In response to recent inquiries regarding disciplinary actions against Big 4 affiliates, the Institute of Chartered Accountants of India ( ICAI ) issued a comprehensive statement outlining its regulatory framework and commitment to fair procedures.
The query sought insights into ICAI’s disciplinary actions against entities like M/s. SR Batliboi & Associates, LLP, M/s. SRBC & Co, LLP, and M/s. SR Batliboi & Co, LLP, formerly known as SR Batliboi & Associates and SR Batliboi & Co.
The focus was on breaches of the Chartered Accountants Act related to dealings with global firms under the EY network, which fall outside domestic regulations.
In its response, the Institute highlighted its statutory mandate to regulate and develop the Chartered Accountancy profession, as enshrined in the Chartered Accountant Act, 1949. The Act’s Chapter V addresses misconduct and penalties, with provisions for quasi-judicial bodies like the Board of Discipline and Disciplinary Committees. These bodies include independent external experts appointed by the Government of India and operate under statutory rules ensuring adherence to principles of natural justice and fair procedure.
Regarding concerns about action against Multinational Accounting Firms (MAFs), ICAI referred to the Supreme Court’s involvement, particularly the 2018 judgment in S. Sukumar vs. ICAI.
The Supreme Court had directed ICAI to further examine issues related to MAF operations in India within a specified timeframe, acknowledging ICAI’s ongoing efforts and regulatory role.
The reply to the queries by the Institute stated that, “In so far as action against Multinational Accounting Firms (MAFs), it may please be noted that the issue was also dealt with by the Hon’ble Supreme Court vide its judgment dated 23.02.2018 in S. Sukumar vs. ICAI.
The issue for consideration by the Supreme Court was as to whether the MAFs are operating in India in violation of the law in force in a clandestine manner and no effective steps are being taken to enforce the said laws. If so, what orders are required to be passed to enforce the said law?
The Hon’ble Supreme Court after referring to the Report dated 15.09.2003 of the Study Group of ICAI & Report on Operations of MAFs in India dated 29.07.2011 submitted by the Expert Group of ICAI and considering various provisions of the Chartered Accountant Act, 1949 and the action initiated by the ICAI till then, the Hon’ble Court has directed ICAI to further examine all the related issues at an appropriate level as far as possible within three months and take such further steps as may be considered necessary.
In view of the above, it may please be noted that the ICAI which is a Statutory Regulator of the Profession of Chartered Accountants is discharging its duties as laid down under the Chartered Accountants Act, 1949 and the rules and regulations made thereunder. ICAI is committed to discharge its Regulatory functions in accordance with due procedure established by law and in compliance with the direction of the Hon’ble Supreme Court.”
Further developments are awaited.
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