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COST AND WORKS ACCOUNTANTS (AMENDMENT) ACT 2006

THE COST AND WORKS ACCOUNTANTS (AMENDMENT) ACT, 2006
NO. 7 OF 2006
An Act further to amend the Cost and Works Accountants Act, 1959.
BE it enacted by Parliament in the Fifty-seventh Year of the
Republic of India as follows:-
1.
Short title and commencement.
1.
Short title and commencement.-(1) This Act may be called the Cost
and Works Accountants (Amendment) Act, 2006.
(2) It shall come into force on such date as the Central Government
may, by notification in the Official Gazette, appoint:
Provided
that different dates may be appointed for different
provisions of this Act and any reference in any such provision to the
commencement
of this Act shall be construed as a reference to the
commencement of that provision.
2.
Amendment of section 2.
2. Amendment of section
2.-In the Cost and Works Accountants Act,
1959 (23 of 1959) (hereinafter referred to as the principal Act), in
sub-section (1) of section 2,-
(i) after clause (a), the following
clauses shall be inserted,
namely:-
'(aa) "Authority" means the Appellate Authority referred to in
section 22A;
(aaa) ''Board'' means
the Quality Review Board constituted under
section 29A;';
(ii) after clause (f), the following clause shall be inserted,
namely:-
'(fa) "notification" means a notification published in the Official
Gazette;';
(iii) after clause (i), the following clauses shall
be inserted,
namely:-
'(ia) "specified" means specified by rules made by the Central
Government under this Act;
(ib) "Tribunal''
means a Tribunal established under sub-section (1)
of section 10B;'.
3.
Amendment of section 4.
3. Amendment of section 4.-In section
4 of the principal Act, for
sub-section (3), the following sub-section shall be substituted,
namely:-
"(3) Every person belonging
to any of the classes mentioned in
clauses (ii), (iii), (iv) and (v) of sub-section (1) shall have his
name entered in the Register
on application being made and granted in
the prescribed manner and on payment of such fees, as may be
determined, by notification,
by the Council, which shall not exceed
rupees three thousand:
Provided that the Council may with the prior approval of the Central
Government, determine the fee exceeding rupees three thousand, which
shall not in any case exceed rupees six thousand.".
4.
Amendment
of section 5.
4. Amendment of section 5.-In section 5 of the principal Act, for
sub-section (4), the following sub-section shall
be substituted,
namely:-
"(4) A member, being an associate who has been in continuous practice
in India for at least five years,
whether before or after the
commencement of this Act, or whether partly before and partly after
the commencement of this Act, and
a member who has been an associate
for a continuous period of not less than five years and who possesses
such qualifications as the
Council may prescribe with a view to
ensuring that he has experience equivalent to the experience normally
acquired as a result of
continuous practice for a period of five
years as a cost accountant shall, on payment of such fees, as may be
determined, by notification,
by the Council, which shall not exceed
rupees five thousand, and on application made and granted in the
prescribed manner, be entered
in the Register as a fellow of the
Institute:
Provided that the Council may with the prior approval of the Central
Government, determine
the fee exceeding rupees five thousand, which
shall not in any case exceed rupees ten thousand.
Explanation I.- For the purposes
of this sub-section, a person shall
be deemed to have practiced in India for any period for which he has
held a certificate of practice
under section 6, notwithstanding that
he did not actually practice during that period.
Explanation II.- In computing the continuous
period during which a
person has been an associate of the Institute, there shall be
included any continuous period during which the
person has been an
associate of the dissolved company immediately before he became an
associate of the Institute.".
5.
Amendment
of section 6.
5. Amendment of section 6.-In section 6 of the principal Act,-
(i) for sub-section (2), the following sub-section shall
be
substituted, namely:-
"(2) Every such member shall make an application in such form, and
pay such annual fee, for his certificate
as may be determined, by
notification, by the Council, which shall not exceed rupees three
thousand and such fee shall be payable
on or before the 1st day of
April in each year:
Provided that the Council may with the prior approval of the Central
Government,
determine the fee exceeding rupees three thousand, which
shall not in any case exceed rupees six thousand:
Provided further that
if a member of the Institute, who was in
practice immediately before the commencement of this Act, has made
within one month of such
commencement an application for the grant of
certificate of practice, he shall not be deemed to have contravened
the provisions of sub-section (1) by reason of his having practised
during the period between such commencement and the disposal of the
application.";
(ii) after sub-section (2), the following sub-section
shall be
inserted, namely:-
"(3) The certificate of practice obtained under sub-section (1) may
be cancelled by the Council under
such circumstances as may be
prescribed.".
6.
Amendment of section 9.
