ICAI has released an exposure draft of the “Proposed Consequential provisions for non-compliance with CPE hours requirement on yearly basis from calendar year 2024 onwards” for members’ comments latest by 2nd January 2024.
The ICAI has proposed categorizing defaulters of CPE requirements into four different levels, based on their duration of non-compliance. Let’s understand the proposed norms considering compliance requirements for the calendar year 2024 (similar provisions to apply for subsequent years with corresponding changes in timelines):
Level I Defaulters: Members who have not completed the required CPE hours by the calendar year end, i.e. 31st December, 2024. They are given a grace period of 6 months (upto 30th June 2025) to complete twice the shortfall, in addition to the current year’s requirements, i.e. for 2025.
Level II Defaulters: If Level I defaulters do not clear shortfalls in the grace period (upto 30th June 2025), they are classified as Level II defaulters from 1st July, 2025. Their non-compliance status is flagged on the CPE portal under their login.
Level III Defaulters: Level II defaulters continuing their non-compliance further for 6 more months (upto 31st december 2024) are categorized as Level III defaulters from 1st January next year (i.e. 1st January, 2026). COP holders have to mandatorily disclose their non-compliance in the MEF now and their names are provided to the Professional Development Committee.
Level IV Defaulters: Continued default after Level III (i.e. after 31st December, 2025) by COP holders/firms would lead to them receiving only Provisional Peer Review Certificates. They can get the full certificate only on clearing shortfalls. If non-compliance continues beyond specified timelines spanning 1.5 years, disciplinary action may be initiated.
Thus, the new ICAI framework on CPE requirements compliance proposes a structured categorization of defaulters based on the duration of non-adherence, with corresponding consequences getting stringent progressively after extended intervals. This allows sufficient opportunity as well as strong deterrence against consistent default.
ICAI Announcement dated 18/12/2023: Exposure Draft on proposed Consequential provisions for non-compliance with CPE hours requirement on yearly basis from calendar year 2024 onwards
Summary of the key points of the ICAI’s proposed new framework for consequential provisions regarding annual CPE compliance requirements beginning calendar year 2024:
1. Applicable from 2024 onwards – Need to plan properly;
2. Grace period of 6 months to clear shortfalls – Time to make up;
3. Email notification on shortfall expected – Chance to reconcile before being marked non-compliant;
4. Non-compliance status on portal login post grace period – Visible flagging;
5. Required to complete twice the shortfall hours – Stringent norms;
6. COP holders need to declare status in MEF now – Additional disclosure;
7. Names given to Institute’s Professional Development Committee – Reputational impact;
8. Only provisional peer review certificates – Could affect practice;
9. Multiple extended timelines spanning 1.5 years – Sufficient opportunities;
10. Deferral of good standing certificate – Limitation for members;
11. Past year shortfall to be cleared first – Backlog clearance important;
12. Constraint put on online CPE hours – Plan physical mode programmes;
13. Mandatory physical events for non-complied hours – Not completely online options;
14. Last date preponed for ULAs – Ensure timely submissions;
15. No carry forward allowed for excess hours – Plan accurately;
16. Existing exemptions continued – Alternative for constraints;
17. Meant only for yearly compliance – One-time requirements unchanged;
18. Chance of disciplinary action after extended periods – Deterrent possibility;
19. CPE compliance now crucial – Stringent follow-up and consequences;
20. Portal dashboards to track status monthly – No excuse for non-awareness.
Related Posts:
CPE Hours Requirements for ICAI Members from 2023 Calendar Year