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COST AND WORKS ACCOUNTANTS (AMENDMENT) ACT, 2006
MINISTRY OF LAW AND JUSTICE
(Legislative Department)
New Delhi, the 20th March, 2006/Phalguna 29, 1927 (Saka)
The following Act of Parliament received the assent of the President on the 17th March, 2006, and is hereby published for general information:—
COST AND WORKS ACCOUNTANTS (AMENDMENT) ACT, 2006
No. 7 OF 2006
[17th March, 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:—
Short title and commencement
1. (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.
Amendment of section 2
2. In the Cost and Works Accountants Act, 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;’.
Amendment of section 4
3. 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.”.
Amendment of section 5
4. 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.”.
Amendment of section 6
5. 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 maybe prescribed”.
Amendment of section 9
6. 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 tinder clause (a) of sub-section (2) for a period of three years after he ceases to be an auditor.”.
Substitution of new section for section 10
7. For section 10 of the principal Act, the following section shall be substituted, namely:—
Re-election or re-nomination to Council
“10. 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 subsection (1) of section 12, shall not be eligible for election or nomination as a member of the Council.”.
Insertion of new sections 10A and 10B
8. After section 10 of the principal Act, the following sections shall be inserted, namely:—
Settlement of disputes regarding election
“10A. 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.
Establishment of Tribunal
10B. (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.”.
Amendment of section 12
9. 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.
Amendment of section 13
10. 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.
Amendment of section 14
11. In section 14 of the principal Act, in sub-section (1), for the words “three years”, the words “four years” shall be substituted.
Substitution of new section for section 15
12. For section 15 of the principal Act, the following section shall be substituted, namely:—
Functions of Council
“15. (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.”.
Insertion of new sections 15A and 15B
13. After section 15 of the principal Act, the following sections shall be inserted, namely:—
Functions of Institute
“15A. 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.
Imparting education by Universities and other bodies
15B. (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.
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.”.
Substitution of new section for section 16
14. For section 16 of the principal Act, the following section shall be substituted, namely:—
Officers and employees, salary, allowances, etc.
“16. (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.”.
Amendment of section 17
15. 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 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.
Amendment of section 18
16. 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 on 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 oft he said accounts and Report shall be forwarded to the Central Government and to all the members of the Institute.”.
Amendment of section 19
17. 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.”.
Amendment of section 20
18. 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.”.
Substitution of new section for section 21
19. For section 21 of the principal Act, the following section shall be substituted, namely:—
Disciplinary Directorate
“21. (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.”.
Insertion of new sections 21A, 21B, 21C and 21D
20. After section 21 of the principal Act, the following sections shall be inserted, namely:—
Board of Discipline
‘21A. (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, Wit 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.
Disciplinary Committee
21B. (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 laths.
(4) The allowances payable to the members nominated by the Central Government shall be such as may be specified.
Authority, Disciplinary Committee, Board of Discipline and Director (Discipline) to have powers of civil court
21C. 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, 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.
Transitional provisions
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