ICAI begins Disciplinary Action against CAs for Incorporating Chinese Shell Companies

The President of Institute of Chartered Accountants of India (ICAI) stated that they will wrap up the disciplinary proceedings against a list of chartered accountants who are accused of helping Chinese businesses establish putative shell corporations in India.

According to Dr. Debashis Mitra, the ICAI is investigating 200 chartered accountants for possible professional misconduct. The self-regulator for the accounting industry has already published alerts and had information from these experts. The ICAI president noted that a prima facie case had been made in these cases, but he did not say how many CAs were found guilty. They might receive a lifetime ban if proved guilty, he warned. The ICAI has a “zero tolerance” stance for professional misconduct and these matters are being handled quickly, according to Mitra.

An illustration of the situation is where a chartered accountant failed to confirm the company’s assertion regarding the entity’s address. The investigation and disciplinary action were sparked by the ministry of corporate affairs, which requested that ICAI look into the situation.

The Serious Fraud Investigation Office (SFIO) has been asked to look into 33 firms as part of a crackdown on shell corporations, and the Ministry of Corporate Affairs said earlier this month that one person has been arrested following searches at three of those companies. Recently, one of the companies under investigation eventually denied any wrongdoing.

The president also mentioned that the ICAI is developing standards for evaluating the social impact of corporate social responsibility programmes. Large CSR spenders are required by law to conduct an independent impact assessment of their CSR efforts.