6. Amendment of section 9.-In section 9 of the principal Act,-
(i) for sub-section (2), the following sub-section shall be
substituted, namely:-
"(2) The Council shall be composed of the following
persons, namely:-
(a) not more than fifteen persons elected by the members of the
Institute, from amongst the fellows of the Institute
chosen in such
manner and from such regional constituencies as may be specified:
Provided that a fellow of the Institute, who has
been found guilty of
any professional or other misconduct, and whose name is removed from
the Register or has been awarded penalty
of fine, shall not be
eligible to contest the election,-
(i) in case of misconduct falling under the First Schedule of this
Act,
for a period of three years;
(ii) in case of misconduct falling under the Second Schedule of this
Act, for a period of six years,
from the completion of the period of removal of name from the
Register or payment of fine, as the case may be;
(b) not more than
five persons nominated in the specified manner by
the Central Government.";
(ii) after sub-section (2), the following sub-sections
shall be
inserted, namely: -
"(3) No person holding a post under the Central Government or a State
Government shall be eligible for
election to the Council under clause
(a) of sub-section (2).
(4) No person who has been auditor of the Institute shall be eligible
for election to the Council under clause (a) of sub-section (2) for a
period of three years after he ceases to be an auditor.".
7.
Substitution of new section for section 10.
7. Substitution of new section for section 10.-For section 10 of the
principal Act, the
following section shall be substituted, namely:-
"10. Re-election or re-nomination to Council.-A member of the
Council, elected or
nominated under sub-section (2) of section 9,
shall be eligible for re-election or as the case may be, re-
nomination:
Provided that
no member shall hold the office for more than two
consecutive terms:
Provided further that a member of the Council, who is or has
been
elected as President under sub-section (1) of section 12, shall not
be eligible for election or nomination as a member of the
Council.".
8.
Insertion of new sections 10A and 10B.
8. Insertion of new sections 10A and 10B.-After section 10 of the
principal
Act, the following sections shall be inserted, namely: -
"10A. Settlement of disputes regarding election.-In case of any
dispute
regarding any election under clause (a) of sub-section (2) of
section 9, the aggrieved person may make an application within thirty
days from the date of declaration of the result of election to the
Secretary of the Institute, who shall forward the same to the
Central
Government.
10B. Establishment of Tribunal.-(1) On receipt of any application
under section 10A, the Central Government shall,
by notification,
establish a Tribunal consisting of a Presiding Officer and two other
Members to decide such dispute and the decision
of such Tribunal
shall be final.
(2) A person shall not be qualified for appointment,-
(a) as a Presiding Officer of the Tribunal
unless he has been a
member of the Indian Legal Service and has held a post in Grade I of
the service for at least three years;
(b)
as a Member unless he has been a member of the Council for at
least one full term, and who is not a sitting member of the Council
or who has not been a candidate in the election under dispute; or
(c) as a Member unless he holds the post of a Joint Secretary to
the
Government of India or any other post under the Central Government
carrying a scale of pay which is not less than that of a Joint
Secretary to the Government of India.
(3) The
terms and conditions of service of the Presiding Officer and
Members of the Tribunal, their place of meetings and allowances shall
be such as may be specified.
(4) The expenses of the Tribunal shall be borne by the Council.".
9.
Amendment of section 12.
9. Amendment
of section 12.-In section 12 of the principal Act, -
(i) in sub-section (2), for the words "Chief Executive Authority",
the word
"Head" shall be substituted;
(ii) in sub-section (3),-
(a) after the words "he shall be eligible for re-election", the
words, brackets
and figure "under sub-section (1)" shall be inserted;
(b) in the proviso, for the words "the President", the words "the
President
and the Vice-President" shall be substituted.
10.
Amendment of section 13.
10. Amendment of section 13.-In section 13 of the principal
Act,-
(i) in sub-section (2), after the words "meetings of the Council",
the words "or he has been found guilty of any professional
or other
misconduct and awarded penalty of fine," shall be inserted;
(ii) in the proviso to sub-section (3), for the words "six months",
the words "one year" shall be substituted.
11.
Amendment of section 14.
11. Amendment of section 14.-In section 14 of the principal
Act, in
sub-section (1), for the words "three years", the words "four years"
shall be substituted.
12.
Substitution of new section
for section 15.
12. Substitution of new section for section 15.-For section 15 of the
principal Act, the following section shall
be substituted, namely: -
"15. Functions of Council.-(1) The Institute shall function under the
overall control, guidance and supervision
of the Council and the duty
of carrying out the provisions of this Act shall be vested in the
Council.
(2) In particular, and without
prejudice to the generality of the
foregoing powers, the duties of the Council shall include -
(a) to approve academic courses and
their contents;
(b) the prescribing of fees for the examination of candidates for
enrolment;
(c) the prescribing of qualifications
for entry in the Register;
(d) the recognition of foreign qualifications and training for the
purposes of enrolment;
(e) the prescribing
of guidelines for granting or refusal of
certificates of practice under this Act;
(f) the levy of fees from members, examinees and
other persons;
(g) the regulation and maintenance of the status and standard of
professional qualifications of members of the Institute;
(h) the carrying out, by granting financial assistance to persons
other than members of the Council or in any other manner, of research
in accountancy;
(i) to enable functioning of the Director (Discipline), the Board of
Discipline, the Disciplinary Committee and the
Appellate Authority
constituted under the provisions of this Act;
(j) to enable functioning of the Quality Review Board;
(k) consideration
of the recommendations of the Quality Review Board
made under clause (a) of section 29B, action taken thereon with a
report to the
Central Government within a period of three months, and
their inclusion in the annual report; and
(l) to ensure the functioning of
the Institute in accordance with the
provisions of this Act and in performance of other statutory duties
as may be entrusted to the
Institute from time to time.".
