ICAI will soon be given the authority to take action against offending partnership firms

With modifications to the Chartered Accountants Act proposed by the government, the premier organisation of chartered accountants, the ICAI, would soon have the authority to take disciplinary action against erring partnership businesses as well.

Similar authority would be granted to the apex institutes for cost accountants and corporate secretaries.

Corporate Affairs Minister Nirmala Sitharaman submitted a bill in the Lok Sabha on Friday to amend the Acts governing these professions in order to strengthen the disciplinary mechanisms of the ICAI and the institutes of cost accountants and company secretaries.

Various safeguards have been implemented by the government throughout the years to prevent potential business wrongdoing. Some chartered accountants’ roles have come under regulatory scrutiny in recent years.

Against this environment, the proposed modifications seek to empower the ICAI to initiate disciplinary action against Chartered Accountant partnership Firms (CAs).

The Institute of Chartered Accountants of India (ICAI) can only take action against its members at the moment.

According to ICAI President Nihar N Jambusaria, the proposed revisions to the Act will allow the institute to take action against partnership firms.

Several modifications to the Chartered Accountants Act of 1949, the Cost and Works Accountants Act of 1959, and the Company Secretaries Act of 1980 have been proposed.

On Friday, the Chartered Accountants, Cost and Works Accountants, and Company Secretaries (Amendment) Bill, 2021, was tabled in the Lok Sabha.

The Institute of Company Secretaries of India (ICSI) stated in a statement that the scope for dealing with professional misconduct will be expanded with the addition of a member in his individual capacity or as a partner/owner of the firm.

“The law, which aims to improve the disciplinary system by making the disciplinary directorate independent, will begin the process of appointing a non-member, appointed by the central government, as Presiding Officer. ICSI also likes the bill’s proposed time limit for resolving cases “ ICSI stated.

In the Act, a new provision for firm registration and registration has been proposed.

Furthermore, names can be removed from the firm record and evaluated by the ICSI council. This will aid in the effective supervision of firms as well as the streamlining of the registration and function of company secretarial firms.

The bill’s main goals are to strengthen the disciplinary processes, provide for time-bound disposition of complaints against members of the three institutes, resolve the conflict of interest between the institutes’ administration and disciplinary arms, and improve overall accountability.

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