March 29, 2022
Saugata Roy’s speech on Chartered Accountants, Cost & Works Accountants & Company Secretaries Bill
Sir, I rise to speak on the Chartered Accountants, the Costs and Work Accountants and Company Secretaries
(Amendment) Bill, 2021. This Bill was brought to Parliament in December, 2021. It was referred to the Standing Committee of which Mr. Jayant Sinha was the Chairman and of which I also happen to be a Member. The Standing Committee has by and large endorsed the Bill. But the Standing Committee mentioned certain things which the ultimate Bill has not followed. What is it? The Standing Committee mentioned that the autonomy of these institutes should not be hampered. Yes, regulation is to be ensured but in making regulations, you should not throw out the baby out with the bathwater and that is what has happened. The bureaucrats in the Ministry of Corporate Affairs have increased their stranglehold on these three independent professions through this Bill. Why? Now, they are saying that there will be a Coordination Committee consisting of three types of professionals – chartered accountants, cost accountants and company secretaries – and it will be headed by the Secretary, Ministry of
Corporate Affairs. The Bill aims at bringing discipline to the professions but the Disciplinary Authority will be headed by a non-chartered accountant. And the Disciplinary Committee would have more non-CA members than CA members. Sir, this is what this Government is doing generally. Earlier, there was an elected Medical Council of India. They dismissed that. Now, they have got National Medical Commission, all appointed people. They want to take away the power of all professional bodies. First, they take away the power of medical profession. Then, slowly they will also take away the powers of the Bar Council. This Government is taking away the powers of the professionals. I do not say that these professions are perfect. We all know that Chartered Accountant Institutes purposely limit the number of pass-outs. If the pass-outs are less, then the scope of jobs is more. I do not know of any Chartered Accountant who is unemployed. The Chartered Accountants sign everything starting from balance sheet of
schools, NGOs, companies. The hon. Prime Minister mentioned that `your signatureिisिmoreिimportantिthanिours’िbecauseिifिthe Chartered Accountants sign the balance-sheet of a company, then the document becomes sacrosanct. The Chartered Accountants have not been ideal in this respect. We all know of the incident of the Satyam Computers, a very famous audit firm of India was engaged in auditing their accounts. Satyam was showing its shares at an inflated value. It was found that it was a total wrong-doing of the Chartered Accountant firm. Recently, ILFS were also caught with their hand in the till. In that incident also it
was the failure of the Chartered Accountants. I know that there is a need to control and bring in some discipline amongst the Chartered Accountants, but it cannot be ensured by giving more powers to the Ministry of Corporate Affairs. The mechanism within the professions has to be strengthened. There was a recommendation of the Standing Committee in this regard. The Government has not gone by the recommendations made by the Standing Committee. The Standing Committee very specifically said, Shri Jayant Sinha said that we should not take away the autonomy of this institute. Why have the Government taken away the autonomy of this institute? It is alright to bring in some small changes like increasing the term of the Council from three years to four years; the penalties can be enhanced; there could be fines imposed in case of misconduct. So, this amendment has become self-defeating. Of course, I know that Chartered Accountants have great lobbies. Earlier also such a Bill was brought forward but they lobbied hard requesting not to put much restrictions on them and they were successful then, but in order to control their lobby this is not the way. The Parliamentary panel has said that the Government should consider setting up an
Indian Institute of Accounting akin to IITsand IIMs across the country for enhancing the development of accounting and finance profession. That is a good idea but the Government has not accepted this recommendation. The Parliamentary panel also suggested that multiple bodies, as is the norm in advanced nations, are required
to promote healthy competition for raising the standards and improving the credibility of financial reporting and auditing in the country. The Prime Minister himself said that the signature of a Chartered Accountant is more important than thatिofिtheिPrimeिMinister.िSo,िheिproposedिwhatिisिalreadyिthereिinिtheिCompany’sि
ActिthatिNationalिFinancialिReportingिAuthorityि…ि(Interruptions) मैंबताऊं? आप तो इन सब बातों मेंमदलचस्पी लेतेहैं। मैंआपको एग्जैक्टली बताता ह ं।…(व्यवधान) I am quoting from an article dated 25th July, 2017 published in the Business Standard. The PM, Narendra Modi had been particularly keen on curbing corruption and the black economy and almost all his speeches stressed on the big and small changes that need to make India less corrupt. Much attention has been focussed on the financial rectitude of businesses in India. Now, the hon. Prime Minister mentioned that the demand forिNFAिisिnotिaिnew.िTheिCompany’sिActिofि2013िalreadyिprovidesिforिsuchिaि regulatory body And the Prime Minister himself said that your signature is more important than mine. That statement was made by the Prime Minister while he was inaugurating the GST Council. हा, ाँ वषक2017 मेंदोनों हुआ है। यह प्राइम मममनस्टर नेबोला है।… (व्यवधान) The PM highlighted that however the Institute has been found wanting in acting against its errant members on many occasions. A fact highlighted by Mr. Modi himself, speaking at the ICAI Foundation Day, he told chartered accountants that their signatures were more powerful than that of the Prime Minister and asked them to introspect and improveि theirि standard.ि ि Theि PMि alsoि highlightedि theि ICAI’sि embarrassingि
disciplinary record wherein only 25 errant auditors had been prosecuted over the past eleven years and 1400 cases were pending This was reported by Business Standard dated 26th July, 2017. Do you need a copy of this? सर, मैंइनको इसकी कॉपी देदते ा ह ।ाँ…ि(व्यवधान) आप इसेठीक सेपमढ़ए। आपके प्रधान मंत्री यह सबबोलतेहैंऔर आपहमारा मवरोध करतेहैं।…ि(व्यवधान) िSir,िIिwillिslowlyिwindिup.…ि(Interruptions) Yes, Shri Jayant Sinha, I will always yield to you. You are a Harvard trained man. I must yield to you. Thatिisिfine.ििItिwasिnotिhisिpersonalिview.ि..…ि
(Interruptions) That is why I say, as Shri Raja suggested, that we must have a special Committee on this Report of the Standing Committee because the Report of the Standing Committee has not been followed. The Government has been intent in its purpose of increasing the stranglehold of the bureaucracy of the Ministry of Corporate Affairs on the independent profession of chartered accountancy. This is not to say that chartered accountants do not help in setting up shell companies. This is not to say that they are at many times complicit in the acting of the firms, especially the shell companies. But this is also to say that the choice is not between the baby and the bath water. You cannot throw out the baby with the bath water. So, I urge upon the Government to please give some independence and some autonomy, improve the disciplinary mechanism by all means, and bring in people from outside to judge the chartered accountants. I do not agree with this theory of domain knowledge that only chartered accountants can deliberate on the misdeeds of chartered accountants, if there are. Non-chartered accountants can also deliberate on them. With these words, I will again recommend to the Government to have a fresh look, instead of going by the Report of the bureaucrats of the Ministry of the Corporate Affairs.
