HomeBusinessGovt Introduces Bill in LS to Amend Laws Governing Chartered, Cost Accountants,...

Govt Introduces Bill in LS to Amend Laws Governing Chartered, Cost Accountants, Company Secretaries

The government on Friday introduced a bill in the Lok Sabha to amend the laws governing chartered accountants, cost accountants, and company secretaries in order to mainly strengthen the disciplinary mechanisms in place at the respective institutes. Strengthening the disciplinary mechanisms, providing provision for time-bound disposal of cases against the members of the three institutes, addressing the conflict of interest between the institutes’ administrative and disciplinary arms, and enhancing overall accountability are the bill’s key objectives.

The Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021, was introduced in the Lower House on Friday amid Opposition din over the Lakhimpur Kheri violence that happened in Uttar Pradesh in October. Chartered accountants, cost accountants and company secretaries come under the Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959 and the Company Secretaries Act, 1980, respectively.

Finance and Corporate Affairs Minister Nirmala Sitharaman, who moved the bill, said that on account of changes in the country’s economic and corporate environment, it has become necessary to amend the Acts. “Further, recent corporate events have put the profession of chartered accountancy under a considerable scrutiny,” she said in the bill’s Statement of Objects and Reasons.

In recent years, the role of certain chartered accountants has come under the scanner following various corporate frauds coming into light. The amendments to the Acts have been proposed on the basis of recommendations made by a high-level committee that was set up by the corporate affairs ministry to examine the existing provisions in the Acts for dealing with the cases of misconduct in the three professional institutes.

The Institute of Chartered Accountants of India, the Institute of Cost Accountants of India and the Institute of Company Secretaries of India are the three professional institutes and they also have the powers to take disciplinary action against their respective members. The recommendations were aimed at “strengthening the existing mechanism and ensure speedy disposal of the disciplinary cases”.

One of the aims of the bill is to strengthen the disciplinary mechanism by augmenting the capacity of the disciplinary directorate concerned to deal with the complaints and information. Besides, it seeks to provide “time-bound disposal of the cases by specifying the time limits for speedy disposal of the cases against members of the institutes”. The bill also seeks to address the conflict of interest between the administrative and disciplinary arms of the institutes, provide for a separate chapter on registration of firms with the respective institutes and include firms under the purview of the disciplinary mechanism.

According to the government, the amendments would enhance accountability and transparency by providing for the audit of accounts of the institutes by a firm of chartered accountants to be appointed annually from the panel of auditors maintained by the Comptroller and Auditor-General of India. Another objective is to provide autonomy to the council of the respective institutes to fix various fees.

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