We are what we repeatedly do. Excellence, then, is not an act, but a habit, says the ancient Greek philosopher Aristotle, which aptly fits our profession. Following a glorious tradition of excellence for more than six decades, our profession today is an integral part of Indias success story. The persistent pursuit of perfection, integrity, skills and knowledge has placed us in an exalted position in the present professional order of our country. But this triumph of our profession must continue unhindered even in these times of transition. We need to think different and think big. We need to continuously strive to explore and conquer the emerging frontiers of challenges. The best way to be ready for the future is to invent it. And I am sure that together WE CAN.
Working in Unison with Government
And in line with that spirit, we recently had the august presence of the Honble Minister for Corporate Affairs, Shri Salman Khurshid amidst us to address the CA profession first time since he took over. According to him, the next big revolution after the software revolution could happen in the world of accountancy. In fact, with the convergence of accounting standards, India can play a crucial role by contributing possibly the best and the largest number of young accountants. To that effect, he said, Indian accountancy today needs a veritable vision that combines confidence, competence, capacity and creativity - a telescopic vision to be able to see much further. Though on a cautious note, he said that it was important that Indian accountancy didnt stay behind in the age of rapid advancements and so if the profession thinks of protection, it must not think of protecting itself in a manner that it becomes incapable of fighting in the rest of the world. However, he assured us that the Government would be alive to the interests of the struggling smaller professionals trying to find a little space in the world of extreme competition with large big fishes floating around and that the Ministry would continue working to improve the opportunities and platforms for the CA profession. We are committed to you; we are here for you in an enlightened way, we want to re-chart you and help you, he concluded. We completely agree with his view and vision and, on behalf of the Council and the CA fraternity, assure him to proactively work to translate his vision into reality. Full text of his speech is published elsewhere in this issue of the journal for your information.
Secretary of the Ministry of Corporate Affairs Shri R. Bandyopadhyay also paid a special visit recently to the ICAI headquarters to address our Council. In his address, he said that he considered the Institute as an extended family of the MCA that can act as a friend, philosopher and guide to the corporate world and show it the right way to work and prosper. He said that Indian chartered accountants are comparable with the best in the world. However, he said, that concerted and constant proactive efforts need to be made on part of the Institute and its members to maintain that high stature and trust, and live up to the increasing expectations of the various stakeholders, including the Government.
We, on our part, utilised this opportunity to apprise him of the Institutes commitments, views, suggestions and concerns on several important issues including the convergence of accounting and auditing standards; the Companies Bill, 2009, auditors liability and independence, limited liability partnership, and our well-acknowledged and appreciated educational, regulatory and standard setting functions, etc. We impressed upon him that there should be some limitation on auditors liability and there should be greater emphasis on their independence in the Companies Bill, 2009. We explicitly expressed our reservation about the proposal to have a NACAS-like government body for Auditing and Assurance Standards, which has been one of our core areas of competence. We reassured him that the Institute is committed to uphold the trust bestowed on it and it will never let down the society, government and nation. We thank him for guiding us to serve better, and look forward to his continued support.
In between, we also met the Honble Finance Secretary Shri Ashok Chawla and discussed some important issues of professional interest, particularly about the change in the system of appointment of auditors for public sector banks. We apprised him of the Institutes apprehension about the misuse of the changed system and stressed that it would be more prudent and in the larger interest of the banking system and related stakeholders, if auditors are appointed from the ICAI panel by the RBI as before. We emphasised that the profession appreciates the need for greater functional autonomy for bank managements. But at the same time there is a need to balance the greater autonomy through checks and balances which could include appointment of auditors by an independent regulatory body like RBI. To emphasise on our stand, we also apprised him of similar autonomy enjoyed by Navratna Public Sector Undertakings where the auditors continue to be appointed by Comptroller and Auditor General of India. We had similar meetings with RBI Deputy Governor Smt. Usha Thorat and Executive Director Shri. G. Gopalakrishna respectively.
Many of our members conducting central and statutory bank branch audits have regularly expressed their concern, dismay and discomfort over insufficient time given by bank managements to complete the audit. We will take up this genuine concern of our members with the RBI to do away with irrationally short deadlines. However, the tight deadlines can never be an excuse for compromise on quality of an audit. The responsibility to complete the audit work conforming to and complying with the prescribed standards lies with the auditor only.
