“If his name or on his behalf.

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“If he allows any person to practice in his name as a Chartered Accountant unless such person is also a chartered accountant in practice and is in partnership with or employed by himself.”

According to this clause, no member of the Institute can allow any unqualified or non-member to practice in his name or on his behalf. A member can, however, be permitted to act on his behalf if such a member is also a member of the Institute and is a partner of the member. If an employee of a member works on his behalf directly under his control and supervision, he can be allowed to do so.

Clause -2:

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“If he pays or allows or agrees to pay or allow, directly or indirectly, any share, commission or brokerage in the fees or profits of his professional business, to any person other than a member of the Institute or partner or a retired partner or the legal representative of a deceased partner.”

Under this clause, a member is prohibited to share his fees directly or indirectly with any non-member but he may agree to pay any share of his fee, commission or brokerage earned during the course of his professional business to any partner or a retired partner or even to the legal representatives of a deceased partner.

It is to be noted that in the opinion of the Council of the Institute, a retired partner or the widow of a deceased partner should not be allowed to have a share in the profits if it is not provided to do so under the partnership agreement.


“If he accepts or agrees to accept any part of the profits of the professional work of a lawyer, auctioneer, broker or other agent who is not a member of the Institute.”

Under this clause, a member of the Institute is prohibited to share any fees, brokerage or commission earned by a non-member. This is done so lest a member should not take undue advantage of his position as the auditor of a client.

If, on the advice or recommendation of the auditor, his client appoints someone as a legal adviser or an auctioneer, the fee of the latter cannot be shared by the former. A member cannot share his fee or professional profits with a non-member.

Clause – 4:

“If he enters into partnership with any person other than a Chartered Accountant in practice or a person resident without India who but for his residence abroad would be entitled to be registered as a member under clause (v) of sub-section (1) of Section 4 or whose qualifications are recognised by the Central Government or the Council for the purpose of permitting such partnerships, provided that the Chartered Accountant shares in the fees or profits of the business of the partnership both within and without India.”

According to this clause, a Chartered Accountant is permitted to take a person (not in practice) as a partner if-

(a) He is resident outside India;

(b) He is qualified to be enrolled as a member of the Institute provided he had been in India; and

(c) He shares the fees and profits of the business of the partnership both in India and outside.

Clause -5:

“If he secures, either through the services of a person not qualified to be his partner or by means which are not open in a Chartered Accountant, any professional business.”

This clause prohibits a member to secure professional business through a person not qualified to be his partner. He is also not permitted to adopt such means and practices for securing business as are not open to a Chartered Accountant.


“If he solicits clients or professional work either directly or indirectly by circular, advertisement, personal communication or interview or by any other means.”

This clause prohibits a member in order to secure professional work from contacting or interviewing people or sending circulars of advertising, etc.

A Chartered Accountant sent a printed card and circular letters soliciting work. It was held that he was guilty under the clause.

In another case where a Chartered Accountant wrote to the Ministry of Commerce and Industry to enroll the name of his firm in the list of auditors maintained by the Department, he was held guilty of the charge. – Re. K. C. J. Satyavadi, 1955.

A Chartered Accountant sent an application to the Chairman of a Co-operative Society offering himself for appointment as an auditor. It was held in this case that the infringement was a serious breach of professional ethics. – Re. G. K. Joglekar and Re. D. C. Jawalkar, 1957.


“If he advertises his professional attainments or services, or uses any designation or expressions other than Chartered Accountants on professional document, visiting cards, letter heads or signboards, unless it be a degree of a university established by law in India or recognised by the Central Government or a title indicating membership of the Institute of Chartered Accountants or of any other institution that has been recognised by the Central Government or may be recognised by the Council.”

According to this clause, a Chartered Accountant should not advertise his professional attainments or make use of any designations unless he is so permitted by the Institute. He may, however, use any title, works, etc., permissible by any Institute of Accountancy of England if they are recognised by the Council or the Central Government.

A Chartered Accountant used the designation ‘Incorporated Accountant’, London and ‘Registered Accountant’, India, in the Balance Sheet and also failed to report to the shareholders in the prescribed form under the Banking Companies Act. It was held that the Chartered Accountant was guilty under the clause.

Clause -8:

“If he accepts a position as auditor previously held by another Chartered Accountant or a restricted state auditor without first communication with him in writing.

Under this clause if an auditor is appointed by a limited company in place of an existing auditor, he is not expected to accept his assignment unless he has communicated with retiring auditor about the reason due to which the latter is retiring.

Actually, this clause serves as a safeguard for a new auditor and enables him to know well in advance the circumstances which have led to his appointment and retirement of the existing auditor.

A Chartered Accountant failed to communicate in writing to the previous auditor of his appointment as auditor of a co-operative bank and such commission was not intentional. It was held that the breach was only technical.

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