13.
Insertion of new sections 15A and 15B.
13. Insertion of new sections 15A and 15B.-After section
15 of the
principal Act, the following sections shall be inserted, namely: -
"15A. Functions of Institute.-The functions of the Institute
shall
include-
(a) the examination of candidates for enrolment;
(b) the regulation of training of students;
(c) the maintenance and
publication of a Register of persons
qualified to practice as cost accountants;
(d) collection of fees from members, examinees and
other persons;
(e) subject to the orders of the appropriate authorities under this
Act, the removal of names from the Register and
the restoration to
the Register of names which have been removed;
(f) the maintenance of a library and publication of books and
periodicals
relating to accountancy and allied subjects;
(g) the conduct of elections to the Council of the Institute; and
(h) the granting or
refusal of certificates of practice as per
guidelines issued by the Council.
15B. Imparting education by Universities and other bodies.-(1)
Subject to the provisions of this Act, any University established by
law or any body affiliated to the Institute, may impart education
on
the subjects covered by the academic courses of the Institute.
(2) The Universities or bodies referred to in sub-section (1) shall,
while awarding degree, diploma or certificate or bestowing any
designation, ensure that the award or designation do not resemble
or
is not identical to one awarded by the Institute.
(3) Nothing contained in this section shall enable a University or a
body to
adopt a name or nomenclature which is in any way similar to
that of the Institute.".
14.
Substitution of new section for section
16.
14. Substitution of new section for section 16.-For section 16 of the
principal Act, the following section shall be substituted,
namely: -
"16. Officers and employees, salary, allowances, etc.-(1) For the
efficient performance of its duties, the Council shall
-
(a) appoint a Secretary of the Council to perform such duties as may
be prescribed;
(b) appoint a Director (Discipline) to perform
such functions as
assigned to him under this Act and the rules and regulations framed
thereunder;
(c) designate an officer of the
Council or the Institute to carry out
the administrative functions of the Institute as its chief executive.
(2) The Council may also
-
(a) appoint such other officers and employees to the Council and the
Institute as it considers necessary;
(b) require and take
from the Secretary or from any other officer or
employee of the Council and the Institute such security for the due
performance of
his duties, as the Council considers necessary;
(c) prescribe the salaries, fees, allowances of the officers and
employees of the
Council and the Institute and their terms and
conditions of service;
(d) with the previous sanction of the Central Government, fix
the
allowances of the President, Vice-President and other members of the
Council and members of its Committees.
(3) The Secretary
of the Council shall be entitled to participate in
the meetings of the Council but shall not be entitled to vote
thereat.".
15.
Amendment
of section 17.
15. Amendment of section 17.-In section 17 of the principal Act,-
(a) in sub-section (1), for clause (ii), the following
clause shall
be substituted, namely :-
"(ii) a Finance Committee; and";
(b) for sub-section (3), the following sub-section shall
be
substituted, namely:-
"(3) Each of the Standing Committees shall consist of the President
and the Vice-President ex officio, and
minimum of three and maximum
of five members to be elected by the Council from amongst its members
.";
(c) sub-sections (4) and (5)
shall be omitted;
(d) in sub-section (6), for the words "two-thirds of total membership
of the Committee", the words "one-third of
total membership of the
Committee" shall be substituted.
16.
Amendment of section 18.
16. Amendment of section 18.-In section 18
of the principal Act, -
(i) for sub-sections (3), (4) and (5), the following sub-sections
shall be substituted, namely: -
"(3) The
Council shall keep proper accounts of the fund
distinguishing capital from revenue in the manner prescribed.
(4) The Council shall
prepare in the manner prescribed and approve,
prior to the start of the financial year, an annual financial
statement (the budget)
indicating all its anticipated revenues as
well as all proposed expenditures for the forthcoming year.
(5) The annual accounts of
the Council shall be prepared in such
manner as may be prescribed and be subject to audit by a chartered
accountant in practice to
be appointed annually by the Council:
Provided that no member of the Council or a person who has been a
member of the Council during the last four years or a person who is
in partnership with such member shall be eligible for appointment as
an auditor under this sub-section:
Provided further that, in
the event it is brought to the notice of
the Council that the accounts of the Council do not represent a true
and fair view of its
finances, then, the Council may itself cause a
special audit to be conducted:
Provided also that if such information, that the accounts
of the
Council do not represent a true and fair view of its finances, is
sent to the Council by the Central Government, then, the
Council may,
wherever appropriate cause a special audit or take such other action
as it considers necessary and shall furnish an
action taken report on
it to the Central Government.";
(ii) after sub-section (5), the following sub-sections shall be
inserted,
namely: -
"(5A) As soon as may be practicable at the end of each year, the
Council shall circulate the audited accounts to its members
at least
fifteen days in advance and consider and approve these accounts in a
special meeting convened for the purpose.
