Recently, there were reports that the CBI (Central Bureau of Investigation) would take the help of `neutral CAs'. The context was a preliminary enquiry against Uttar Pradesh Chief Minister Mulayam Singh for allegedly amassing assets disproportionate to his known sources of income, and the CBI planning to use the services of a neutral team of chartered accountants (CAs) to scrutinise the evidentiary material. Business Line contacted Mr Sunil Talati, President of the Institute of Chartered Accountants of India (ICAI), to know more about the `neutral CAs'.
First, who are `neutral CAs'?
The word `neutral' appears to have been used to indicate that the CAs entrusted with the task of scrutinising the material for the preliminary inquiry would be independent, that is, having no conflict of interest, and are able to act objectively and with fairness.
The concept of being independent or neutral used in this context, if extended to its natural meaning, would mean that such CAs would not have any affiliation directly or indirectly with any political party and that they have not been associated, in the recent past, with the Uttar Pradesh Government in any capacity which is likely to impair their independence and objectivity while undertaking the task.
The words `affiliation' and `association' referred above would require to be amplified. `Affiliation' might include affiliation of the person as an individual or through his relatives or partners of the firm.
Similarly, the word `associated' could mean to include allotment in the recent past of professional assignment or any benefit, financial or otherwise, to the organisation and institutions with which the CA might be directly or indirectly associated.
Has the Institute been approached for names to be suggested for the purpose? Or, do you think the CAG is better suited for the job?
The ICAI does prepare a panel of CA, which is sent to the RBI (Reserve Bank of India) for appointment of bank branch auditors. The panel is multipurpose and also used for preparing purpose-specific panel, whenever asked for, by any authority/organisation.
Similarly, the Office of Comptroller and Auditor General (CAG) of India also prepares a panel for appointment of auditors for Central PSUs (public sector undertakings) and for sending to the RBI for appointment of statutory auditors. All the CAs in the panel are neutral.
In case the CBI asks for the panel it would be required to determine the following: (a) criteria in regard to profile of the CAs, or firm of CAs, considered necessary for the Bureau, keeping in view the requirements of the preliminary inquiry; and (b) criteria in regard to independence considered appropriate taking into account the facts and circumstances of the case.
However, if specific declaration is required that no such CA is connected with any political party directly or indirectly and/or related to any Minister, etc., directly or indirectly, the same can be taken, and this would further strengthen the concept of neutral CA.
How should such a CA go about the task of verifying disproportionate wealth? Are there any guidelines from the Institute?