IBC - Since petitioner is virtually assailing correctness of findings before self same Court and pleading for reconsideration of issue, which cannot be entertained by Court : HC (See 'Legal Desk') PMLA - If there is no prima facie material to substantiate that Accused knowingly facilitated transfer of proceeds of crime, no presumption can be drawn that petitioner is involved in money laundering : HC (See 'Legal Desk') Competition Act - Documents and evidences produced do not substantiate allegations of collusion/cartelisation : CCI (See 'Legal Desk') Foundational Literacy and Numeracy Assessment Test to be conducted nationwide under ULLAS (See 'Corp Brief') SARFAESI Act - Petitioner is unable to carve out any exceptional or extraordinary circumstance, which calls for interference by Court : HC (See 'Legal Desk') Bricks laid to establish 'Centre for Preservation & promotion of Tribal Culture & Heritage' (See 'Corp Brief') SAST Regulations - There is undue delay in filing of appeal and same is liable to be dismissed on ground of laches : SAT (See 'Legal Desk') Govt signs MoU with SIDBI and NIESBUD for transformation of Fair Price Shops (See 'Corp Brief') PMLA - Mere issuance of summons to another person or seeking leave of Court to file additional evidence, without there being any other sufficient material to challenge, petitioner cannot be held to be entitled to default bail : HC (See 'Legal Desk') IBC - Mr. Alok Kumar compromised his independence as RP for which his registration can be suspended for 3 months : IBBI (See 'Legal Desk') Govt to promote indigenous manufacturing and self-reliance in coal sector (See 'Corp Brief') SEBI Act - Contention that appellants would release money only after their accounts are de-freezed is patently misconceived and cannot be accepted : SAT (See 'Legal Desk') IBC - Application filed u/s 95 to initiate Insolvency Resolution Process against Personal Guarantor can be admitted as Personal Guarantor has defaulted in payment of dues within 14 days from service of demand notice : NCLT (See 'Legal Desk') Railways revenue touches Rs 2.40 Lakh Crores; over 1500 Million Tonnes of freight transported; aims 5100 Km of track laying this fiscal (See 'Corp Brief') SCRA - Even if there is technical breach and there is no misuse of client funds, nonetheless, if something is required to be done in particular manner it should be done in that fashion : SAT (See 'Legal Desk') SARFESI Act - Mere reference to property as 'agricultural’ as per revenue records is not sufficient to accept same as such for purpose of SARFESI Act: HC (See 'Legal Desk')

Violations by Foreign Accounting Firms - SC asks Govt to set up Panel

Published: Feb 24, 2018

By TIOLCORPLAWS News Service

NEW DELHI, FEB 24, 2018: The Apex Court on Friday directed the Govt for constitution of an expert panel to examine the regulatory framework for the purpose of enforcing statutory code of conduct against Multinational Accounting Firms. The Apex Court also also directed that Committee of experts should also examine the need for a separate regulation on the pattern of overseas bodies to oversee the profession of the auditors.

A PIL was filed before the High Court to seek direction for exercise of power u/s 21 of the CA Act to initiate investigation against Multi-National Accounting Firms (MAFs) and Indian Chartered Accountancy Firms (ICAFs) having arrangement with such MAFs in breach of Code of Professional Conduct and also to take penal action by way of cancellation of permission granted to them by the Institute of Chartered Accountants of India (ICAI). It was pleaded before the HC that MAFs were illegally operating in India and providing Accounting, Auditing, Book Keeping and Taxation Services. Operations of such entities were alleged to be in violation of Companies Act, the CA Act and the Code of Conduct laid down by the ICAI.

The stand of the ICAI in the form of a status report filed before the High Court was that 161 out of 171 firms were examined by the High Powered Committee in pursuance of report of the Expert Group dated 29th July, 2011 with regard to alleged violations and some of the cases were referred to the Director (Discipline) for further action. Remaining 10 firms were in the process of being examined. The High Court observed that in view of the stand of the ICAI, no further action was necessary and disposed of the writ petition.

Thereafter, PIL was filed directly in the Apex Court, which stated that PricewaterhouseCoopers Private Limited (PwC) and their network audit firms operating in India, apart from other violations, had indulged in violation of Foreign Direct Investment (FDI) policy, Reserve Bank of India Act (RBI) & Foreign Exchange Management Act (FEMA) which requires investigation. Firms operating under the brand name of PwC received huge sums from abroad in violation of law but the concerned authorities had failed to take appropriate action. The SFIO and CBI had found PwC taking undue advantage of many loopholes in the regulatory regime.

Therefore, the Apex Court issued following directions :

(i) The Union of India may constitute a three member Committee of experts to look into the question whether and to what extent the statutory framework to enforce the letter and spirit of Sections 25 and 29 of the CA Act and the statutory Code of Conduct for the CAs requires revisit so as to appropriately discipline and regulate MAFs. The Committee may also consider the need for an appropriate legislation on the pattern of Sarbanes Oxley Act, 2002 and Dodd Frank Wall Street Reform and Consumer Protection Act, 2010 in the USA or any other appropriate mechanism for oversight of profession of the auditors.

(ii) The ED may complete the pending investigation within three months;

(iii) ICAI may further examine all the related issues at appropriate level as far as possible within three months and take such further steps as may be considered necessary.

While giving the decision, the Apex Court observed that, there was a bar under CA Act to practice as CAs for a company which includes a limited liability common partnership which has company as its partners. Code of Conduct for the CAs prohibits fee sharing, advertisements but the MAFs by using international brands and mixing other services with the services to be provided as part of practice of chartered accountancy violate the said Code of Conduct for which there was no regulatory regime as the MAFs do not register themselves with ICAI. It was observed that the Indian firms using similar brand names are registered with the ICAI but the real entities being MAFs, ICAI is unable to take requisite action for violation of Code of Ethics by the MAFs. Thus, revisit of existing legal framework may become necessary so as to have an oversight mechanism to regulate MAFs on the touchstone of Code of Ethics.

 

 

 

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