We recently also had a meeting with the Executive Director of the SEBI, Smt. Usha Narayanan, wherein we suggested to alter the Clause 49 of listing agreement to prescribe for independent internal audit by the external professional firm of chartered accountants. Alternatively, in case a corporate entity has its own internal audit department to mandate for external monitoring of the compliance of standards of the internal audit system by independent firm of chartered accountants. Further, it was requested to suitably amend the SEBI circular on Systems Audit of Mutual Funds to expressly include DISA qualification of ICAI as a recognised qualification. Moreover, it was emphasised that Chartered Accountants may alone be permitted to conduct internal audit of credit-rating agencies under the Regulation 22 as we are most suitable for the purpose. It was also suggested that a standard audit manual for inspection of mutual funds may be prepared to address the shortcomings and improve quality of inspection of mutual funds and bring uniformity in reporting the same.
Meanwhile, the general debate about the Union Budget 2010-11 is almost over. And now it is time for us to sit up and take stock of the consequent new changes and challenges pertaining to our area of activity in detail and move on with professional panache for which we are known. Let us update ourselves with the latest and continue with our professional journey confidently and ethically. Remember that knowing is not enough; we must simplify the knowledge and apply it to the fullest satisfaction of our clients and other stakeholders. While knowledge is a process of piling up facts, wisdom lies in their simplification.
Now let you be updated on some of other major developments concerning our Institute and profession over the last month.
Consolidating ICAI Tie-ups Abroad
It is our earnest desire to see the Indian CA community play a lead role on global stage. We, in the Council, have been relentlessly pursuing this dream and have met with some notable success too. Today Indian CAs are known, recognised and respected globally. However, a large number of them are yet to make full use of that recognition, particularly abroad. We are actively working on that front. The Institute on its part has already signed MoUs/MRAs/joint declarations, mainly for qualification recognition arrangements, with some leading organisations like the Institute of Chartered Accountants in England and Wales, The Institute of Chartered Accountants in Australia, the Certified Practicing Accountants Australia, the Certified General Accountants Association of Canada, the Canadian Institute of Chartered Accountants, and the Bahrain Institute of Banking and Finance, etc. But only signing the MoUs/MRAs/joint declarations is not enough. These tie-ups have great potential for Indian CA profession. Hence, these need to be made one of the most vibrant aspects of our global profession-boosting initiatives and systems. As such, we have decided to consolidate, fine-tune, optimise and systematically and effectively implement and popularise the existing tie-ups before entering into new ones so that these can be beneficial to a larger segment of members. The focus will be on providing a sustainable framework of capacity building through these mutual recognition arrangements. We are already in touch with respective foreign bodies in this regard. In between, we will be proactively guiding and assisting our members in exploiting the potential of the tie-ups to the hilt. We are sure this initiative will help our members excel globally, besides opening avenues for professional opportunities and global collaborations in the field of research. Meanwhile, we are open to your suggestions on further tie-ups for better prospects of the Indian CAs. But our immediate focus is to strengthen the existing tie-ups and make them more useful to members.
Reactivating Foreign Chapters
Our other priority with regard to the ICAIs international standing is to rejuvenate some of our international chapters whose performance is not up to expectations. Such chapters make about one-third of the total 21 existing chapters at present. In case they fail to reactivate themselves and serve the cause of the ICAI in the spirit with which they have been formed, we will have to consider appropriate action. The main objectives of our foreign chapters were to bring our members on a common platform to promote the brand Indian CA, carry out the mission of ICAI, augment professional avenues abroad and act as informational resource hubs and an interface between the ground realities in such countries for the ultimate benefit of the profession. We are determined to ensure that our foreign chapters achieve these objectives.
Four New Groups to Make ICAI More Robust
The Institute has been relentlessly and successfully serving the cause of its members and our nation for more than six decades. However, of late, there has been a manifold increase in expectations, particularly in view of a sharp rise in the number of members and students. There is an urgent need to bring the ICAI effectively in tune with the reality to serve its members and students, and the nation better. And there is a lot of scope for improvement on this front. As such, to make the Institute more responsive, progressive, robust and member/student-friendly, we have constituted four new groups - Central Grievances Redressal Cell, Group on Codification of Regulations, Directions of Council regarding functions of Branches of Regional Councils, Infrastructure Acceleration Group, and Information Technology Initiatives Group.
