Ramila & Associates is a proprietorship firm of chartered accountant. Ramila, the proprietor of the firm, was the board member of Lalima Bank Ltd till 32 Asadh, 2067. During the AGM of Bank for the financial year 2066/67, she has been appointed as statutory auditor for the financial year 2067/68. Should she accept the said appointment?

Auditing and Assurance Revision Questions and Answers

Answer
As per the provisions of Code of Ethics issued ICAN, “when professional accountants in public practice are or were, within the period under current review or immediately preceding an assignment:
a) a member of the board, an officer or employee of a company; or
b) a partner of or in the employment of, a member of the board or an officer or employee of a company. They would be regarded as having an interest which could detract from independence when reporting on that company”.

As per Sec 34 (12) of Nepal Chartered Accountant Act, 1997 One shall not perform audit of accounts of any organization where he has served until the elapse of at least three years of his leaving the service. Accordingly, as per above Para, CA Ramila was board member of the bank immediately preceding an assignment, hence she should not accept this assignment as statutory auditor for the financial year 2067/68.



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