The wait for Sachin’s elusive hundred continues, the one for the Lokpal Law is hopefully over. After a delay of more than four decades the Lokpal Bill has been passed by the Lok Sabha. For close to the past one year this subject was the matter of debate and discussion among all sections of the public. The bill in the form that it has been passed may not satisfy all but I believe that it is a good beginning. Law making is a process and one cannot wait for the “perfect” law for which hardly exists. This sentiment was echoed by the Finance Minister as he wound up the debate on the Bill before the vote thereon. The bill has still to pass through the Rajya Sabha but one hopes that it will do so. What was heartening to note was that the government accepted some of the suggestions made.
What one needs is a proper implementation and enforcement of this Lokpal legislation. The challenge before the leaders of the movement against corruption, is to keep up the pressure to ensure that the administrative mechanism for the Lokpal is set up early. Let us hope that the government acts proactively on this issue.
The last two months of 2011, saw the government awakening from the slumber that it was in. The FDI in retail had to be kept in abeyance due to lack of support from the allies in the UPA, but I think the policy will be introduced in the near future. For some other policy initiatives one may have to wait for the forthcoming assembly elections to end.
Apart from the Lokpal bill, two other important pieces of legislation are pending approval of Parliament. These are the Companies Bill 2011 and the Direct Tax Code. Out of them the Companies Bill was introduced and has been referred to the select committee. As far as the Direct Tax Code is concerned the report of the committee has yet to be received after which it is hoped that the suggested amendments will be made in the bill and the same will may be discussed in the budget session.
The year 2012 will probably see the enactment of these two laws both of which are of great importance to our profession. The Direct Tax Code has already been sufficiently debated and deliberated upon. One now awaits its passage through parliament. The Companies Bill have a significant number of changes as compared to the Companies Act 1956. Many of these have already been debated and discussed and the deliberations will continue for a long time to come.
The bill provides for a number of changes like rotation of auditors in regard to a certain class of companies, the prohibition for a statutory auditor to render other services to the auditee etc. There could be a number of views on these proposals. However, I wish to draw attention to the two most significant changes for auditors. The first is the change the role of the National Advisory Committee on accounting standards (NACAS) to National Financial Reporting Authority (NFRA). This authority will now have the power to investigate cases of professional misconduct. This virtually takes away the disciplinary mechanism from the Institute of Chartered Accountants of India (ICAI). One wonders whether such a change is advisable. There is no denying the fact that there is a perception among the public that the profession is soft on its members. There could be two views in that regard as well, but to set up another forum is hardly the solution. The second most important proposal is the duty cast on the auditor to report fraud to the Central Government. Undoubtedly the proposal uses the words “in the course of performance of his duties as an auditor” in the context of such reporting, but once the proposal becomes law it may mark a shift in the classical role of an auditor. I am sure that the ICAI will make the necessary representation but other stakeholders must also make their views known. Let us hope that the representations of all stakeholders concerned will be duly considered by the Parliament when the Companies Bill and the Direct Tax Code bill ultimately become law.
As I conclude this communication, I am reminded of the stories that were doing the rounds a few days ago that the world will come to an end in 2012. One needs to ignore all such “prophecies”. All prophets have also said that India is on its way to become a super power. But merely believing in prophecies will take us nowhere. If all of us have self belief, and work hard towards our goals, the coming year will be joyful and prosperous for us and our country. Let us hold hands, recite our century old national anthem and be proud to be Indians!
Leaders are more powerful role models; When they learn than when they teach..
