In a major disciplinary action, the Institute of Chartered Accountants of India (ICAI) has suspended a Chartered Accountant for one year in connection with a multi-crore bank fraud case. The ICAI Disciplinary Committee found CA Parminder Singh Oberoi guilty of professional misconduct and ordered the removal of his name from the Register of Members for one year. The committee also imposed a monetary penalty of Rs. 1,00,000.
Background of the Case
The case originated from a complaint filed by the Central Bureau of Investigation (CBI), New Delhi. According to the complaint, CA Parminder Singh Oberoi, proprietor of M/s P S Oberoi & Associates, New Delhi, had audited and certified false and forged financial statements.
The allegations stated that the CA certified financial statements of M/s White Metals for the financial years 2009-10 to 2011-12, along with provisional balance sheets for M/s White Metals and M/s White Tiger Steels Pvt. Ltd.
How the Bank Fraud Occurred
Based on these certified financial documents, M/s White Tiger Steels Pvt. Ltd. managed to obtain a cash credit facility of Rs. 10 crores from Punjab National Bank (PNB), Darya Ganj branch.
However, during the investigation, the CBI discovered that M/s White Metals was not conducting any business activities. In fact, the company’s VAT/TIN number had already been cancelled retrospectively from 31 March 2007. This meant that the VAT returns and turnover figures certified by the Chartered Accountant were completely fabricated.
This case highlights that Banks should not be highly dependent on CAs for documents. Banks should assess the customer, visit the business location and analyse whether the business is in operation or not.
How Chartered Accountants (CAs) Are Related to Bank Loans
In many loan cases, banks rely on financial documents prepared or certified by Chartered Accountants (CAs). Recently, a case came to light where a CA prepared a fake balance sheet for a borrower. Based on these documents, the bank approved a loan which later turned into a Non-Performing Asset (NPA). After investigation, the Institute of Chartered Accountants of India (ICAI) suspended the CA.
Role of Chartered Accountants in Bank Loans
- CAs prepare and certify financial statements of businesses.
- Banks use these documents to understand the financial position of the borrower.
- CAs also help businesses prepare project reports and financial projections for loan applications.
- Certified statements increase the credibility of financial information provided to banks.
Important Documents Provided or Certified by CA
- Balance Sheet
- Profit and Loss Statement
- Net Worth Certificate
- Projected Financial Statements
- Income Tax Returns verification
- Turnover certificate for business loans
What Banks Should Check Before Approving Loans
- Verify financial statements with Income Tax records.
- Check bank account transactions and GST returns.
- Conduct independent credit appraisal instead of relying only on CA certificates.
- Verify business turnover and assets.
- Cross-check financial data through audits and internal verification.
Main Issue in the Case
The main issue before the disciplinary authorities was whether CA Parminder Singh Oberoi was guilty of professional misconduct under the Chartered Accountants Act, 1949.
Specifically, he was charged under Clauses (5), (6), (7), and (8) of Part I of the Second Schedule, which relate to:-
- Failure to exercise due diligence
- Failure to obtain sufficient information before certifying statements
- Certifying financial statements that contain material misstatements
These actions are considered serious violations of professional responsibilities expected from a Chartered Accountant.
Findings of the Disciplinary Committee
After reviewing the evidence, the ICAI Disciplinary Committee held the Chartered Accountant guilty on all counts of professional misconduct.
The committee noted several serious lapses:-
- The respondent failed to produce supporting documentary evidence such as bank statements, valid VAT returns, or audit working papers.
- Despite certifying large turnover figures, he could not justify them with proper records.
- He relied only on management representations without conducting independent verification.
The committee observed that this conduct violated professional auditing standards, including SRS-4410 related to compilation engagements.
Additional Observations
The Disciplinary Committee also pointed out that the CA’s actions enabled the accused persons to defraud the bank of crores of rupees.
Another significant concern was that the respondent failed to appear for the final hearing of the case, even after being granted 13 adjournments, many of which were due to his absence or at his request.
Final Decision
Considering the seriousness of the misconduct and the lack of cooperation during proceedings, the ICAI Disciplinary Committee ordered:-
- Removal of CA Parminder Singh Oberoi’s name from the Register of Members for one year
- Imposition of a fine of Rs. 1,00,000
The decision highlights ICAI’s commitment to maintaining professional integrity and ensuring that Chartered Accountants strictly follow auditing standards and ethical practices.
