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Revised Code of Ethics by ICAI

Venkat Raj , Last updated: 15 December 2020  

ICAI (Institute of Chartered Accountants of India) being regulator certifier educator of accountancy profession since 1949 in India has brought up new code of ethics 2019. The same was to be made effect from 1st April 2020 however made applicable from 1st July 2020 due to Covid 19. The regulator being a member of International federation of accountants (IFAC) has revised new code of ethics in accordance with international standards. This code principles are in accordance set by International ethical standard board of association (IESBA) a group of IFAC. When at the global level IFAC revised the code of ethics in 2018 ICAI also in tandem worked for revision of code of ethics. Ethics marks the hall mark of profession. Very important and essential to know ethics properly and do successful practice. Even the same applies for employment although governed by very few clauses. ICAI is governed by

  • Chartered accountants Act 1949
  • Chartered accountants Regulation 1988

Apart from the above council decisions taken from time to time.

Code of ethics was introduced from 1963 but changed from time to time considering professional developments. Ethical standard board being a non standing committee under section 17 of CA Act 1949 was constituted in 1976. However IFAC introduced ethical standard board only in 1977 namely IESBA

ICAI motto - YA Esha Supteshu Jagrati (Awakening even when world is asleep)

ICAI emblem - Garuda symbol

ICAI logo- CA with a tick mark inside a rounded rectangle with white background.it was applicable from 1st July 2007 where by CA firms can use also can be used by CA in their car (at back) irrespective of full time practice or not.

CA Act 1949 consists of only two schedules. It describes about professional misconduct and other misconduct. These are as follows

Revised Code of Ethics by ICAI

Schedule 1

  • Part 1: Professional misconduct for members in practice (12 clauses)
  • Part 2: Professional misconduct for members in service (2 clauses)
  • Part 3: Professional misconduct for members generally (3 clauses)
  • Part 4: Other misconduct for members generally (2 clauses)

Schedule 2

  • Part 1: Professional misconduct for members in practice (10 clauses)
  • Part 2: Professional misconduct for members generally (4clauses)
  • Part 3: Other misconduct for members generally (1 clause)

Major changes have taken place in code of ethics which are as follows from erstwhile code . These are as follows.

Volume 1

1. NOLCAR (Non compliance with other laws and regulation)

A new version introduced this is done to ensure that while Chartered accountant is appointed for any function the responsibility to ensure that management follows all laws whether or not affecting financial statements.

Some examples are

  • Fraud corruption bribery
  • Money laundering , Terrorist financing and proceeds of crime.
  • Data protection
  • Public health and safety

2. Changes in provision of taxation services to audit client

This is peculiar. A statutory auditor can undertake tax audit (44ab of income tax act and section 35 of CGSt act 2017) also take representation services at different forums and do issue certificates.

But as against valuation under direct taxation is concerned still clarification is to be issued

3. Fees relative size

A single client fees cannot exceed 15% of total fees .

The above 3 clauses mentioned above are being deferred considering covid 19 constraints faced by members in practice.

However other provisions are suo moto applicable

A critical change taken place in Volume 1 code of ethics

As per companies act 2013 rotation of auditors became applicable for certain class of companies. However under now code of ethics even partner rotation is there in the term of period which decided by client.

Changes in volume 2 code of ethics

  1. Date of establishment of firm cannot be mentioned neither in letter head nor firm website. however year of establishment can mentioned in firm website. The same continues in new code of ethics. Under existing code celebration of year of establishment of firm were silent however under revised code celebrations for silver/ Diamond jubilee also can be given as advertisement
  2. As laid down under part 1 schedule 1 clause 10 A chartered accountant in practice cannot charge fees on percentage basis except in circumstances as may laid in regulation 192 of ca regulation 1988. However a new service has been under where fee charged on percentage basis in case of insolvency services (appointed by IBBI).
  3. A member in practice can sponsor for event conducted by ICAI (CPE event). However name of firm and logo of ICAI cannot be used.
  4. Considering Covid 19 pandemic times where by virtuality became a reality now members whether in practice or not can upload video. as against members in practice can upload videos only relating to profession (education related and not other field) but no referral can be given to firm name. even when contesting for ICAI election the voting support can be shared through online.

Here considering cyberfrauds online means only you tube channel created in personal name for sharing knowledge.

  1. As per part 1 schedule 1 clause 11 A chartered accountant in practice can be a “director Simplicitor “. It like a concept of independent director (only eligible for sitting fees, remuneration for participation in board meeting and other meetings and reimbursement expenses). However by being an independent director statutory audit cannot be conducted.After statutory auditor term is getting over only after cooling period of two years can be appointed as independent director.
  2. There has been a spell bound changes made as regarding activity which would not constitute as other occupation as under chartered accountancy act 1949 for a Chartered accountant in full time practice. Regulation 190 A allows
  • Write articles of professional nature
  • Act as speaker
  • Author books (professional)
  • Act as faculty (ICAI ,and other courses) even part time lecturer in a college is allowed.
  • E ditor of professional journal
  • A ct as examiner /Paper setter / Moderator of exams of any professional body
  • Honorary position in educational, charitable, non profit organisation

As against writing articles / Books / presentation under earlier code of ethics only prefix CA was allowed firm name was not to be used. Considering constraints faced by members council has revised the norms

Now either prefix CA or firm name is to be used but both cannot be used simultaneously.


X writes a book published by taxman publishers

Either can mention
CA X (Bcom , ACA ,DIIT (ICAI)) Or
X co chartered accountants

Either of them can be written in cover page of book

But I strongly recommend the 1st choice irrespective of a book , article , presentation. no need of mentioning firm name. In case of jointly written both names can be written by prefix CA. (in inside page can acknowledge contribution made by CA or staff individually)

Even as regarding online presentation only file name should be with .xlsx.

As regarding educating CA students by coaching classes no advertisement can be made as per present code of ethics.

However logo of ICAI can be used in coaching class . name of coaching class can be mentioned ( not like big banner). However online website can go for coaching class describing subjects taught there in and faculty profile in brief.

  1. Communication with retiring auditor

A significant change has been made in part 1 schedule 1 clause 8. Earlier only through registered acknowledgement due. now considering covid 19 situations it can be done through email.

(note whatsap is not valid source)

  1. Visiting card

A Chartered accountant in practice can not use CPA or international qualification in visting card despite of passing it. However the council has amended that international qualification for which ICAI has a MRA (mutual recognition agreement) can be used. The bodies are CPA Canada , CPA Ireland , CPA australia , institute of chartered accountants of England and whales , Institute of Chartered accountants of Southafrica only above mentioned can be used. (we are talking only accounting bodies)


Schedule 1 misconduct is governed by board of discipline whereas schedule 2 misconduct or both schedules is governed by director discipline.

Most of cases filed are not really professional in nature. when it comes to profession only Schedule 2 part 1 clause 7 (not exercising due diligence) get attracted. Sometimes advertisement clause get attracted under schedule 1 part 1 clause 6.

Most of it are family disputes related. It is also noted most of them are relating to husband wife. These are true hazards of getting married to same profession. An illustration to support this

Mr X Mrs X were practicing in different name. Mrs X was doing audit of trust A. After period of tenure got over for Mrs X now Mr X became auditor. There was a need to give communication to previous auditor but as it was relationship between spouse they deemed as accepted. These are typically chaos of related party (between spouse) for which compliant was filed by the new trust.

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Published by

Venkat Raj
Category Audit   Report



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