Lok Sabha discusses Bill to amend Chartered Accountants Act

The Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021 was taken up for consideration and passing by Lok Sabha on Tuesday, after a Parliamentary Standing Committee on Finance examined the Bill and proposed changes to a law governing chartered accountants.

The Bill proposes to strengthen the disciplinary mechanism under these Acts, and provide for time-bound disposal of cases against members of the Institute of Chartered Accountants of India, the Institute of Cost Accountants of India and the Institute of Company Secretaries of India.

It also provides more external representation on the Board of Discipline and Disciplinary Committee.

The Bill creates a Coordination Committee headed by the Secretary of the Ministry of Corporate Affairs, which will have representation from the three Institutes formed under the Acts.

The Secretary to each Council will be designated as chief executive with the President as the head of the Council.

The President will be responsible for ensuring the implementation of decisions of the Council. Firms will have to register with the Institutes.

The Councils will maintain a register of firms containing details including the pendency of any actionable complaint or imposition of penalty. The Bill also increases certain fines under the three Acts.

If a partner or owner of a firm is repeatedly found guilty of misconduct during the last five years, disciplinary action can be taken against the firm. The Bill proposes to change the composition of the two disciplinary entities to allow for more external representation.

However, these external members will be selected from a panel of persons prepared by the three Councils. This may be against the objective of resolving conflict of interest between the disciplinary and administrative functions of the three professional Councils.

Participating in the debate on the BIll, TMC MP Saugata Roy, who is also a member of the Parliamentary Standing Committee that examined the Bill, said the suggestions given by the panel have not been considered in the present version of the Bill.

He said that the Committee had said the autonomy of the ICAI, and the institutes for company secretaries and cost and works accounts should not be hampered.

DMK member A Raja accused the government of having a hidden agenda in CA Amendment Bill.

"What is surprising and shocking is, earlier the chairman of the ICAI disciplinary committee was supposed to be a chartered accountant, but now the chairman will be a non-chartered accountant," he said.

Congress MP MK Vishnu Prasad meanwhile said that the Institute of Chartered Accountants of India (ICAI) is a statutory and autonomous body, yet it is under the control of the Ministry of Corporate Affairs, adding that the ministry does not provide funding to the institute.

"The government keeps talking about the independence of ICAI, where is the independence? The number of ICAI council members should exceed the number of government nominees so that a balance is met," he said.

Institute of Chartered Accountants of India has opposed the Bill and called for maintaining the "status quo" on the constitution of the institute's disciplinary committee stating that the current system is working well.