The Institute of Chartered Accountants of India (ICAI) has said it is working with the corporate affairs ministry on the rules and regulations of the disciplinary mechanism, which are yet to be notified, a year since the CA Act was amended.
While the ICAI had opposed the inclusion of non-CA members in the disciplinary committee, its President Aniket Sunil Talati told reporters: “There is no objection. Because it is an Act, it’s a reality and we as mature professionals have to accept it.”
Talati said ICAI’s view on the issue was that if the majority of the disciplinary panel’s members were from the accounting community, there would be a more accurate understanding of the ground realities. “These are technical matters which are highly complex in nature. And therefore, our view was that if there is a majority of such members, it will only help in dispensation of faster justice,” he said.
The disciplinary committee for CAs has five members — three ICAI central council members and two government nominees. The new Act proposes to include two CAs and three non-CAs. The committee, the Act says, has to be headed by a non-CA.
The ICAI has registered 6,766 cases since 2007 till March 31, 2023, out of which 63 per cent (4,249 cases) have been concluded. “We have brought down the pendency limit of older cases tremendously. And therefore, you will not see any cases that are pending for more than four or five years,” the ICAI president said.
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Improving audit quality
Talati said the ICAI was actively addressing the negative perception about the accounting and auditing community. While the self-evaluation of audit firms through its Audit Quality Maturity Model became effective from April 1, the Institute has deferred the implementation of the peer review of the same by three months to July.
The ICAI president said the institute had given its views on the foreign trade agreements with the UK and Canada, supporting foreign audit firms to operate in India on a reciprocity basis.
On the waning public confidence in auditors, Talati said: “Audit is to be done to give a reasonable assurance that the financial statements are free from material misstatements. What it was never intended to be a venture in the form of an investigation.”
He said the Centre for Audit Quality was coming up with procedures to ensure a good audit providing extensive training.
The ICAI’s ethical standard board is also holding a meeting to review the threshold limit for the audit fee that a firm can get from a single client as a part of its entire business. Currently, the limit is at ~25 lakh, and if the fee crosses 15 per cent, the audit firm needs to notify the Institute.
“These limits may not work for smaller firms, for whom this may be the size of their total business. We are working on revising the code of ethics,” Talati said.