The government plans to redefine the functions of the National Advisory Committee on Accounting Standards (Nacas) to convert it into an independent regulatory entity to monitor the quality of audit undertaken across the corporate sector in the country.

The proposal, made by the corporate affairs ministry to the Parliamentary Committee on Finance that looked into the Companies Bill, 2009, says the revamped Nacas should be allowed to oversee and monitor the performance of standard setting bodies for the accountancy and audit professions.

Autonomous institutions such as the Institute of Chartered Accountants of India (ICAI) and the Institute of Company Secretaries of India, under the administrative control of the corporate affairs ministry, are the standard setting bodies for accountancy and audit professions.

The ministry response came after the Parliamentary committee, which submitted its report last week, expressed concerns over the global economic crisis and the failure of big companies and suggested the formation of an independent regulator to recommend standards for corporate financial reporting, corporate audit and the quality of service of professionals associated with ensuring compliance with such standards. It also wanted this body to oversee, monitor and supervise the bodies involved in setting such standards.