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A Parliamentary Bill the ICAI needs to take note of

Context

A Bill has been introduced in the Lok Sabha for strengthening the Institute of Chartered Accountants of India’s (ICAI) accountability, governance and administration.

Relevance

GS-II: Statutory, Regulatory and various Quasi-judicial Bodies. Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

Dimensions of the Article

  • Amendments in the Bill
  • Issues with ICAI
  • Benefits of the Amendment
  • Introducing Indian Institute of Accountancy (IIAs)
  • Way Forward

Amendments in the Bill

  • Bill seeks to amend Cost and Works Accountants Act, 1959, Chartered Accountants Act, 1949 and Company Secretaries Act, 1980.
  • ICAI’s disciplinary committee and board of discipline will be headed by non Chartered Accountants.
  • Elected council members will no longer be in majority in them.
  • Term of the ICAI’s Council will be raised from three to four years.
  • Maximum number of consecutive terms for its elected members will be reduced from three to two years.
  • ICAI’s Secretaries will replace the ICAI’s President as its Chief Executive and perform the functions specified.
  • ICAI will appoint its auditor from the CAG’s panel of CA firms.
  • Government will form a coordination committee for the ICAI and the Institutes of Cost Accountants and Company Secretaries of India.

Issues with ICAI

  • Problematic record in disciplining members.
  • Lack of Quality and Integrity.
  • CA has not kept pace with the changes on India’s economy and society.
  • It has thrived on the license raj for long.
  • Lack of Professional Development and Capacity Building.
  • Overseas qualifications Association of Chartered Certified Accountants (ACCA) and Chartered Institute of Management Accountants (CIMA) are gaining popularity in India due to its contemporary nature.

Benefits of the Amendment

  • Strengthen the ICAI’s accountability, governance, and administration.
  • Monopoly of ICAI in providing certifications will be done away with.
  • Make the CA more relevant to contemporary society and economy.
  • Reducing laxity of ICAI in acting against its errant members.

Introducing Indian Institute of Accountancy (IIAs)

  • On the lines of IITs and IIMs.
  • Will offer full-time and board-based degree in accounting, auditing and related areas and their graduates.
  • More competition will result in better quality and higher standards of conduct.
  • IIAs can enhance quality of education with a wholesome curriculum.
  • Accessibility will improve to make the accounting community more inclusive and socially diverse.

Way Forward

Parliamentary Panel has endorsed the changes being made by the Bill, and even the PM of India has been critical of ICAI. International best practices need to be included in the Indian Accounting System. ICAI must ponder over reforms and respond maturely.

Source – The Hindu

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October 2022
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