Chartered Accountancy Bill: Proposal to have non-CAs in ICAI panel irks fraternity

The proposal to introduce non-CA members into the Institute of Chartered Accountants of India's (ICAI) disciplinary committee and the Chartered Accountancy Bill, which was sent by Lok Sabha to a Parliamentary standing committee for scrutiny on December 21st, has caused growing angst and nervousness among chartered accounting firms and accounting professionals.

Chartered Accountants, Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021, has proposed the inclusion of two CAs and three non-CAs (often government nominees) in the ICAI disciplinary committee, a change from the current setup comprising two non-CA nominees and three ICAI members.

The rejig in composition changes the power equation in favour of non-CAs in the committee which oversees the complaints and enquiries relating to the misconduct of members.

In the CA fraternity, the move is being widely seen as another attempt by the government to assert control over the profession after the creation of the National Financial Reporting Authority (NFRA).

The proposal to have a non-Chartered Accountant (CA) as the presiding officer of the disciplinary committee has also riled the fraternity as it is a post traditionally held by the President of the Institute who holds considerable sway over the committee's decisions.

"There is a trend against self-regulation. The action is clearly an attempt by the government to act in an independent way and reduce the institute's power and influence over the profession," said a senior auditing partner with a Big Four firm who works closely with the institute.

Many chartered accountants feel that non-CAs won't have the deep knowledge of accounting that's required to deliver fair judgements.

"The main concern is that they (non-CAs) don't understand the profession and its practicalities or intricacies. The new bill would, however, mean that there would be an independent and unbiased view on several aspects," said Jeenendra Bhandari, partner, MGB & Co LLP.

Over the years, auditing has increasingly become highly technical and specialised, and the scope of audit is quite clearly defined through multiple standards.

"Having a majority of non-chartered accountants in the committee whose presiding officer is also a non-chartered accountant may result in more decisions based on individual judgement than those driven by the governing standards," said Nikhil Singhi, senior partner at Singhi & Co.

The government is taking the bulls by the horns regarding frequent allegations that the ICAI disciplinary committee had been very slow, took very few tough disciplinary actions, and that cases dragged on for long periods.