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Tuesday, Mar 12, 2002

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ICAI panel to review CA Act

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NEW DELHI, March 11

THE 30-member Central Council of the Institute of Chartered Accountants of India (ICAI) has constituted a six-member working group to review the Chartered Accountants Act and the regulations governing the profession in its entirety in the context of the changing environment.

"The working group will comprise five nominees representing the five regional councils and the sixth member will be a nominee of the Department of Company Affairs,'' the President of ICAI, Mr Ashok Chandak, told a news conference here.

He said the working group would look into all aspects of the legislation, including the demands of the members of the profession and their implications for the accounting and auditing profession in the context of the opening up of the services sector under the World Trade Organisation (WTO).

The ICAI move to constitute a working group comes close on the heels of the Finance Minister, Mr Yashwant Sinha's Budget speech outlining the Government's intention to strengthen the regulations governing the auditing profession.

The working group has been asked to submit its report before May 10 this year. "The report will be forwarded to the Department of Company Affairs (DCA) for appropriate action at their end," the ICAI President said.

A number of chartered accountants have been asking the institute to permit them to advertise the services offered by them. Some of them have also pleaded that the members be allowed to charge "success fees" — fees as a percentage of the turnover of the clients.

The ICAI has not been in favour of permitting their members to charge fees as a percentage of the turnover of their clients as it would have a bearing on the "independence" of their audit work.

Besides the demands of the members in the context of the changing environment, the working group is also expected to look into the adequacy of the powers of the President of ICAI in taking certain actions on complaints received against the members of the institute.

"Our earlier suggestion to the Government on the need to have separate disciplinary benches at the regional levels will also be considered by this working group. We had made this suggestion to the DCA in 1994," Mr Chandak said.

Meanwhile, ICAI's Central Council has also authorised its Accounting Standards Board to issue an accounting standard on `Impairment of assets'. This standard will be a recommendatory standard for a period of two years. It will be mandatory from April 1, 2004 for public sector units, banks and listed companies. For other types of entities, the standard will mandatory from April 1, 2005.

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