The Institute of Chartered Accountants of India (ICAI) is likely to ask for powers to penalise errant audit firms, but only with prior approval from the government.

The ICAI Council, the apex decision-making body that met last week, was divided on the issue of the regulatory agency for auditors getting powers to penalise firms as well. Instead, it agreed that the powers be used only in special circumstances, said members present in the meeting. A panel constituted by the Council has been tasked with defining what can trigger ICAI intervention against a firm. “If we find that auditors from one firm are repeatedly engaged in offences or if the act of an auditor is really grave, ICAI should have powers to act against a firm,” a member of the Council said.

Following the Satyam accounting fraud, ICAI had sought powers to cancel the registration of audit firms as well. At present, its jurisdiction covers individual auditors only. The move was also being seen as a step towards regulating foreign firms, most of which are operating in India through tie-ups with local firms.

Armed with the Council’s approval, ICAI would approach the Ministry of Corporate Affairs to amend the Chartered Accountants Act, the institute’s president Amarjit Chopra said. “It (regulation) will be done on a case-to-case basis after getting approvals from the ministry on each occasion,” Chopra added.

POWER WITH A RIDER
* ICAI is likely to seek powers to penalise errant audit firms, but not without prior approval from the government
* The ICAI Council was divided on the issue of the regulatory agency for auditors getting powers to penalise firms

* A panel constituted by the Council has been tasked with defining what can trigger ICAI intervention against a firm
* At present, ICAI’s jurisdiction covers individual auditors only
* Armed with the Council’s approval, ICAI would approach the Ministry of Corporate Affairs to amend the Chartered    Accountants Act.

Another ICAI Council member said that amendments to Schedule I and Scheduled II of the Act had been proposed. Once Parliament approves the changes, ICAI will have powers to send show cause notices, levy penalties and in cases of grave offences, cancel licences.

The ICAI move comes days after the Bombay High Court had ruled on August 13 that the Securities and Exchange Board of India (Sebi) could proceed with its enquiry against audit firm Price Waterhouse for its alleged role in the Satyam scam.

The court had observed that Sebi had the power to act in the interest of the shareholders of listed companies. However, it noted that actions against the professionals (chartered accountant in this case) could be taken only by the body that regulates that profession. The court’s observation had triggered a debate as to whether Sebi could debar Price Waterhouse from working with listed companies, if proved guilty.

Currently, the disciplinary committee of ICAI holds individual chartered accountants responsible for any malpractices or discrepancy that happens during the audit work. ICAI has the powers to suspend the registration of such persons, if found guilty. However, the institute has no such powers to take similar actions against the audit firm.

MK MPs have passed a resolution opposing the implementation of Goods and Service Tax (GST), party chief and Tamil Nadu Chief Minister M. Karunanidhi said Tuesday.

'A detailed debate is needed on the GST. The same have been expressed in the resolution passed by our party MPs,' he told reporters here after chairing the meeting of the parliamentarians.

Queried about the party's stand on the increase in MPs salaries, he said: 'This issue was not discussed at the MPs meeting.'

On the lack of progress in the Sethusamudram Shipping Canal Project, Karunanidhi said: 'At times, superstition and wrong beliefs hinder good projects like these.'

He dismissed as 'engineered' the crowd that gathered at the recent public rally addressed by AIADMK chief J. Jayalalithaa and recalled that many newspapers had predicted that DMK will not get two seats in the 2009 parliamentary elections.

The DMK, which is part of the ruling United Progressive Alliance at the centre, has 18 seats in the Lok Sabha.