INSTITUTE OF CHARTERED ACCOUNTANTS [Cap.119

CHAPTER 119

INSTITUTE OF CHARTERED ACCOUNTANTS

ActsNos. 23 of 1959,

16 of 1964,LawNo. 34 of 1975.

AN ACT TO PROVIDE FOR THE ESTABLISHMENT OF AN INSTITUTE OF CHARTEREDACCOUNTANTS OF SRI LANKA AND OF A COUNCIL OF THE INSTITUTE WHICHSHALL BE RESPONSIBLE FOR THE MANAGEMENT OF ITS AFFAIRS AND FOR THEREGISTRATION AND CONTROL OF AND THE MAINTENANCE OF PROFESSIONALSTANDARDS AND DISCIPLINE BY MEMBERS OF THE INSTITUTE IN SRI LANKA ANDFOR MATTERS CONNECTED WITH OR INCIDENTAL TO THE MATTERS AFORESAID.

Short title.

Establishmentof Institute ofCharteredAccountants ofSri Lanka.

Incorporationof Institute.

Eligibility formembership ofInstitute.[§ 2, Law 34 of1975.]

1. This Act may be cited as the Instituteof Chartered Accountants Act.

ESTABLISHMENT OF INSTITUTE ANDMEMBERSHIP

2. There shall be an Institute with thename "The Institute of CharteredAccountants of Sri Lanka" (hereinafterreferred to as " the Institute ").

3. (1) The persons for the time beingenrolled as members of the Institute shall bea body corporate with the name " TheInstitute of Chartered Accountants of SriLanka".

(2) The Institute shall have perpetualsuccession and a common seal and may sueor be sued in its corporate name and mayhold, acquire and dispose of any property,movable or immovable.

4. (1) Subject to the provisions ofsection 15, the following persons shall beeligible for membership of the Institute:—

(i) a person who passes the qualifyingexaminations for membership ofthe Institute to be conducted by theCouncil under this Act andcompletes a scheme of practicaltraining approved by the Counciland for such period as may beprescribed by the Council:

Provided, however, that suchpractical training shall not berestricted to service under apractising accountant;

[15th December, 1959.]

(ii) a person who is a member of anysociety or institute of accountantsby whatever name called and approvedby regulations made by the Councilas being in the opinion of theCouncil an association ofequivalent status to the -Institute:

Provided, however, thatnotwithstanding the approval ofany such society or institute theCouncil may declare that any classor description of members of thesociety or institute shall not beeligible for membership of theInstitute; and

(iii) a person who was, at the I5th day ofDecember, 1959, registered as anAuditor under the Companies(Auditors) Regulations, 1941.

(2) Any regulations made by the Councilprescribing practical training for thepurpose of paragraph (i) of subsection (1)may contain such special provisions as theCouncil may deem expedient declaring thata person who had commenced prior to the15th day of December, 1959, or the 29th dayof August, 1975, and completed orcompletes, whether prior to or after theaforesaid dates, training as an articled clerkunder a practising accountant for suchperiod as may be specified in the regulationsshall be deemed to have completed thetraining prescribed for the purposes of theaforesaid paragraph (i).

(3) Any regulations made by the Councilby which any society or institute is approvedfor the purposes of paragraph (ii) ofsubsection (1) may provide, as a condition

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Fee formembership ofInstitute.

Classificationof members asFellows andAssociates.

[§ 3, Law 34 of1975.]

[§ 3, Law 34 of1975.]

of such approval, that a member of suchsociety or institute shall not be eligible formembership of the Institute of CharteredAccountants of Sri Lanka, unless he hasundergone such training as approved by theCouncil for such period as may be specified.

5. (1) Subject to the provisions ofsection 15 a person who is eligible formembership of the Institute shall beenrolled as a member upon payment to theCouncil of a fee of one hundred and twenty-five rupees or such other amount as may besubstituted therefor by regulation. Such feeshall be paid to the president of the Councilor, if the Council has not been constituted,to the Registrar of Companies.

(2) The enrolment of a person as amember of the Institute shall be effectiveuntil the thirty-first day of December of theyear of enrolment; and the enrolment maybe renewed annually upon payment to theCouncil of the prescribed fee in respect ofeach such renewal.

6. (1) The members of the Institute shallbe divided into two classes consistingrespectively of Fellows and AssociateMembers.

