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Firms cant keep assets secret
Wed, 23 Jun 2010 03:58:55 GMT

Firms can’t keep assets secret:Icai

Companies may have to provide detailed information including details of financial assets, the complete list of shareholders and directors to the Institute of Chartered Accountants of India (Icai) if the government accepts the amendments to Chartered Accountants (CA) Act 1949 suggested by the institute. The institute has sought powers to summon information from companies.

Under the laws, Icai has the powers to call for information only from its members and not from companies directly. The government is reviewing amendments to the CA Act, 1949.

Icai president, Amarjit Chopra told Financial Chronicle, “We have suggested that the provisions in the CA Act 1949 be amended to give us more powers so that the committee of Icai are allowed to summon information from companies directly wherever in public interest.”

The CA institute is also seeking a review of the punishment for erring audit firms whose partners have committed repeated acts of gross negligence or fraud.

“We have proposed that in case a partner of an audit firm commits repeated acts of gross negligence or colludes with the management to defraud shareholders and creditors, the particular practice that the partner is in should be banned,” said Chopra.

When asked whether revoking the license of the firm would also be considered, Chopra said that it could be limited to the particular segment where the misdemeanor has taken place. “Why should the license for the entire firm be revoked and the entire firm be punished when it’s the partner in the said practice that has committed the act?”

“So for instance if it is the partner of the tax practice that has committed gross negligence then there should be a ban on tax practice and not for the entire firm which makes the partner of the audit firm suffer too. There could also a punishment such as banning the firm from auditing listed companies or imposing a fine,” Chopra added.

GK Kedia & Company’s managing partner Gopal Kumar Kedia said that at present in case of defaults, Icai has a right to revoke the certificate of practice from one day to lifelong depending on the magnitude of the ban.
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