8.3 The Council in this context deliberated upon the applicability of Clauses (5) and (6) of Part I of Second Schedule to the Chartered Accountants Act, 1949 and noted in this regard that Clause (5) of Part I of Second Schedule envisages the non disclosure of a material fact known to the auditor which is not disclosed in a Financial Statement but disclosure of which is necessary to make the Financial Statement not misleading and Clause (6) of Part I of the Second Schedule envisages the non-reporting of a material misstatement known to the auditor to appear in a Financial Statement with which he is concerned in a professional capacity. However, the Council keeping in view the scope of work assigned to a concurrent auditor and also in the instant matter wherein it was almost impossible to detect the fraud committed over a period of time even by preceding and successive auditors and/or during inspection by the senior officer of Bank and inspection audit done by RBI, was of the view that in the instant matter where undisclosed material fact or unreported material misstatement had emanated as a result of the fraud committed by an employee of the Bank in the said Branch, the same cannot be expected to be within the knowledge of the Respondent and certainly there was no malafide intention on his part. Hence, the Council held the view that the Respondent cannot be held guilty of any misconduct under these Clauses (5) and (6) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. The Council, however while noting the terms of reference of the Respondent’s appointment was of the further view that although the fraudulent
