The Institute of Chartered Accountants of India (ICAI)
has constituted a seven-member financial report review
board (FRRB) that has been empowered to suo motu look
into the published accounts of different organisations,
including banks and financial institutions.
The FRRB findings
on the deficiencies and irregularities observed, if any,
would be sufficient enough for initiating action under
the disciplinary mechanism of the institute, says ICAI
president Ashok Chandak.
regulatory system for triggering the scrutiny of its members
role in alleged corporate frauds had recently come under
intense debate. ICAI, which is also the regulator of the
chartered accountancy profession, has been till recently
taking a position that the institute is not empowered
to suo motu seek information about the financial
statements of a company.
The institute has
already recommended amendments in the Chartered Accountants
Act, 1949, to the central government to enable FRRB to
exercise such powers that are already vested in a civil
court. FRRB is keen to empower itself with power for discovery
and production of any document from the organisation concerned.
Sources say FRRB
would, pending amendments in the Act, start discharging
its functions without some of the special powers that
are vested in a civil court.
Amarjit Chopra is the chairman of FRRB. The seven-member
board also includes G C Srivastav, joint secretary, revenue
department (Central Board of Direct Taxes), and Rajiv
Mehrishi, joint secretary, Department of Company Affairs
ICAIs move to set up a FRRB comes at a time when DCA
has been toying with the idea for constituting an independent
panel of experts, which would at random scrutinise financial
statements of companies and ensure that follow-up action
is taken on the qualifications made by the auditors in