Whistleblower policy may affect business, feel city's CAs

NAGPUR: While the Institute of Chartered Accountants of India (ICAI), the governing body for accounting professionals, is considering a whistleblower policy, CAs of the city are apprehensive that the move may harm their business interests. There are fears that that if they begin reporting anomalies like frauds or violation of any law which they come across during a firm's audit, they may also end up losing clientele.
A meeting of the ICAI's central council is scheduled to be held on September 18 and a discussion on bringing a whistleblower policy under the code of conduct for chartered accountants is likely to be on the agenda.
Satish Sarda, chairman of the Nagpur branch of ICAI, said the policy can be implemented effectively only if auditors are appointed by the government. At present it is the companies which appoint chartered accountants for the statutory audit of their business.
Under the present system the professional may fear that whistleblowing may lead to a loss of business. Even though it is mandatory under the law to get accounts audited, the client is always in a dominating position. This can be done away with if the government directly appoints an auditor. This will also ensure freedom in discharging duties.
ICAI's vice-president Jaideep Shah feels that the whistleblower policy is a tricky issue. "Several issues will have to be considered as violations are not reported to the RBI. The question is whether they should be reported or not," said Shah, adding "Matters to be reported must be finalised by regulators like the Securities and Exchange board of India (SEBI) or the Insurance Regulatory and Development Authority (IRDA). There is a regulator for each sector."
"Every regulator has a format through which irregularities can be reported," said Rajesh Loya, a senior chartered accountant.
However, Julfesh Shah, treasurer of the ICAI's western regional council, backed the policy. He said reporting violations should be extended to all stake holders and not just the management.
Former chairman of the ICAI's Nagpur branch, Samir Bakre endorsed the view. He said that the policy could be implemented with a note of caution.
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