Why in news?
ICAI has been in news post PNB Fraud scandal as it clearly showed the inefficiency of ICAI in prevention of Frauds and regulation of Chartered Accountants. Cabinet has given approval to set up National Financial Regulatory Authority (To know more click here) to overtake ICAI functions.
The Institute of Chartered Accountants of India (ICAI) is a statutory body established by an Act of Parliament, viz. The Chartered Accountants Act, 1949 (Act No.XXXVIII of 1949) for regulating the profession of Chartered Accountancy in the country.
The Institute, functions under the administrative control of the Ministry of Corporate Affairs, Government of India.
The ICAI is the second largest professional body of Chartered Accountants in the world, with a strong tradition of service to the Indian economy in public interest.
Governing Council of ICAI:
The Council constitutes of 40 members of whom 32 are elected by the Chartered Accountants and remaining 8 are nominated by the Central Government generally representing the
Comptroller and Auditor General of India,
Securities and Exchange Board of India,
Ministry of Corporate Affairs,
Ministry of Finance and other stakeholders.
It holds office for a period of three years.
President is elected by the Council for one year term.
Roles of ICAI:
Regulate the profession of Accountancy
Education and Examination of Chartered Accountancy Course
Continuing Professional Education of Members
Conducting Post Qualification Courses
Formulation of Accounting Standards
Prescription of Standard Auditing Procedures
Laying down Ethical Standards
Monitoring Quality through Peer Review
Ensuring Standards of performance of Members
Exercise Disciplinary Jurisdiction
Financial Reporting Review
Input on Policy matters to Government
Criticism of ICAI:
Harshad Mehta, Ketan Parikh, the Satyam imbroglio and the latest scam involving our second-largest public sector bank prove that all is not well with the way audits are being conducted.
Despite ICAI Guidelines, the CAs did not tally entries made in the Swift (Society for Worldwide Interbank Financial Telecommunications) software with those made in the core banking solution. The Institute’s Guidelines specifically required auditors to check the records independently. This led to the PNB Fraud.
Dr. Raja Chelliah had held the profession responsible for the failure of the presumptive tax scheme.