(2) Any member of the Institute whosatisfies the Council that he has been incontinuous practice as an accountant fornot less than five years, whether before orafter the 15th day of December, 1959, orpartly before and partly after that date, or,who has completed ten years as a memberof the Institute, shall on application made tothe Council in that behalf on or beforeDecember 31, 1985, and on payment to theCouncil of a prescribed fee be registered bythe Council as a Fellow of the Institute andshall be entitled to use the addition" F.C.A. " after his name to indicate that heis a Fellow.

(3) Any member of the Institute who isnot eligible for registration by the Councilas a Fellow of the Institute in terms ofsubsection (2) shall be eligible forregistration by the Council as a Fellow ofthe Institute on passing the FellowshipExamination to be conducted by theCouncil and on application made to theCouncil in that behalf and on payment to

the Council of a prescribed fee. Suchmember shall upon registration by theCouncil as a Fellow of the Institute beentitled to use the addition " F.C.A. " afterhis name to indicate that he is a Fellow.

(4) Every member of the Institute who is [§ 3, Law 34 ofnot registered under subsection (2) or 1975.]subsection (3) as a Fellow of the Instituteshall be an Associate Member and shallhave the right to use the addition " A.C.A. "after his name to indicate that he is anAssociate Member.

(5) Every member of the Institute shall beentitled to take and use the title " CharteredAccountant".

THE COUNCIL

7. (1) There shall be a Council of the Constitution ofInstitute, in this Act referred to as "the Council.Council".

(2) The Council shall consist of a [§ 5,16 ofpresident, a vice-president and ten other 1964.]members appointed or elected as hereinafterprovided.

(3) During the period of ten years [§ 5,16 ofcommencing on the 15th day of December, 1964.]1959, the president, the vice-president andthe other members of the Council shall beappointed by the Minister, and of themembers so appointed at least six shall bepersons who are members of the Institute,of whom not more than four-shall bepractising accountants,

(4) After the expiration of the period of [§ 5, 16 of ten years referred to in subsection (3), the 1964.]president and the vice-president of theCouncil shall be elected by the members ofthe Institute from themselves, and theremaining members of the Council shallconsist of—

(a) six members appointed by theMinister, and

(b) four members elected by the membersof the Institute from among itsmembers, of whom not more thanthree shall be practisingaccountants:

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Term of officeof members ofthe Council.

[§ 6, 16 of1964.]

Provided, however, that—

(i) where the Minister fails to appoint,within three months after theexpiration of the period of ten yearsreferred to in subsection (3), one ormore of the members specified inparagraph (a) of this subsection, or

(ii) where the Minister fails to appoint,within three months after the deathof, or vacation of office by, amember of the Council appointedunder paragraph (a) of thissubsection, another person in placeof such member,

the members of the Institute may elect fromthemselves such number of persons as maybe necessary to make up the number ofmembers specified in paragraph (a) of thissubsection.

(5) The elections under subsection (4)shall be conducted in accordance with suchprovisions in that behalf as may be made bythe Minister by Order published in theGazette.

8. (1) Every member of the Councilshall, unless he earlier vacates his office,hold office for a period of two years fromthe date of his appointment or election :

Provided, however, that the membersappointed under subsection (3) of section 7and holding office at the expiration of aperiod of ten years from the date referred toin that subsection shall thereupon vacateoffice.

(2) A member of the Council shall vacateoffice by resignation therefrom or if heceases to be a member of the Institute.

(3) In the event of the death of, orvacation of office by, a member of theCouncil, another person shall, in accordancewith the provisions of section 7, beappointed or elected, as the case may be, inplace of such member, and shall hold officeduring the remaining part of the term ofoffice of such member.

(4) Any member of the Council whovacates office by effluxion of time shall beeligible for reappointment or re-election as amember.

9. (1) The Council shall be charged with General powersthe administration and management of the and duties of

. „ , .„ ,. Council.Institute and shall be responsible forcarrying out the provisions of this Act andthe functions and duties conferred orimposed upon the Council by this Act.

(2) It shall be the duty of the Council—

(a) to conduct or provide for the conductof the qualifying examinations formembership of the Institute and toprescribe or approve courses ofstudy for such examinations ;

(b) to supervise and regulate theengagement, training and transferof articled clerks who have enteredinto articles of agreement on orbefore the 29th day of August,1975;

(c) to supervise and regulate theregistration of students and thecourses of practical training forsuch registered students for suchperiod as may be prescribed by theCouncil;

(d) to specify the class of persons whoshall have the right to train articledclerks who have entered intoarticles of agreement on or beforethe 29th day of August, 1975, andto specify the circumstances inwhich any person of that class maybe deprived of that right;

(e) to fix the maximum amount of thepremia or fees to be charged fromarticled clerks who have enteredinto articles of agreement on orbefore the 29th day of August,1975, and the conditions subject towhich such fees are to be charged ;

(f) to maintain and publish a register ofmembers of the Institute and aregister of persons authorized topractise in Sri Lanka as CharteredAccountants;

(g) to secure the maintenance ofprofessional standards amongmembers of the Institute and totake such steps as may be necessaryto acquaint them with the methodsand practices necessary to maintainsuch standards;

[§ 4, Law 34 of1975.]

