The recommendations of the Naresh Chandra committee on 'corporate audit and governance', if implemented by the government, will go a long way in improving corporate governance in the country, Ashok Chandak, president of Institute of Chartered Accountants of India, said.
Chandak, who is one of the committee members, said the panel has made "good suggestions" that bring a new era in corporate governance.
"The report reflects the measures taken by the ICAI itself to improve auditing practices over the last few years and proposes to make them into law."
"The ICAI is a very proactive organisation which has been constantly reviewing its process in the light of recent developments. We have taken several initiatives in the last few years and these have been practically granted a seal of approval by the Naresh Chandra Committee," Chandak said.
Chandak was in Nagpur for the three-day Central Council meeting of ICAI which began on Thursday morning.
Vice-president of ICAI, R Bupathy, was also present. It is for the first time in the 53-year-old history of the ICAI that its Central Council, the highest-decision making body of the institute, is meeting in Nagpur.
"The meeting here is a mark of tribute to the city, which is celebrating the tercentenary of its foundation," Chandak said.
The institute has long been asking the government to amend its disciplinary mechanism for quick delivery of justice. This suggestion has been accepted by the Naresh Chandra Committee.
"The setting up of an appellate tribunal, as recommended by the committee, would ensure faster justice," Chandak said.
Earlier, whenever the disciplinary committee of ICAI handed down punishment to an errant member, it was taken in appeal to the high court where it dragged on for years.
"The appellate tribunal, on the other hand, will give quick confirmation of penalty and the case need not go to the high court."
The tribunal will be headed by a retired high court chief justice or a retired Supreme Court Judge and will have four members.
During the last six years, the ICAI has taken disciplinary action in 2,000 cases, the punishment being temporary or permanent disqualification from ICAI membership.
And in the last five years, the institute has disqualified one member for life, a chartered accountant from Ahmedabad but the case is pending before the high court.
Referring to the panel's suggestions for setting up quality review board by the ICAI, Chandak said, "The institute had already moved in this direction by setting up a Peer Review Board, which comprises of six Central Council members and five nominees of the various government regulatory agencies. This would now be known as Quality Review Board. The only difference in the committee's report is the composition of the board which will have five members from ICAI and five from the regulatory agencies."
Another initiative from ICAI has been the setting up of Financial Report Review Panel. This panel may suo motto examine the published accounts of different organisations.
If any deficiency or irregularity is observed by the panel, its findings would form the basis for initiating action under the disciplinary mechanism, Chandak said.
"The committee has also suggested prohibiting auditors from undertaking non-audit services such as accounting and book keeping. According to Chandak, however, this practice is being followed in the country since 1949 since, as a self-regulatory measure, the ICAI had restrained firms from giving both auditing and accounting services. The committee has sought to canonise the measure," Chandak said.
Meanwhile, the Central Council meeting will be discussing four new auditing standard which would be introduced by the end of this month, taking the total number of auditing standards to 29. The ICAI has 28 accounting standards.
