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Quality review boards of ICAI, ICWAI, ICSI working overtime to stay relevant.
Three professional institutions — Institute of Chartered Accountants of India (ICAI), Institute of Companies Secretaries of India (ICSI) and the Institute of Cost and Work Accountants of India (ICWAI) — are trying to make the best of their quality review boards (QRBs). Thanks to the government's plan to set up a National Financial Reporting Authority (NFRA) that will do exactly the job QRBs are supposed to do, and more.
According to the Companies Bill, 2011, which got Cabinet clearance last week, NFRA is meant to better monitoring of corporate financial management and will have the mandate to ensure scrutiny and compliance of accounting and auditing standards. It will also ascertain the quality of the service of professionals associated with the compliance.
In addition, NFRA will have quasi-judicial powers. It can order investigation, levy penalty and bar professionals from practice in case of their indulgence in professional or other misconduct.
While ICAI, the law-making body and regulator of accountancy profession, is planning to review the quality of the performance of, at least, 20 of their members by January, ICSI and ICWAI have readied and shared quality audit manuals for their members. ICSI is also known to be picking up its members at random to inspect the quality of work they do.
The QRBs, statutory bodies that draw powers from respective Acts (for instance Chartered Accountants Act for ICAI) that govern each of the three professional institutions, have so far been focusing on advocacy roles, which is just one of the three mandates for QRB.
In addition to guiding the members of the institute to improve the quality of services and adherence to the various statutory and other regulatory requirements, QRBs are also expected to make recommendations to the governing council with regard to the quality of services provided by the members of the institute and review the quality of services provided by the members of the institute.
The QRB inspections will cover only the practicing professionals and not chartered accountants or company secretaries who are employees of various corporate bodies.
According to Amarjit Chopra, former president of ICAI and currently a member of its QRB, the institute had been opposing the need for a duplication of QRB’s efforts through NFRA. He felt ICAI’s QRB, whose three year term ends in 2013, has been performing hard to achieve all three objectives.
“Since the new QRB was constituted seven months ago, we have met four times and intend to review the performance of 20– 50 members every year. If the government feels peer review tend to be soft, QRB has a majority membership of non-professional experts,” said Chopra.
“Give us at least three years to prove ourselves,” he added.
Of the 11 members of ICAI’s QRB, six, including its chairman, are government nominees and not necessarily accountancy professionals. The other five are nominated by ICAI.
ICSI and ICWAI, both having five member QRBs, have three government nominees on their boards to ensure independent functioning of quality review process. ICSI and ICWAI QRBs have a four-year term. Anil Kumar Murarka, president of ICSI, welcomed the government move. He felt both the quality review mechanisms will co-exist as NFRA is expected to have a wider mandate.
“Our new QRB was constituted early this year and, within 15 days from now, we are going to see our draft review regulations getting finalised. As the new mechanism (NFRA) will take at least a year to take shape, we are going ahead with our plans to review the performance of our members now”, Murarka said.
ICWAI does not have a QRB at the moment as the previous board’s term got over in September. The government is yet to notify a new QRB for this institute.