Its that time of the year when we are busy reflecting on our past and setting new goals for our future. Its that time of the year when fresh resolutions are being listed and plans for achieving greater prosperity are being inked. Welcome to 2010 the last year of the first decade of the new millennium. The New Year is a fresh beginning, a beginning that is filled with positive prospects for all of us. It is frequently said that stronger the foundation, higher the building. This is especially true for us who have seen our Institute go from strength to strength in the past year. In fact, each and every aspect of our Professional and Institutional life, be it Infrastructure, IT, Education, Environment Awareness or International Recognition has been raised to a level higher than ever before. We have taken our Institute to greater heights of glory only because we are focused and work together as one united family.
The Institute and the Profession were recently honoured with Recognition of Excellence Award by H. E. Smt. Pratibha Devisingh Patil, Honourable President of India. On behalf of the entire CA Parivar, I humbly accepted this honour during the India Corporate Week-2009 organised by Ministry of Corporate Affairs in recognition of the excellence of ICAIs valuable contribution in upholding the Corporate Governance norms of India Inc. This was a historic moment for me as it was under my Presidency that we were bestowed this award. This is the first time in the 60 years history of the Institute that such an honour was conferred on the ICAI. This is truly a jewel in the crown of the Institute in its Diamond Jubilee year. Let us all be inspired and strive to earn more such awards for the profession and the Institute.
Negative Media Coverage
ICAI has taken great strides in the last two years. We are now internationally renowned and recognised. A lot of changes had to be made to reach where we are today, changes that were required to take the Institution and all members on a higher curve of progress. However, many of these changes were not taken positively as was evident from the recent CNBC coverage. Not only was the Institute kept in the dark as to the kind of interview that was to take place, even common considerations were not taken into account.
As President of our glorious Institution, I have to ensure that protocol towards our Alma Mater is followed at all times. This was totally ignored by the media channel, encouraged by certain vested interests. My only aim was to ensure that our Institution and our Profession were given the accord and respect they deserve. I had no intention of not answering the queries put forward by them, but their questions have been already answered by me through my messages in this Journal. I was saddened by the attempt of the channel and people to cover up the great and good work done by the Institution.
I am especially saddened by the attempts made during the election time, when I repeatedly exhorted members not to use this as a personal platform to push themselves forward at the cost of denigrating our Institute. I hope that we take greater care in the future so as to prevent our Institute from being maligned in public by people with vested interests.
Synergy with C&AG
We recently made the landmark decision of combining the synergies of ICAI with the Office of the Comptroller and Auditor General (C&AG) of India. This coming together of ICAI and C&AG will create a unique powerhouse that would bring enormous gains nationally and globally. To that end, ICAI will now facilitate Indian Audit and Accounts Service (IA&AS) officers to acquire the Chartered Accountancy qualification. Through this decision, IA&AS officers desirous of becoming CAs would write all the papers prescribed for CPT, IPCC and CA Final course. The IA&AS officers can appear in the CA Final course during the last six months of their practical training as per the present scheme of Education & Training namely CPT, IPCC and Final.
For the practical training of three years, prescribed under Chartered Accountants Regulations, 1988, one year work experience of the IA&AS officers would be recognised as equivalent to one year practical training and the balance period of practical training has to be undergone under a practicing CA.
Now the IA&AS officers who are often deputed abroad for audit of internationally aided institutions would be able to synergise their experience as departmental auditors along with the high professional knowledge accruing to them through the Chartered Accountancy course. In fact, ICAIs coordination with C&AG will be able to contribute to the monitoring of the nations financial affairs in a more systematic and comprehensive manner.
