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Home » Blog » Key Highlights | The Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021

Key Highlights | The Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021

  • Other Laws|Blog|
  • 4 Min Read
  • By Taxmann
  • |
  • Last Updated on 31 May, 2022

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Chartered Accountants; the Cost and Works Accountants; the Company Secretaries (Amendment) Bill

1. Introduction

The Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021 (‘Bill’) was introduced in Lok Sabha on December 17, 2021.  The Bill proposes to amend the Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959 and the Company Secretaries Act, 1980 (Acts). The Statement of the object and reasons as provided in the Bill states that amendments were necessary to account for changes in the economic and corporate environment in the country.

The amendments are based on the recommendations of a High-Level Committee constituted by the MCA, among other things, to examine the existing provisions in the Acts and the rules and regulations made thereunder, for dealing with the cases of misconduct, to strengthening the existing mechanism and ensure speedy disposal of the disciplinary cases in the three Professional Institutes, namely:

      • The Institute of Chartered Accountants of India
      • The Institute of Cost Accountants of India
      • The Institute of Company Secretaries of India

The Bill further states that recent corporate events have put the chartered accountancy profession under considerable scrutiny.

The amendments in the Acts have been made inter alia to:

    1. [Strengthen the Disciplinary Mechanism] by augmenting the capacity of the Disciplinary Directorate to deal with the complaints and information and providing time-bound disposal of the cases by specifying the time limits for Speedy disposal of the cases against members of the Institutes.
    2. [Address Conflict of Interest] between the administrative and disciplinary arms of the Institute
    3. [Registration of Firms] provides for a separate chapter on registration of firms with the respective Institutes and include firms under the purview of the disciplinary mechanism
    4. [Enhance Accountability and Transparency] by providing for the audit of accounts of the Institutes by a firm of chartered accountants. They will be appointed annually by the Council, from the panel of auditors, maintained by the Comptroller and Auditor-General of India
    5. [Provide Autonomy to the Council to Fix Fees] of the respective.

2. Key features of the Bill

a. Council of Institutes empowered to decide fee on registration of members

The Bill seeks to amend the Acts to substitute the word “Register” with the word “Register of members” and to empower the Council of the respective Institutes to decide fee required for entry of names in the Register of members or as a Fellow member and to dispense with the condition of prior approval of Central Government to determine such fees.

b. Registration of Firms

The Bill states that firms must register with the Institutes by making an application to the respective Councils of the Institutes.  The Councils must maintain a register of firms containing details such as pendency of any actionable complaint or imposition of penalty against the firms.

c. Constitution of Disciplinary Directorate for time-bound investigations

The Bill provides that the respective Councils of the three Institutes under the Acts would be required to constitute a Disciplinary Directorate, headed by Director (Discipline), who is an officer of the Institute.  The Bill further provides that each Directorate must also include at least two Joint Directors.

Under the Acts, on receiving a complaint, the Director arrives at a prima facie opinion on the alleged misconduct.  Depending on the misconduct, the Director places the matter before the Board of Discipline or the Disciplinary Committee.  The Bill amends this to empower the Directorate to independently initiate investigations against members or firms.  The Director must decide whether a complaint is actionable within 30 days of receiving such a complaint.  If the complaint is actionable, the Director must submit a preliminary examination report to the Board or the Committee (as the case may be) within 30 days.  Under the Acts, a complaint may be withdrawn if permitted by the Board or Committee.  The Bill provides that a complaint filed with the Directorate will not be withdrawn under any circumstances.

d. Constitution of Board of Discipline

Under the three Acts, each Council constitutes a Board of Discipline. Members of the Board include:

    1. Presiding officer (having experience in law and knowledge of disciplinary matters).
    2. Two members
    3. Director (Discipline) as secretary.

Under the Chartered Accountants Act, 1949, one of the two members is nominated by the central government while the other is a member of the Council.  As per the other two Acts, both the members are from the Councils or the Institutes.

The Bill empowers the Central Government to establish one or more Boards of Discipline, each comprising of a Presiding Officer and two members, of whom one shall be nominated by the Council and one member to be nominated by the Central Government. It further seeks to fix a timeframe for completion of inquiry by Boards of Discipline, empower the Central Government to make rules for procedures to be followed by the Boards of Discipline, modify penalty provisions for misconduct by members of the Institute, provide for the inclusion of firms of CA/CS/CMAs under the purview of disciplinary mechanism and to empower the Council to remove names from the Register on non-payment of penalties imposed under the Bill.

e. Constitution of Disciplinary Committee

Under the three Acts, the Councils shall constitute Disciplinary Committees (DC) consisting of:

    1. Presiding Officer (President or Vice-President of the Council).
    2. Two members elected from the Council.
    3. Two members nominated by the Central Government.

The Bill amends the Acts to provide that the Presiding Officer must not be a member of the institutes and shall be nominated by the central government.  The Committee must conclude its inquiry in 180 days from the receipt of the preliminary examination report.

f. Increase in the Penalty amount

Under the Acts, in cases of professional or other misconduct by the members, the Committees may:

    1. reprimand or remove the member from the Register of the Institute, or
    2. impose a fine of up to Rs. 5 lakhs.

The Bill increases the maximum amount of fine to Rs. 10 lakh.  The Bill also provides that the Committee may take certain actions against the firm which is found habitual offender, i.e. (if a partner or owner of a firm is repeatedly found guilty of misconduct during the last five years).  The actions include:

    1. prohibiting the firm from undertaking activities related to the profession of chartered account, cost accountant, or company secretary, as the case may be, for up to two years, or
    2. imposing of a fine of up to Rs 50 lakhs.

Tags:work account Amendment Bill 2021 cost account

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied
View all posts by Taxmann

Author TaxmannPosted on December 22, 2021May 31, 2022Categories Other Laws, BlogTags work account, Amendment Bill, 2021, cost account

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