KATHMANDU, Aug 5: The Inland Revenue Department (IRD) is mulling enforcement of a strict code of conduct for chartered accountants (CAs) and certified auditors in a bid to check tax leakages.
Chief of IRD Tanka Mani Sharma said the department has already working with the Institution of Chartered Accountants (ICAN) - - the accounting and CAs´ regulatory authority -- and Auditors Association of Nepal (AuDoN) to formulate the code of ethics.
“Bringing about improvement in the behaviors of CAs and other tax intermediaries is very important,” he stated.
The revenue authority decided to take the move mainly after a recent probe into fake VAT receipts showed 518 firms of evading tax worth around Rs 6 billion in connivance with CAs.
Following the disclosure, the government last year effected changes in tax law, making CAs and certified auditors accountable and punishable for any wrong deeds by business firms on the tax front.
The new law assumes that business firms cannot evade taxes unless tax intermediaries connive with them and if found guilty, tax intermediaries are liable to penalty.
“But we are not satisfied with mere change in the law. There must be a fundamental change in the way the CAs and certified auditors work. We believe the enforcement of a stringent code of ethics would help us achieve our objective,” said Sharma, addressing a function organized by IRD and AuDoN on Saturday.
On the occasion, Finance Secretary Krishna Hari Baskota urged the chartered accountants (CAs) to adhere to their professional ethics. If found involved in tax anomalies, he said the government will not hesitate to penalize them.
Baskota said the government recognizes CAs as professionals who help companies reform and modernize, pinpointing their weaknesses. It entrusts them with the responsibility of checking unfair business practices and ensuring adherence to law.
“It is unfortunate that the CAs have not been doing justice to their profession,” said Baskota. He also urged the chartered accountants to pay their taxes. Baskota also flayed CAs for preparing multiple financial statements to serve the interests of business enterprises.
“These practices have tainted the image of the profession,” he stated.
Chairman of ICAN Madhuveer Pandey agreed with Baskota, and urged the CAs and other certified auditors to prove their worth by improving their behavior.