Institute of Chartered Accountants of India flags areas of concern in Companies Act 2013

Feb 16,2014

MANGALORE: The Institute of Chartered Accountants of India (ICAI) has certain concerns and issues in the Companies Act, 2013 as well as in the draft rules. The issue of constitution of National Financial Reporting Authority (NFRA), reporting on fraud by the auditor, cap on number of audits, auditor barred from rendering certain services. A lignment of law and rules relating thereto needs to be focused in order for proper implementation and regulation thereof, K Raghu, ICAI president said.

Since, it is for very first time under Companies Act, rules have come in larger numbers for as many sections, matching of law and its rules are far more important for all stakeholders, he said. Introduction of section 132 in the Act on the constitution of NFRA was a surprise and also the parliamentary standing committee on finance which examined the Companies bill earlier has not recommended constitution of such authority, Raghu pointed.

As on date, there are several regulations governing the profession. Need of the hour is to provide more accountability and strengthening the existing system. Multiplicity of regulators will not serve the purpose as it would lead to duplication of work on the same matter. ICAI has taken care of steps suggested by Government. NFRA will definitely lead to duplication of self-regulated authority and autonomy in the field of accounting and auditing.

The wide and sweeping powers which NFRA has under the section are likely to pose serious problems not only in the administration of corporate affairs but also the functioning of other institutions, he warned. Noting that the government is in the process of finalising the rules for the Act, Raghu said, "The ICAI has drawn the attention of the ministry to its concerns over NFRA in the draft rules and hopefully these issues will be addressed when the rules are notified.