ICAI Disciplinary Action: CA Removed from Register, Heavy Fine Imposed

ICAI Disciplinary Action: CA Removed from Register, Heavy Fine Imposed

The complaint was filed by the Deputy General Manager of State Bank of India regarding statutory audits of First Leasing Company of India Ltd. The company had availed large credit facilities, and RBI issued restrictive directions in September 2013. A forensic audit pointed to irregularities including inflated income recognition, wrongful accounting of lease foreclosure, incorrect depreciation, concealment of losses, cash dealings in loan repayments, non-deduction of TDS, and undisclosed related party transactions.

The Respondent, CA. V. Balasubramanyan, partner in M/s Sarathy & Balu, was the statutory auditor for the years 2002-3 to 2012–13. He was accused of not gathering adequate audit evidence and not reporting material misstatements in the company’s financial reports for several years.

Issue Before Disciplinary Committee: Whether the statutory auditor was guilty of professional misconduct in failing to collect adequate audit evidence, not being diligent enough, and failing to disclose material misstatements in First Leasing Company’s FY 2002-03 to 2012-13 audits.

Committee Held: The Committee considered the forensic audit report, complaint, and submissions, and convicted the auditor of misconduct under Clauses (5), (7), and (8) of Part I, Second Schedule.
By order dated 09/08/2025, the Committee ordered erasure of the name of CA. V. Balasubramanyan from the Register of Members for two years and levied a fine of Rs. 1,50,000 payable within 90 days. Upon default, the erasure would be extended for a further period of three months. The order also stated that the punishment would run concurrently with penalties imposed in related cases.

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