Auditors, Chartered Accountants :India
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Multinational auditors
SC suggests curb on their illegal operations
The Supreme Court took serious note of alleged illegal operations of multi-national accounting firms (MAFs) in India in collaboration with Indian charted accountancy firms (ICAFs) and asked the Centre on Friday to examine steps to rein them in.
“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 Chartered Accountants Act and the statutory code of conduct for CAs requires revisit so as to appropriately discipline and regulate MAFs,” a bench of Justices Adarsh Kumar Goel and Uday Umesh Lalit ordered.
Petitioner S Kumar and NGO Centre for Public Interest Litigation had alleged that MAFs, operating illegally in India in contravention of the CA Act and providing accounting, auditing, book keeping and taxation services, were found indulging in falsification of accounts leading to major scams like the one involving Satyam Computers.
The NGO, while seconding Kumar’s allegations, had alleged: “PricewaterhouseCoopers Private Ltd and their network audit firms operating in India... have indulged in violation of FDI policy, RBI Act and FEMA, which requires investigation.”
Taking note of the facts, the bench said: “The ED may complete the pending investigation within three months. In the present context... it may prima facie appear there is violation of statutory provisions and policy framework.”
The bench tasked the three-member expert committee, to be constituted within two months, to consider steps for effective enforcement of provisions of the FDI policy and FEMA regulations. “It may identify the remedial measures which may then be considered by appropriate authorities. Report of the committee may be submitted within three months of it being constituted. The Union government may take further action after due consideration of such report,” the bench said.
