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Lack of Transparency in CA Exam Process and Results: DARPG

For the Ministry of Corporate Affairs, the top most issue, accounting for 48% of grievances was no return of deposited money, followed by queries regarding CA exams and results, which accounted for another 12% of the grievances, followed by issues in registration of new company and glitches in MCA form website, accounting for 3% each.

Introduction

1.1 CONTEXT

The Department of Administrative Reforms and Public Grievances (DARPG) received 11,94,931 (related to central government) grievances in 2016 across 88 Ministries/Departments through Centralized Public Grievance Redress and Monitoring System (CPGRAMS). This department’s role is to facilitate the pursuit of excellence in governance through improvements in government structures and processes, initiatives and dissemination of best practices. Moving towards this goal, the department commissioned a grievance analysis study of top 20 Ministries/Departments receiving high number of citizen grievances. The study involved identification of top grievance categories and recommending systemic reforms. The Parliamentary Standing Committee for Personnel, Public Grievances and Law & Justice recommended conducting similar study for next 20 Ministries/Departments.

1.2 OBJECTIVE

The study carried by Quality Council of India, as per the mandate given by DAR&PG, was conducted from August 2016 to March 2017, covering more than 100 grievance categories across 20 Ministries/Departments. A team of consultants was deployed to understand issues in depth from the officials and collect information from more than 70 domain experts. Moreover, this team of consultants conceived the methodology, process and outcome of the study. It is hoped that this study will bring the necessary third party evaluation into picture for guiding the schemes and providing useful lessons for similar evaluations on a larger scale in future.

1.3 IDENTIFICATION OF 20 MINISTRIES/DEPARTMENTS

The grievances received on the portal provided the source for data analysis. The top 20 Ministries/Departments were covered in the earlier grievance study. This study identifies next 20 Ministries/Departments, based on the number of grievances received by the particular  Ministries/Departments (from 01.04.2012 to 31.03.2016). For the scope of this particular report we will be focusing on the Corporate Affairs (S.NO 24).

Table 1: List of 20 Grievance Study Ministries

S.No   Ministry/Department Number of grievances
21 Information and Broadcasting 18,567
22 Financial Services (Insurance Division) 17,840
23 Environment, Forest and Climate Change 17,323
24 Corporate Affairs 17,084
25 Consumer Affairs 16,047
26 Agriculture Cooperation and Farmers Welfare 14,342

 

27 Electronics & Information Technology 12,729
28 Social Justice and Empowerment 12,637
29 Civil Aviation 12,448
30 Rural Development 11,646
31 Drinking Water and Sanitation 10,723
32 Power 10,392
33 Women and Child Development 9,773
34 Economic Affairs 9,553
35 Commerce 9,509
36 Water Resources, River Development & Ganga Rejuvenation 9,265
37 Food and Public Distribution 8,292
38 Housing and Urban Affairs 7,287
39 Defence Finance 6,604
40 Coal 6,346

1.4 INTRODUCTION TO MINISTRY OF CORPORATE AFFAIRS

The Ministry is primarily concerned with administration of the Companies Act 2013, the Companies Act 1956, the Limited Liability Partnership Act, 2008 & other allied Acts and rules & regulations framed there-under mainly for regulating the functioning of the corporate sector in accordance with law. The Ministry is also responsible for administering the Competition Act, 2002 to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers through the commission set up under the Act.

Besides, it exercises supervision over the three professional bodies, namely, Institute of Chartered Accountants of India(ICAI), Institute of Company Secretaries of India(ICSI) and the Institute of Cost Accountants of India (ICAI) which are constituted under three separate Acts of the Parliament for proper and orderly growth of the professions concerned. The Ministry also has the responsibility of carrying out the functions of the Central Government relating to administration of Partnership Act, 1932, the Companies (Donations to National Funds) Act, 1951 and Societies Registration Act, 1980.

Deep Dive Grievance Analysis

The three point approach for grievance analysis study includes data analysis, root cause analysis, and systemic reforms recommendations for the service issues.

