ICAI to soon get powers to act against erring partnership firms

Chartered accountants’ apex body ICAI will soon have powers to initiate disciplinary action against erring partnership firms as well, with the government proposing amendments to the Chartered Accountants Act.

The apex institutes for cost accountants and company secretaries too will get similar powers.

As part of efforts to bolster the disciplinary mechanism of the ICAI as well as the institutes of cost accountants and company secretaries, Corporate Affairs Minister Nirmala Sitharaman on Friday introduced a bill in the Lok Sabha to amend the Acts governing these professions.

Over the years, the government has taken various measures to curb possible corporate misdoings. In recent years, the role of some chartered accountants has come under the regulatory scanner.

Against this backdrop, the proposed amendments seek to empower ICAI to take disciplinary action against partnership firms of Chartered Accountants (CAs).

At present, the Institute of Chartered Accountants of India (ICAI) can only initiate action against its members.

ICAI President Nihar N Jambusaria told PTI that the proposed amendments to the Act would empower the institute to take action against partnership firms.

Various amendments have been proposed to the Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959 and the Company Secretaries Act, 1980.

The Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021 was introduced in the Lok Sabha on Friday.

In a statement, the Institute of Company Secretaries of India (ICSI) said the scope to deal with professional misconduct will be widened with the inclusion of a member in his individual capacity or as partner/owner of the firm.

“The bill aimed at strengthening the disciplinary mechanism by making the disciplinary directorate independent will initiate the appointment of non-member, nominated by the central government, as Presiding Officer. ICSI also appreciates the time bound disposal of cases proposed in the bill,” ICSI said.

A new provision in the Act has been proposed for registration and register of firms.

Besides, names can be removed from the register of firms and reviewed before the ICSI council. This will help in effective supervision of the firms as well as streamline the process of registration and function of firms of company secretaries.

Bolstering 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.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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