Disciplinary Action Proposed for Errant Audit Cos

The governing bodies of charted accountants, company secretaries and cost accountants could soon be able to take disciplinary action on erring audit firms if it finds lapses, lacunae or wrongdoings in the auditing process.

The government on Friday introduced the Chartered Accountants, the cost and Works Accountants and the Companies Secretaries (Amendment) Bill in the Parliament, which will allow the three bodies to take action on its members that includes imposing a maximum penalty of Rs50 lakh or debar firms for violating norms.

At present, the three governing bodies Institute of Charted Accountants of India, Institute of Cost Accountants of India and Institutions of company Secretaries of India can only act against individual members.

The proposed bill in Lok Sabha provides for a separate chapter on registration of firms with the respective Institutes and included firms under the purview of the disciplinary mechanism.

The amendments to these Acts have been proposed on the basis of recommendations made by a high level committee that was set up by the corporate affairs ministry to examine the existing provisions in the

Acts for dealing with the case of misconduct in the three professional institutes.

The panel was set up after serious audit lapses came to light in some key cases or corporate frauds such as IL&FS and DHFL.

Union finance and corporate affairs minister Nirmala Sitharaman, who moved the bill, said on account of changes in the country’s economic and corporate environment, it had become necessary to amend the Acts.

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