Tuesday, April 16, 2013

GOVERNMENT SHOULD DESIST FROM INTERFERING IN THE CA PROFESSION

Over the last few years, the Government is bent upon interfering in the affairs of the CA profession being regulated by the Institute of Chartered Accountants of India, a body set up by an Act of the Parliament. Satyam episode is being cited as the example for mismanagement and lack of regulation.
But the facts are otherwise. World over ICAI is being praised for its high grade education and creation of talented professionals. Chartered accountants from India are performing so well in the entire sphere they are involved with. It is a clear indication that CA profession in India is on the right path and being regulated properly.

It will be disastrous on the part of the Government to interfere in the profession of Chartered Accountant in the proposed manner. It has to re look and reconsider.

Satyam episode was only an aberration and the Institute of Chartered Accountant of India has already
punished the guilty and has given them toughest legal punishment of fine and removal of name for life. The delay in the judgement was primarily due to court's stay and principles of natural justice/CPC being followed by ICAI.

The Government's ill-intentions are reflected from the various provisions relating to auditors in the Companies Bill, 2012 (Passed by Lok Sabha). The Bill provides for:

  • Very heavy penalties on Auditors, for minor fault/ technical breaches.
  • The delegated legislation proposes to give too many wide powers to prescribe Rules by the Government bureaucracy.
  • Imprisonment and penalties even without a wilful default or criminal negligence (mens are not mandatory)
  • Legislating on code of ethics for CAs including maximum number of Audits, undertaking other assignment by Auditors etc.
  • The most glaring example of clear interference in the profession is the provision of setting up of National Financial Reporting Authority to :
  • Prescribe Auditing Standard
  • Prescribing Accounting Standard
  • Undertaking disciplinary action against Auditors/Audit firms, with minimum fines, penalties and imprisonment to be imposed.

The aforesaid assault and interference in the Chartered Accountant profession is highly condemn able. The Government has full right to prescribe expectations of the society, corporate sector and investors from Auditors and not beyond. The Government has ample representation in the governing of ICAI to ensure compliances and putting in place checks and balances. It may be noted that Indian Accounting Standards and Auditing Standards are currently at par with International Standards notified by International Accounting Standards Board (IASB) and Indian Auditing and Assurance Standards Board (IAASB). The Government has not been able to point out any deficiency in Auditing Standards prescribed by the ICAI. In case some Auditor fails to follow auditing standard, he need to be punished by ICAI having adequate representation of the Government on the council and also on Disciplinary committees.

The Government has no in-house capability or competence to design accounting and auditing standards. Even investigation machinery of MCA including serious fraud office has a very very poor track record. The functioning of Government has been saddled with several allegations of corruption and mal practices. It will be disastrous on the part of the Government to interfere in the profession of Chartered Accountant in the proposed manner. It has to relook and reconsider.

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