India’s Ministry of Corporate Affairs (MCA) has raised concerns over the Institute of Chartered Accountants of India’s (ICAI) proposed Global Networking Guidelines, ETCFO reported, citing sources.
At the centre of the matter is whether a framework with regulatory implications should be issued by the government rather than the accounting body.
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As a result, the ICAI has paused the rollout of the proposed framework for now, people familiar with the matter told the publication.
This is despite the institute having completed stakeholder consultations and finalised the draft.
The issue is likely to be discussed by ICAI president Prasanna Kumar and senior officials at the Corporate Affairs Ministry before any decision is taken on the way forward, the report said.
People aware of the discussions said the ministry’s concerns are not primarily about the contents of the proposed guidelines or the compliance requirements within them. Instead, the focus has been on jurisdiction.
According to the sources, the ministry’s view is that measures carrying regulatory implications would normally fall within the government’s domain.
“The discussions are more about jurisdiction than about the contents of the guidelines. The issue being examined is who should issue such a framework,” one of the sources said.
Another person familiar with the discussions said there is also a view that, if the ICAI were to issue such a document, it may be more appropriate as recommendations rather than guidelines that could be read as having regulatory effect.
“The discussion is not about rewriting the framework. The focus is on the nature of the document and the authority under which it should be issued,” the person added.
People familiar with the development said the ICAI has not yet taken a final decision on the future of the proposed Global Networking Guidelines.
For now, the institute has held back any further action while discussions with the ministry continue.
The proposed guidelines were drawn up to create a governance framework for networking arrangements involving chartered accountant practices, including companies linked to international accounting networks.
Before finalising the framework, the ICAI carried out consultations with accounting practices and other stakeholders.
Sources said the current discussions are not about whether the ICAI has statutory powers under the Act. Rather, they are about the extent of those powers where a framework may be seen as having wider regulatory implications.
“The deliberations are focused on the institutional role and the character of the framework. Those discussions are still ongoing,” another source said.