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Officers of theCouncil.

Financialprovisions.

(h) to maintain a library of books andperiodicals relating to accountancyand to encourage the publication ofsuch books in Sri Lanka;

(i) to carry out and encourage research inSri Lanka in the subjects ofaccountancy, audit and otherrelated subjects and generally topromote the education, training andadvancement of the registeredstudents and secure the well-beingand advancement of the professionof accountants;

(j) to approve the scheme of practicaltraining to be followed by theregistered students; and

(k) to require any institution to provideinformation to the Council withregard to facilities available fortraining students in accounting andaudit.

10. The Council may appoint a secretaryand such other officers and servants as itmay deem necessary.

11. (1) The Council shall establish andmaintain a fund under its management andcontrol into which shall be paid all moneysreceived by the Council and out of whichshall be met all expenses and liabilitiesincurred by the Council in carrying out itspowers, functions and duties under this Act.

(2) The Council may invest moneys in thefund in any securities issued or guaranteedby the Government of Sri Lanka or in anyother securities approved by the Minister.

(3) The Council may maintain an accountin any bank or banks in Sri Lanka.

(4) The annual accounts of the Councilshall be subject to audit by a member of theInstitute (not being a member of theCouncil) in practice as a CharteredAccountant in Sri Lanka who shall beappointed for the purpose each year by theCouncil.

(5) As soon as may be after the end ofeach financial year of the Council, theaccounts for the preceding year shall be

published in the Gazette and copies thereofshall be furnished to the Minister and toeach member of the Institute.

(6) As soon as convenient after the 15thday of December, 1959, the Governmentshall donate to the Council a sum of twohundred thousand rupees.

(7) The Minister in charge of the subjectof Finance may from time to time decidethat a temporary loan shall, subject to suchconditions as he may determine, be made tothe Council from the Consolidated Fund inorder to enable the Council to meet anycurrent liabilities pending the receipt ofincome by the Council. Any sum which is tobe tent to the Council under this subsectionis hereby charged on the Consolidated Fund :

Provided, however, that the total amountof such loans to the Council outstanding atany time shall not exceed ten thousandrupees.

12. (1) The Council may make Power to makeregulations for or in respect of any matter regulations.required or authorized by this Act to beprescribed or of any matter relating to orconnected with its powers, functions andduties under this Act or the proper exercise,discharge or performance thereof.

(2) Without prejudice to the generality ofthe provisions of subsection (1), the Councilmay make regulations in respect of all orany of the following matters:—

(a) the summoning and holding ofmeetings of the Council, the timesand places of such meetings and theconduct of business thereat;

(b) the management of the property ofthe Council, the custody of its fundsand the maintenance and audit ofits accounts;

(c) the election or appointment by theCouncil of standing or othercommittees, the powers, functionsand duties of such committees, andthe conditions subject to which suchpowers may be exercised and suchfunctions and duties performed;

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(D) the powers, functions and duties ofthe secretary and other officers ofthe Council and the salaries, fees,allowances and conditions ofservice of such officers andservants;

(e) the establishment and regulation of aprovident fund for the benefit of theofficers and servants and theirdependants or nominees, and thecontributions to be made by theCouncil and by such officers andservants to such Fund ;

(f) the exercise of disciplinary controlover officers and servants of theCouncil;

(g) the time and manner of the paymentof enrolment, registration andrenewal fees, the termination ofmembership upon failure to payrenewal fees and the conditions ofrestoration to membership in suchcases;

(h) the fees to be paid to the Council bystudents admitted to the qualifyingexaminations or for courses ofinstruction provided by theCouncil, and the engagement andremuneration of lecturers andexaminers; and

(i) the grant of assistance, whetherfinancial or otherwise, to societiesof students.

[§ 10, 16 of QUALIFICATIONS FOR ENROLMENT, AND1964.] PROVISIONS AS TO DISENROLMENT, ETC.