New Guidelines for Opening New Branches
India is a vast country. Many members and students currently do not have access to our branches and thus lose out on support and infrastructure provided by the ICAI through its branches. So far we only used to take into account the membership strength of a particular region before deciding whether to open a branch or not. We never took the strength of our future potential, i.e. the students. We have now decided to take into account the growing number of students as well for the formation of new branches. To accommodate all members and students and bring ICAI activities to your doorstep we have decided to amend the existing regulation which states that branches can only be set up when there are 150 members in a city or within a distance of 50 kms. from the city limits. The amended regulation now also includes the number of students and states that a branch could be set up in a location where number of members are more than 100 but less than 150 as also the number of students are more than 250 at the said location or within radius of 50 kms. We have decided that a branch can also be formed if there is no existing branch in any of places falling under the jurisdiction of a district, but there are 100 members in a district taken as a whole.With this amendment, I am pleased to say, members & students, especially female students, will no longer have to travel long distances to avail of benefits provided by ICAI branch offices.
There are members whose names have been removed on account of non-payment of fees or who do not apply for membership restoration in the same financial year or in the next financial year. Their application after a lapse of few years and their demands for immediate issue of Certificate of Practice has been looked into very seriously. Such members, during the period their names stood removed, are not part of any of the programmes organised by CPE Committee or the Institute, Regional Councils or Branches and thus remain ignorant of the Institutes programmes.It is entirely possible that these members have not updated their knowledge with the Accounting Standards, Auditing and Assurance Standards, Quality Control Standards and other pronouncements impacting the audit and other attested functions.
To overcome these gaps in professional information, we have decided that members whose membership have remained off the list for a period of three consecutive years and more shall be required to undergo a refresher course of minimum three months or a special examina- tion to be devised specifically for such members by Board of Studies. Only after the successful completion of the required course or examina- tion, as the case may be, their membership will be restored and CoP issued. This, I believe, will help main-tain the high levels of quality and professionalism that is now expected from our members.
Students have alw-ays been my top priority. The successful initiatives of the past year have enabled us to provide better services to the students but there is still so much we can and should do. There are many brilliant and talented students in our country who are unable to turn into reality their dreams of pursuing the CA course due to lack of finance. Benevolent fund schemes are not adequate in todays inflationary times. Livelihood expenses are increasing day by day and education takes a backseat in these situations. As part of our social responsibility, it falls upon us to uplift the financially weaker students and provide them the tools to stand on par with the rest of the world. To start this positive process, Education Sponsorship Boxes will soon be placed at all offices of the Institute including regional offices and branches.
Members are requested to be more socially responsible by sponsoring the education of these economically weaker but highly talented young minds by depositing their cheques in these Education Sponsorship Boxes which would be then channelised towards sponsoring the education of these students through the Benevolent Fund.
Training of Articled Assistants Abroad
ICAI members settled abroad will be pleased to know that they would now be eligible to train articled assistants which was not permitted earlier. Taking a holistic perspective of the matter as well as to increase the global footprint of the Institute, the Council has decided that our members holding Certificate of Practice with their principal place of practice abroad would now be eligible to train articled assistants there in terms of Regulation 43, in the same manner as in India, provided the member has also intimated an address in India. Similar provisions for Secondment and Industrial Training would also be available to articled assistants abroad. Members working as Qualified/Paid Assistants in firms of Chartered Accountants would be eligible to train one articled assistant, on the same lines as in India.
This is a positive step forward in promoting the brand image of Indian CAs abroad while at the same time fulfilling the demands of our members in foreign lands.
Submission of Form 112
The breach of Regulation 65 by students who did not file Form 112 was seen as diluting the sanctity of the practical training and certain restrictive conditions were imposed on such students before enrolling them as members.
The Council has now decided to take a liberal view of the delay in submission of Form 112 by students. To help our students in this matter it has been decided that wherever additional course was pursued during articleship, without clash of class hours with office timings, membership be granted, as an amnesty measure for all such requests already received or to be received up to 31st March 2010.
However, for all other courses pursued during day time classes along with articleship, each case will be individually considered by the Executive Committee and delay may be condoned by imposing certain conditions like delaying grant of membership, completing a special course, etc. It has been further decided that if any statement made by a student or member is found to be false or varying with the facts at any stage, the student or member concerned will be liable to face disciplinary proceedings in accordance with the Chartered Accountants Act, 1949 and the Regulations framed thereunder. However, it has also been decided that no request for condonation of breach of Regulation 65 for delay in submission of Form 112 will be considered effective from 1st April 2010.
