Policy

Lok Sabha passes Chartered Accountants Bill

K.R. Srivats | Updated on: Mar 30, 2022
Union Finance Minister Nirmala Sitharaman in the Lok Sabha

Union Finance Minister Nirmala Sitharaman in the Lok Sabha | Photo Credit: -

Proposed revamp of Disciplinary Committee in line with best international practises, says FM Sitharaman

The Centre on Wednesday moved one more step closer towards an overhaul of the disciplinary mechanism in the three professional bodies — Chartered accountants, company secretaries and cost accountants—with the Lok Sabha giving its approval for the much talked about amendment Bill.

Replying to the discussion on the Bill  in the lower house—The Chartered Accountants, The Cost and Works Accountants and The Company Secretaries (amendment) Bill 2021, the Finance Minister Nirmala Sitharaman rejected the suggestion of the Opposition members that the government should as part of the revamp refrain from making a non-member as a presiding officer of the disciplinary committee in these institutes as this would impinge on their autonomy.

Sitharaman highlighted that the disciplinary committee composition revamp and introduction of a non member as its presiding officer was in line with the best international practices and would not in any manner dilute the autonomy of the three institutes.

“Globally the conduct of chartered accountants, particularly those who are auditors of public interest entities are regulated by independent regulators.  Even in India, on similar lines we have set up NFRA, which only has non CAs as full time members. We are only matching ourselves to global best practices and there is nothing to worry that we are undermining our institutions. On the contrary we are strengthening them with greater transparency and greater number of outsiders looking into their working”, Sitharaman said.

As part of the revamp of the disciplinary committee, the Bill had proposed a change in composition of the Disciplinary Committee so as to introduce a 2+3 formula (two Institute nominees and three non-Institute members) instead of the current composition of 3+2 (three institute members and two government nominees). Also the Bill stipulated that presiding officer has to be a non-member to be appointed by the central government from a panel to be recommended by the Councils of the three respective institutes.

Sitharaman allayed concerns of Opposition members, who cited other professions such as law and medical field where the conduct of their members are judged by members of their profession. 

The Finance Minister highlighted that government would be appointing the presiding officer only out of the names recommended by the Central Council.

It maybe recalled that the CA Institute had recently said that the disciplinary committee revamp, proposed in the Bill, was not the best outcome for it and therefore had written to the Ministry of Corporate Affairs seeking a re-look at the provision, particularly with regard to the composition of disciplinary committee and the Board of Discipline.

The ICAI had preferred continuation of the 3+2 formula instead of the proposed 2+3 formula .Also, it had submitted that the presiding officer has to be a member of the institute and a chartered accountant for the disciplinary mechanism to work efficiently,

Coordination committee

Sitharaman highlighted that the coordination committee concept forming part of the Bill is not something new. In the year 2000 itself, the three institutes had signed a MoU to have a coordination committee, but it had “not taken off”.  

“The absence of coordination is standing out despite Coordination Committee formed in 2000 through a MoU”,she said. 

Finance Minister also allayed concerns of MPs on the coordination committee giving directions. “People doubt on whether coordination committee is going to give directions to the institutes on how to use the resources. It is not going to be that. The governance and management of resources is going to be governed by the practice (section 18) that is existing now”, Sitharaman said.

In order to make coordination effective, periodic meetings in a given structure is held and that is only possible through a institutionalised framework and that is why the government wants to go through this route, she added.

Published on March 30, 2022
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