2016 (4) TMI 175 - HC - Indian Laws

Cost accountant v/s Chartered Accountants - nature of work - amendment to Section 63 of the Karnataka Co-operative Societies Act, 1959 - auditing of accounts by Cost Accountants of a firm of Cost Accountants permitted. - Held that - it is not evident that by virtue of the impugned amendment, a Cost Accountant has been enabled to carry out functions which can only be performed by a Chartered Accountant. This is statutorily governed and there can be no entrenchment on such functions. It is not the case of the petitioners that auditing the accounts of a cooperative society is the exclusive domain of Chartered Accountants. If that be so, there is no ground for challenge made out.

Summary

Issues:
Challenge to amendment of Section 63 of the Karnataka Co-operative Societies Act, 1959 permitting Cost Accountants to audit accounts.

Analysis:
The petitioners, an Association of Chartered Accountants and practicing Chartered Accountants, challenged the amendment to Section 63 of the Karnataka Co-operative Societies Act, allowing Cost Accountants to conduct audits. They argued that this encroached on the profession of Chartered Accountants, contrary to the 97th Amendment and the Chartered Accountants Act, 1949. The State legislature's amendment enlarged the definition of 'auditor' to include Cost Accountants, overlooking the distinct classifications of professionals under different governing Acts.

The State defended the amendment by highlighting the importance of costing work in sectors like co-operative sugar factories and industrial societies. They argued that Cost Accountants possess adequate knowledge of accounting principles and systems, making them suitable for auditing co-operative societies facing a shortage of professionals. The State emphasized the similarity in curriculum between Cost Accountants and Chartered Accountants, asserting that Cost Accountants are competent to perform auditing work, supported by various Central and State enactments.

The Court examined the contentions and found no evidence that the amendment allowed Cost Accountants to perform functions exclusive to Chartered Accountants. It was noted that auditing co-operative society accounts was not the exclusive domain of Chartered Accountants, and statutory regulations govern such functions. As the petitioners failed to establish a valid ground for challenge, the petitions were dismissed.