New Delhi, January 12, 2018

Centre seeks monthly report from ICAI on disciplinary action taken against chartered accountants associated with barred shell cos

Taking its crackdown on shell companies a step further, the government has sought a monthly report from the Institute of Chartered Accountants of India (ICAI) on disciplinary action taken against chartered accountants associated with barred shell companies, an official aware of the development said. “The task force had been discussing the role of chartered accountants in routing black money using shell companies,” the official told Cogencis.

“It had been noticed that the track record of the ICAI in taking action against erring chartered accountants is poor.” The government had constituted a task force on shell companies under the joint chairmanship of the secretaries of revenue and corporate affairs departments in February as part of its crackdown on shell companies. The task force has members from Department of Financial Services, Department of Revenue, Central Board of Excise and Customs, Central Bureau of Investigation, Enforcement Directorate, Serious Fraud Investigation Office and Financial Intelligence Unit. The task force on shell companies has asked the institute to submit report on chartered accountants involved in the operation, audit and certification of barred shell companies. Punishment of erring chartered accountants will act as a deterrent, the official said. “The ICAI has also been asked to take quick action against chartered accountants who are already under probe by agencies such as the Enforcement Directorate (ED) and the CBI,” the official told the news agency.

The action by the government comes in the backdrop of increasing scrutiny of chartered accountants. The government is likely to notify the National Financial Reporting Authority, a regulatory body for chartered accountants, by early next month, the official said. Last month, Minister of State for Corporate Affairs P.P. Chaudhary told the Lok Sabha that in addition to the self regulation mechanism existing within the Institute of Chartered Accountants of India’s framework, there was need for an independent regulator to oversee compliance with accounting and auditing standards and for oversight of audit professionals. As on Dec 20, the institute was looking into 1,583 cases against chartered accountants that are at various stages of probe, the official said. The government has so far identified 297,000 suspicious shell companies, of which 224,000 companies have been de-registered from the books of the Registrar of Companies (RoC).

[The Free Press Journal]