Centre forms body to review disciplinary rules for errant CAs, CSs

The committee recommends a massive overhaul of disciplinary actions taken by three institutes, ICAI, Institute of Company Secretaries of India, and Institute of Costs and Works Accountants of India

The government is looking to boost its oversight over three professional institutes including Institute of Chartered Accountants of India (ICAI) for its failure to discipline errant auditors according to a report by The Times of India. 

The Ministry of Corporate Affairs (MCA) has formed a high-level committee to review rules and regulations governing CAs, company secretaries and cost accountants. The committee chaired by retired IAS Meenakshi Datta Ghosh has been tasked with recommending changes to "ensure speedy disposal of disciplinary cases" and "strengthen existing mechanisms". This committee also includes retired IRS and IDAS officers, an advocate of the apex court and a joint director in the MCA. 

Despite being ticked by PM Narendra Modi 15 months ago, the committee was formed on April 10. According to a report by Economic Times, the committee was to be formed on March 27 but was delayed. 

Report of the committee has not been made public, but its focus largely lies on the auditors and it has recommended that the three institutes should appoint directors and secretaries of discipline. These officials must be government officials and their appointment will be similar to those appointed in autonomous bodies. 

While pointing out that the current mechanism needs to be reworked, the committee suggests that the disciplinary platform should be independent of the institutes. In place of three-five years taken in present, the committee has sought a one-year time frame to dispose of cases. It has also called for reducing the practice of frequent adjournment. 

After the Enforcement Directorate (ED) conducted raids at the office of some chartered accountants who were allegedly involved in money laundering through shell companies, the ICAI initiated disciplinary proceedings against accused members. The ICAI is the statutory body responsible for regulating professional accountancy in the country. 

This move comes after the government set up the National Financial Reporting Authority (NFRA) which will take over ICAI's disciplinary powers related to listed large companies. The primary objective of the NFRA is to have an independent oversight body to oversee the quality of accounting and auditing services with respect to listed public firms. Audit firms, which were unregulated, now have been brought under the jurisdiction of the NFRA. 

The committee has asked the government to merge the disciplinary committee and the board of discipline. It has also said that the members elected to the institute's council, should recuse themselves if they are subjected to any disciplinary action.