Sri Lanka Consolidated Acts

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Institute Of Chartered Accountants Act (No. 23 of 1959) - Sect 25

Transitional arrangements

25. Notwithstanding anything in the preceding sections of this Act, the following provisions shall apply in relation to the first enrolment of members of the Institute and the constitution of the first Council to hold office under this Act: -
(1) As soon as may be after the appointed date, the Minister shall in terms of subsection (3) of section 7 appoint a person to be the President of the Council.
(2) The President shall, by notice published in the Gazette and in at least two daily newspapers circulating in Ceylon, call upon persons eligible for membership of the Institute to make application therefore.
(3) The President shall, subject to the provisions of sections 5 and 15, enrol as members of the Institute all persons eligible for such membership who make application in that behalf within the period of three months immediately succeeding the appointed date.
(4) The names of the persons enrolled under paragraph (3) of this section shall be presented to the Minister for the purpose of enabling him to make the other appointments for which provision is made in subsection (3) of section 7.
(5) As soon as may be after all appointments are made, the Minister shall by Order published in the Gazette specify the date on which the first Council established under this Act shall commence to hold office.
1. For the purposes of any inquiry to be held under section 17 of the Act, the Council shall appoint, by drawing lots if the Council so determines, three persons from among its members to constitute a Disciplinary Committee, and shall appoint one of them to be Chairman of the Committee. 2.
(1) The Council shall cause a statement to be prepared setting out the charges to be investigated by the Disciplinary Committee, and the Secretary shall transmit a copy of the statement to each member of the Committee and to the person whose conduct is the subject of the investigation.
(2) When the inquiry is to be held in consequence of a petition or complaint alleging misconduct by any person, the Secretary of the Council shall in addition transmit a copy of that petition or complaint to that person and to each of the members of the Disciplinary Committee.
3.
(1) The Secretary of the Council shall give notice of the first date fixed for the inquiry to the person whose conduct is the subject of the investigation. Every such notice shall, at least fourteen days before the date fixed for the inquiry, be delivered by hand at, or sent through the post by registered letter addressed to, the last known place of residence of that person.
(2) "Where any person to whom a notice has been given under paragraph (1) fails to appear in person or is not represented by counsel, the inquiry may be held by the Disciplinary Committee in his absence.
(3) Notice of any date to which the inquiry may be adjourned shall be given by the Committee personally to the person whose conduct is the subject of inquiry or be given in manner provided in paragraph (1).
4.
(1) If the Council is of opinion that the evidence of any person, or the production by any person of any document, is necessary to enable any matter to be investigated by a Disciplinary Committee, the Council shall direct the Secretary of the Council to require the attendance of that person, or the production by that person of such document, at such time and place as may be specified in a notice which shall be delivered by hand at, or sent through the post by registered letter addressed to, the last known place of residence of that person.
(2) Where any person who has been served with a notice under paragraph (1), fails, without reasonable cause, to attend or to produce any document, as the case may be, at the time and place specified in the notice, he shall be guilty of an offence under the Act.
(3) The Secretary for the time being of the Council shall be the Secretary of every Disciplinary Committee and every notice issued under these rules shall be signed by him.
(4) A Disciplinary Committee shall have power to administer oaths or affirmations to all persons who are required to give evidence before such Committee, and every person who refuses to be sworn or affirmed, or to answer such questions as may be put to him concerning any matter in respect of which the inquiry is held, shall be guilty of an offence under the Act.
(5) Every person who upon examination upon oath or affirmation before a Disciplinary Committee wilfully gives false evidence shall be guilty of an offence under the Act.
(6) Any person whose conduct is the subject of investigation at an inquiry or who is in any way concerned or implicated in such inquiry may be represented by one or more advocates or proctors at the inquiry.
(7) The Council may authorize any advocate or proctor to assist the Disciplinary Committee as to the leading and taking of evidence.
(8) Every inquiry held by a Disciplinary Committee shall, unless the Council otherwise determines in any case, be held in camera.
(9) Any question before a Disciplinary Committee shall be determined by the decision of the majority of the members of that Committee.
(10) Upon the conclusion of an inquiry, the Disciplinary Committee shall prepare and transmit to the Council a report embodying the findings on the matters in respect of which the inquiry was held.
A. Each of the following acts on the part of a Chartered Accountant shall constitute professional misconduct: -
(1) allowing any other person to practise in his name as a Chartered Accountant unless such person is also a Chartered Accountant and is in partnership with or employed by himself;
(2) entering into partnership with any person other than a Chartered Accountant or securing, either through the services of a person not qualified to be a Chartered Accountant or by means which are not open to a Chartered Accountant, any professional business; and
(3) engaging in any business or occupation other than the profession of Chartered Accountant unless permitted by the Council so to engage:
B. Each of the following acts or omissions on the part of a Chartered Accountant or a Registered Accountant and Auditor shall constitute professional misconduct: -
(1) paying or allowing or agreeing to pay or allow, directly or indirectly, to any person, other than a member of the Institute, a Chartered Accountant or Registered Accountant and Auditor or a retired partner or a nominee or the legal representative of such partner, any share, commission or brokerage out of the fee or profits for his professional services;
(2) accepting or agreeing to accept any part of the profits of the professional work of a lawyer, auctioneer, broker or other agent who is not a Chartered Accountant or a Registered Accountant and Auditor;
(3) soliciting clients or professional work either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means;
(4) advertising his professional attainments or services;
(5) disclosing information acquired in the course of his professional engagement to any person other than his client, without the consent of his client, or otherwise than as required by any law for the time being in force;
(6) accepting a position as auditor previously held by another Chartered Accountant or Registered Accountant and Auditor without first communicating with him in writing;
(7) accepting an appointment as auditor of a company without first ascertaining from it whether the requirements of the Companies Ordinance relating to the appointment of auditors have been duly complied with;
(8) Certifying or submitting in his name or in the name of his firm a report of an examination of financial statements unless the examination of such statements and the related records have been made by him or by a partner or an employee in his firm;
(9) permitting his name or the name of his firm to be used in connection with an estimate of earning contingent upon future transactions in a manner which may lead to the belief that he vouches for the accuracy of the forecast;
(10) expressing his opinion on financial statements of any business or any enterprise in which he, his firm or a partner in his firm has a substantial interest, unless he discloses the interest also in his report;
(11) charging in respect of any professional employment fees which are based on a percentage of profits or which are contingent on results;
(12) failing to disclose a material fact known to him which is not disclosed in a financial statement, but disclosure of which is necessary to make the financial statement not misleading;
(13) failing to report a material misstatement known to him to appear in a financial statement with which he is concerned in a professional capacity;
(14) gross negligence in the conduct of his professional duties;
(15) failing to obtain sufficient information to warrant the expression of an opinion;
(16) failing to invite attention to any material departure from the generally accepted procedure of audit applicable to the circumstances;
(17) failing to keep moneys of his client in a separate banking account or to use such moneys for purposes for which they are intended; and
(18) including in any statement, return or form to be submitted to the Council any particulars knowing them to be false.
C. Notwithstanding anything to the contrary in paragraph A or paragraph B of this Schedule, a Chartered Accountant or a Registered Accountant and Auditor shall not be guilty of professional misconduct by reason only of any of the following acts: -
(1) entering into or being in partnership with any person outside Ceylon who is a member of a society or institute of accountants of the description specified in section 4 (1) (ii) of the Act;
(2) securing professional business by reason of such partnership;
(3) allowing such partnership to be carried on in his name;
(4) paying or allowing or agreeing to pay or allow to any such partner any share out of the fees or profits for professional services.


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