The accounting and auditing regulator, the Institute of Chartered Accountants of India (ICAI), is set to enter a new area, till now a domain of the Institute of Company Secretaries of India (ICSI), by setting up corporate affairs standards (CAS) on various areas of corporate law and practices.
ICAI has already prepared three such standards on business valuation, on an auditor’s appointment, retirement and removal, and Certification under the MCA 21 e-governance project. Asked to comment, officials said that they were deliberating on the issue and declined to say more.
Online GST Certification Course by TaxGuru & MSME- Click here to Join
According to a senior ICAI member, these standards are benchmarks to guide members and other stakeholders. The ICAI Council, the apex decision-making body, has approved these standards and now they would be notified soon, he said. These would become recommendatory from April 2010.
The business valuation standard lays down measures to be followed while evaluating any business, shares, brands or any other business. The official says India has become the third country in the world to come out with a valuation standard. In the aftermath of the Rs 7,000 crore Satyam scam, this standard would be useful for auditors who are evaluating a business.
The standard on auditor’s appointment, retirement and removal deals with the legal, regulatory and ethical issues arising from the appointment, retirement and removal of an auditor under the Companies Act, 1956.
And the objective of the CAS on Certification under MCA 21 is to establish standards and provide guidance on the procedures to be followed when an engagement to certify various e-forms under MCA 21 is undertaken.
MCA 21 is an e-governance project implemented by the Ministry of Corporate Affairs under a national plan. “At the moment, there is no benchmark or minimum standards to be followed by the auditors while countersigning the e-forms,” informed the ICAI official.
Treading on ICSI’s toes
While ICAI says the latest standards are required in the current global business environment, there are others who feel ICAI is clearly infringing on the ICSI domain. Even a senior ICAI Council member accepted that ICAI’s corporate affairs standards may overlap with that of ICSI.
“ICAI’s role is well defined as an accounting regulator, which is setting accounting standards and see to it that they are adhered to. It should stay away from getting into uncharted areas,” said a Chennai-based leading company law expert and a practicing company secretary who didn’t want to be identified. Too many standards create confusion, he added.
ICAI says the purpose of formulating CAS is not to interpret the law but to set out the concepts, principles, practices and procedures that underlie corporate governance and management. “ICAI is not at all interfering in ICSI’s work but by setting up these standards, it is helping its members to serve the public in a better way,” said the ICAI member.