Know Salient Feature of New ICAI, ICSI and CMA Bill

The Chairperson of the Standing Committee on Finance having been authorised by the Committee present this Forty-fifth Report on ‘The Chartered Accountants, The Cost And Works Accountants And The Company Secretaries (Amendment) Bill, 2021’

‘The Chartered Accountants, The Cost And Works Accountants And The Company Secretaries (Amendment) Bill, 2021’, introduced in Lok Sabha on 17 December, 2021 was referred to the Committee on 22 December, 2021 for examination and report thereon, by the Speaker, Lok Sabha under Rule 331E of the Rules of Procedure and Conduct of Business in Lok Sabha.

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An independent witness submitted the following suggestion: “Establishment of Indian Institutes of Accounting. This proposal is for establishing a string of Indian Institute of Accounting (HA) that will raise the standards of accounting education and offer competition to the Institute of Chartered Accountants of India.

Salient features of the Bill as submitted by the Ministry of Corporate Affairs in a written note are as under:

introduction of provision for making distinction between actionable and non-actionable complaints and information to be determined by the Disciplinary Directorate within 30 days of receipt of a complaint or information;
Before taking a decision on whether a complaint or information is actionable or non-actionable, the complainant or informant is to be given fifteen days’ time to file additional documents, if any;
Provision for appointment of at least two Joint Directors (Discipline) in the Disciplinary Directorates of the Institutes (not below the rank of Deputy Secretary of the institutes) to deal with the disciplinary cases. At present, there is no provision for appointment of Joint Directors. The appointment of Joint Directors would enhance the capacity of the Disciplinary Directorate to deal with the complaints and information and thus reduce the time taken for the disposal of disciplinary cases;
Preliminary Examination Report (PER) to replace Prima Facie Opinion (PFO) by Director (Discipline) holding the respondent guilty or not guilty in his/her opinion;
Director or Joint Director{Discipline) to give opportunity to respondent to submit a written statement within twenty-one days which may be further extended by another twenty-one days on a specific request with reasons for seeking further extension. Rejoinder to be submitted by the complainant or the informant upon receipt of written submissions of the respondent within twenty-one days;
Submission of PER by Director or Joint Director (Discipline) within 30 days upon receipt of written submissions and rejoinder, if any, if prima facie case is made out;
Complaint filed by an authorized officer of Government or statutory authority accompanied by an investigation report or extract thereof along with supporting evidence is to be treated as PER. At present, the said complaints go through PFO route and are first examined by Director (Discipline). This would avoid delays in concluding inquiries in such cases at the preliminary stage;
Non-actionable complaints and information to be submitted to Board of Discipline within 60 days of receipt. Board of Discipline may ask Director (Discipline) to reexamine the information or complaint;
Withdrawal of complaint not permitted at any stage;
Appointment, re-appointment and termination of appointment of Director (Discipline) and Joint Director (Discipline) by the Council of the Institutes with the previous approval of the Central Government as a check and oversight mechanism to enable the officers engaged in investigation of the complaints or information to discharge their functions in an independent and unbiased manner, without any fear or favour;
Inclusion of Firms under the purview of Disciplinary Mechanism and a new chapter proposed for Registration of Firms with:the Institutes;
The Council shall continue to constitute Board(s) of Discipline (BoDs) and Disciplinary Committees (DCs) as at present. However, the majority will be of non-members of the Institutes (commonly called as lay members) in these bodies.
The present practice of direct nomination by the Central Government in the BoD and DCs is proposed to be discontinued. Instead, the Presiding Officers will be selected by the Central Government from out of a panel of suitable persons with experience in law, having knowledge of disciplinary matters and the profession and lay members will be selected from out of a panel of persons of eminence having experience in the field of law, economics, business, finance or accountancy. The presiding officers and lay members shall not be the members of the Institutes. The panels of non-members of Institute will be prepared and provided by the Councils. of the institutes.
On the other hand, appointments of the members of the Institute in BoDs and DCs will be done by the Council itself out of a panei of such members to be prepared by the Council. Regulations for such matters will be made;
Provision for more BoDs for quicker disposal of cases on the lines of DCs;
Provision for Presiding Officers and lay members in the Bob of the ICSI and ICoAI in place of existing practice of nomination of only members of the Institutes by the Councils of these two Institutes on the lines of ICAI;
Insertion of the word ‘development along with regulation in the preamble of the Chartered Accountants Act, ‘1949 and the Cost and Works Accountants Act, 1959 to provide nor developmental mandate for the members of the Institutes; Proposal to enhance the term of the Council of ION from 03 years to 04 years and maximum two consecutive terms of 04 years for a person in the Council;
Enhancement in Penalties/Fines in case of misconduct;
Autonomy to the Councils of the institutes in the matter of fixation of fees;
Provision to enable the Institutes to remove the name of the firms or members in case of non-payment of penalties;
Disposal of Disciplinary Cases within 180 days by Disciplinary Committee and 90 days by Board of Discipline;
Entire Disciplinary proceedings, since filing of complaint to be completed within 365 days;
Audit of annual accounts of the Councils of the Institutes by a firm of chartered accountants to be appointed annually by the Councils from the panel of auditors maintained by the Comptroller and Auditor General of India; and,
Nomenclature of “Cost and Works Accountants Act, 1959” proposed to be changed to “Cost Accountants Act, 1959”.