COMMITTEE OF EXPERTS

Inviting comments from stakeholders

Last date of submission – August 16, 2018

1 The Supreme Court of India in its recent judgment dated February 23, 2018 in the matter of
S. Sukumar versus The Secretary, Institute of Chartered Accountants of India and Centre for
Public Interest Litigation versus Union of India directed the Government to constitute a
three member Committee of Experts to look into the regulatory and other issues related to
multi-national accounting firms.

2 The Government of India has constituted a three-member Committee of Experts on April

20, 2018 consisting of the following persons:

i Chairperson: Shri Anurag Agarwal, Joint Secretary, Ministry of Corporate Affairs.

ii Member: Shri Sudhanshu Pandey, Joint Secretary, Department of Commerce,

Ministry of Commerce and Industry

iii Member: Shri Ravinder, Joint Secretary, Department of Industry, Ministry of

Commerce and Industry.

3 The Committee invites specific suggestions from all stakeholders like auditors, audit firms,
companies, investors and regulators.

4 For the convenience of the stakeholders, the questions have been categorised under two
broad heads i.e., competition issues and oversight mechanism.

Competition

a Do you think foreign audit firms are operating in India or whether these are Indian
firms affiliated with an international network?

b Do you know whether these firms while operating in India have violated any
provision of the Chartered Accountants Act, 1949 (CA, Act), norms prescribed by
the Institute of Chartered Accountants of India (ICAI) or any other laws? If yes,
what kind of violations?

c The Companies Act, 2013 prohibits rendering of certain non-audit services by the
statutory auditor/network entities to avoid conflict of interest. However, there are no
disclosure requirements in the Act on other (permitted) non-audit services rendered
by the network/associated entities. What specific disclosures should be made both
by the company and auditor to ensure sufficient transparency in the domain of non-
audit services?

d Do you think audit firms having affiliation with international network:

i) face any indirect control issues in their audit functions?

 ii) have an unfair advantage through network?

If yes, please elaborate.

e Presently the CA Act and professional code of conduct imposes several restrictions
on soliciting work through advertisement and promotion. What are your views on
these restrictions?

f The respective councils of the professional institutes i.e., ICAI, ICSI and ICOAI 1
are yet to take a final decision on the modalities of setting up multi-disciplinary
partnership (MDP) firms. What are your views on allowing MDP firms ?

Oversight mechanism

a Do you think the current liability regime for auditors i.e., both firm and individual,
is strong enough to ensure sufficient transparency and accountability in audit
profession? If no, what are the key measures which can be taken to
strengthen/improve the standards of accountability?

b In the event of serious lapses, is liability correctly attributed in the cases of large
firms (including big four) to the concerned decision making partner?

c What should be the appropriate form of oversight mechanism in the Indian context?

d The Companies Act, 2013 proposes to set up the National Financial Reporting
Authority (NFRA), an exclusive oversight body. Do you agree that there is need for
setting up such a body? If yes, what specific powers should be given to NFRA to
ensure a strong enforceable oversight mechanism?

e How do you see the role of ICAI going forward once NFRA becomes completely
operational?

5 Your submissions would be very helpful for the Committee, if they are provided with
supporting facts, reasons and suggestions. When responding please state whether you are
responding as an individual or representing the views of an organisation. Kindly mail your
comments with your details (Name, Address, Occupation, etc.) to:

Shri G. Vaidheeswaran at (g.vaidheeswaran@nic.in)

Deputy Secretary, Ministry of Corporate Affairs, Government of India

1
Formerly known as ICWAI.