Government has introduced the Chartered Accountants, the Cost And Works Accountants and the Company Secretaries (Amendment) Bill, 2021 in the Lok Sabha on December 17, 2021. On December 21, 2021 the Bill has been referred to the select committee specially the proposal to induct presiding officer of the disciplinary committee who is not a Chartered Accountant (non CA). This Bill proposes to make various amendments in the 3 Statutes governing these professions, i.e. the Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959 and the Company Secretaries Act,1980, regulating the professions of the chartered accountants, cost accountants and company secretaries, respectively.
The Bill seeks to strengthen the disciplinary mechanism under these Acts, and provide for time bound disposal of cases against members of the Institute of Chartered Accountants of India, the Institute of Cost Accountants of India and the Institute of Company Secretaries of India.
Key features of the Bill
Certain regulatory and professional lapses have surfaced time and again, which have put the regulators and professionals under a considerable scrutiny, specially the profession of chartered accountancy. Amendments proposed in these Acts are based on the recommendations of a High Level Committee constituted by the Ministry of Corporate Affairs.
(i) Disciplinary Directorate: strengthen the disciplinary mechanism by augmenting the capacity of the Disciplinary Directorate to deal with the complaints and information and providing time bound disposal of the cases by specifying the time limits for speedy disposal of the cases against members of the Institutes;
(ii) Conflict of interest: address conflict of interest between the administrative and disciplinary arms of the Institute;
(iii) Registration of firms: provide for a separate chapter on registration of firms with the respective Institutes and include firms under the purview of the disciplinary mechanism;
(iv) Audit of accounts: enhance accountability and transparency by providing for audit of accounts of the Institutes by a firm of chartered accountants to be appointed annually by the Council from the panel of auditors maintained by the Comptroller and Auditor-General of India;
(v) Autonomy of councils: provide for autonomy to the Council of the respective Institutes to fix various fees.
(vi) Board of Discipline: Under the three Acts, each Council constitutes a Board of Discipline. Members of the Board include: (i) presiding officer (having experience in law and knowledge of disciplinary matters), (ii) two members and (iii) Director (Discipline) as secretary. Under the Chartered Accountants Act, 1949, one of the two members is nominated by the central government while the other is a member of the Council. As per the other two Acts, both the members are from the Councils or the Institutes.
(vii) Penalties: Under the Acts, in cases of professional or other misconduct the Committees may: (i) reprimand or remove the member from the register of the Institute, or (ii) impose a fine of up to five lakh rupees. The Bill increases the maximum amount of fine to ten lakh rupees. The Bill also adds that if a partner or owner of a firm is repeatedly found guilty of misconduct during last five years, the Committee may take certain actions against the firm. The actions include: (i) prohibiting the firm from undertaking activities related to the profession of chartered account, cost accountant, or company secretary, as the case may be, for up to two years, or (ii) impose a fine of up to Rs 50 lakh.
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