ICAI recommends 1-yr ban for pension fund auditor

The Institute of Chartered Accountants of India (ICAI) has decided to recommend a one-year ban for an auditor, R Laxminarayan, of C C Chokshi & Co, for professional misconduct.

ICAI said the decision to deregister the auditor from its members’ list was taken after the disciplinary committee submitted its report. It said detailed hearings on a complaint against the Pension Funds auditor for negligence and non-observance of accounting standards were also held.

ICAI will forward its recommendation before the High Court, which is hearing a case between Britannia Industries and the company’s Pensioners Welfare Association (PWA). The PWA had charged the auditor for “serious misconduct in deliberately permitting illegal withdrawal of over Rs 12 crore from the Pension Fund and refunding it to Britannia Industries Limited".

The petitioners had said that the auditor’s action was responsible for the non-payment of pensions to retired officers and managers of the company from April 2003.

Following a showcause notice from the Income Tax Department and a Calcutta High Court order, Britannia had to return the amount and deposit it in a nationalised bank.

The PWA has been fighting a legal battle with Britannia Industries alleging that the company had had stopped payment of “due pension to managers and officers (as per the Fund rules) who retired after March 2003, attempting to retrospectively convert the Defined Benefit Pension Funds to Defined Contribution Scheme”.

CA R Laxminarayan was appointed both as a consultant and the auditor for the Pension Funds in 2003, and PWA had alleged that the auditor was negligent in carrying out his professional duties ignoring the statutory accounting standards.

When contacted, Deloitte India which has a pact with C C Chokshi & CO in India, declined to comment.