New Delhi, Apr 5 (PTI) Parliament on Tuesday passed a bill to revamp the functioning of the institutes of chartered accountants, cost accountants and company secretaries, with Union Minister Nirmala Sitharaman asserting that the changes will usher in transparency and will not in any way impact the autonomy of these bodies.
Rajya Sabha passed the Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2022 with a voice vote after negating all amendments moved by the Opposition.
Lok Sabha had cleared the bill on March 30.
Replying to the discussion in the Upper House, Sitharaman asserted that the new legislation would facilitate India in creating homegrown world class institutions soon, comparable with the ‘Big Four’ in the audit and accountancy areas, and meet the global demands.
“This (bill) is with the intention of making the three institutions a lot more transparent in their disciplinary matters, and raise the quality of the disciplinary processes. Above all, I think this would also facilitate India to be able to support institutions and firms which can be encouraged by the council to create something (completely of India origin) similar to the Big Four, which we periodically talk about,” she said.
Sitharaman, who is in charge of finance and corporate affairs ministries, noted that the bill has been envisaged after consulting various stakeholders and taking into account the findings of the Meenakshi Datta Ghosh committee.
Stressing that India has witnessed rapid changes in the way the economy is being profiled, the finance minister said, “at this time, the sanctity of the audited financial statement which is where the role of CAs come into play has got to be maintained, has got to be given its due position and we need to have audit and certification quality. We also need to have a favourable investment climate being brought in.”
Citing the examples of Satyam and the IL&FS scandals, she said, “we have repeatedly been questioned about the number of failings of the CAs who did not deliver as per the expectations.”
Reiterating the need to bring the bill, Sitharaman said the corporate governance system needs to be robust in order to meet the global investment expectations.
Besides, she said there is a need to bring greater robustness and accountability in India’s standards of audit and how audit certificates are being given.
Dispelling apprehensions expressed by certain members regarding the autonomy of the three institutes, she said their functioning continue to be governed by their respective three Acts.
“This one Act which is going to have an impact on each of these Acts only to a limited extent of bringing in greater transparency in the disciplinary processes with which these institutes function,” Sitharaman asserted.
The three institutes — Institute of Chartered Accountants of India (ICAI), Institute of Cost Accountants of India (formerly known as ICWAI), and Institute of Company Secretaries of India (ICSI) — will continue to have the authority for qualifying and licensing of people and regulation of their conduct as was done before, she said.
The finance minister said that in the last few years, there has been an increase in the number of entities wanting to register as LLPs after steps taken by Prime Minister Narendra Modi to promote startups and smaller entrepreneurs across the country.
With this, she said these firms are “bringing a new kind of environment and we also see that the requirement for regulating them also needs to be robust”.
The bill amends the Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959, and the Company Secretaries Act, 1980.
Among other things, the bill provides for the setting up of a coordination committee headed by the Secretary of the Ministry of Corporate Affairs. It will have representations from the three institutes.
The bill also provides for registration of firms with the institutes and it will help in paving the way for Indian accountancy firms to grow big, she said.
It also proposes to enhance the quantum of fines for partners and firms found guilty of misconduct.
The legislation also seeks to appoint non-Chartered Accountant (CA), non-cost accountant and non-company secretary as the presiding officer of the disciplinary committees of the respective institutes.
The Congress, TMC, DMK, CPI (M) and YSRCP opposed the bill, citing “infirmities” and alleging that it was a blatant attack on professional autonomy.
Neeraj Dangi of Congress accused the government of trying to control everyone, be it businessmen, doctors, industrialists, teachers, government employees or students and the bill is one such example of doing it to control chartered accountants.
Other Rajya Sabha members — Abdul Wahab (IUML), K Ravindra Kumar (TDP) and Binoy Viswam CPI(M) — who spoke during the discussion also opposed the Bill.