Schedule 2 of The Cost Accountants Act, 1959
THE SECOND SCHEDULE [See sections 21 (3), 21B (3) and 22] PART I Professional misconduct in relation to cost accountants in practice A cost accountant in practice shall be deemed to be guilty of professional misconduct, if he—
- (1)discloses information acquired in the course of his professional engagement to any person other than his client so engaging him, without the consent of his client, or otherwise than as required by any law for the time being in force;
- (2)certifies or submits in his name, or in the name of his firm, a report of an examination of cost accounting and related statements unless the examination of such statements has been made by him or by a partner or an employee in his firm or by another cost accountant in practice;
- (3)permits his name or the name of his firm to be used in connection with an estimate of cost or earnings contingent upon future transactions in a manner which may lead to the belief that he vouches for the accuracy of the forecast;
- (4)expresses his opinion on cost or pricing statements of any business or enterprise in which he, his firm or a partner in his firm has a substantial interest;
- (5)fails to disclose a material fact known to him in a cost or pricing statement, which is not disclosed in a cost or pricing statement but disclosure of which is necessary in making such statement where he is concerned with such statement in a professional capacity;
- (6)fails to report a material mis-statement known to him to appear in a cost or pricing statement with which he is concerned in a professional capacity;
- (7)does not exercise due diligence, or is grossly negligent in the conduct of his professional duties;
- (8)fails to obtain sufficient information which is necessary for expression of an opinion or its exceptions are sufficiently material to negate the expression of an opinion ;
- (9)fails to invite attention to any material departure from the generally accepted procedure of costing and pricing applicable to the circumstances;
- (10)fails to keep moneys of his client other than fees or remuneration or money meant to be expended in a separate banking account or to use such moneys for purposes for which they are intended within a reasonable time. PART II 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—
- (1)contravenes any of the provisions of this Act or the regulations made thereunder or any guidelines issued by the Council;
- (2)being an employee of any company, firm or person, discloses confidential information acquired in the course of his employment, except as and when required by any law for the time being in force or except as permitted by the employer;
- (3)includes in any information, statement, return or form to be submitted to the Institute, Council or any of its Committees, Director (Discipline), Board of Discipline, Disciplinary Committee, Quality Review Board or the Appellate Authority any particulars knowing them to be false;
- (4)defalcates or embezzles moneys received in his professional capacity. PART III Other 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 other misconduct, if he is held guilty by any civil or criminal court for an offence which is punishable with imprisonment for a term exceeding six months.]
Summary
- The Second Schedule lists severe professional or other misconduct for members of the Institute, both practicing and non-practicing.
- For cost accountants in practice, misconduct includes disclosing client information without consent, certifying reports without personal examination, expressing opinions where they have substantial interest, failing to disclose material facts, and failing to keep client moneys in a separate bank account.
- For all members generally, misconduct includes violating the Act, regulations, or Council guidelines, submitting false particulars to any Institute authority, and embezzling professional funds.
- Non-professional misconduct occurs if a member is convicted by a court of an offence carrying imprisonment for more than six months.
- Under Section 21, the Disciplinary Directorate, led by the Director (Discipline), investigates complaints, and if a member appears prima facie guilty of misconduct under the Second Schedule or both Schedules, the Director must refer the case to the Disciplinary Committee.
Practical examples
FAQ
1. What happens if the Director (Discipline) finds a member prima facie guilty of misconduct under the Second Schedule?
Under Section 21(3), if the Director (Discipline) forms an opinion that a member is guilty of misconduct mentioned in the Second Schedule, or in both the First and Second Schedules, the Director must place the matter before the Disciplinary Committee.
2. What are the consequences if a member is convicted of a criminal offence?
Under Part III of the Second Schedule, a member is guilty of misconduct if they are held guilty by any civil or criminal court for an offence that is punishable with imprisonment for a term exceeding six months.
3. Can a practicing cost accountant express an opinion on a firm's statements if they have an interest in that firm?
No. Under Part I, Item 4 of the Second Schedule, it is professional misconduct for a cost accountant in practice to express an opinion on cost or pricing statements of any business in which they, their firm, or their partner has a substantial interest.
4. Can an employee of a company disclose confidential information under the Second Schedule?
Under Part II, Item 2 of the Second Schedule, a member in service is guilty of professional misconduct if they disclose confidential information acquired during employment, unless the disclosure is required by law or permitted by the employer.
Test yourself
Q1.Under Section 21 of The Cost Accountants Act, 1959, if the Director (Discipline) receives a complaint and finds a member prima facie guilty of misconduct listed in both the First Schedule and the Second Schedule, what action must be taken?
Q2.Under Part III of the Second Schedule of The Cost Accountants Act, 1959, a member of the Institute, whether in practice or not, is deemed guilty of other misconduct if convicted by a competent court of an offence punishable with imprisonment exceeding what term?
Q3.Under Part I of the Second Schedule of The Cost Accountants Act, 1959, which of the following actions constitutes professional misconduct for a cost accountant in practice?
Q4.Under Part II of the Second Schedule of The Cost Accountants Act, 1959, in which situation is an employed member of the Institute permitted to disclose confidential information acquired during their employment?
Q5.Under Part I of the Second Schedule of The Cost Accountants Act, 1959, a practicing cost accountant is guilty of professional misconduct if they certify or submit a report on an examination of cost accounting statements, unless the examination has been made by whom?