2.1 DATA ANALYSIS

2.1.1 IDENTIFICATION OF TOP DIVISIONS

The shortlisted divisions were the ones receiving maximum grievances (from 1.4.2015 to 31.3.2016). The highest grievances were received by Registrar of Companies ( ROC ) Uttarakhand, which accounted for 14% of grievances received. Another 11% of the grievances were received each by ROC of West Bengal and Delhi, another 10% by Registrar of Companies (ROC) of Maharashtra and another 5% by Policy Section, ROC Chennai and ROC Madhya Pradesh.

2.1.2 IDENTIFICATION OF FOCUS SERVICE

Grievance data in top 10 divisions was deep dived and 10% of sample was analyzed.

Table 2: Sample size selected for the study

The next step was grievance-by- grievance analysis for a sample of the grievances received by the top 10 divisions, namely, ROC of Uttarakhand, West Bengal, Delhi, Maharashtra, Chennai, Madhya Pradesh & Rajasthan and MCA 21 Section, Policy section, Proffonal Institute.

AN EXAMPLE OF A GRIEVANCE ANALYZED IS AS FOLLOWS

“Dear Sir, This is complaint regarding non receipt of payment of interest amount and principal amount for FD no.31376 (12th Jun 2015 maturity date) with Birla Power Solutions whose CIN is L31101MH1984PLC032773. Till today I haven’t received any payment from Birla Power solutions. I am a senior citizen and would need the positive response/intervention from MCA to get money released from company. Pls. do needful, Regards, Devyaniben Bax.”

ACTION TAKEN BY MINISTRY OF CORPORATE AFFAIRS

The Complainant was asked to the claim in prescribed Form No 66 along with notarized documentary proof with this office and the same shall be considered in accordance with Law

For the Ministry of Corporate Affairs, the top most issue, accounting for 48% of grievances was no return of deposited money, followed by queries regarding CA exams and results, which accounted for another 12% of the grievances, followed by issues in registration of new company and glitches in MCA form website, accounting for 3% each.

Table 3: Focus service for root cause analysis

2.2 ROOT CAUSE ANALYSIS (RCA)

With regards to Glitches in MCA form website, the issue has been de-prioritized for reform recommendation exercise as the issue has been resolved by the Ministry by taking up with IT vendor- Infosys.

The root cause of the other addressable focus issues was dug deeper for root cause analysis. For this, the study team spent time with each implementation body within that division to understand core processes, accountability and performance tracking. Domain experts were also consulted to understand root cause for each grievance category.

The questions revolved around policy, process and people problems that were leading to lack of quality implementation

Table 4: Root Cause Analysis of grievances related to Ministry of Corporate Affairs

Grievance issues of not received invested amount and registration of new company are mapped to Company’s ACT 2013 and Make in India.

The Companies Act, 2013 consolidates and amends the law relating to companies. Some of the provisions of the Act have been implemented by a notification published on 12th September, 2013.

India was ranked 134 in 2015 on the World Bank’s Doing Business index. Since 2014, the Government of India launched an ambitious program of regulatory reform aimed at making it easier to do business in India. The program represents a great deal of effort to create a more business-friendly environment. The efforts have yielded results with India jumping 4 places on the World Banks’ Doing Business rankings. The below changes have been the incorporated contributing to this growth.

  • Starting a Business: India’s ranking on this parameter has improved from 164 in 2015 to 155 in 2016. This improvement has been mainly on account of decrease in number of procedures and time taken to start a business in India.
  • Getting Electricity: India’s ranking on this parameter has improved from 99 in 2015 to 70 in 2016. The number of days taken to get a permanent electricity connection for a business is just 53 days, which is less than the average time taken in South East Asian and OECD member countries.

Chart 2: National schemes for catering grievance

2.3 SYSTEMIC REFORMS RECOMMENDATIONS

Based on the key root cause for improper delivery of service, corresponding recommendations were identified and designed. These recommendations were arrived after discussing with the Ministry/Department representative.

For each issue, the problem was broken into multiple parts to ensure that each aspect of the problem is addressed independently, while ensuring maximum impact. Systemic and structural reform recommendations were made for investment related grievances, CA exam results and poor compliance of doing business across the following areas.

