Erring CAs: The Hindu,July 31, 2017

http://www.thehindu.com/business/Economy/regulator-turns-up-heat-on-erring-cas/article19391897.ece

Erring CAs

This refers to the report “Regulator turns up heat on erring CAs” (The Hindu, July 31). This is one more disturbing signal bringing to public glare the depth of the malignancy of unethical and corrupt practices eating into the country’s economic system. The action initiated shows that Prime Minister Modi’s concern is not limited to the three aspects of corruption (unaccounted money, terrorism and forged currency) he mentioned in his November 8, 2016 speech but there is a willingness on the part of GOI to challenge corrupt practices in any walk of life. The clarion call to come together to eradicate filth, poverty, corruption, terrorism, casteism and communalism contained in Modi’s Mann Ki Baat on July 30, 2017 should be seen in this context.
Reserve Bank of India (RBI), through a circular dated July 27, 2017 has raised the ‘rest’ period for statutory central auditors(SCAs) of banks to 6 years”. The grounds for longer rest period for SCAs given in the RBI circular more than justifies the enhancement of rest period for  SCAs from two years prevailing since 2001 to six years. They are also suggestive of unethical practices being followed by professionals and banks in tandem.
Let us concede that regulatory oversight alone cannot ensure best practices of governance in organizations which manage huge resources including public funds. And diminishing public trust in professionals is a matter for worry not only for the government or regulators, but for the common man and the taxpayer. In the given case, even the possibility of lateral movement of individuals from one CA firm to another can reduce the impact of forced ‘rest’ periods. It is difficult to build trust and honest behavior through statutes or directions.
In this context, the only option left is strict self-regulation by professional bodies. The institute of CAs, RBI and banks should expose unethical approaches by individual CA firms and their employees and where proved guilty the firms/individuals should be punished. If there are legal hurdles, GOI need to come to help them out.

M G Warrier, Mumbai

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