The law could be patterned on the Sarbanes Oxley Act 2002 and the Dodd Frank Wall Street Reform and Consumer Protection Act 2010 in US or any other appropriate mechanism, the Bench had suggested disposing of two petitions — an appeal against a Karnataka High Court order and a writ petition filed by a NGO, Centre for Public Interest Litigation.

The Bench had also said that accounting firms could not be left to self-regulate themselves and the issue of separate oversight body for auditing work and updating the existing legal framework appear to be necessary.

The apex court felt that it appears necessary to realise that auditing business is required to be separated from the consultancy business.

The Bench had also wanted the Government appointed expert panel to examine the question as to whether on account of conflict of interest of auditors with consultants, the auditors’ profession may need an exclusive oversight body.

The Bench had also faulted the CA Institute for not taking appropriate action to uphold the law although its committee of experts had in July 2011 itself concluded that MAFs were involved in violating ethics and law.

It was contended before the apex court that MAFs are illegally operating in India with the help of Indian chartered accountancy firms and providing accounting, auditing, book keeping and taxation services.

It was also argued that no effective steps were being taken to enforce the law in force although the MAFs are operating in India in violation of law in a clandestine manner.

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