NEW DELHI: Parliament on Tuesday approved a bill to revamp the functioning of the institutes of chartered accountants, cost accountants and company secretaries, with Finance Minister Nirmala Sitharaman asserting that the changes will not impact the autonomy of these bodies.
Rajya Sabha passed the Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2022 with a voice vote after negating all amendments moved by the Opposition.
Lok Sabha had cleared the bill on March 30, 2022.
The legislation seeks to appoint non-Chartered Accountant (CA), non-cost accountant and non-company secretary as the presiding officer of the disciplinary committees of the respective institutes.
The Congress, TMC, DMK and YSRCP opposed the bill, citing "infirmities" and alleging that it was a blatant attack on professional autonomy.
The three institutes are the Institute of Chartered Accountants of India (ICAI), Institute of Cost Accountants of India (formerly known as ICWAI), and Institute of Company Secretaries of India (ICSI).
The bill amends the Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959, and the Company Secretaries Act, 1980.
Among other things, the bill provides for the setting up of a coordination committee headed by the Secretary of the Ministry of Corporate Affairs.
It will have representations from the three institutes.
The bill also provides for registration of firms with the institutes and it will help in paving the way for Indian accountancy firms to grow big, she said.
It also proposes to enhance the quantum of fines for partners and firms found guilty of misconduct.
After Finance Minister Nirmala Sitharaman moved the Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2022 for consideration and passage in the Rajya Sabha, the discussion started in the Upper House.
BJP member Suresh Prabhu, who is also a chartered accountant, defended the bill, saying the Institute of Chartered Accountants of India (ICAI) has accepted most of the proposals mooted by the concerned ministry in this important piece of legislation.
BJD member Sujeet Kumar also supported the bill.
He said the amendments will make the three bodies more accountable and enable them to adopt global best practices besides reform and speed up the disciplinary mechanisms of these institutes.
The bill, already passed in the Lok Sabha, aims to amend the Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959, and the Company Secretaries Act, 1980.
The bill proposes changes in the disciplinary mechanism under the three Acts and specifies timelines for disciplinary proceedings.
It also provides more external representation on the Board of Discipline and Disciplinary Committee.
Initiating the debate on the bill in the Upper House, L Hanumanthaiah (Congress) pointed out "loopholes" in the bill and suggested corrections before its passage.
He demanded a correction in Section 20 of the bill that deals with the registration of firms and verification of names registered through a single agency, saying this will put a burden on the people.
He also said that the name of a person or firm against which a complaint is pending should not be put in the public domain until the final order is issued, else it will have an adverse impact.
Even the status of actionable information should be made public only after the final order.
"These are my submissions under the bill. After the correction, this bill may be passed," he added.
Opposing the bill, Mausam Noor (AITC) said the bill proposes radical changes in the composition of the bodies which regulate the important members of the financial sector.
The bill proposes a presiding officer of a disciplinary board to be a government nominee and not a member of the institutes.
"Not only does this allow non-sector experts to influence the functioning of industry-specific institutes but also allows the Union of India to interfere in the matters of trade bodies," she said, adding this is contradictory to the government's stated intention of ease of doing business.
Echoing similar views, P Wilson (DMK) said while the government's intention is to complete the disciplinary proceedings in a time-bound manner, there are a lot of infirmities in the bill.
The bill aims to curtail the role of professionals and elected governing councils in each of the professional institutes in the disciplinary bodies and disciplinary matters, he said.
Ayodhya Rami Reddy (YSRCP) alleged that the bill is a blatant attempt to take away the autonomy of the three professional bodies.
"Bringing these amendments, the Centre is setting a precedent that could negatively impact the independence of other professional bodies as well," he added.
Supporting the bill, former union minister Suresh Prabhu said this is a key piece of legislation that brings amendments to some of the important institutions and professional bodies that function in the country.
To ensure the corporation sector functions properly, a law was passed in 1949 when Institute of Chartered Accountants of India (ICAI) and Institute of Costs Accountants of India and consequently Institute of Company Secretaries of India, he said.
These are the three main bodies that play an important role in ensuring the corporate sector functions properly and ensure their own function is transparent, he said.
Prabhu, who himself is a chartered accountant, said ICAI has accepted the proposals mooted by the concerned ministry.
"It is not true that ICAI has fully opposed the bill. It has accepted the proposals including the fee for entry of name in the register, increasing the quantum of punishment, maintenance of registered firms, duration of the council term, finance of the council, increasing the penalty for wrongly claiming as a member, etc," he said.
However, there are some apprehensions in the minds of chartered accountants and firms with regard to disciplinary action to be taken, he said and suggested that the judgement of the fairness of a financial statement should be left to professionals and not non-chartered accountants who are also proposed to be part of a disciplinary board.
Stating that there is huge potential in service export which can rise faster than merchandise export, Prabhu said services of these three institutes like ICAI can also be exported.