The apex accounting body in the country feels that provisions of the ICAI Act, legislation regulating chartered accounts, are inadequate in the modern and complex economic environment. "Despite powers in the act we are unable to take strict action against auditors who violate accounting standards," ICAI president Rahul Roy told PTI.

He said currently there is no financial penalty for auditors for violation of the ICAI Act. "We must seriously look into financial penalty for auditors," Roy said.

ICAI disciplinary committee which looks into the misconduct of auditors regularly takes action against chartered accountants but the procedure is time consuming.

ICAI president said there is a need for re-constitution of the disciplinary committee with representation of eminent experts outside the institute. "The committeeshould have representation from bankers, retired judges and other public nominees," he said.

ICAI has already suggested to the department of company affairs (DCA) for amendment of the ICAI Act, 1949, Roy said, adding the department has reacted positively to the institute recommendations.

Among the suggestions given by the institute include fast disciplinary action by giving more powers to the disciplinary committee and reconstitution of the committee. The committee can debar a chartered accountant from practice for a maximum of five years and if the punishment is for more than five years, the case is referred to the high court.

In addition to it, there have been frequent changes in the disciplinary committee every year with the re-constitution of the ICAI council. "The committee has to take up the case again after its re-constitution which results in further delay in taking action," Roy said.

He said despite these bottlenecks ICAI has made every effort to improve accounting standards through peerreview. Under it an auditor reviews the auditing of the other firms and gives its comments. Quality of the audit can improve through this practice of peer review, he added.