In the budget session of 2022, the Govt. passed the “The Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021“.
Lets understand the highlights of the Bill and how that will help prevent large corporate frauds?
All the CAs need to be registered with the “Institute of Chartered Accountants of India (ICAI)”.
Following are the highlights of the Bill and how the amendment will curb corruption.
- Changes in disciplinary committee: The ICAI has a disciplinary committee of whose the members are CAs themselves (members of ICAI). The new law provides external representation in the Disciplinary Committee. New people (not from among the CA fraternity and non-ICAI members) becoming members of the committee will result to better discipline among the practicing CAs.
- CA firms also need to register with ICAI: Earlier individual CAs only registered with the ICAI where as the CA firms did not. In the case of Satyam where CA firms were involved the corruption, the ICAI Disciplinary committee could not take any action. With the CA firms being made to register with ICAI and bringing the CA firms at par with the individual CAs will ensure that CA firms are not involved in fraud. This is a very important step towards ensuring clean corporate governance.
- More punishment for misconduct: The Bill increases certain fines. If a partner or owner of a firm is repeatedly found guilty of misconduct during last five years, disciplinary action can be taken against the firm.
Hence, with the above changes in law, we can expect corruption frauds (whether in corporates or in Govt or in Municipal Corporations) go down.
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