Money & Banking

ICAI to step up disciplinary proceedings against errant members

Surabhi Mumbai | Updated on April 08, 2020 Published on April 07, 2020

With the focus on the role of auditors after a spate of financial crises, the Institute of Chartered Accountants of India (ICAI) is stepping up disciplinary proceedings against erring auditors and is also hoping to get more powers to take action against audit firms.

ICAI is hoping to take up at least 500 cases this year. Atul Kumar Gupta, President ICAI, told BusinessLine that it is also working on a fast track system to ensure that pending hearings are cleared within a year’s time.

“Last year, ICAI had concluded disciplinary hearings in more than 400 cases, where 200-plus members are facing stringent action. We are working on a fasttrack system so that no case is pending for more than one year,” he said, adding that it has started e-hearing and increased the number of benches to five.

“We are targeting 500-plus cases this year,” he said. Meanwhile, ICAI, which is a statutory body set up under the Chartered Accountants Act, 1949, is also awaiting amendments to the Act to get more powers to punish audit firms.

“At present, ICAI can take action against the member, but does not have the provision to take suitable action against the firm for which amendments are being sought for so that it can act as a deterrent to the erring members and firms,” said Gupta.

Under the current provisions, ICAI does not have the powers to debar an errant firm as a whole, but can only take action against members.

The government will have to amend the Chartered Accountants Act for this. Responding to a Rajya Sabha unstarred question in December last year, Finance and Corporate Affairs Minister Anurag Thakur had said that a high-level committee to examine the existing provisions in the Acts, rules and regulations for dealing with cases of misconduct in the three professional institutes – ICAI, Institute of Company Secretaries of India (ICSI) and Institute of Cost Accountants of India (ICoAI) – has submitted its report. “The report of the high-level committee is under examination in the Ministry,” he had said.

The move comes after the National Financial Reporting Authority, which was notified in 2018, took over the role of monitoring and regulating auditors of listed companies and large unlisted firms.

Published on April 07, 2020

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