(5B) The
Council shall cause to be published in the Gazette of India
not later than the 30th day of September of the year next following,
a copy of the audited accounts and the Report of the Council for that
year duly approved by the Council and copies of the said accounts
and
Report shall be forwarded to the Central Government and to all the
members of the Institute.".
17.
Amendment of section 19.
17.
Amendment of section 19.-In section 19 of the principal Act,-
(i) in sub-section (3), the words "on payment of such amount as may
be prescribed" shall be inserted at the end;
(ii) for sub-section (4), the following sub-section shall be
substituted, namely:-
"(4)
Every member of the Institute shall, on his name being entered
in the Register, pay such annual membership fee as may be determined,
by notification, by the Council, which shall not exceed rupees five
thousand:
Provided that the Council may with the prior approval
of the Central
Government, determine the fee exceeding rupees five thousand which
shall not in any case exceed rupees ten thousand.".
18.
Amendment of section 20.
18. Amendment of section 20.-In section 20 of the principal Act,
after sub-section (2), the following
sub-section shall be inserted,
namely:-
"(3) If the name of any member has been removed from the Register
under clause (c) of sub-section
(1), on receipt of an application,
his name may be entered again in the Register on payment of the
arrears of annual fee and entrance
fee along with such additional
fee, as may be determined, by notification, by the Council which
shall not exceed rupees two thousand:
Provided that the Council may with the prior approval of the Central
Government, determine the fee exceeding rupees two thousand
which
shall not in any case exceed rupees four thousand.".
19.
Substitution of new section for section 21.
19. Substitution of new
section for section 21.-For section 21 of the
principal Act, the following section shall be substituted, namely:-
"21. Disciplinary
Directorate.-(1) The Council shall, by
notification, establish a Disciplinary Directorate headed by an
officer of the Institute designated
as Director (Discipline) and such
other employees for making investigations in respect of any
information or complaint received by
it.
(2) On receipt of any information or complaint along with the
prescribed fee, the Director (Discipline) shall arrive at a prima
facie opinion on the occurrence of the alleged misconduct.
(3) Where the Director (Discipline) is of the opinion that a member
is
guilty of any professional or other misconduct mentioned in the
First Schedule, he shall place the matter before the Board of
Discipline
and where the Director (Discipline) is of the opinion that
a member is guilty of any professional or other misconduct mentioned
in
the Second Schedule or in both the Schedules, he shall place the
matter before the Disciplinary Committee.
(4) In order to make investigations under the provisions
of this Act,
the Disciplinary Directorate shall follow such procedure as may be
specified.
(5) Where a complainant withdraws the
complaint, the Director
(Discipline) shall place such withdrawal before the Board of
Discipline or as the case may be, the Disciplinary
Committee, and the
said Board of Committee may, if it is of the view that the
circumstances so warrant, permit the withdrawal at
any stage.".
20.
Insertion of new sections 21A, 21B, 21C and 21D.
20. Insertion of new sections 21A, 21B, 21C and 21D.-After section
21
of the principal Act, the following sections shall be inserted,
namely:-
'21A. Board of Discipline.-(1) The Council shall constitute
a Board
of Discipline consisting of-
(a) a person with experience in law and having knowledge of
disciplinary matters and the profession,
to be its presiding officer;
(b) two members one of whom shall be a member of the Council elected
by the Council and the other member
shall be the person designated
under clause (c) of sub-section (1) of section 16;
(c) the Director (Discipline) shall function as
the Secretary of the
Board.
(2) The Board of Discipline shall follow summary disposal procedure
in dealing with all the cases before
it.
(3) Where the Board of Discipline is of the opinion that a member is
guilty of a professional or other misconduct mentioned in
the First
Schedule, it shall afford to the member an opportunity of being heard
before making any order against him and may thereafter
take any one
or more of the following actions, namely:-
(a) reprimand the member;
(b) remove the name of the member from the Register
up to a period of
three months;
(c) impose such fine as it may think fit which may extend to rupees
one lakh.
(4) The Director (Discipline)
shall submit before the Board of
Discipline all information and complaints where he is of the opinion
that there is no prima facie
case and the Board of Discipline may, if
it agrees with the opinion of the Director (Discipline), close the
matter or in case of
disagreement, may advise the Director
(Discipline) to further investigate the matter.