General dis- *15. (1) No person shall be enrolled as aqualifications, member of the Institute- [§ 11, 16 of1964.] (a) unless he has attained the age of

twenty-one years and is either acitizen of Sri Lanka or hasordinarily resided in Sri Lanka fora period of not less than threeyears;

(b) if he has been adjudged by acompetent court to be of unsoundmind;

(c) if having been adjudged an insolventor bankrupt, he has not beengranted by a competent court acertificate to the effect that hisinsolvency or bankruptcy has arisenwholly or partly from unavoidablelosses or misfortunes;

(d) if he has been convicted by acompetent court, whether in SriLanka or elsewhere, of any offenceinvolving moral turpitude andpunishable with imprisonment orsimilar punishment and has notbeen granted a free pardon.

(2) The Council shall disenrol any personwho is a member of the Institute, if he [§ 11,16 ofbecomes subject to any disqualification 1964.]mentioned in paragraph (b) or paragraph (c)or paragraph (d) of subsection (1) of thissection:

Provided, however, that such [§11, 16 ofdisenrolment shall not prevent the Council 1964.]from subsequently re-enrolling such personif satisfied that he is fit to practise theprofession of an accountant and auditor.

16. (1) The Council may disenrol anyindividual who is a member of the Institute,if satisfied that he is unfit to practise theprofession of an accountant and auditor byreason that he has been guilty ofprofessional misconduct.

(2) The disenrolment of the registration [§12,16 ofof any person under subsection (1) shall not 1964.]prevent the Council from subsequently re-enrolling that person, if satisfied that he isfit to practise the profession of anaccountant and auditor.

17. (1) The Council shall not, undersection 16, disenrol any person, unless adisciplinary committee has, after inquiry,made a report to the Council that the personhas been guilty of professional misconduct.

(2) Where the Council has reasonablecause to believe, whether upon complaintmade to it or otherwise, that any personwho is a member of the Institute has been [§ 13, 16 ofguilty of professional misconduct, the 1964.]

Disenrolmentforprofessionalmisconduct.[§ 12, 16 of1964.]

Inquiries bydisciplinarycommittees.

[§13,16 of1964.]

* Sections 13 and 14 are repealed by Act No. 16 of 1964.

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Suspension inlieu ofdisenrolment.

[§ 14, 16 of1964.]

Appeal to theCourt ofAppeal fromdecisions of theCouncil undersection 16 orsection 18.

Council may appoint a disciplinarycommittee for the purpose of holding aninquiry into the conduct of that person.

(3) The provisions of the First Schedule*to the Act shall apply in relation to theconstitution of and the procedure to befollowed by disciplinary committeesappointed under this section, theproceedings at inquiries held by suchcommittees and the powers exercisable bysuch committees.

(4) The Minister may, upon therecommendation of the Council, by Orderpublished in the Gazette, amend or alter oradd to or revoke any or all of the provisionsof the First Schedule.*

(5) The provisions of the First Schedule*for the time being in force shall be as validand effectual as if they were herein enacted.

18. In any case where the Council is bysection 16 empowered to disenrol anyperson from membership of the Institute,the Council may, in lieu of exercising thatpower, suspend the person frommembership for such period as the Councilmay deem fit.

19. (1) Any person aggrieved by adecision of the Council under section 16 orsection 18 may appeal against that decisionto the Court of Appeal.

Meaning of" professionalmisconduct".

(2) Every appealagainst a decision—

under subsection (I)

(a) shall be made by petition in writingbearing a stamp of one rupee ;

(b) shall be preferred within ten daysafter the date of that decision.

20. (1) For the purposes of this Act," professional misconduct" means any actor omission which is for the time beingspecified in the Second Schedule* to thisAct.

(2) The Minister may, upon therecommendation of the Council, by Orderpublished in the Gazette, amend or alter oradd to any or all of the provisions of theSecond Schedule+.

Restrictions onpractising asaccountant.[§ 15, 16 of1964.]

RESTRICTIONS ON PRACTICE ASACCOUNTANTS

21. (1) No person who is a member ofthe Institute or is a partner of any such firmof accountants as is referred to in subsection(3) of section 22 shall practise as anaccountant unless he is the holder of acertificate to practise which is for the timebeing in force:

Provided, however, that such certificate [§ 5, Law 34 ofto practise shall not be issued to a member 1975.]of the Institute unless such person has hadat least a period of two years' practicaltraining in a firm of practising accountantsafter he has passed one of the qualifyingexaminations prescribed by the Council.

(2) Every certificate to practise shall beissued by the Council upon payment of theprescribed fee; different fees may beprescribed in respect of Fellows, Associate [§ 15,16 ofMembers, and partners of any such firm of 1964.]accountants as is referred to in subsection(3) of section 22 respectively.

