Parliament passes CA and CS Amendment Bill
On April 5th, 2022, the Rajya Sabha passed the CA, CWA, and CS Bill via voice votes which amended the existing acts that regulate Chartered Accountants, Cost Accountants, and Company Secretaries. The Chartered Accountants Act, 1949, The Cost and Works Accountants Act, 1959, and The Company Secretaries Act, 1980 govern the professions mentioned above and discuss their standard mode of operation, duties, and other responsibilities.
The Lok Sabha officially passed the Bill on March 30th, 2022.
The CA, CWA, and CS Bill centers around the composition of the Board of Discipline (BD) and the Disciplinary Committee (DC). It also talks about the constitution of a Coordination Committee of the three professional institutes (ICAI, ICSI, ICMAI).
The term of the council members on the committee, the role of the president and the committee’s secretary, and the timeline of the disciplinary proceedings are also some areas of focus. The Bill also talks about the liabilities of a firm in case of a partner’s gross misconduct and the power to take strict actions against professional companies.
Highlights of the Bill
- This Bill is an amendment to The Chartered Accountants Act, 1949, The Cost and Works Accountants Act, 1959, and The Company Secretaries Act, 1980
- It provides a specific timeline for disciplinary proceedings for all three Acts, and by doing so, it modifies the corrective mechanism under the Acts. The Bill also offers external representation on the Board of Discipline and Disciplinary Committee.
- The Coordination Committee created under this Bill is headed by the Ministry of Corporate Affairs secretary. The committee receives representation from the institutes formed under the Acts.
- The president is the head of the Council and is responsible for ensuring that the Council’s decisions are implemented. The secretary of each of these councils will be appointed as the chief executive.
- All firms are required to register with the Institutes. The Council maintains the register of all the firms with details about any pendency of their actionable complaints or penalties.
- This Bill strictly condemns certain acts with an increase in the rates of the fines under the three Acts. Actions such as repeated misconduct by a partner or owner can lead to strict disciplinary actions against the firm itself.
Analysis and Key Issues
This Bill allows for external representation in the Board of Discipline (BD) and the Disciplinary Committee (DC). This clause might go against the objective of resolving conflicts between the disciplinary and administrative functions of the professional Council as the external members are selected from a panel presented by the three councils consisting of people chosen by the Councils themselves.
This proposed change to allow external representation in the composition of both the disciplinary entities might affect smooth conflict resolutions.
The Bill also mandates that all firms and members need to fully disclose the pendency of complaints or actionable against them.
All the amendments proposed in the Bill are carefully deliberated within a High-Level Committee meeting consisting of the Ministry of Corporate Affairs. The committee has examined the current provisions and made suggestions to modify the Act to help tackle cases of misconduct in the three professional institutes of the Chartered Accountants, Cost Accountants, and Company Secretaries of India.