The Competition Commission of Pakistan (CCP) has granted stay order to Institute of Chartered Accountants of Pakistan (ICAP) against the imposition of huge penalty for not withdrawing Auditing Technical Release (ATR-14) circular.
Sources told Business Recorder on Thursday that a divisional bench of the commission headed by Khalid Mirza, chairman heard the viewpoint of the ICAP for granting stay on the issue until final outcome of the case. In this connection, the CCP has temporarily suspended the order pertaining to the withdrawal of condition of minimum fees prescribed for the audit of listed companies.
During the hearing, the ICAP raised Constitutional issues relating to the establishment of the commission. However, the CCP officials commented that legal justification for the constitution of the commission should be taken up at the appropriate judicial fora.
According to the findings of the CCP, the evidences and investigations have confirmed that the ATR-14 violates Section 4(1) of the Competition Ordinance. The commission has further directed the ICAP to inform its members through a circular re: withdrawal of revision in ATR-14. In case of non-compliance the commission would impose a penalty of Rs 300,000 per day of infringement under Section 40 of the Competition Ordinance. However, now the CCP would not impose this penalty on the ICAP from December 19, 2008.
The CCP took suo motu notice of ICAP Circular No 09/2008 of August 13, 2008 addressed to the members of ICAP to convey the decision of the Council of ICAP about the revisions of ATR-14, which prescribes the minimum hourly charge out rates and minimum fee for audit engagements based on the turnover of the company being audited. The revised ATR-14 applies to all audit appointments made after August 31, 2008.
The circular also mentioned that failure to comply with the directives of the Council will "fall within the mischief of Part 4 of Schedule I of the Chartered Accountants Ordinance, 1961," which lays down the instances of "professional misconduct in relation to the members of the institute generally." A show cause notice was issued to ICAP on October 20, 2008 and the hearing was conducted on November 28, 2008.