The government is consider reviewing the structure of the apex chartered accountants body in the country, the Institute of Chartered Accountants of India (ICAI), that may result in the separation of its academic and regulatory functions.
When contacted, Corporate Affairs Minister Salman Khursheed said, “If ICAI requires a review, we will look at it... The idea that the education part is kept apart from regulation, I think it is being floated around. Other countries have implemented this successfully including the UK. I am very willing to talk on this.”
ICAI president Uttam Prakash Agarwal, however, said, “What is the purpose of two bodies? Have they (those who are talking about splitting the role) found anything lacking? We have proved over credibility across the globe... On the basis of foreign practices, they are saying so... The institute has eight government nominees.”
Ministry officials, who did not wish to be quoted, pointed out that the Administrative Reforms Commission had suggested separation of academic and regulatory roles of all institutes including ICAI, ICSI, etc. The ministry was, in principle, in favour of the ARC recommendations. “We will ask them to do so (separate the roles)…we will nudge them. People need to work efficiently, if they don’t, we question them and they have to come up with answers. If they don’t, discussions could inevitably lead to change in the structure,” a ministry official said adding a lot of work has to be done before this can be achieved. The Chartered Accountants Act has to be amended. The thinking in the government has gathered momentum after the Satyam case came to light last year and it was found by the Serious Frauds and Investigation Office that apart from the founder chairman of the firm, the company’s auditors too were involved in the fraud. For years, the auditors turned a blind eye to the wrong doings of the IT firm’s top brass, the agency said. The auditors — S Gopalakrishnan and Talluri Srinivas — have since been arrested, but the incident brought to fore the weakness of the institute in taking action against its erring members. The ICAI issued show cause notices to the auditors but so far nothing has been done. The institute has been maintaining that since the auditors are in jail, they have not been able to submit their replies and as per the principle of natural justice, they have to be given time. Experts, however, said the ICAI could have taken the court’s permission for taking the disciplinary function forward. Not doing this has raised questions about the institute’s willingness to take action against its members. The government is, therefore, mulling of splitting the academic and regulatory function so that the institute is able to handle the functions better and there are no conflicts of interest, senior officials told The Indian Express. There seems to be conflict of opinion within the institute itself on various issues including that of surrogate practice by foreign auditing firms in India. While ICAI ex-president Ved Jain had said surrogate practice by big multinational auditing firms is rampant in the country, the current president has been maintaining that it is debatable. Though the institute had issued notices to the firms using names of foreign companies last year, no clear position has been stated by the ICAI till date.
https://www.indianexpress.com/news/ca-institute-may-be-split/568422/0
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