Finance and corporate affairs minister Nirmala Sitharaman on Tuesday told Rajya Sabha that the new Bill to amend the laws governing professionals like chartered accountants, cost accountants and company secretaries was brought in with the idea of ensuring greater robustness and accountability in corporate governance.
In her response to a discussion on the Chartered Accountants, the Cost and Works Accountants, and the Company Secretaries (Amendment) Bill, 2022 in the Upper House, the minister said that the new legislation does not change the composition of the Councils responsible for the management of affairs of the three professional institutes–ICAI, ICSI and ICWAI.
It is global best practices that govern many of the features of this Bill, Sitharaman said.
The Bill, passed by both the Houses, seeks to strengthen the disciplinary mechanism of the three professional institutes and provides for more external representation on the disciplinary panels of the institutes.
The minister said that global best practices clearly say the self-regulatory model probably cannot actually meet expectations.
Sitharaman said that the government’s focus on promoting entrepreneurship is leading to the incorporation of new companies and limited liability partnerships. “At this time, the sanctity of the audited financial statements of companies, which is where the role of chartered accountants comes into play, is to be maintained. We need a favourable investment climate,” the minister said.
Sitharaman also explained that chartered accountants, cost accountants and company secretaries are three pillars of the corporate governance structure.
“If corporate governance is to measure up to global investor expectations about our standards of audits, we need to have greater robustness and level of accountability,” the minister said.
There is no change in the composition of the Council responsible for the management of affairs of the three institutes, the minister said. ICAI has 40 members, eight of them government nominees and 32 elected members. The institutes, therefore, shall continue to function under the overall control, guidance and supervision of their respective councils, the minister said.
Senior BJP leader Sushil Kumar Modi said during the discussion on the Bill that it does not affect the autonomy of the three professional institutes and that the Bill was meant to strengthen the disciplinary mechanism of professionals.
At present, the disciplinary committees of these institutes look into the conduct of their professional members, and there is the added oversight of the National Financial Reporting Authority on audit firms.
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