the financial statements of the - Financial statements and the relevant explanatory Company. Therefore, the member did not follow notes did not provide the information regarding the requirements of the ISAs and Section 255 of the material items (such as fixed capital expenditure, Companies Ordinance, 1984 in respect of the audit capital work-in-progress, amounts due to report issued on the financial statements of the associated undertakings, advances, deposits and Company. other receivables etc.); and The Council provided an opportunity of hearing to the member which he did not avail. - Disclosure of date of authorisation of financial statements was not provided in the In view of the above, after considering the report of financial statements. the Investigation Committee and the information and In addition to the above, it was also noted that the evidence available on record, the Council decided to hold the Respondent, Mr. Mohammad Aslam Tabussum, audit report issued by the member on the financial FCA [R-0818] guilty of professional misconduct under statements of the Company was not in accordance Clause (3) of Part 4 of Schedule I of the Chartered with the requirements of Section 255 of the Companies Accountants Ordinance, 1961 for not complying with Ordinance, 1984 read with Form-35A of the Companies (General Provisions and Forms) Rules, 1985. the fundamental principles stated in paragraphs 100.4(c) (Professional Competence & Due Care) and 100.4(e) (Professional Behaviour) of the Code of Ethics In view of the above, after considering the report of the for Chartered Accountants (May, 2008) contained in Investigation Committee, the information and evidence Directive 6.04 of the Institute. available on record and the submissions made by the member during his hearing, the Council decided to The Council decided to reprimand Mr. Mohammad hold the Respondent, Mr. Muhammad Kaleem Rathor, Aslam Tabussum, FCA under Section 20D of the FCA [R-0487] guilty of professional misconduct under Chartered Accountants Ordinance, 1961. Clause (3) of Part 4 of Schedule I of the Chartered 22 February 2019