Professional Practice

ICAI Reprimands CA and Imposes ₹50,000 Fine for Issuing a Certificate Without Verifying the Cash Book

Published 10 Aug 2026· Updated 10 Aug 2026· 6 min read

Executive Summary

The ICAI Disciplinary Committee, Bench-II, has held a Mumbai-based Chartered Accountant guilty of professional misconduct under Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949, for issuing a Cash Withdrawal Certificate without exercising due diligence. In its Order dated 23 July 2026, the Committee reprimanded the Respondent and imposed a fine of ₹50,000 under Section 21B(3)(a) of the Chartered Accountants Act, 1949, after finding that the certificate — dated 12 September 2020, relating to a proprietorship for the year ended 30 September 1985 — was prepared primarily on the basis of the bank passbook and financial statements, without verifying the Cash Book, and that the Respondent had himself admitted the underlying books of account were not available when the certificate was issued.

Background / Facts

The Respondent had certified that particulars in the Cash Withdrawal Certificate were in agreement with the books of account maintained, financial statements prepared, and bank passbook of the entity concerned. The Disciplinary Committee found that the certificate was in fact based only on the bank passbook and financial statements — the Cash Book itself was never verified. Certain expenses, including bank interest, bank charges and commission, and interest on term loans, had been treated as cash payments without proper verification, reflecting an unverified assumption that all Profit & Loss Account expenses had been paid in cash. Critically, the Respondent admitted in his own submissions that the relevant books of account were not available for verification at the time the certificate was issued — a fact corroborated by the minutes of an arbitral meeting recording that the books of account for the relevant period were unavailable. In his defence, the Respondent argued the lapse reflected a want of due care rather than dishonesty or malafide intent, that the passbook figures and cash withdrawals were never disputed, and that no stakeholder suffered financial loss or was deceived. The Committee accepted these as mitigating factors in sentencing but not as a defence to the underlying charge.

The Committee’s Reasoning

The Committee held that certifying agreement with “books of account” while knowing those books were unavailable and unverified amounted to a misleading professional certification, regardless of whether the underlying figures later proved accurate or whether anyone suffered demonstrable loss. The absence of dishonest intent, personal gain, or client harm was treated as relevant to the quantum of punishment — reprimand plus a monetary fine, rather than a more severe sanction such as suspension — but not as a basis for exoneration on the misconduct finding itself. The Committee’s order draws a clear line between the accuracy of the figures certified (not in dispute here) and the process by which the certifying professional arrived at them (found deficient) — professional misconduct under Item (7) attaches to the latter.

Why It Matters

This order is a direct, current reminder of the standard expected when issuing any certificate that represents verification of books of account — cash withdrawal certificates, net worth certificates, turnover certificates, and similar attestations are all exposed to the same scrutiny. It confirms that ICAI’s Disciplinary Committee will find misconduct even where the certified figures are not challenged and no financial loss is alleged, purely on the basis that the certifying process did not match what was represented. For a profession increasingly asked to issue certificates for banking, litigation, arbitration, and regulatory purposes — often under commercial time pressure — this is a timely reminder that the certificate’s wording must match the actual scope of verification performed, not the scope that was originally intended or expected.

Key Takeaways

Professional misconduct under Item (7), Part I, Second Schedule of the Chartered Accountants Act, 1949 can be established purely from a mismatch between what a certificate represents was verified and what was actually verified — independent of whether the certified figures are accurate.
Absence of dishonest intent, personal benefit, or demonstrable stakeholder loss mitigates the quantum of punishment but does not negate the misconduct finding itself.
Where the underlying books of account are unavailable, the correct professional response is to qualify the certificate accordingly (or decline to certify) — not to proceed on the basis of secondary evidence (passbook, financial statements) while representing that the books themselves were verified.
The punishment here — reprimand plus ₹50,000 fine under Section 21B(3)(a) — reflects the relatively lower end of the penalty spectrum available to the Disciplinary Committee, consistent with the absence of dishonesty or loss; more serious fact patterns can attract suspension of the Certificate of Practice.

Practical Implications

Firms and practitioners issuing certificates of any kind — cash withdrawal, net worth, turnover, utilisation, or statutory certificates — should treat the precise wording of the certificate as a compliance-critical document, not a formality. Before signing, confirm that every document referenced in the certificate (books of account, ledgers, cash book, bank statements) was actually examined to the extent represented; where full verification was not possible within the engagement timeline, the certificate should be worded to reflect the actual scope of work performed (e.g., “based on the bank passbook and financial statements provided” rather than “in agreement with the books of account”), or the engagement should be declined until proper verification is possible.

Action Checklist

Review standard certificate templates used by the firm (cash withdrawal, net worth, turnover certificates) to ensure the representation of verification scope matches actual practice.
Where books of account are not made available by a client within the engagement timeline, either decline to certify or explicitly qualify the certificate to reflect the limited basis of verification.
Maintain a clear record (working papers) of exactly which documents were examined for every certificate issued, to support the certificate’s stated scope if challenged later.
Brief team members and article assistants involved in certification engagements on this order as a training example of the gap between “certified basis” and “actual basis” of verification.

Relevant Sections / Rules / Notifications

Item (7), Part I, Second Schedule, Chartered Accountants Act, 1949 (professional misconduct in relation to certification)
Section 21B(3)(a), Chartered Accountants Act, 1949 (Disciplinary Committee’s power to reprimand and impose a fine)
Rule 19(1), Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007
ICAI Disciplinary Committee, Bench-II (2026-2027): Order dated 23 July 2026, File No. PR/269/2021-DD/242/2021-DC/1838/2023

FAQs

Q: Did the Committee find that the certified figures themselves were wrong?

A: No — the Committee’s finding was not that the figures were inaccurate, but that the Respondent represented a level of verification (agreement with books of account) that had not actually been performed, since the books themselves were unavailable and unverified.

**Q: Why was the punishment limited to reprimand and a fine, rather than suspension?**

A: The Committee treated the absence of dishonest intent, personal gain, and demonstrable stakeholder loss as mitigating factors relevant to sentencing, even though they did not negate the underlying misconduct finding.

Q: What is the practical lesson for certification engagements generally?

A: Ensure the certificate’s language precisely matches the verification actually performed. If full books of account cannot be examined, either qualify the certificate accordingly or decline the engagement — do not certify “agreement with books of account” on the basis of secondary documents alone.

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Author & Disclaimer

Prepared by Finoscape Editorial Team — contact@finoscape.com. This article is for general informational purposes and does not constitute legal or tax advice. Readers should consult the full text of the ICAI Disciplinary Committee order and applicable professional standards before relying on this analysis for any specific certification engagement.