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December 18, 2021

Know 9 Key Changes in CA, CWA and CS Amendment Bill 2021

by facelesscompliance in ICAI

Know 9 Key Changes in CA, CWA and CS Amendment Bill 2021

The FM has introduced, The Chartered Accountants, The Cost And Works Accountants And The Company Secretaries (Amendment) Bill, 2021 in the parliament to primary strengthen and make change the disciplinary mechanisms for chartered accountants, cost and work accountants and company secretaries. Following are the highlight of the Bills

1) Add “Development” to Title of The Chartered Accountant Act 1949

The Title of The CA Act 1949 says ” An Act to make provision for the regulation of the profession of Chartered Accountants”. The (Amendment) Bill, 2021 has incorporated the word Development with Regulation, giving a hint that government is looking for developing and evolving the Act, which will be beneficial to professionals and all stakeholders and govt is not just interested in regulation

2) Change in Terms of Appoint of CCM and Regional Council

A member of the Council, elected or nominated under, shall be eligible for re-election, Provided that no member shall hold the office for more than three consecutive terms as per CA Act. In the proposed Bill the Term of Central council of ICAI has been reduce to 2 years from 3 years earlier

3) COP Fees to be paid in Advance

The CA Act 1949, has defined fees for COP or Membership of Institute will shall be Rs 3,000 to Rs 6,000/- . The above limitation on Membership fees defined in the Act has been omitted. That means Govt will be free to increase the fees for Certificate of Practice which may be higher than what is defined in previous law. Further Certificate of Practice Fees by Practicing CA , CMA , CS will be required to be paid in advance on 1 April each year

4) Coordination Committee for harmonisation of CA, CMA and CS

The Bill says there shall be a Coordination Committee consisting of the President, Vice-President and the Secretary of the Council of each of the Institutes of Chartered Accountants of India, the Cost Accountants of India and the Company Secretaries of India for the development and harmonisation of the professions of Chartered Accountants, Cost Accountants and Company Secretaries. The meeting of the Coordination Committee shall be chaired by the Secretary,
Ministry of Corporate Affairs.

The meeting of the Coordination Committee shall be held once in every quarter of a year. The Committee shall be responsible for the effective coordination of the functions assigned to each Institute and shall––

(i) ensure quality improvement of the academics, infrastructure, research and all related works of the Institute;
(ii) focus on the coordination and collaboration among the professions, to make the profession more effective and robust;
(iii) align the cross-disciplinary regulatory mechanisms for inter professional development;
(iv) make recommendations in matters relating to regulatory policies for the professions;

5) Penalty for falsely claiming to be a member increased

Any individual claiming to be a CA, CS, CMA , using designation as a CA etc, who is not a member of ICAI or council, will be penalise by Rs 1 lakh for 1st time conviction and subsequent conviction Rs 5 lakh / 10 Lakh with 6 months / 1 year imprisonment, this change will help to punish Fake professionals with imprisonment

6) Appointment of Secretary, Director (Discipline) and Joint Directors (Discipline)

For the efficient performance of its duties, the Council shall appoint Secretary, Director (Discipline) and Joint Directors (Discipline) with the prior approval of central government. The Council shall, by notification, establish a Disciplinary Directorate consisting of a Director (Discipline), at least two Joint Directors (Discipline) not below the rank of Deputy Secretary of the Institute and such other employees appointed under section 16, for making investigations either suo motu, or on receipt of an information or a complaint, in such form, along with such fees as may be specified. Entire process for filing complain is defined and status of complain shall be available in the public domain by the Disciplinary Directorate

The bills aim to deal with the conflict of interest between the administrative and disciplinary arms of the institutes. Firms will now have to be registered separately with the respective institutes and will come under purview of disciplinary mechanism.

7) Audit of Books of Accounts of ICAI, ICSI and CMA

The annual accounts of the Council shall be prepared in such manner as may be prescribed and subject to audit by a firm of chartered accountants to be appointed annually by the Council from the panel of auditors maintained by the
Comptroller and Auditor-General of India. Provided that a firm shall not be eligible for appointment as an auditor, if any of its partner is or has been a member of the Council during the last four years. The above changes will ensure more transparency and Independence while conducting audit. In case where account do not represent a true and fair view of its finances, then, the Council may itself cause a special audit to be conducted

8) Removal from Register of firms

The Council shall remove from the Register of firms the name of any firm—
(a) which is dissolved or liquidated; or
(b) from which a request has been received to that effect; or
(c) is declared insolvent or bankrupt under the Insolvency and Bankruptcy Code, 2016 and remains undischarged; or
(d) which has been debarred from undertaking any activity or activities relating to the profession of a chartered accountant in practice under any law for the time being in force or by any competent court; or
(e) in respect of which an order for removal has been passed under this Act.

Any firm aggrieved by the decision for refusal of registration may apply for review before the Council within one month from the date of such refusal.

9) Board of Discipline and Disciplinary Committee

One of the aims of the bill is to strengthen the disciplinary mechanism by augmenting the capacity of the disciplinary directorate concerned to deal with the complaints and information. Besides, it seeks to provide “time-bound disposal of the cases by specifying the time limits for speedy disposal of the cases against members of the institutes”.

The Role of Board of Discipline will be, Upon inquiry, if the Board of Discipline finds that such member is guilty of a professional or other misconduct mentioned in the First Schedule, it may pass an order within thirty days of such finding, after providing an opportunity of being heard to the member taking any one or more of the following actions, namely:––
(a) reprimand the member and record it in the Register of members;
(b) remove the name of the member or members from the Register of members, up to a period of six months;
(c) impose such fine as it may think fit which may extend to two lakh rupees.

Where on the basis of evidence brought on record or during the course of an inquiry pertaining to a member, the Disciplinary Committee is of the opinion that any such member, who is a partner or owner of a firm has been repeatedly found guilty of misconduct mentioned in the Second Schedule or in both the First Schedule and the
Second Schedule, during the last five years, the following actions may also be taken against such firm, namely:––
(a) prohibit the firm from undertaking any activity or activities relating to the profession of a chartered accountant in practice for such period not exceeding two years; or
(b) suspend or cancel the registration of the firm and remove its name from the Register of firms permanently or for such period as it may think fit; or
(c) impose such fine as it may think fit, which may extend to fifty lakh rupees.

The bill also seeks to address the conflict of interest between the administrative and disciplinary arms of the institutes, provide for a separate chapter on registration of firms with the respective institutes and include firms under the purview of the disciplinary mechanism.

Click below to Download the Copy of Bill – The Chartered Accountants, The Cost And Works Accountants And The Company Secretaries (Amendment) Bill, 2021

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