21B. Disciplinary Committee. (1) The Council
shall constitute a
Disciplinary Committee consisting of the President or the Vice-
President of the Council as the Presiding Officer
and two members to
be elected from amongst the members of the Council and two members to
be nominated by the Central Government from
amongst the persons of
eminence having experience in the field of law, economics, business,
finance or accountancy:
Provided that
the Council may constitute more Disciplinary Committees
as and when it considers necessary.
(2) The Disciplinary Committee while
considering the cases placed
before it, shall follow such procedure as may be specified.
(3) Where the Disciplinary Committee is
of the opinion that a member
is guilty of a professional or other misconduct mentioned in the
Second Schedule or both the First Schedule
and the Second Schedule,
it shall afford to the member an opportunity of being heard before
making any order against him and may
thereafter take any one or more
of the following actions, namely:-
(a) reprimand the member;
(b) remove the name of the member from
the Register permanently or
for such period, as it thinks fit;
(c) impose such fine as it may think fit, which may extend to rupees
five lakhs.
(4) The allowances payable to the members nominated by the Central
Government shall be such as may be specified.
21C.
Authority, Disciplinary Committee, Board of Discipline and
Director (Discipline) to have powers of civil court.-For the purposes
of an inquiry under the provisions of this Act, the Authority, the
Disciplinary Committee, Board of Discipline and the Director
(Discipline)
shall have the same powers as are vested in a civil
court under the Code of Civil Procedure, 1908 (5 of 1908), in respect
of the
following matters, namely:-
(a) summoning and enforcing the attendance of any person and
examining him on oath;
(b) the discovery and production of any
document; and
(c) receiving evidence on affidavit.
Explanation.-For the purposes of sections 21, 21A, 21B, 21C and 22,
"member of
the Institute" includes a person who was a member of the
Institute on the date of the alleged misconduct although he has
ceased to
be a member of the Institute at the time of the inquiry.
21D. Transitional provisions.-All complaints pending before the
Council
or any inquiry initiated by the Disciplinary Committee or any
reference or appeal made to a High Court prior to the commencement
of
the Cost and Works Accountants (Amendment) Act, 2006 shall continue
to be governed by the provisions of this Act, as if this Act had not
been amended by the Cost and Works Accountants (Amendment) Act,
2006.'.
21.
Substitution of new section for section 22.
21. Substitution of new section for section 22.-For section 22 of the
principal
Act, the following section shall be substituted, namely:-
'22. Professional or other mis-conduct defined.-For the purposes of
this
Act, the expression "professional or other misconduct" shall be
deemed to include any act or omission provided in any of the
Schedules
but nothing in this section shall be construed to limit or
abridge in any way the power conferred or duty cast on the Director
(Discipline)
under sub-section (1) of section 21 to inquire into the
conduct of any member of the Institute under any other
circumstances.'.
22.
Insertion of new sections 22A, 22B, 22C, 22D and 22E.
22. Insertion of new sections 22A, 22B, 22C, 22D and 22E.-After
section 22
of the principal Act, the following sections shall be
inserted, namely:-
'22A. Constitution of Appellate Authority.-The Appellate
Authority
constituted under sub-section (1) of section 22A of the Chartered
Accountants Act, 1949 (38 of 1949), shall be deemed to be the
Appellate Authority for the purposes of this Act subject to the
modification that for clause
(b) of said sub-section (1), the
following clause had been substituted, namely:-
"(b) the Central Government shall, by notification
appoint two part-
time members from amongst the persons who have been members of the
Council of the Institute of Cost and Works Accountants
of India for
at least one full term and who is not a sitting member of the
Council;".
22B. Term of office of members of Authority.-A
person appointed as a
member shall hold office for a term of three years from the date on
which he enters upon his office or until
he attains the age of sixty-
two years, whichever is earlier.
22C. Procedure, etc., of Authority.-The provisions of section 22C,
section 22D and section 22F of the Chartered Accountants Act, 1949
(38 of 1949) shall apply to the Authority in relation to allowances
and terms and conditions of service of its Chairperson and members
and in the discharge of its functions under this Act as they apply to
it in the discharge of its functions under the Chartered Accountants
Act, 1949.
22D. Officers and other staff of Authority.-(1) The Council shall
make available to the Authority such officers and other staff
members
as may be necessary for the efficient performance of the functions of
the Authority.
(2) The salaries and allowances and
conditions of service of the
officers and other staff members of the Authority shall be such as
may be prescribed.
22E. Appeal to
Authority.-(1) Any member of the Institute aggrieved
by any order of the Board of Discipline or the Disciplinary Committee
imposing
on him any of the penalties referred to in sub-section (3)
of section 21A and sub-section (3) of section 21B, may within ninety
days
from the date on which the order is communicated to him, prefer
an appeal to the Authority:
Provided that the Director (Discipline)
may also appeal against the
decision of the Board of Discipline or the Disciplinary Committee to
the Authority if so authorised by
the Council, within ninety days:
Provided further that the Authority may entertain any such appeal
after the expiry of the said period
of ninety days, if it is
satisfied that there was sufficient cause for not filing the appeal
in time.