The Accounting Standards Board recently made suggestions regarding the approach for applicability of Accounting Standards to Public Interest Entities (PIEs) and Small & Medium enterprises (SMEs). Taking these into consideration, it was decided that the Applicability of IFRS Converged Accounting Standards to various entities falling under Phase I would be from April 1, 2011 and those falling under Phase II to begin from April 1,2014. The criteria for entities under Phase I will be decided and announced soon. In line with IFRS for SMEs, it was decided to form simplified standards for SMEs which the ASB will formulate soon. We have made good progress towards the implementation and will be completely ready in a few months time. The Institution has given its word and I reaffirm our commitment to the Government of India to implement converged standards from April 1, 2011.
My top priority has been the international positioning of brand CA India.To that end I aimed to have recognition arrangements in place with the Canadian accounting profession as well after our arrangements with UK and Australia. I am pleased to tell you that we are in the final phase of dialogue with the Canadian Institute of Chartered Accountants (CICA) and expect to capitalise a working arrangement with them soon. A similar arrangement is also under discussion with CGA-Canada. An arrangement with CPA Ireland will be unveiled soon while CPA Hong Kong has been approached for initiating the dialogue. As you can see, I am ensuring that we dont lose any time in making ICAI global.
In order to provide due impetus to ICAI plan to offer customised modules to Middle East region, ICAI office at UAE has been approved. It has also been decided that henceforth the Chapters of Sydney, New York and Toronto will be recognised as the national chapters with the city name being changed to the country name i.e. Australia chapter, USA chapter and Canada chapter respectively.
The Ministry of Corporate Affairs has requested ICAI to make the presentation in respect of its proposal for formation of International Federation of Accounting Technicians (IFAT). Subject to the concurrence of the Ministry of Corporate Affairs and subsequent steps to be initiated for its registration under the Society Registration Act, efforts are being made to have IFAT in place for formal launch during the ICAI Corporate Week Forum on 31st January 2010. We have invited the founder members of the proposed Federation for the round table conclave during this Corporate Week Forum.
ICAI will be hosting the CAPA Strategic Finance meeting and a workshop on IFRS for SMEs at Centre of Excellence, Hyderabad from 25th January to 28th January 2010. The Indian Accounting Profession is well respected worldwide and to better understand our dynamics, a delegation of Malaysian Institute of Accountants (MIA) is visiting India during this time period. I am sure they will be impressed with the Institute and its members.
By taking proactive steps we have also succeeded in opening up ICAI chapters in Switzerland, New Zealand, and South Africa. I am positive that we will soon have an ICAI chapter in every country of the world.
GCC Regional Conference 2010
Our International Chapters are doing an admirable job in promoting ICAI internationally. Along those lines, the ICAI Bahrain Chapter is organising a pan Gulf Cooperation Council (GCC) Conference in January 2010 on the theme Global Financial Markets: The Road Ahead. I will be the Conference Chairperson while Chief Guest will be Mr. R. Bandyopadhyay, Secretary, Ministry of Corporate Affairs, Government of India who has played a prominent role in promoting Indian CAs and ICAI in Bahrain.
The Bahrain summit will be an excellent forum for knowledge sharing and discussing real-time issues with experienced professionals from the industry as well as taking advantage of the collective expertise of the distinguished guests. I am sure that this conference will confirm ICAIs position as the premier accounting institution in the GCC region.
Brand CA Attracts More MoUs
The various initiatives taken to create Brand CA is having a rippling effect. Today the Institute and CAs are in demand on all fronts. We are now being approached by financial institutions, regulators and Government agencies to enter into MoUs with them. The main reason for this is the positive brand image of the Institute that has been carefully nurtured by us all. The Institute is working to enter into MoUs with a number of institutions for mutual benefit:
MoU with MCX-SX: The stock exchange subsidiary of Multi-Commodity Exchange of India Ltd, MCX-SX caters to financial participants while operating under the regulatory framework of SEBI and RBI. Our MoU will match synergies leading to better services offered to financial participants by CAs. The benefits to CAs would include seminars, training on financial markets and corporate governance, certification programmes on financial markets, conducting research on financial markets and impact of accounting standards on financial markets, courses on various asset classes, currency, commodity, etc. and collaborating for joint certification of ICAI professionals through MCX-SX online tests. This is an excellent opportunity to extend our range of services to the financial markets and also provide compliance services.
