Section 18 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.
Section 18 is the financial rulebook for the Council. It creates the Council's fund, lets it invest surplus money, requires proper accounts and a budget, sends the annual accounts to audit by a firm of chartered accountants from the panel kept by the Comptroller and Auditor-General of India, requires publication in the Gazette by 30 September of the next year, and allows borrowing from a scheduled bank or the Central Government.
This article is as per the Act as printed in the ICAI edition of 2022 (amended up to the Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Act, 2022). Later amendments and notifications should be checked.
The Council keeps one fund into which all money received is paid and out of which expenses are met. Since 10 May 2022 the annual accounts are audited by a firm of chartered accountants appointed annually from the panel kept by the Comptroller and Auditor-General of India; a firm is ineligible if any partner is or has been a Council member in the last four years. The Council circulates the audited accounts to members at least fifteen days in advance, approves them in a special meeting and publishes them in the Gazette not later than 30 September of the next year.
Section 18(1) and (2): the fund and investment
18(1). A fund is established under the management and control of the Council. All moneys received by the Council are paid into it, and all expenses and liabilities properly incurred by the Council are met out of it. The word "properly" ties spending to the Council's functions under the Act.
18(2). The Council may invest any money standing to the credit of the fund in any Government security or in any other security approved by the Central Government. The Act does not list those other securities; the Central Government's approval is the test.
Section 18(3) and (4): accounts and the budget
18(3). The Council shall keep proper accounts of the fund, distinguishing capital from revenue, in the manner prescribed. "Prescribed" points to the regulations.
18(4). The Council shall prepare, in the manner prescribed, and approve, prior to the start of the financial year, an annual financial statement (the budget) indicating all its anticipated revenues and all proposed expenditures for the forthcoming year. Sub-sections (3) and (4) in this form came from the 2006 Amendment Act, in force from 17 November 2006.
Section 18(5): annual accounts and audit
Section 18(5) was substituted by the 2022 Amendment Act, in force from 10 May 2022. The annual accounts of the Council shall be prepared in such manner as may be prescribed and be subject to audit by a firm of chartered accountants appointed annually by the Council from the panel of auditors maintained by the Comptroller and Auditor-General of India. There are three provisos.
| Proviso | Rule |
|---|---|
| First | a firm is not eligible for appointment if any of its partners is or has been a member of the Council during the last four years |
| Second | if it is brought to the notice of the Council that its accounts do not represent a true and fair view of its finances, the Council may itself cause a special audit to be conducted |
| Third | if such information is sent to the Council by the Central Government, the Council may, wherever appropriate, cause a special audit or take such other action as it considers necessary, and shall furnish an action taken report to the Central Government |
What changed
Before 2022, the audit was by "a chartered accountant in practice" appointed annually by the Council, and the bar on appointment covered a member of the Council, a person who had been a member during the last four years, or a person in partnership with such a member. The 2022 text moves the appointment to a firm drawn from the Comptroller and Auditor-General's panel. The first proviso now speaks of a firm whose partner is or has been a member of the Council in the last four years. The Institute's own auditor is also relevant to the Council election bar in section 9(4).
The second and third provisos give two routes to a special audit: the Council's own notice and information from the Central Government. In the second case, the Council must report back with an action taken report. If your own accounts and audit records face a review of this kind, a check by our books of accounts compliance team can be a useful first step.
Section 18(5A) and (5B): approval and publication
Both sub-sections were inserted by the 2006 Amendment Act, in force from 17 November 2006.
18(5A). As soon as may be practicable at the end of each year, the Council shall circulate the audited accounts to its members at least fifteen days in advance and consider and approve them in a special meeting convened for the purpose.
18(5B). The Council shall cause to be published in the Gazette of India, not later than the 30th day of September of the year next following, a copy of the audited accounts and the Report of the Council for that year, duly approved by the Council. Copies of the accounts and the Report are forwarded to the Central Government and to all the members of the Institute.
| Step | What the Act requires | Timing |
|---|---|---|
| Budget | prepared and approved by the Council | prior to the start of the financial year (18(4)) |
| Audit | by a CAG-panel firm appointed annually | after the year (18(5)) |
| Circulation | audited accounts sent to Council members | at least fifteen days in advance of the special meeting (18(5A)) |
| Approval | in a special meeting convened for the purpose | as soon as practicable after the year-end (18(5A)) |
| Publication | audited accounts and Council Report in the Gazette of India | not later than 30 September of the next year (18(5B)) |
| Forwarding | to the Central Government and to all members | with the publication (18(5B)) |
"Members" in sub-section (5A) means the members of the Council, to whom the accounts are circulated, while sub-section (5B) sends copies to all the members of the Institute.
Section 18(6): borrowing
The Council may borrow from a scheduled bank, as defined in the Reserve Bank of India Act, 1934, or from the Central Government:
- (a) any money required for meeting its liabilities on capital account, on the security of the fund or of any other assets belonging to it; or
- (b) for the purpose of meeting current liabilities pending the receipt of income, by way of temporary loan or overdraft.
The reference to the Reserve Bank of India Act, 1934 is as printed; current law should be checked for the meaning of "scheduled bank". The Act sets no limit on the amount; it limits the purpose and the sources.
How this fits with other provisions
The Council's fees and allowances are partly set under other sections: the Council determines fees by notification under sections 4, 5 and 6, and fixes allowances with the Central Government's sanction under section 16(2)(d). Under section 18(1), all moneys received by the Council are paid into the fund.
A worked example
At the end of a financial year, the Council has audited accounts prepared by a CAG-panel firm. One partner of the firm was a Council member three years earlier. Under the first proviso to section 18(5), that firm is not eligible for appointment, because a partner has been a Council member during the last four years. The Council appoints a different panel firm. It then circulates the audited accounts to its members at least fifteen days before the special meeting, approves them and publishes them with its Report in the Gazette before 30 September of the following year.
Need help with accounts and audit compliance?
Institutions and firms that must prepare, audit and publish accounts to a calendar will recognise the discipline in section 18. Our books of accounts compliance service can help set up the records, the audit file and the timetable that this kind of cycle needs.
Key takeaways
- All money received by the Council goes into one fund, and all properly incurred expenses are met from it.
- Investment is in Government securities or other securities approved by the Central Government.
- The Council must keep accounts distinguishing capital from revenue and approve a budget before the year starts.
- Since 10 May 2022, the annual accounts are audited by a firm appointed from the Comptroller and Auditor-General's panel; a firm with a partner who has been on the Council in the last four years is ineligible.
- A special audit can follow the Council's own notice or information from the Central Government, with an action taken report.
- Audited accounts must be circulated fifteen days ahead, approved in a special meeting and published in the Gazette by 30 September of the next year.
Read next
- Sections 16 and 17 of the Chartered Accountants Act, 1949: officers, employees and committees
- Section 9 of the Chartered Accountants Act, 1949: constitution of the Council
- Sections 19 and 20 of the Chartered Accountants Act, 1949: the Register of members
- Sections 16 to 18 of the Cost Accountants Act, 1959: officers, committees and finances
Disclaimer: Based on the Chartered Accountants Act, 1949 as printed in the ICAI edition of 2022 (amended up to Act 12 of 2022), read with S.O. 2184(E) dated 10 May 2022, which brought only part of the 2022 amendments into force, as consulted on 3 October 2026. Regulations, rules, Council guidelines, later amendments and commencement notifications should be checked. This article is general information, not legal advice; check the official text before acting.