We are shocked at the move. One day we are the accounting regulator, the next day we are stripped of every power, said an ICAI official. He said the government representatives rarely attend a general council meeting of the institute. As per the current norms, there are eight government nominees on the ICAI board out of 40 members. According to the source, the institute would formally take up the matter at its Corporate Law Committee meeting on December 19 followed by its general council meeting on December 26 and 27.
NFRA would be an overarching body that would look into the activities of every institute. This committee would have a chairperson and members not exceeding 15. Government sources said the provision for a fully autonomous institute was included in the Bill to ensure the institutes do not misuse their powers. We have to keep a tab on the activities of the institutes whether they like it or not, a source said.
Once it comes into force, NFRA could be one of the most influential bodies enjoying the same powers as a civil court. It would also be able to order suo motu investigations and ban an accounting firm from anywhere between six months and 10 years. It can also impose fine of up to R10 lakh on auditing firms. The NFRA accounts shall be audited by CAG at such intervals as may be specified by him and such accounts as certified by CAG together with the audit report thereon shall be forwarded annually to the government by NFRA, the Bill states.
When contacted, ICAI president G Ramaswamy said, We are closely reading the Bill after which we will take a decision on the matter. He also said that since there is already a Quality Review Board in place how would the NFRA function.