The Hindu Business Line : Bill in CA shop

THE NEW BILL to amend the Chartered Accountants Act appears to have set the cat among the pigeons. Accounting professionals are peeved that self-regulation is giving way to a bureaucratic regime, and that new fetters are going to be in place if the Bill becomes law. Established by an Act of Parliament more than half a century ago, the Institute of Chartered Accountants of India has seen its membership grow beyond a lakh — a factor that has led to an increase in the absolute number of disciplinary cases.

The elaborate procedure the Institute has for dealing with errant CAs coupled with the reported non-cooperation of other entities and regulators in supplying information required by the ICAI disciplinary committee have earned it a bad name. For instance, the `Statement of Objects and Reasons' of the Bill, as put forth by the Finance Minister, recounts how a Joint Parliamentary Committee had adversely commented on the Institute's slow disciplinary procedure. Also, in the post-Enron accounting world, there was an urgent need to set the Indian house in order, and the Naresh Chandra Committee devoted whole chapters to such topics as auditor-company relationship and auditing the auditors. Prosecution Directorate, Appellate Body and Quality Review Board (QRB) are not new figments of imagination but mentioned in the Naresh Chandra report more than a year ago. In the meantime, the Institute had brought in the peer review system that became operational from April 1, 2003.

Despite fears of administration cost escalation, bureaucratic overhang and clipped self-regulatory freedom, there is little merit in resisting any institutionalised review and independent quality control in a profession as sensitive as accounting. Also, many of the proposals contained in the latest Bill factor in suggestions made by the ICAI after a working group it constituted studied amendments to the CA Act and Regulations. Addressing the governance aspect, the Bill increases the number of council members from 30 to 40, and also adds a year more to the council's life — moves that are pragmatic and cost-effective. Yet, there are a few wrong signals: Looking for an increase in the number of government-appointed nominees to the council and steamrollering controls in the name of harmonisation with other professional bodies such as those of costing and company secretaries. Asking for more berths for bureaucrats in autonomous bodies, when deregulation is the order of the day, appears anachronistic. A question that arises is whether the government nominees who have all along been in the governing council did not play their role adequately enough on matters of institutional governance so as to merit draconian measures that can even stifle the democratically-elected council.

The move to clamp down on foreign travel expenses of the ICAI appears too selective, especially in the current context, and also could rob the Institute of its autonomy. Given the record of the DCA in getting its Bills through, optimistic accountants have reason to keep their fingers crossed that this bull too may simply pass their fragile china shop.

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