MoU with Doordarshan: : This MoU has far- reaching implications for us. DD reaches a massive 90% of Indias population and content made by ICAI will be aired every Friday for half an hour. The main objective would be to develop understanding and awareness among the middle and lower income households on various tax laws. We will also be increasing educational awareness and educate the people of India through these programmes. I sincerely believe that this MOU will prove an excellent brand building exercise for the ICAI amongst the public at large.
MoU with LNJN National Institute of Criminology & Forensic Science (NICFS), Ministry of Home Affairs, Government of India: : As you all may be aware that NICFS is a unique organisation involved in training, teaching, research and publication. It organises joint training programmes for officers from judiciary, police, prosecution and correctional departments on various aspects of criminology and forensic science. The MoU with NICFS will include training courses in forensic accounting. We are also considering a proposal of organising two such courses in the forensic accounting during the financial year 2010-11. This MoU will go a long way in educating people about the transparency and trustworthiness of the service we provide to individuals and institutions everywhere.
MoU with CBEC: : Members are aware of the recently launched Automation of Central Excise & Service Tax (ACES) project by CBEC. They have approached ICAI to facilitate them in setting up of Certified Facilitation Centres (CFCs) by Chartered Accountants in practice or proprietary concerns and firms at locations across the country to facilitate transactions in ACES like e-filing of returns and other documents by assessees of Central Excise and Service Tax. I am sure this MoU will be extremely beneficial for all our members, giving a vast opportunity to offer services in a totally innovative and efficient way.
MOU with Swami Ramanand Teerth Marathwada University, Nanded: This MoU is similar to the one already extant with Bhartiyar University with the objective of offering an additional dimension to our members and students through various value added courses to equip them with the multi- faceted skills in various fields.
Companies Bill, 2009
In August 2009, the Minister for Corporate Affairs Shri Salman Khurshid introduced the Companies Bill, 2009 in the Lok Sabha. The Ministry saw it fit to give us the responsibility of formulating views and providing them constructive feedback. In this regard, a Study Group, was formed which had considered some of the provisions of the Bill related to accounts and audit. The draft suggestions of the members, which are under consideration of the Study Group, will be finalised soon and will be placed before the appropriate authority.
Tendering Process for Utilising Our Services
The Government initiated utilisation of the services of CAs to audit schemes like the massive Rs. 39,000 crore NREGA scheme is a mark of the trust and respect accorded to the Institute. The Government is aware that the provision of audit of such schemes by CAs will ensure proper utilisation of funds at the grass root level. Normally, such audits are allotted to CAs or firms on a consolidated basis through tenders. We have been raising our concern with appropriate authorities in respect of tenders including depositing earnest money specifying restrictive conditions in terms of turnover, size, etc. and the quotation of unrealistic low amounts by some members having no relationship with the scope of work and time involved in conducting the audit.
I have been personally keeping track of various issues relating to tendering process such as depositing earnest money, specifying criteria to suit particular set of firms, scope of work not mentioned clearly, etc. since the tender process has been made open in all respects. In my personal opinion, this has not only lowered the fees being paid to CAs but has made a severe impact on the quality of audits being conducted as well. Moreover, as all of you will also appreciate, CAs are offering their services and not selling any commodity, therefore, asking CAs to pay earnest or deposit money does not seem logical. Hence, I have requested for inclusion of an item Requirement of earnest or deposit money while responding to tenders or enquiries issued by various users of professional services or organisation from time to time for the consideration of the Council. Further, to address all issues relating to tenders in a comprehensive manner, the Ethical Standards Board has been entrusted with the task of formulating Draft Guidelines proposed to be mandatory for CAs while responding to tenders, advertisements, circulars and various other enquiries for the consideration of Council. This will wipe out any unethical behaviour while at the same time bring out ethical professionalism to the fore.
