The ministry of corporate affairs (MCA) has constituted a high-level committee to review disciplinary rules and regulations governing chartered accountants, company secretaries and cost accountants.
The six-member committee, chaired by retired IAS officer Meenakshi Datta Ghosh, has been tasked with recommending amendments to “ensure speedy disposal of disciplinary cases“ and “strengthen the existing mechanisms“ followed by statutory professional institutes, a senior official at the ministry told ET.
Other members include retired IRS and IDAS officers, an advocate of the Supreme Court and a joint director in the ministry of corporate affairs.
The committee was constituted on April 10. It was to form on March 27, but was delayed to include more elaborate terms of reference, the official said.
Some new points came up after the ministry prepared a letter to constitute the committee, the person said. “So in supersession of the earlier letter this memorandum was taken out.“
Recently, the Enforcement Directorate (ED) conducted raids at the offices of some chartered accountants who were allegedly involved in money laundering through shell companies, following which the Institute of Chartered Accountants of India (ICAI), the statutory body for regulating professional accountancy in the country, initiated disciplinary proceedings against the accused members.
Some Delhi-based chartered accountants that ET spoke to welcomed the review, saying effectiveness of disciplinary committees have been under question for a while, and especially after demonetisation, which allegedly led to mushrooming of money laundering networks that helped people convert their black money held in old currency into legal tenders for a fee.
“There is no fixed timeline for deciding a case and the disciplinary hearings are repeatedly adjourned leading to delays,“ said a chartered accountant who requested not to be named.
The standing committee on finance, in its December 2016 report on the Companies (Amendment) Bill, noted that of the 1,972 cases taken up by the board of discipline of ICAI, 1,226 cases were closed at a prima facie stage.
“We have rules which are over 10-12 years old,“ said an ICAI spokesperson.
“This committee was set up to have a relook whether they are contemporary and need to be changed or not. It is a natural process… when something is over a decade old, some changes are required,“ the person said.
The standing committee report suggested that “necessary amendments to the ICAI Act may be brought before Parlia ment…so that adequate transparency can be ensured in maintaining accounting and auditing norms as well as ethical standards with a view to protecting the interest of investors and stakeholders“.
The high-level committee will look at various issues including, but not limited to, the time limit to conclude disciplinary proceedings, independence of disciplinary committees, and doing away with the practice of two-stage issue of orders -one for holding guilty and the other for declaring punishment, according to the memorandum issued by the ministry.
The committee shall explore the possibility of creating more than one director (discipline) and also look at the role of government nominees in the appointment of the same.
All acts governing corporate professionals, including company secretaries and cost accountants, mandate creation of a `disciplinary directorate’ headed by an officer designated as `director (discipline)’ to investigate cases or complaints filed against its members.
Other matters include the possibility of counselling defaulting members and imposing penalties for frivolous or personally motivated complaints.
The committee shall submit its recommendations within 60 days to the ministry and also draft the consequent amendments to the acts, rules and regulations.