(2) The Authority may, after
calling for the records of any case,
revise any order made by the Board of Discipline or the Disciplinary
Committee under sub-section
(3) of section 21A and sub-section (3) of
section 21B and may-
(a) confirm, modify or set aside the order;
(b) impose any penalty
or set aside, reduce, or enhance the penalty
imposed by the order;
(c) remit the case to the Board of Discipline or Disciplinary
Committee for such further enquiry as the Authority considers proper
in the circumstances of the case; or
(d) pass such other order
as the Authority thinks fit:
Provided that the Authority shall give an opportunity of being heard
to the parties concerned before
passing any order.'.
23.
Amendment of section 25.
23. Amendment of section 25.-In section 25 of the principal Act, sub-
section (3)
shall be omitted.
24.
Amendment of section 27.
24. Amendment of section 27.-In section 27 of the principal Act, for
sub-section (2),
the following sub-section shall be substituted,
namely:-
"(2) Any person who contravenes the provisions of sub-section (1)
shall,
without prejudice to any other proceedings which may be taken
against him, be punishable on first conviction with a fine not less
than five thousand rupees but which may extend to one lakh rupees,
and in the event of a second or subsequent conviction with
imprisonment
for a term which may extend to one year or with a fine
not less than ten thousand rupees but which may extend to two lakh
rupees
or with both.".
25.
Insertion of new Chapter VIIA.
25. Insertion of new Chapter VIIA.-After Chapter VII of the principal
Act, the
following Chapter shall be inserted, namely:-
"CHAPTER VII A
QUALITY REVIEW BOARD
29A. Establishment of Quality Review Board.-(1)
The Central
Government shall, by notification, constitute a Quality Review Board
consisting of a Chairperson and four other members.
(2) The Chairperson and members of the Board shall be appointed from
amongst the persons of eminence having experience in the field
of
law, economics, business, finance or accountancy.
(3) Two members of the Board shall be nominated by the Council and
other two
members shall be nominated by the Central Government.
29B. Functions of Board.-The Board shall perform the following
functions, namely:-
(a) to make recommendations to the Council with regard to the quality
of services provided by the members of the Institute;
(b) to
review the quality of services provided by the members of the
Institute including cost audit services; and
(c) to guide the members
of the Institute to improve the quality of
services and adherence to the various statutory and other regulatory
requirements.
29C.
Procedure of Board.-The Board shall meet at such time and place
and follow in its meetings such procedure as may be specified.
29D.
Terms and conditions of service of Chairperson and members of
Board and its expenditure.-(1) The terms and conditions of service of
the Chairperson and the members of the Board,
and their allowances
shall be such as may be specified.
(2) The expenditure of the Board shall be borne by the Council.".
26.
Omission
of section 33.
26. Omission of section 33.-Section 33 of the principal Act shall be
omitted.
27.
Substitution of new section for
section 36.
27. Substitution of new section for section 36.-For section 36 of the
principal Act, the following section shall be substituted,
namely:-
"36. Protection of action taken in good faith.-No suit, prosecution
or other legal proceeding shall lie against the Central
Government or
the Council or the Authority or the Disciplinary Committee or the
Tribunal or the Board or the Board of Discipline
or the Disciplinary
Directorate or any officer of that Government, Council, Authority,
Disciplinary Committee, Tribunal, Board, Board
of Discipline or the
Disciplinary Directorate, for anything which is in good faith done or
intended to be done under this Act or
any rule, regulation,
notification, direction or order made thereunder.".
28.
Insertion of new section 36A.
28. Insertion of new
section 36A.-After section 36 of the principal
Act, the following section shall be inserted,
namely: -
"36A. Members, etc., to be
public servants.-The Chairperson,
Presiding Officer, members and other officers and employees of the
Authority, Disciplinary Committee,
Tribunal, Board, Board of
Discipline or the Disciplinary Directorate shall be deemed to be
public servants within the meaning of
section 21 of the Indian Penal
Code.".
29.
Insertion of new section 38A.
29. Insertion of new section 38A.-After section 38 of the
principal
Act, the following section shall be inserted, namely:-
"38A. Power of Central Government to make rules.-(1) The Central
Government may, by notification, make rules to carry out the
provisions of this Act.
(2) In particular, and without prejudice to
the generality of the
foregoing powers, such rules may provide for all or any of the
following matters, namely:-
(a) the manner of
election and nomination in respect of members to
the Council under sub-section (2) of section 9;
(b) the terms and conditions of
service of the Presiding Officer and
Members of the Tribunal, place of meetings and allowances to be paid
to them under sub-section
(3) of section 10B;
(c) the procedure of investigation under sub-section (4) of section
21;
(d) the procedure while considering the
cases by the Disciplinary
Committee under sub-section (2) and fixation of allowances of the
nominated members under sub-section (4)
of section 21B;
(e) the procedure to be followed by the Board in its meetings under
section 29C; and
(f) the terms and conditions
of service of the Chairperson and
members of the Board under sub-section (1) of section 29D.".
