The govt. has enacted Sec 132 in Companies Act 2013 that empowers the NFRA to interfere and disturb the register of members kept under the Chartered Accountants Act 1949. This is totally ultra vires the constitution and civil rights guaranteed thereunder. Similar defective provision was made under SEBI Act 1992 which gave overriding powers to SEBI to adjudicate over the Companies Act 1956 and all actions which were valid under CA 1956 were modified and circumvented by SEBI. Most of the cases went in appeal in High Courts and Supreme Court and stay was granted resulting in huge piling of disputes. Who suffered ultimately? Only the industry as an institution and investors as a society.
Similarly authority constituted under CA 2013 to adjudicate the matters under chartered accountants will create similar scenario as CA certifying financial statements of a company will only be prosecuted while huge majority of financial transactions will be done and manipulated by individuals, partnership firms, trusts, cooperative societies, charitable societies etc that are not covered by the CA 2013. None of these entities undertaking financial transactions are required to maintain books of accounts on an accrual basis or adhere to any accounting standards prescribed for companies.
Therefore, in my opinion, all stakeholder in the field of finance, accounts, audit, taxation, banking & insurance must address the real cause of the problem and come out of their limited domain of profession they are attached with, consider and suggest the corrective action to the govt. and file appeal to the highest judiciary if required. I suggest the following measures-
All three Chartered Accountants Act 1949, Cost Accountants Act 1959 & Company Secretaries Act 1980 should be amended to provide for ORDINARY MEMBERSHIP only that is granted by the Institutes after completing prescribed education, examination and training. I personally advocate merging of three institutes in one conducting specialized courses and recognition as deemed university and recognition of pass certificates as diploma and degree of a university.
Authority constituted under Sec 132 of Companies Act to adjudicate disciplinary action against the auditors and other finance professionals should be constituted under a separate law like IDRA, TRAI, SEBI etc so that its scope and coverage be extended to all finance and tax professionals working in different corporate/non corporate entities who directly or indirectly work on different financial reports submitted to different public authorities and the whole professional ethics has been burdened of one profession ie chartered accountant.
All Certificate of Practice (COP) should be issued by one independent authority and must be separate from the membership of any professional body. The procedure of UDIN coined by ICAI should be available to practitioners only registered on the separate web portal. This authority may consist of members of institutes nominees of CAG, RBI, SEBI, MCA, CBDT, CBIC etc.
For the time being ICAI must make policy to issue COP to members with a SEPARATE NUMBER and design the website accordingly. Today the membership number and COP number of practicing chartered accountants is same and therefore unscrupulous business entities managed by unprofessional businessmen and supported by other professional rivals ( who don't incur any professional liability) can use the membership no of any chartered accountant to make any false certificate and submit to required authority and when caught to implicate the innocent member.
The best solution, in my opinion, shall be-
1. separation of three institutes from their respective statutes by making law under UGC Act and AICTE Act and recognize them as deemed university granting membership as a degree of a university recognized all over the country.
2. Creation of regulatory authority under separate law for all finance, taxation, economic and business professionals with detailed rules & regulations for issue of certificate of practice, accounting standards, audit guidelines, professional ethics and disciplinary actions subordinate to High Court/Supreme Court (Current rules/regulations/standards/guidance notes/policies etc can be transferred to such authority as it is)
With due regards, I solicit your opinion and request all of you to address it to all forums and authorities.