ICAI Joins Forces with FATF
During the recent interaction of ICAI nominees with Financial Action Task Force (FATF) on Money Laundering as part of a mutual evaluation exercise of granting India the membership of FATF as undertaken by Financial Intelligent Unit of Ministry of Finance, various initiatives undertaken by ICAI in preventing the act of Money Laundering and combating terror financing including formulation of KYC norms for our clients were discussed in detail. I hope that India will soon gain FATF membership which would not only allow India to gain access to real-time exchange of information on money laundering and terror financing but also help the country raise its diplomatic pitch globally against the export of terror.
New Standards on Auditing
The ICAI has made excellent progress on the convergence of Indian Standards of Auditing (SA) with International Standards of Auditing (ISA). Over the last couple of years, 25 new and revised standards on auditing have been issued by the ICAI in line with the clarity project of IAASB. These standards are the ICAIs response to the changing economic & business environment at global and national level. This will also cater to the expectation of society, regulators & government in terms of continuously improving the quality of audit process of providing assurance to the financial statements.
It is with great pride that I inform all members that we have cleared three more Standards on Auditing in line with the international best practices. The three standards are Revised Standard on Auditing (SA) 700 - Forming an Opinion and Reporting on Financial Statements, Standard on Auditing (SA) 705 - Modifications to the Opinion in the Independent Auditors Report and Standard on Auditing (SA) 706 - Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditors Report. These crucial standards deal with the most critical part of an auditors work, i.e., formation of his opinion on the financial statements and the audit report. With the clearing of these standards we have taken one more step on the road of convergence with the IAASBs International Standards.
Enrolment to ICAEW, CAPA and ICCA- Australia
To expedite the issue of letter of good standing to members for enrolment with ICAEW, CAPA-Australia and ICCA-Australia, we have decided that letter should mention that the member concerned has complied with the examination, training and other requirements prescribed for admission as a member of our Institute and that the validity of certificate be raised to six months from the date of issue in place of the earlier validity of three months. Also, the letter of good standing will not have specific details such as Roll Number, Year of passing, dates of commencement and completion of articleship.
The Disciplinary Committee has achieved significant levels of results this year through the consideration of prima facie opinion in 163 Complaint cases and in 100 Information cases. In fact, hearing initiated in all 5 cases have been fully concluded by the Disciplinary Committee and Board of Discipline in the 1st meeting itself. Our earnest endeavour is to dispose off cases at the prima facie stage itself. Under the old mechanism, 12 meetings have been held wherein 49 cases have been heard and concluded. We are making additional efforts to have 4-5 hearings through which we would try to complete hearing in 15-20 cases. Out of 109 current reports, notices for consideration have already been issued to parties in 37 cases. Last but not the least, all complaint cases under the old mechanism have been considered by the Council at the prima facie stage excepting one which has a stay order from the High Court. The balance 13 Information cases have been considered in the Council meeting bringing to a conclusion all the Information cases under the old mechanism at the prima facie stage.
The 2009 CA Elections saw a much higher voter turnout than previous years. With all the enthusiasm that was prevalent, there were still disturbing news of booth capturing and illegal activity. I strongly condemn these activities which are not the mark of our profession. We are here to uphold the laws of ethics and be guiding lights to professionals everywhere and not to bring bad name to our profession and the Institute.
Whilst distinctly saddened, rest assured I will ensure the offenders are brought to book and disciplined as per the Code of Conduct. The election votes are being counted and collated at present and results will be declared in a few weeks time. In fact, the next Journal will also announce the full election results.
I, again, take this opportunity to wish all our members and students a very happy New Year 2010 and remind ourselves of the wise words of Benjamin Franklin, Be at war with your vices; at peace with your neighbours, and let every New Year find you a better man.
My Pranaams to all, CA. Uttam Prakash Agarwal New Delhi, December 27,2009