30.
Amendment of section 39.
30. Amendment
of section 39.-In section 39 of the principal Act,-
(i) in sub-section (1), the words "and a copy of such regulations
shall be sent
to each member of the Institute" shall be omitted;
(ii) in sub-section (2),-
(a) in clause (h), the words "the Council and" shall
be omitted;
(b) clause (t) shall be omitted;
(iii) sub-section (5) shall be omitted.
31.
Insertion of new section 40.
31. Insertion
of new section 40.-After section 39 of the principal
Act, the following section shall be inserted, namely:-
"40. Rules, regulations
and notifications to be laid before
Parliament.-Every rule and every regulation made and every
notification issued under this Act
shall be laid, as soon as may be
after it is made or issued, before each House of Parliament, while it
is in session, for a total
period of thirty days which may be
comprised in one session or in two or more successive sessions, and
if, before the expiry of the
session immediately following the
session or the successive sessions aforesaid, both Houses agree in
making any modification in the
rule, regulation or notification, or
both Houses agree that the rule, regulation or notification should
not be made or issued, the rule, regulation or notification shall
thereafter
have effect only in such modified form or be of no effect,
as the case may be; so, however, that any such modification or
annulment
shall be without prejudice to the validity of anything
previously done under that rule, regulation or notification.".
32.
Substitution
of new Schedules for First Schedule and Second Schedule.
32. Substitution of new Schedules for First Schedule and Second
Schedule.-For
the First Schedule and the Second Schedule to the
principal Act, the following Schedules shall be substituted, namely:-
'THE FIRST
SCHEDULE
[See sections 21 (3), 21A(3) and 22]
PART I
Professional misconduct in relation to cost accountants in practice
A cost accountant
in practice shall be deemed to be guilty of
professional misconduct, if he-
(1) allows any person to practice in his name as a cost
accountant
unless such person is also a cost accountant in practice and is in
partnership with or employed by him;
(2) pays or allows
or agrees to pay or allow, directly or indirectly,
any share, commission or brokerage in the fees or profits of his
professional
business, to any person other than a member of the
Institute or a partner or a retired partner or the legal
representative of a deceased
partner, or a member of any other
professional body or with such other persons having such
qualifications as may be prescribed, for
the purpose of rendering
such professional services from time to time in or outside India.
Explanation.-In this item, "partner" includes
a person residing
outside India with whom a cost accountant in practice has entered
into partnership which is not in contravention
of item (4) of this
Part;
(3) accepts or agrees to accept any part of the profits of the
professional work of a person who is not
a member of the Institute:
Provided that nothing herein contained shall be construed as
prohibiting a member from entering into profit
sharing or other
similar arrangements, including receiving any share, commission or
brokerage in the fees, with a member of such
professional body or
other person having qualifications, as is referred to in item (2) of
this Part;
(4) enters into partnership,
in or outside India, with any person
other than a cost accountant in practice or such other person who is
a member of any other professional
body having such qualifications as
may be prescribed, including a resident who but for his residence
abroad would be entitled to
be registered as a member under clause
(iv) of sub-section (1) of section 4 or whose qualifications are
recognised by the Central
Government or the Council for the purpose
of permitting such partnerships;
(5) secures, either through the services of a person who
is not an
employee of such cost accountant or who is not his partner or by
means which are not open to a cost accountant, any professional
business:
Provided that nothing herein contained shall be construed as
prohibiting any arrangement permitted in terms of items (2),
(3) and
(4) of this Part;
(6) solicits clients or professional work, either directly or
indirectly, by circular, advertisement, personal
communication or
interview or by any other means:
Provided that nothing herein contained shall be construed as
preventing or prohibiting-
(i) any cost accountant from applying or requesting for or inviting
or securing professional work from another cost accountant in
practice; or
(ii) a member from responding to tenders or enquiries issued by
various users of professional services or organisations
from time to
time and securing professional work as a consequence;
(7) advertises his professional attainments or services, or uses
any
designation or expressions other than cost accountant on professional
documents, visiting cards, letter heads or sign boards,
unless it be
a degree of a University established by law in India or recognised by
the Central Government or a title indicating membership of the
Institute of Cost Accountants of India or of any other institution
that has been recognised by the Central Government
or may be
recognised by the Council:
Provided that a member in practice may advertise through a write up,
setting out the services
provided by him or his firm and particulars
of his firm subject to such guidelines as may be issued by the
Council;
(8) accepts a
position as cost accountant previously held by another
cost accountant in practice without first communicating with him in
writing;
(9) charges or offers to charge, accepts or offers to accept in
respect of any professional employment, fees which are based on a
percentage of profits or which are contingent upon the findings or
results of such employment, except as permitted under any regulation
made under this Act;
(10) engages in any business or occupation other than the profession
of cost accountant unless permitted by
the Council so to engage:
Provided that nothing contained herein shall disentitle a cost
accountant from being a director of a company
(not being a managing
director or a wholetime director) unless he or any of his partners is
interested in such company as accountant;
(11) allows a person not being a member of the Institute in practice,
or a member not being his partner to sign on his behalf or
on behalf
of his firm, any cost or pricing statements or any other statements
relating thereto.
