A Chennai-based Chartered Accountant, V. Venkata Siva Kumar has approached the Madras High Court challenging the vires of the constitution of the new regulator for the CA profession, National Financial Reporting Authority ( NFRA ).
The petitioner sought for a declaration that the constitution of National Financial Reporting Authority (NFRA) under Sec. 132 of the Companies Act, 2013 as unconstitutional, void and inoperative.
According to the petitioner, the creation of NFRA as the super regulator which is in the embryo stage at present, destabilizes the present regulator, i.e., ICAI from carrying out its core functions, proposed to be run by a senor bureaucrat without any practical knowledge in ever expanding highly complicated business environment on account of rapid technological changes due to globalization will result in total disaster defeating and frustrating the very objectives of creating this super regulator.
He pointed out that after the implementation of NFRA, there will be two regulating bodies for CAs- ICAI and NFRA. “This artificial unreasonable classification on the basis of turnover is against Article 14 of our Constitution and liable to be struck down,” the petition reads.
“This act of constitution of NFRA denudes and destroys the ICAI and gives unfettered financial muscle to the executive which gains control over PSU banks, insurance and the industry controlling resources of the public to the tune of hundreds of laks of Crores. As a super regulating body which acts as all in one – complainant, the investigator adjudicator and awarder of punishment to the members of the ICAI deprives them of their independence to carry out their profession and express their opinion thus violating Art. 19 (1) (a) and (g),” it said.
NFRA is an independent regulator for the chartered accountants, for enforcing their accounting and auditing standards, therefore, enhancing investor and public confidence in financial disclosures of companies.
In March, the Union Cabinet approved the regulatory authority for chartered accountants, the National Financial Regulatory Authority.
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