Companies may have to provide detailed information including details of financial assets, the complete list of shareholders and directors to the Institute of Chartered Accountants of India (ICAI) if the government accepts the amendments to Chartered Accountants (CA) Act 1949 suggested by the institute. The institute has sought powers to summon information from companies.
Under the laws, ICAI has the powers to call for information only from its members and not from companies directly. The government is reviewing amendments to the CA Act, 1949.
ICAI president, Amarjit Chopra said, “We have suggested that the provisions in the CA Act 1949 be amended to give us more powers so that the committee of ICAI is allowed to summon information from companies directly wherever in public interest.”
The CA institute is also seeking a review of the punishment for erring audit firms whose partners have committed repeated acts of gross negligence or fraud.
“We have proposed that in case a partner of an audit firm commits repeated acts of gross negligence or colludes with the management to defraud shareholders and creditors, the particular practice that the partner is in should be banned,” said Chopra.
When asked whether revoking the license of the firm would also be considered, Chopra said that it could be limited to the particular segment where the misdemeanor has taken place. “Why should the license for the entire firm be revoked and the entire firm be punished when it’s the partner in the said practice that has committed the act?”
“So for instance if it is the partner of the tax practice that has committed gross negligence then there should be a ban on tax practice and not for the entire firm which makes the partner of the audit firm suffer too. There could also a punishment such as banning the firm from auditing listed companies or imposing a fine,” Chopra added.
GK Kedia & Company’s managing partner Gopal Kumar Kedia said that at present in case of defaults, ICAI has a right to revoke the certificate of practice from one day to lifelong depending on the magnitude of the ban.
Ref Mr. Vijay sharma. Sir, there is nothing in person.
It is a common phenomena that usually auditors are appointed not by the shareholders but by the top management only who holds little more than 15 to 20% of the shares. And they always appoint the same person who cooperates with them. Most of the time to do the wrong job in a right way so that the auditors can always escape if it is cought by somebody.
About the banning, in my view it is a great idea. The partners should be jointly responsible for every work which they do. Don’t they share the profits of the firm if somebody else is signing the accounts.
In our law books we may read thousand things about auditor’s independancy but all that is not a real truth.
I will again say that the ICAIs self regulatory claim is very mystical. We have presidents who themselves are in to different wrong practices and will never allow a chain to be attached to their own hands.
And I donot know, if you know that there are several firms who operate based on dummy partners. This step of ICAI will ensure that the firm have to think twice before they take a person as dummy partner, since the dummy partner can jeopardize the whole firm.
Good luck ICAI.
Ref. Mr. Vijay Sharma and Mr. Vinod’s views, one would be interested in reading in this website the response of the current and the “Past” presidents of the ICAI. In the past, it is such CAS only who even questioned (before IT authorities, including departmental appeallate forums, ITAT and Settlement Commisiion) the authority of the IT Deptt. to call for such details. In fact, the past activities of some of the past top men of the ICAI are really mired in filthy mystery which must now be unearthed, especially in the context of Mr. Vojay Sharma’s startling revealation.
CA TO BE GOVERNED BY LAW OF PUNISHMENT, THEIR INVOLVEMENT IN MAKING FRAUD WILL IMPACT TO COMMON MAN AS WELL TO ECOMONY OF THE COUNTRY. THERE SHOULD BE FIX UP THE VOLUME OF AUDIT TO BE CONDUCTED BY CA FIRM IN THE STRENGTH OF THE MANPOWER AND DAYS TO BE GRANTED FOR AUDIT MANDATORY FOR ONE COMPANY TO AVOID ANY OVERLOAD WORK AND TIME CONSTRAINT OF THE AUDITOR.
I SEEAN CA WHO HAS MORE THAN 300 COMPANIES AUDITING IN A YEAR HOW IS IT POSSIBLE WITH ONE CA HAVING TWO BCOM AND ONE ARTICLESHIP STUDENT ??????
SO PLEASE FIX UP MAXIMUM LIMIT OF AUDIT AND ALSO THE TIME TO DEVOTE FOR AUDIT OF THE ONE COMPANY IN THE STRENGTH OF MANPOWER THAT IS ALSO TO BE DECLARED EVERY YEAR AND ALSO IN THEIR OFFICE
ALSO GIVE POWER TO GOVT. DEPT. TO WATCH DOG SUCH PRACTISING CA / FIRM AND ALSO TO FORMULATE YEARLY RETURN THAT IS TO FILE WITH THE GOVT. DEPT. BY THE PRACTISING CA / FIRM.
CA ACTION IS DIRECTLY IMPACT ON ECONOMY / BANK / SHAREHOLDERS / CREDITOR HENCE IT IS NECESSARY TO CONTROL IT.
I think Mr Amarjit Chopra’s statement seems to be joke since i know for a fact that a specific complaint made by Mr Nikhil Talwar an aggrieved director in Talbros in relation to this company and the auditor’s firm was sent to him detailing the utter disregard to financial norms and i also know for a fact that the matter has not moved an inch