(3) Every certificate to practise shall be inforce until the thirty-first day of Decemberof the year of issue of that certificate, andmay from time to time be renewed uponpayment of the fee prescribed as provided insubsection (2).

(4) Where each of the partners in a firmof accountants is the holder of a certificateto practise, no such certificate shall berequired to authorize the firm to practise asaccountants.

(5) The preceding provisions of thissection shall not come into operation untilsuch date as may be fixed by the Ministerby Order published in the Gazette.

(6) Where all or any of the partners of a [§ 15,16 of firm of accountants are not citizens of Sri 1964.]Lanka and are not qualified to be membersof the Institute by reason of the fact thatthey have not- ordinarily resided in SriLanka for a period of not less than threeyears, then, if the number of partners whoare not such citizens and are not so qualifiedis increased by the admission to that firm ofa partner who is not a citizen of Sri Lanka

* First and Second Schedules are omitted.+ Second Schedule is omitted.

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Restrictions asto use of titlesconferredunder this Act.

[§ 16. 16 of1964.]

Offences andpenalties.

Meaning of" practise "

and who has not ordinarily resided in SriLanka for a period of not less than threeyears, that firm shall not practise asaccountants.

RESTRICTIONS AS TO USE OF TITLES, ETC.

22. (1) No person, not being a memberof the Institute, shall take or use the title" Chartered Accountant ", or any additionmentioned in section 6.

(2) Notwithstanding anything insubsection (1) any firm of accountants, eachof the partners of which is a member of theInstitute, may take and use the title" Chartered Accountants ".

(3) Notwithstanding anything insubsection (1), any firm of accountants allor any of the partners of which are notcitizens of Sri Lanka and are not qualifiedto be members of the Institute by reason ofthe fact that they have not ordinarily residedin Sri Lanka for a period of not less thanthree years may, if that firm was in practiceon the ninth day of February, 1959, takeand use the title " Chartered Accountants ".

MISCELLANEOUS PROVISIONS

23. (1) Any person who contravenesany provision of this Act shall be guilty ofan offence and shall be liable, on convictionafter summary trial before a Magistrate, toimprisonment of either description for aterm not exceeding six months or to a finenot exceeding one thousand rupees or toboth such imprisonment and fine.

(2) Any person who is declared by anyrule in the First Schedule* to be guilty of anoffence under this Act shall be liable, onconviction after summary trial before aMagistrate, to a fine not exceeding fivehundred rupees.

(3) No prosecution for any offence underthis Act shall be instituted except by amember or officer of the Council authorizedin writing for the purpose by the Council.

24. (1) For the purposes of this Act, aperson shall be deemed to practise as ana c c o u n t a n t i f , in cons ide ra t i on of

remuneration received or to be received, andwhether by himself or in partnership withany other person, he—

(a) engages himself in the practice ofaccountancy or holds himself out tothe public as an accountant; or

(b) offers to perform or performs serviceinvolving the auditing orverification of financial transactionsbooks, accounts or records, or thepreparation, verification, orcertification of financial accountingand related statements; or

(c) renders professional service orassistance in or about matters ofprinciple or detail relating toaccounting procedure orcertification of financial facts ordata; or

(d) renders any other service which maybe declared by the Council byregulation to be service constitutingpractice as an accountant.

(2) A person who is the salaried employeeof the Government or of any one employershall not, by reason only that he does anyact referred to in subsection (1) in hiscapacity as such employee, be deemed topractise as an accountant.

25. Notwithstanding anything in the Transitionalpreceding sections of this Act, the following arrangements.provisions shall apply in relation to the firstenrolment of members of the Institute andthe Constitution of the first Council to holdoffice under this Act:—

(1) As soon as may be after the 15th dayof December, 1959, the Ministershall in terms of subsection (3) ofsection 7 appoint a person to be thepresident of the Council.

(2) The president shall, by noticepublished in the Gazette and in atleast two daily newspaperscirculating in Sri Lanka, call uponpersons eligible for membership ofthe Institute to make applicationtherefor.

* First Schedule is omitted.

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(3) The president shall, subject to theprovisions of sections 5 and 15,enrol as members of the Institute allpersons eligible for suchmembership who make applicationin that behalf within the period ofthree months immediatelysucceeding the 15th day ofDecember, 1959.

(4) The names of the persons enrolledunder paragraph (3) of this sectionshall be presented to the Minister

for the purpose of enabling him tomake the other appointments forwhich provision is made insubsection (3) of section 7.

(5) As soon as may be after allappointments are made, theMinister shall by Order publishedin the Gazette specify the date onwhich the first Council establishedunder this Act shall commence tohold office.

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