The proposal to create an over-arching regulator to oversee auditing norms in the country has been opposed by the Institute of Chartered Accountants of India (ICAI), adding to the large list of contentious issues the government is dealing with while giving the final shape to the Companies Bill.

The ICAI has already voiced its opposition before the ministry of corporate affairs and is now preparing a detailed representation, said a government official, requesting anonymity.

The parliamentary standing committee on finance has recommended enhancing the regulatory oversight of the National Advisory Committee on Accounting Standards (NACAS) to enable it to vet all audit norms, a suggestion that has found favour with the ministry of corporate affairs as well.

NACAS, which functions as an expert authority under the administrative commands of the ministry of corporate affairs, has representation from all regulators like Sebi, Comptroller and Auditor General of India, Central Board of Direct Taxes and Reserve Bank of India, apart from having representatives from industry.

In its new form, the body will be called the National Advisory Committee on Accounting and Auditing Standards (NACAAS) and there will be a provision requiring ICAI to seek a go-ahead from the expert forum before prescribing any norm.

Having the expertise, we should continue with our role of framing the auditing standards and other authoritative literature for compliance, said Amarjit Chopra, ICAI president, in a communication to all its members opposing the proposal.

A committee within ICAI, the auditing and assurance standards board, currently prepares audit norms. The draft norms are vetted by its own council, which has representation from the ministry as well.

However, the government is prepared to go ahead depite the oppostion. If we have to be globally accepted, there has to be an independent autonomous body (to vet auditing norms), said Salman Khurshid, minister for corporate affairs, when asked about the matter.

The ICAI feel that audit standards should be left to them and accounting standards should be with NACAS. But an over-arching regulator for the accounting as well as the auditing standards is the suggestion that has been made.

If the suggestions of the standing committee are accepted, NACAAS could emerge as a regulator that will not just have a say on the formulation of norms but also on the quality of audits undertaken across the corporate sector.

The auditing standards currently followed as best-practice norms prescribed by ICAI will get legal sanction under the new Companies Bill being drafted.