Govt. has notified the Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Act, 2022, i.e. CA, CWA and CS (Amendment) Act, 2022, pending Notification on commencement date for respective provisions.
GOI Notification dt. 18/04/2022: CA, CWA and CS (Amendment) Act, 2022
Some of the important provisions included in the CA, CWA and CS (Amendment) Act, 2022 relates to change in the composition of Board of Discipline/ Disciplinary Committee, including fixation of timelines for various disciplinary processes, formation of a Coordination Committee of the three professional institutes (ICAI/ ICSI/ ICMAI), and power to take actions against professional firms.
It may be noted that most of the provisions of the CA, CWA and CS (Amendment) Act, 2022, including power to take actions against professional firms, enhanced penalty for falsely claiming to be a member, maintenance of Register of Professional/ CA Firms, duration of the Council term, etc. were earlier recommended by the ICAI only. Further, the CA, CWA and CS (Amendment) Act, 2022 has not introduced any amendments for creating ‘Indian Institute of Accountants (IIA)‘ as publicized widely in social media, based on proposals in Report of Standing Committee on Finance.
CA, CWA and CS (Amendment) Bill, 2021 referred to Standing Committee
Earlier, the Govt. has introduced the Chartered Accountants, the Cost And Works Accountants and the Company Secretaries (Amendment) Bill, 2021 (i.e. CA, CWA and CS (Amendment) Bill, 2021) in the Lok Sabha on 17/12/2021, which was subsequently referred to the Parliamentary Standing Committee on 22/12/2021 for scrutiny, in view of concerns expressed by ICAI over certain proposed amendments, specially the proposal to induct presiding officer of the disciplinary committee who is not a Chartered Accountant (non CA).
This Bill proposes to make various amendments in the 3 Statutes governing these professions, i.e. the Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959 and the Company Secretaries Act,1980, regulating the professions of the chartered accountants, cost accountants and company secretaries, respectively.
With the growing scale of economy and number/ size of financial transactions and commensurate changes in the Indian economic and corporate environment over the last few decades, certain regulatory and professional lapses have surfaced time and again, which have put the regulators and professionals under a considerable scrutiny, specially the profession of chartered accountancy.
Amendments proposed in these Acts are based on the recommendations of a High Level Committee constituted by the Ministry of Corporate Affairs. The committee has examined the existing provisions in the respective Acts and the rules and regulations made thereunder, for dealing with the cases of misconduct in the three Professional Institutes, (Institute of Chartered Accountants/ Cost Accountants/ Company Secretaries of India). Accordingly, the Committee has submitted reports/ suggestions to strengthen the existing mechanism and ensure speedy disposal of the disciplinary cases at these Institutes. The CA, CWA and CS (Amendment) Bill, 2021 proposes to:
i) strengthen the disciplinary mechanism by augmenting the capacity of the Disciplinary Directorate to deal with the complaints and information and providing time bound disposal of the cases by specifying the time limits for speedy disposal of the cases against members of the Institutes;
(ii) address conflict of interest between the administrative and disciplinary arms of the Institute;
(iii) provide for a separate chapter on registration of firms with the respective Institutes and include firms under the purview of the disciplinary mechanism;
(iv) enhance accountability and transparency by providing for audit of accounts of the Institutes by a firm of chartered accountants to be appointed annually by the Council from the panel of auditors maintained by the Comptroller and Auditor-General of India;
(v) provide for autonomy to the Council of the respective Institutes to fix various fees.
As per News Reports, ICAI has three prime issues on the proposals of the Bill, relating to disciplinary committee, approval of names of CA firms registered with ICAI and coordination committee between the three Institutes (ICAI, ICSI & ICMAI). ICAI has apprehensions that if a non-CA becomes the presiding officer of the disciplinary committee, it would be difficult for him to make judgements as there will be lack of understanding in the matter of accounting standards, auditing standards, ethical standards, etc. ICAI has another issue with the proposal relating to ICAI approving the firm names which are unique and not similar to any existing CA firm in India or abroad, due to lack of database of firms abroad. Further, ICAI is apprehensive of proposed coordination committees among the three professional bodies, as the scope of their working is perceived to be beyond the coordination requirements, i.e. ICAI seeks that the committee’s scope of work should be restricted to coordination only, as all of them are autonomous bodies.
CA, CWA and CS (Amendment) Bill, 2021 dt. 17/12/2021