The Institute of Chartered Accountants of India, the regulator of corporate accounting and audits, is hoping the Union Ministry of Corporate Affairs will acknowledge its current role and accept its recommendations regarding avoidance of certain domain-overlapping functions with those of the proposed National Financial Reporting Authority.

The Union Ministry of Corporate Affairs is yet to notify the relevant provisions and rules related to NFRA under the Companies Act, 2013.

The Ministry has proposed that the National Advisory Committee on Accounting and Auditing Standards (NACAS) be renamed as National Financial Reporting Authority with a mandate to ensure monitoring and compliance of accounting and auditing standards and to oversee quality of service of professionals associated with compliance.

K Raghu, President of ICAI, told Business Line that the institute suggested that it should continue to set the accounting and auditing standards, which could be approved by the NFRA.

Fraud monitoring

The super-regulator should also take action in case of “large-scale” accounting fraud. The regular monitoring of accounting and auditing practices should remain in the domain of ICAI. So far, the ICAI had been formulating and setting the accounting standards.

Similarly, the body with constitutional powers, had been taking actions against its members, who failed to comply with the standards set by the institute. Raghu said the ICAI, in consultation with the Ministry, has planned to introduce IFRS from April 1, 2016.

“Issues of taxation have delayed introduction of IFRS in India. However, in case of consolidated accounts, this problem would not arise”, he explained. The consolidated accounts of the holding company and its subsidiaries — listed or unlisted companies will have to be prepared following the IFRS. The standalone accounts, however, continue to be prepared following the Indian GAAP.