If a CA firm is conducting an audit of a Government undertaking. So is it possible that they can prepare accounts of that concern also. I think that it is not possible as question of independence will be violated. But I am not getting any proof for that with respect to ethics and relevant section. So suggest any answer ..
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Audit
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As per Clause 4, Part I, Second Schedule to The CA Act, 1949, A Member in Practice will be held guilty of professional misconduct if he expresses opinion on financial statement of an entity in which he himself, his partner, or his relative is :
i) director
ii) having substantial interest
if he is preparing the accounts of the auditee, or
he is a proprietor or partner in such entity.
NOTE: Substantial interest means voting rights/profit sharing >= 20% at any time during the year
Relative includes: spouse, children, brother, sister, lineal ascendant or lineal descendant
I think you got your answer, you cannot audit accounts prepared by yourself.
Thanks & Regards
Sourav
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