Ankur | Mar 24, 2022 |
CA Institute will Not Spare fraudulent CA, But Don’t Paint Everyone With The Same Brush: Debashis Mitra, President
Debashis Mitra said, “If a CA is found to have done anything wrong, the Institute’s disciplinary mechanism will not spare him. At the same time, don’t paint everyone with the same brush. It will be unjust. There are some outstanding CPAs among us.” In a press conference, Mitra told reporters. “If the CA is not found guilty, then it should not be punished simply because we want to be strict and go for quantity,”
The new President of the Institute of Chartered Accountants of India (ICAI), stated on Tuesday that the CA Institute will not spare any member found guilty of fraud or wrongdoing, but he cautioned against painting the entire profession with the same brush.
According to the President, the Institute reprimanded members in 313 cases between 2007 and 2020. He emphasized that in 7 cases, the Institute permanently barred the members, in 2 cases, it barred members for more than 5 years, in 48 cases, it barred members for 1 to 5 years, in 57 cases, it barred members for 6 months to 1 year, in 153 cases, it barred members for 6 months, and in 59 cases, a monetary penalty was imposed.
His remarks came against the backdrop of the Institute’s increasing perceived ineffectiveness in taking action against its own members over the last several years, even as instances of corporate failures and accounting fraud increased. The lack of self-regulation is thought to have resulted in the establishment of an independent audit watchdog, the National Financial Reporting Authority, in March 2018. (NFRA). Auditors have been subjected to increased regulatory and public scrutiny in recent years.
“Perception remains a significant challenge,” said the ICAI President. He stated that when an auditor provides a true and fair view of the financial statements, he or she is providing “reasonable assurance,” and in that case, he or she is acting as a watchdog. However, if it is a forensic audit, the auditor is expected to be a bloodhound, he said. He emphasised the importance of maintaining a distinction between the two.
Mitra also stated that the National Financial Reporting Authority (NFRA) and the CA Institute can coexist as audit profession regulators.
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The President emphasised the critical importance of auditor independence in ensuring audit quality. He stated that promoters have an influence on the appointment of auditors in many companies.
“We’re investigating how this affects independence.” “If our independence is threatened, we’re in big trouble,” he said.
He indicated that the Institute is considering whether it should request the Securities and Exchange Board of India, the country’s market watchdog, to appoint auditors in the case of listed companies in order to improve audit independence.
The issue of the auditor’s independence arises in the first place because if he is appointed by the company, his independence to work independently from the company is called into question.
The ICAI President also stated that the Institute is in favour of clarifying the definition of management services as long as it improves audit independence.
Management services are currently one of the eight services prohibited under the Companies Act, 2013 for statutory auditors in order to maintain auditor independence. What exactly constitutes management services has been a source of consternation for the audit community, which has been seeking clarification in this regard.
We have developed 23 forensic audit standards, we are trying our best to see these standards are very well respected, and the members related to forensic audit abide by these standards and ensure the quality of forensic audit is of the highest standards, according to Mitra.
The President also stated that the ICAI is working on a research paper on cryptocurrency and that it will likely submit its report to the government in about one and a half months. “We’ve formed a research team.” We’re investigating the effects of cryptocurrency on accounting, taxation, and auditing. The ICAI takes this matter very seriously.
Mitra explained, “We’re also looking at how cryptocurrency is related to blockchain, and so on,”
As a result, there is no regulatory framework in place for cryptocurrencies. The finance ministry taxed gains from crypto assets at 30% in Budget 2022.
Source: The Economic Times
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