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May 3, 2020

Incoming Auditor to Communicate with Retiring Auditor via Email – Code of Ethics ICAI FAQ Covid-19

by facelesscompliance in Compliance Law, GST, ICAI, Income Tax

Incoming Auditor to Communicate with Retiring Auditor via Email – Code of Ethics ICAI FAQ

The ICAI members have raised concerns that during the period of ongoing lockdown, it is not possible for the Incoming Auditor to communicate with the Retiring Auditor through the mode(s) of communication permissible in terms of provisions of Code of Ethics.

The existing Code of Ethics, 2009 , provides, under commentary to Clause (8) of Part-I of First Schedule to The Chartered Accountants Act, 1949 as under :-

“Members should therefore communicate with a retiring auditor in such a manner as to retain in their hands positive evidence of the delivery of the communication to the addressee. In the opinion of the Council, communication by a letter sent “Registered Acknowledgement due” or by hand against a written acknowledgement would in the normal course provide such evidence.”

Due to the existing constraint of communication through above mentioned modes, it has been decided that the members may communicate with the Retiring Auditor vide E-mail , provided an acknowledgement of such communication is received from the Retiring Auditor’s E-mail address registered with the Institute or his last known official E-mail address. Such acknowledgement of communication would be deemed as valid evidence of positive delivery of communication.

FAQ on how to take NOC from Retiring Auditor via Email

1) Why Changes in Code of Ethics for Email Communication?

Due to Covid-19 Lockdown and restriction of postal communication, many CAs for accept new Audit Assignment will find difficult to communicate with the Retiring Auditor through the mode(s) of communication permissible in terms of provisions of Code of Ethics. So ICAI has enable to accept such communication via Email

2) Whats is the Format of NOC

Draft Format to be send from Registered Email Address of New Auditor to Retiring Auditor

XXth May, 2020

Name as per ICAI Records

Chartered Accountants, Mumbai

Dear Sir / Madam

Re: No Objection Certificate

This is to inform you that we have been appointed as the Tax Auditor of (Client Name) for the financial year 20xx – 20xx.

We have been informed that the said appointment has been made in view of your resignation as Tax Auditor for (Client Name).

Accordingly this is to seek your No objection in our favour so as to enable us to accept the said appointment as Statutory Auditor of the Company via Email. Further please confirm the receipt of the Email as it is Compulsory required. Further also confirm there is no Audit fees due from (Client Name)

As per Revised Guidlines of ICAI we need acknowledgement of above communication from the Retiring Auditor’s E-mail address registered with the Institute or his last known official E-mail address, as it will deemed as valid evidence of positive delivery of communication.

Your early response shall be appreciated.

Thanking you.

Yours faithfully,

For XXXX & Co

Chartered Accountants

3) Where you can search the Email ID of The Firms Partner?

The ICAI Firm card has to details of the Email ID of the partners, Date of Joining and Opening Date. You can ask your client to get copy of the same. Further in the last audit report stationery use like Letter Head has mention email of the Firm or Partner that could be considered

4) What if Incoming Auditor has not received Acknowledgement?

If no Acknowledgement is received it would be against Code of Ethics and Auditor cannot start the new assignment

5) Which Email Ids should Incoming Auditor or Retiring Auditor should use?

All communication should be from the Retiring Auditor’s E-mail address registered with the Institute or his last known official E-mail address