PART II
Professional misconduct in
relation to members of the Institute in
service
A member of the Institute (other than a member in practice) shall be
deemed to be
guilty of professional misconduct, if he being an
employee of any company, firm or person-
(1) pays or allows or agrees to pay, directly
or indirectly, to any
person any share in the emoluments of the employment undertaken by
him;
(2) accepts or agrees to accept any
part of fees, profit or gains
from a lawyer, a cost accountant or broker engaged by such company,
firm or person or agent or customer
of such company, firm or person
by way of commission or gratification.
PART III
Professional misconduct in relation to members of
the Institute
generally
A member of the Institute, whether in practice or not, shall be
deemed to be guilty of professional misconduct,
if he-
(1) not being a fellow of the Institute acts as a fellow of the
Institute;
(2) does not supply the information called for,
or does not comply
with the requirements asked for by the Institute, Council or any of
its Committees, Director (Discipline), Board
of Discipline,
Disciplinary Committee, Quality Review Board or the Appellate
Authority;
(3) while inviting professional work from
another cost accountant or
while responding to tenders or enquiries or while advertising through
a write up, or anything as provided
for in items (6) and (7) of Part
I of this Schedule, gives information knowing it to be false.
PART IV
Other misconduct in relation
to members of the Institute generally
A member of the Institute, whether in practice or not, shall be
deemed to be guilty of other
misconduct, if-
(1) he is held guilty by any civil or criminal court for an offence
which is punishable with imprisonment for a term
not exceeding six
months;
(2) in the opinion of the Council he brings disrepute to the
profession or the Institute as a result of
his action whether or not
related to his professional work.
THE SECOND SCHEDULE
[See sections 21 (3), 21B (3) and 22]
PART I
Professional
misconduct in relation to cost accountants in practice
A cost accountant in practice shall be deemed to be guilty of
professional
misconduct, if he -
(1) discloses information acquired in the course of his professional
engagement to any person other than his
client so engaging him,
without the consent of his client, or otherwise than as required by
any law for the time being in force;
(2) certifies or submits in his name, or in the name of his firm, a
report of an examination of cost accounting and related statements
unless the examination of such statements has been made by him or by
a partner or an employee in his firm or by another cost accountant in
practice;
(3) permits his name or
the name of his firm to be used in connection
with an estimate of cost or earnings contingent upon future
transactions in a manner
which may lead to the belief that he vouches
for the accuracy of the forecast;
(4) expresses his opinion on cost or pricing statements
of any
business or enterprise in which he, his firm or a partner in his firm
has a substantial interest;
(5) fails to disclose a
material fact known to him in a cost or
pricing statement, which is not disclosed in a cost or pricing
statement but disclosure of
which is necessary in making such
statement where he is concerned with such statement in a professional
capacity;
(6) fails to report
a material mis-statement known to him to appear
in a cost or pricing statement with which he is concerned in a
professional capacity;
(7) does not exercise due diligence, or is grossly negligent in the
conduct of his professional duties;
(8) fails to obtain sufficient
information which is necessary for
expression of an opinion or its exceptions are sufficiently material
to negate the expression
of an opinion ;
(9) fails to invite attention to any material departure from the
generally accepted procedure of costing and pricing
applicable to the
circumstances;
(10) fails to keep moneys of his client other than fees or
remuneration or money meant to be expended
in a separate banking
account or to use such moneys for purposes for which they are
intended within a reasonable time.
PART II
Professional
misconduct in relation to members of the Institute
generally
A member of the Institute, whether in practice or not, shall be
deemed
to be guilty of professional misconduct, if he -
(1) contravenes any of the provisions of this Act or the regulations
made thereunder
or any guidelines issued by the Council;
(2) being an employee of any company, firm or person, discloses
confidential information
acquired in the course of his employment,
except as and when required by any law for the time being in force or
except as permitted
by the employer;
(3) includes in any information, statement, return or form to be
submitted to the Institute, Council or any of its
Committees,
Director (Discipline), Board of Discipline, Disciplinary Committee,
Quality Review Board or the Appellate Authority any
particulars
knowing them to be false;
(4) defalcates or embezzles moneys received in his professional
capacity.
PART III
Other misconduct
in relation to members of the Institute generally
A member of the Institute, whether in practice or not, shall be
deemed to be guilty
of other misconduct, if he is held guilty by any
civil or criminal court for an offence which is punishable with
imprisonment for
a term exceeding six months.'.
T. K. VISWANATHAN,
Secy. to the Govt. of India.
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