Rule amended! ICAI says disciplinary body to have 3 non-CA members by 2022-23

The Indian Institute of Chartered Accountants (ICAI) on Thursday said that three non-CA members will be in its disciplinary committee by the end of the current financial year.

According to the amended rule, there will be three non-CA nominees in the five-member committee which is entrusted to take action against chartered accountants for any professional wrongdoing. At present, the panel comprises two non-CA nominees and three ICAI members.

"With the passage of the amendment bill in Parliament despite our strong opposition, three non-CA members in the disciplinary committee will now be a reality. Once the government comes out with the rules and regulations, the process to follow the norms will begin from our side," ICAI President Debashis Mitra told PTI in an interview.

ICAI will shortlist about 6-7 non-CA persons and send the names to the Ministry of Corporate Affairs for their final selection as members of the re-constituted committee, he said.

"The entire process will be completed within this fiscal," the ICAI chief said.

The ICAI is a statutory body established by an Act of Parliament in 1949 for regulating the profession of chartered accountancy in the country. The institute functions under the administrative control of the Ministry of Corporate Affairs.

The government, through the Chartered Accountants, Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021, has proposed the inclusion of two CAs and three non-CAs in the ICAI disciplinary committee.

Rajya Sabha passed the bill on April 5 while Lok Sabha cleared it on March 30.

ICAI had objected to the proposals arguing that non-CAs would not have the "in-depth knowledge of accounting" which is a must for fair judgement for technical evaluation of a CA professional.

The Centre, however, asserted that the changes would usher in transparency and would not in any way impact the autonomy of these bodies.

Mitra said that SEBI has entrusted ICAI to prepare the Social Audit Standard which is under preparation.

"ICAI has been working on drafting the framework for social audit and social audit standards on eligible activities in 16 thematic areas. SEBI has already come out with notification of the social auditor," he said.

The government has mooted listing of profit and not-for-profit organisations that can raise funds through the Social Stock Exchange route and an audit will help assess the impact of the funds on social activity resulting in greater transparency.

Mitra said that ICAI is carrying out awareness about Business Responsibility and Sustainability Report (BRSR), the new mandatory reporting format for Environmental, social, and governance (ESG) policies for the top 1000 listed companies, which will be applicable from 2022-23.

In 2021-22, the ESG reporting was kept voluntary.