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The Chartered Accountants Institute does not see any need for a separate regulator to oversee its members and hopes that the government would go with the recommendation of the Standing Committee on Finance on this matter, a top official said.
“Our view is very clear. We are doing a good job and we don’t need another regulator. We had lagged earlier in showcasing our capabilities. Now that perception gap is being bridged by engaging with the Ministry,”, said Nilesh Vikamsey, the newly elected President of Institute of Chartered Accountants of India (ICAI).
He also said that CA Institute – as a regulator of audit profession — was open to work on its weaknesses, if any, and make appropriate changes that may be suggested by the government.
The Veerappa Moily-headed Standing Committee on Finance had recently recommended that it was not in favour of establishing a separate regulator — independent of audit profession — for auditors.
This stance of the Parliamentary panel is being widely read as its veto for setting up of the National Financial Reporting Authority (NFRA), which was proposed to be established under the Companies Act as a separate body (independent of the CA institute) to regulate audit quality and protect public interest
Vikamsey said that the subject of NFRA cannot be considered as a “closed chapter” till the provisions empowering the centre to set up such an Authority remained in the statute book.
The ball is now in Corporate Affairs Minister Arun Jaitley’s court as his Ministry will have to decide on setting up the NFRA. Technically, the government need not accept a recommendation of a Standing Committee.
Interestingly, the Finance Ministry and the SEBI Chairman have written to the Corporate Affairs Ministry for the establishment of NFRA as it would lead to enhanced institutional oversight over auditors and would lead to enhanced market integrity and transparency as well as protection of investors’ interests and other stakeholders like banks, lending institutions, suppliers etc.
The CA institute has been opposing the setting up of the NFRA as it would end up taking away ICAI’s oversight power on its members. The ICAI sees the NFRA as an interference in the audit profession.
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