Aturf war is brewing in the accounting regulation space, currently governed by the Institute of Chartered Accountants of India (ICAI). A government plan to usurp the two big powers of ICAI â€” to set accounting standards and take disciplinary action against its 200,000 members â€” has raised hackles in the institute and triggered fears among auditors of over-regulation.
The contours of this shift lie in a clause of the new Companies Bill, which is presently awaiting clearance from one of the two houses of Parliament. This clause proposes the formation of a National Financial Reporting Authority "to provide for matters relating to accounting and auditing standards", and details the NFRA's jurisdiction, functions, powers, penalties and staffing, among other things. Although the Companies Bill doesn't state so explicitly, the reading of accounting professionals is that the NFRA will supersede ICAI. "Clearly, a land grab is going on. The institute (ICAI) is not happy about the government encroaching on its territory," says a senior ICAI member who has worked closely with the institute and government. He spoke on the condition of anonymity.