CA, CMA & CS (Amendment) Bill, 2021 regulates the existing act with amendments. The Chartered accountancy act, 1949, the cost and works accountants act, 1959, and the Company secretary’s act 1980 express professional ethics. Parliament passed the bill with changes to these acts. Misconduct in the profession is the area of focus. The three professional institutes need to add the transparency element. Report on CA, CMA and CS (Amendment) Bill, 2021 includes the examination of the high-level committee organised by the ministry of corporate affairs in the year 2017. The appointment of an auditor of the three institutes by the CAG enhances accountability. Parliament passes the CA Amendment bill to overhaul the disciplinary mechanisms in the ICAI. The following amendments elaborate on the changes in the three acts. The act comes into practice after the notification of the central government. This act is called chartered accountants, company secretaries and cost and works accountants amendment act, 2021.
The act included the amendments and added new sections. The below points elaborate on the additions:
• A new section of 9A is inserted after section 9. This new section explains the details of the coordination committee. The coordination committee help with the development of chartered accountants, cost accountants and company secretaries.
• The secretary of the ministry of corporate affairs chairs the meeting held for the coordination of the three professions.
• The research, infrastructure, academic issues, coordination, cross-disciplinary mechanisms, regulatory policies and other functions are the points that the committee will discuss.
• The other new section is 15 B. It conveys the functions of the institute. The broad functions of the institute are as follows: examining the enrolment, engaging the students with article ship training, registering qualified professionals, registering firms publication, fee collection, removal of member name from the register, maintaining publication for the accountancy subject, conducting elections, and refuse certificate for the council.
• New chapter IVA was added to section 20. In this section, the registration, removal from the register and review before the council are explained.
• Section 21 substituted with modification. The section is about the disciplinary directorate.
• Section 21 A is substituted with the details of the boards of discipline.
• Section 21B is replaced with the details of the disciplinary committee.
• Section 22 is again the substituted section.
• There are a total of thirty-seven amendments in the act. The accounts of the council are audited annually by a chartered accountant. If the accounts are proved as false representations, the firm must send the special audit report to the central government.
Autonomy of the three institutes:
CA bill will not dilute the autonomy of the audit bodies, says NirmalaSitharaman. LokSabha passed the bill in March. And RajyaSabha on April 5, 2022. Honourable Finance and corporate affairs minister NirmalaSitharaman said that she believes the bill will bring transparency. Congress and Trinamool Congress members raised concerns regarding the autonomy of the three institutes. The council established with the act empowered the authorities to maintain the details of complaints and penalties with the firms. The council may appoint a presiding officer for handling the operations of the boards organised by the council. ICSI’s president appreciated the government of India for introducing a mechanism for solving disciplinary issues and administrative tasks. The audit of the three institutes would be headed by CAG. In the year 2018, GOI introduced NFRA for regulating the audit process. The Amendment bill help for regulating the complaints, penalties and disciplinary mechanism. Previously, the member of the CA committee can hold the position for a 0-year term. Now the period is brought down to four years. A timeline of 180 days to 90 days will be allowed for the disciplinary cases. The disciplinary committee have more non-CA members. The council has three ICAI members and two central government representatives.
Co-ordination with IIM and IIT:
The bill also recommends for setting up of IIA to offer a five-year course of accounting. There is high-level competition in the auditing sector. By introducing new courses the accounting community become socially diverse. The demand and supply of accounting professionals have limited branches. In general, the accounting professionals come from MBA, CA and CMA. By adding one more professional course, the quality of the accounting professional tends to increase. IIM and IIT take the global issues and inculcate the issues into the syllabus. Similarly, IIA will reflect the global issues.
Human resource management:
The new bill helps the desi big four firms. In the discussion, the honourable finance minister said that we get questions regarding the failure of CAs because of the corporate stories Satyam and IL&FS. The Indian firms are registered under the three institutes. This will help the Indian firms to grow equivalent to the big four firms. The global and the domestic demands are balanced with the academic support of the three institutes. The MeenakshiDattaGhosh committee and many stakeholders say the act will help the transition of Indian audit firms. The audit quality will improve the Indian audit firms. And also improve the investment climate in India. Registration of firms under the institutes will improve the quality and curb the misconduct of the professionals.
The bill tightens the disciplinary mechanism of the three institutes. If the firm is declared registration refusal, the firm can apply for the review application. The council will analyse the appropriate factors and provide the decision. The institute’s member falsely acting as the member and doing the audit process is initially levied with a fine and later sentenced to imprisonment. The rule is to control the fraud cases in the operations of secretarial audits, statutory audits, cost audits and tax audits. The incorporation of law from education into professional life reduces the number of fraud cases. The expert committee and finance minister foresee the act as a path to improve the quality measures in the auditing field. Currently, there is informal coordination among the three institutes. The three courses form an integral part of auditing and corporate governance. The connection between the courses with formal standing committee help for the smooth functioning.