MUCH has been written about the autonomy of financial institutions regulators and academic institutions in the country. So much so that a section has not spared even the judiciary from this debate of being autonomous. What is noteworthy in the whole debate is that, though the experts say that the institutions are under the administrative control of government, when it comes to blaming someone for any mishap it is the institution that is blamed and not the government.
In some cases the exact opposite happens, that is experts say that the institution is autonomous but blames the government for any mishap. It looks like the whole debate on autonomy and independence of these institutions is meaningless. In the melee, what we tend to forget is that these are the very institutions that had partnered with governmental initiatives in nation building. In the midst of the celebrity institutions – CBI, RBI, IITs, UGC, IIMs – there is another set of institutions that are children of lesser God. These institutions – no less important than their celebrity counterparts in keeping the country vibrant and legit – without making any fuss, continue to quietly work with an objective of building a healthy economy and financial ecosystem. One such institution is the Institute of Chartered Accountants of India (ICAI).
One of the earlier articles in this newspaper highlights the issue of having multiple institutions for doing the same job. (http://www.mydigitalfc.com/deep-dive/government-wasting-time-and-resources-setting-nfra). But today, for ICAI the creation of an all-new organisation is now a forgone conclusion.
Discussion on independent oversight body in India found momentum with Satyam episode. It is interesting to note that Satyam’s ADRs being listed on NYSE, it was subjected to audit by a PCAOB registered firm even which also could not predict or prevent the fraud. So let’s make ICAI a case study that will prove that it is not a self-regulated or autonomous organisation. It is time that the institute gets it due. The ICAI, is one of the first statutory bodies to be established by none other than Parliament post-independence. The Chartered Accountants Act, 1949 comes into force to regulate the practice of accountancy in the country and functions under the administrative control of the Ministry of Corporate affairs. So in the first instance, it shows that ICAI is not a self-regulated organisation but has requisite governmental control through government nominees.
In the Council of the ICAI there are eight government nominees. Similarly, in the disciplinary committee (which takes action against erring CAs) there are two government nominees and the Board of Discipline has one government nominee. The presence of a government nominee is a must to form valid quorum for the conduct of DC meetings. Besides this, government nominees are also part of all standing and non-standing committees of ICAI. With this, due oversight and control has been exercised by the government over the activities of the ICAI. The annual reports with accounts of Institute are laid before the Parliament.
Without getting into the blame game, what is worth noting is that the ICAI continues to be one of the strongest pillars in nation building. The Institute’s leading role in nation building is once again highlighted when it facilitated the smooth implementation and transition to the new Goods and Service Tax (GST) regime. Without the institute’s training programmes, GST implementation would have faced more hurdles. Even in shaping GST, the institute played a major role and 131 changes were made on its suggestions. Similar contributions have recently been made for GST Annual Returns and GST Audit report.
As a lawyer one can appreciate ICAI’s invaluable participation in the legislative process. The institute’s suggestions to the Joint Committee on the Financial Resolution and Deposit Insurance Bill, 2017 and the Insolvency and Bankruptcy Code, 2016 made all the difference in the respective legislations. Some of the other legislative changes where ICAI added value are on Benami Transactions (Prohibition) Amendment Bill, 2015, Companies Act, 2013 among others. Footprints of the institute can be traced to almost all major initiatives of the government, from championing ‘Make in India’ to setting up the first Insolvency professional agency of the country, ICAI has taken up major projects in the field of accounting and auditing in national interest.
When an institute has over the past many years continued to play a stellar partnership role in national development, one can be forgiven to forget that the institute is a statutory body with strong oversight from the government. For once, let us – the media, experts, government and common man – stop and take note of the contribution this institution has made. For a modern and strong country every cog in the wheel is important and in my view ICAI is one such cog that is wheeling various visionary initiatives towards new frontiers.
(The writer is an Advocate-on-Record of the Supreme Court of India)