The Institute of Chartered Accountants of India (ICAI), the country's apex body of chartered accountants, has found three EY India affiliate entities guilty of professional misconduct. 

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The three entities, as per an April 25 ICAI order, are: 

  • M/s. SR Batliboi & Associates, LLP (formerly known as SR Batliboi & Associates) 
  • M/s. SRBC & Co, LLP (formerly known as SR Batliboi & Co) 
  • M/s. SR Batliboi & Co, LLP (formerly known as SR Batliboi & Co)

Out of the three entities, the CA body has reprimanded two for breaches of the Chartered Accountants Act, citing the manner of dealings between them and global firms under the EY network that are not regulated within the country. 

It found CA Raj Kumar Agrawal (M. No. 082028), who was identified as ‘member answerable’ by Respondent No. 1 to Respondent No. 3, guilty of professional misconduct. 

"The Committee, with respect to objections raised by the Respondent, considered the reasoning as contained in the findings holding the Respondent Guilty of professional misconduct vis-a-vis written and verbal representation of the Respondent made before it. As regards other submissions of the Respondent, the Committee held that due consideration to the submissions and  documents on record had been given by the Committee before arriving at its Findings and that no fresh ground can be adduced at this stage," read the order by the Disciplinary Committee bench, Constituted under Section 21B of the Chartered Accountants Act, 1949. 

"Upon consideration of the facts and circumstances of the case and after due deliberations on the Report, the Committee ordered that the name of the Respondent i.e. CA. Raj Kumar Agrawal,  (M. No. 082028) be removed from Register of Members for a period of three years [concurrently in all cases], and a fine of Rs 5,00,000/- [in each case separately] be imposed upon him, to be paid within 90 days of the receipt of the order. In case of failure in payment of fine as stipulated, the name of the Respondent be removed for a further period of one year from the Register of Members [concurrently in all cases]," it said.  

"The said punishment for the removal from the Register of Members for a period of three years shall run concurrently in all the three cases referred above. Similarly, punishment for removal of name for one year in lieu of non-payment of fine shall also run concurrently in all the three cases referred above. However, the fine of Rs. 5,00,000/- is to be imposed on him in each case separately," it said. 

The panel also directed the respondent and the respondent firms to immediately stop existing arrangements with the multinational entities, "as the same is circumventing the provisions of the Chartered Accountants Act 1949". The Hon’ble Supreme Court, in the matter of S Sukumar vs The Secretary, ICAI also found that the CA firms were trying to bypass the provisions of Section 25 and Section 29 of the Chartered Accountants Act 1949. The same is dealt with in detail in the findings of the Committee issued in the instant matters, it added. 

Meanwhile, SRBC & Co LLP said in a statement: "We are disappointed to receive the order against our former retired partners in the matter of operations of Indian audit firms having network with global firms. We as Indian audit firms have always respected rules and applicable laws. Among other things, the order has asked that past practices of using global network branding be stopped. Many of such practices no longer exist today. We are reviewing the order and will take action as necessary including all the remedies available under law."

The disciplinary panel's order also stated that a compliance report regarding adherence to the above directions be submitted by the respondent and the respondent firms within 90 days of receiving it.