New Delhi: To bolster its disciplinary mechanism, chartered accountants' grouping ICAI plans to seek powers to temporarily suspend erring members and is examining cases of 34 individuals who purportedly were involved in setting up shell companies.
Asserting that the institute's disciplinary mechanism cannot be influenced, its President Nilesh S Vikamsey today said action would be taken against any member who is found to be involved in wrongdoings.
The Institute of Chartered Accountants of India (ICAI), which has more than 2.60 lakh members, has a disciplinary mechanism in place to act against those entities violating its norms.
About seeking powers to temporarily suspend erring members, Vikamsey said the idea would be discussed internally and would then be taken for approval of the ICAI Council.
After that process, the institute would write to the government to give that powers, he said, adding efforts are on how to make ICAI regulations more contemporary.
The institute has been set up under an Act of Parliament. Currently in case of any alleged violation, the institute first seeks explanation from the entity concerned and the matter is taken up by the disciplinary committee -- which has three elected members and two government nominees.
On steps being taken with regard to shell companies, the ICAI President said a few names have come up in this respect. About shell companies, an ICAI official said there are 34 professionals who have been identified by various agencies.
"... we do not even know whether they are chartered accountants or not... Let the information fully come to us and then we will look at their roles (if they are found to be chartered accountants)," the official said.
These 34 individuals have been identified with respect to alleged illegal cash transactions involving 559 beneficiary companies. The cases happened during 2009, 2010, then 2011, 2012, the official added.
In this regard, Vikamsey said whichever names (of chartered accountants) are clear, action would be taken and "whichever names are unclear, we are seeking information from the Ministry of Corporate Affairs and they are supporting us".
The government has decided to take "harsh punitive" action, including freezing of their bank accounts used to launder money or evade taxes. Meanwhile, Vikamsey also said that a proposal seeking powers to punish a firm in case of violation of ICAI norms is pending with the government for long.
This proposal was mooted after the Satyam case, he said while making it clear that the institute does not want "unbridled powers". Following a review by the Prime Minister's Office, a task force with members from regulatory ministries and enforcement agencies has been constituted to monitor action against "deviant" shell companies.
While the Serious Fraud Investigation Office (SFIO) has filed cases against 49 shell companies, as much as Rs 3,900 crore has been laundered by 559 persons with the help of 54 professionals.
Also, Rs 1,238 crore cash has been deposited in shell or dormant companies, post demonetisation. "There are about 15 lakh registered companies in India and only 6 lakh companies file their annual return.
This means a large number of these companies may be indulging in financial irregularities," the PMO had said in a statement on February 10. Meanwhile, the ICAI Council has taken an in-principle decision to liberalise the ethical standards of the institute.
The Ethical Standards Board is looking at international standards as a base and what can be done under Indian circumstances, Vikamsey said. About opening up auditing and accounting profession for foreign firms, he said, "We are not afraid of competition.
We want reciprocity. What they want in India, they should allow us in those countries... National interest cannot be sacrificed"....