Does statutory framework for MNC accounting firms require revisiting? asks apex Court

New Delhi, Feb 24: The Supreme Court has asked the Central government to set up a Committee of Experts to examine whether the statutory framework for disciplining and regulating the multitiol accounting firms (MAFs) operating in the breach of Chartered Accountants Act requires a fresh look.

The top court asked the government to set up a three member expert committee to look into the question, “whether and to what extent the statutory framework to enforce the letter and spirit of Sections 25 and 29 of the Chartered Accountant Act and the statutory Code of Conduct for the Chartered Accountants requires revisit so as to appropriately discipline and regulate MAFs”. The committee, to be set up within two months, the court said, “may call for suggestions from all concerned” and its report “may be submitted within three months thereafter.”

“The Union of India may take further action after due consideration of such report”, the court said in its directions.

Section 25 of the Chartered Accountants Act, 1949 says, “No company, whether incorporated in India or elsewhere, shall practise as chartered accountants”, while Section 29 providing for reciprocal arrangement says that a subject of a country where an Indian accountancy professiol can’t practice too would not be allowed to practice in India or become a member of ICAI.

The Committee may also consider the need for an appropriate legislation on the pattern of Sarbanes Oxley Act, 2002 and Dodd Frank Wall Street Reform and Consumer Protection Act, 2010 in US or any other appropriate mechanism for oversight of profession of the auditors, said the judgement by the bench of Justice Adarsh Kumar Goel and Justice Uday Umesh Lalit delivered on February 23.

The Expert Committee, the court said, may also consider “steps for effective enforcement of the provisions of the FDI policy and the FEMA Regulations referred to above”.

Besides other material, the court said that the three member committee may examine the report of the Study Group and the Expert Group. (IANS)