Mr. Kumar KC is practicing as a Chartered Accountant from his proprietorship firm. He nominated Mr. LK Khatri as partner on profit sharing basis. Mr. Khatri, is not the member of ICAN.

Auditing and Assurance Revision Questions and Answers

Answer:
Chapter VIII of Section 34.3 of Nepal Chartered Accountant Act, 1997 states that one shall not share or distribute as profit the auditing fees or remuneration with any person other than a member of the Institute; and shall not pay any commission, brokerage etc. out of the professional fees earned to any person or member.

In the given instance; Mr. Kumar, has nominated Mr. Khatri as a partner, who is not member of ICAN on profit sharing basis, which is against the code of conduct prescribed ICAN.
Given the facts, Mr. Kumar is not allowed to nominate Mr. Khatri, who is not member of ICAN as partner on profit sharing basis. Upon complaint to the Institute against Mr., Kumar, for not upholding the conduct mentioned in this Act or the Regulations framed under this Act, the Executive Director shall, if he finds convincing information that proves Mr. Kumar, is not observing the conduct, submit the proposal along with the related facts to the Council for further action against such member or member holding Certificate of Practice, and Mr. Kumar, may face disciplinary action ICAN.



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