AREAS ACROSS WHICH SYSTEMIC REFORMS ARE SUGGESTED

Systemic Reforms

Ease of doing business and Companies Act 2013 are the fag ship and key components of government schemes. There are areas in terms of policy formulation, implementation where few reforms can bring a major impact. Five recommendations have been made based on best practices adopted by state governments and other stakeholders.

Table 5: Systemic Reforms for investee complaints and compliance regulations of a new company

S. No Reform Category Systemic Reforms Ease of implementation
1 Monitoring & Digitization Drive monitoring of financial disbursements. This can be achieved via collaborating with initiative of ‘corporate data management’ and deploying a dashboard that will ensure preemptive action before any investor fraud. Medium

 

2 Operations Improvement Need of less government and more governance through self- compliance/ self certifications of low risk product companies. Medium

 

3 Operations Improvement Consider accreditation medium and high risk product companies through NABCB (National Accreditation Board for Certification Bodies) for better standardization and easier compliance. Low

 

4 Awareness Better awareness through private radio and TV channels advertisements on investing money policies. This will ensure better reach to mass. High

 

5 Awareness Better communication by ICAI authority regarding whom should citizens reach out to regarding CA exams process. High

Case Study On Reforms

THIRD PARTY CERTIFICATION CAPABILITY BY QUALITY COUNCIL OF INDIA*

Traditionally, Government sets regulations and acts as regulators. Government also does inspections and awards punitive actions.

The current accreditation scenario involves various third accreditation bodies including NABCB for certification/inspection bodies, NABL for labs International Accreditation Forum (IAF) for CBs, International Laboratory Accreditation Cooperation (ILAC) for Labs and Pacifc Accreditation Cooperation (PAC) for CBs and Asia Pacifc Laboratory Accreditation (APLAC) for IBs and Labs.

To estimate the capability in India, the number of certification bodies is around 150 plus. In various sectors such as QMS, EMS, FSMS, OHSAS, regulatory compliance is a part of these standards which insure reasonable assurance of compliance. QMS covers product related regulations; EMS covers environmental laws; OHSAS covers occupational health and safety; FSMS covers food regulations. Inspection bodies available with above audit capabilities – most regulations inspection based. The issue of ethics with third party system is also resolved . Thus, there is a necessary need to rely on national accreditation for effective oversight.

With third party certification, there are multi fold benefits. Less Government, more Governance. International acceptance of products – Make in India. Job creation – private sector much faster in responding to demand – army of quality professionals resulting from ISO 9001 standards

Conclusion

This Grievance Analysis Study analyzed 450 grievances of Ministry of Corporate Affairs, spanning across no money return from investors, CA exams query and compliance issue on registering new company. Following key systemic reforms have been recommended, implementation of these will make an impact in reducing grievances.

KEY RECOMMENDATIONS

This report evaluates the grievances of Ministry of Corporate Affairs and recommends the following priority systemic reforms:

01- Drive monitoring (through Regional Office Centers) of financial disbursements. This can be achieved via collaborating with initiative of ‘corporate data management’ and deploying a dashboard that will ensure preemptive action before any investor fraud.

02- Accreditate medium and high risk product companies through NABCB (National Accreditation Board for Certification Bodies) for better standardization and easier compliance.

03- Better communication by Institute of Chartered Accountants of India (ICAI) authority regarding whom should citizens reach out to regarding CA exams process.

LIST OF EXPERTS CONSULTED

Table 6: List of experts

Ministry of Corporate Affairs Outside Ministry Quality Council of India
K.V.R Murthi– Joint Secretary Ajay Shankar – Previous Secretary of DIPP Adil Zainulbhai– Chairman
Bimal Pant– Deputy Secretary Dinesh Kanabar– CEO, Dhruv Advisors Dr. Ravi P. Singh– Secretary General
Source-http://darpg.gov.in/sites/default/files/Corporate%20affairs%20Report.pdf
Categories: CA, CS, CMA

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