ICAI seeks more power to penalise delinquent audit firms


The Institute of Chartered Accountants of India (ICAI) has reportedly reiterated its demand for more powers to impose penalties on errant audit firms.

The Economic Times reported the management committee of the ICAI would discuss any possibility of levying additional fines on Price Waterhouse in the Satyam case with Ministry of Corporate Affairs (MCA) on January 18.

The committee is said to be also demanding widening of the ambit of the ban for unlisted companies.

Vice-president Naveen Gupta clarified the association will meet with MCA, to request for additional powers in such cases, and also discuss the Price Waterhouse.

According to the report, a large number of senior members of the ICAI want to take further corrective action against the Price Waterhouse.

They believe the auditing firm must be further penalised for the Satyam scam with a fine and not be allowed to audit private companies for a few years.

The current Chartered Accountant Act states the institute can only penalize individuals and not firms.

Many members of the association felt the additional penalties levied through the ICAI would send out a strong message to other such dominant foreign companies which include Deloitte, EY, PwC and KPMG.

The senior ICAI members were also divided into two camps over the issue. While one side is for the issue, the other fears it would lead to a lot of complications for elected members.

“With the institute elections coming close, many senior members tend to make noise against foreign firms. However, in reality, the ICAI doesn’t want this power to take action against firms as it could lead to lot of complications for elected members,” said an ICAI member.moneycontrol