ICAI Code of Ethics explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The ICAI Code of Ethics, Thirteenth Edition, applies from 1 April 2026 and is issued in three volumes: Volume I for domestic provisions and Council Guidelines, Volume II converged with the IESBA Code 2024 edition, and Volume III for Ethics Standards for Sustainability Assurance.
The commencement date, precisely
The Preface to the Thirteenth Edition records that the revised Code is applicable with effect from 1 April 2026, with one carve-out: s.no. (xxxi) of Management Consultancy and other services issued under section 2(2)(iv) of the Chartered Accountants Act, 1949, which is effective from 11 December 2025.
The Code was signed off on 28 May 2026 by the President and Vice-President and by the Chairperson and Vice-Chairman of the Ethical Standards Board.
The 11 December 2025 date for that single Management Consultancy entry is easy to miss because it sits inside a Preface that otherwise announces 1 April 2026. If your practice offers services under section 2(2)(iv), check whether the entry at s.no. (xxxi) affects you — it has been operative since December 2025, four months before the rest of the Code.
Three volumes, three purposes
| Volume | Contents | Who it principally affects |
|---|---|---|
| Volume I | Domestic provisions and Council Guidelines — the Chartered Accountants Act, 1949, the First and Second Schedules, the Advertisement Guidelines and the Guidelines on Ethical Issues, 2026 | Every member; this is the disciplinary framework |
| Volume II | Converged with the IESBA Code 2024 edition — the international ethics framework, fundamental principles, independence for audit and assurance engagements | Members in practice, particularly on assurance engagements |
| Volume III | Ethics Standards for Sustainability Assurance | Members undertaking sustainability assurance work |
The three-volume structure is itself the headline change. Volume III did not previously exist as a separate body of ethics standards, and its arrival reflects sustainability assurance moving from a specialist niche into mainstream practice.
What Volume I contains
| Chapter | Subject |
|---|---|
| 1 | Authority attached to documents issued by the Institute; Engagement, Quality Control and Accounting Standards |
| 2 | The Chartered Accountants Act, 1949 — sections 2, 6, 7, 8, 20, 21, 22, 24, 25, 26 and 27, and the First and Second Schedules |
| 3 | Council Guidelines for Advertisement, 2008 (updated to December 2025) |
| 4 | Guidelines on Ethical Issues, 2026 |
| 5 | Self-Regulatory Measures Recommended by the Council |
The Schedules — the disciplinary core
The First and Second Schedules to the Chartered Accountants Act, 1949 define professional and other misconduct. Their structure is worth committing to memory because every disciplinary matter is framed by reference to a Part and a Clause:
| Schedule and Part | Applies to | Clauses |
|---|---|---|
| First Schedule, Part I | Chartered accountants in practice | 1 to 12 — practice by a non-CA, sharing fees, partnership with a non-member, securing business improperly, solicitation, advertising, failure to communicate with the outgoing auditor, section 139-141 non-compliance, contingent fees, other occupation, allowing a non-member to sign |
| First Schedule, Part II | Members in service | 1 to 2 — sharing emoluments, accepting commission from a lawyer engaged by the employer |
| First Schedule, Part III | Members generally | 1 to 3 — falsely acting as FCA, not supplying information to the Institute, giving false information under clauses (6) and (7) |
| First Schedule, Part IV | Other misconduct | 1 to 2 — offence punishable with imprisonment for less than six months; bringing disrepute to the profession |
| Second Schedule, Part I | Chartered accountants in practice | 1 to 10 — disclosing client information, certifying without examining records, vouching future earnings, opining where substantial interest exists, failing to disclose a material fact, failing to report a known misstatement, gross negligence, insufficient information, material departure from audit procedure, client money without a separate bank account |
| Second Schedule, Part II | Members generally | 1 to 5 — contravening the Act, Regulations or Council Guidelines; disclosing employer information; false information to the Institute; defalcation; auditing in contravention of the Companies Act, 2013 |
| Second Schedule, Part III | Other misconduct | Offence punishable with imprisonment for more than six months, civil or criminal |
Note the symmetry: an offence punishable with imprisonment for less than six months is First Schedule, Part IV; more than six months is Second Schedule, Part III. Second Schedule matters carry the graver consequences, so the length of the punishment prescribed for the offence — not the sentence actually imposed — determines which Schedule applies.
The authority of ICAI's documents
Chapter 1 restates a distinction that is frequently blurred in practice. The clarification was published in December 1985, revised in February 2022 at the Council's 408th meeting, and further revised at the 422nd meeting held on 30 June and 1 July 2023.
- Guidance Notes are recommendatory. They assist in implementing Engagement Standards and Standards on Quality Control, and give guidance on generic or industry-specific issues. A professional accountant should be aware of and consider them.
- A member who departs from a Guidance Note must take reasonable and adequate care in performing the alternate procedures adopted, and should document the rationale for those procedures.
- On an attest engagement, a member should examine whether the recommendations of a Guidance Note on an accounting matter have been followed; if not, consider whether disclosure in the report is necessary under the Engagement Standards.
- Accounting Standards and Engagement and Quality Control Standards are mandatory from the dates specified in the document or notified by the Council.
The Code also records a drafting convention worth knowing: the term "professional accountant" used anywhere in the Code refers to a chartered accountant.
What has changed in this edition
The Preface identifies the drivers: amendments arising from statutory changes and contemporary developments, including relaxation in advertisement norms. Three concrete consequences follow for a practising member:
- Advertisement. The Council Guidelines for Advertisement, 2008 as reproduced in Volume I are updated to December 2025, and the permitted write-up and website content has widened.
- Guidelines on Ethical Issues, 2026. These are issued under section 15(2)(fa) of the Chartered Accountants Act, 1949 and replace the Council General Guidelines, 2008 with effect from 1 April 2026. Any checklist or engagement policy citing the 2008 Guidelines needs re-citing.
- Sustainability assurance. Volume III establishes ethics standards for this work for the first time.
The Act sections carried in Volume I
| Section | Subject |
|---|---|
| 2 | Members deemed to be in practice |
| 6 | Significance of the certificate of practice |
| 7 | A member in practice is prohibited from using designations other than "Chartered Accountant" |
| 8 | Disabilities for the purpose of membership |
| 20 | Removal from the Register |
| 21 | Procedure in inquiries for disciplinary matters |
| 22 | Conduct of members in any other circumstances |
| 24 | Penalty for falsely claiming to be a member |
| 25 | Companies not to engage in accountancy |
| 26 | Unqualified persons not to sign documents |
| 27 | Maintenance of branch offices |
What to do now
- Replace every reference to the Council General Guidelines, 2008 with the Guidelines on Ethical Issues, 2026.
- Re-read the advertisement and website position against the updated Chapter 3 before refreshing a firm website or profile.
- If the firm does or plans sustainability assurance, read Volume III as a distinct body of standards, not an extension of Volume II.
- Check whether s.no. (xxxi) of the section 2(2)(iv) services list affects your practice — it has applied since 11 December 2025.
- Where you depart from a Guidance Note, document the rationale for the alternate procedures.
Common misconceptions
- "The whole Code starts on 1 April 2026." One Management Consultancy entry started on 11 December 2025.
- "Guidance Notes are mandatory." They are recommendatory, with a documentation obligation on departure.
- "Volume II replaces Volume I." They operate together; Volume I carries the domestic disciplinary framework.
- "The Council General Guidelines, 2008 still apply." They were replaced from 1 April 2026.