The Central Grievance Redressal Cell will mainly work to effectively and speedily resolve the grievances received from the members and students across the nation centrally. The Group on Codification of Regulations, Directions of Council regarding functions of Branches of Regional Councils, will study and examine the provisions of existing regulations, directions of the Council regarding the functions of Regional Councils or their Branches and various decisions of the Council/the Executive Committee in place and suggest suitable changes therein so as to make such provisions more effective and members-/students-friendly and improve overall functioning of the Branches, including the aspect of staff and technonology requirements. The Infrastructure Acceleration Group will mainly prioritise various infrastructure projects of the ICAI and study, consider and suggest ways and means of accelerating the ongoing projects besides ensuring efficient management and maintenance of the ICAI properties. The Information Technology Initiatives Group will see to it that the Institute becomes more hi-tech to the ultimate benefit of its members and students. As part of this hi-tech drive, the members can now view their membership records and access various prescribed forms online, just at the click of the mouse, without having to visit ICAI offices. This facility is available on the ICAI website on the link: http://22.214.171.124/mem_card.asp. We sincerely hope that these groups will go a long way in uplifting the Institute, its members and the profession as a whole.
Tendering Process for Utilising Our Services
As you know, the Government is now utilising the services of CAs to audit the schemes like the massive Rs. 39,000 crore NREGA. This is an acknowledgement of the trust that the government has in our profession. Generally, such audits are allotted to CAs or accounting firms on a consolidated basis through tenders. However, there are some related issues which need to be resolved in the best interest of the profession. We have raised our concerns with relevant authorities about certain issues including depositing earnest money, specifying restrictive conditions in terms of turnover/size, etc., the quotation of unrealistic low amounts by some members having no relationship with the scope of work in conducting an audit, and lack of clarity on scope of work under the tender. These issues are restricting the participation by CAs to just about one per cent of their total numbers. CAs are offering their services and not selling any commodity, therefore, asking CAs to pay earnest or deposit money is not logical. The Council will take up this matter and arrive at a decision soon. We are impressing upon the various government authorities that acceptance of lowest tender is not desirable in all the cases, as there could be compromise on quality. We are emphasizing that there need to be a benchmark for tender fee offered.
Review of Scope of Concurrent Audit in Banks
With the IT revolution and reforms flooding the financial sector, the operational environment of the banks has changed completely. In the changed scenario, the role of concurrent audit has become more critical and important for the banks in carrying out operations properly and efficiently, particularly for timely detection of irregularities and lapses, as well as prevention of frauds. To respond to these changes, a group was constituted to review the scope of Concurrent Audit in banks to make it more effective. For greater effectiveness of concurrent audit, its various aspects inter-alia coverage of business/ branches, types of activities to be covered, facilities required from banks and training aspects of chartered accountants were reviewed. The aim is to bring about the qualitative improvement in the concurrent audit so that the end user can be benefited and uniform fee structure is applicable across the banking sector. The report as prepared is being reviewed and would soon be submitted to the Reserve Bank of India.
Improving the Policy of Transfer of Articles
Practical training is the cornerstone of the CA profession. Our professions whole future depends on the efficacy of the system of practical training, which is a very important part of the CA Course. The articled assistants need be made to realise this fact in right earnest for the sake of continuous high standards of the profession. As such, we have been urging the members to impress upon the articled assistants not to take transfers lightly and definitely not to take multiple or unnecessary transfers. On its part, the Council too had recently put certain restrictions on the transfers with the prime objective of making students take their training more seriously. However, it is being felt that these restrictions are causing un-intended hardships for the students. Keeping this in view, we may review some of these restrictions in the best interest of the students and profession but without compromising on the utmost relevance and need of the practical training.
Optimum Utilisation of Secondment Scheme
For articled assistants, the practical training is the stepping stone to ultimate professional success. This training not only facilitates an insight into the real life world for the articled assistants but also provides them an opportunity to apply theoretical knowledge in practical life. Now, with the changed economic scenario and ongoing fast-paced changes in the areas of professional interest, it is high time that our articled assistants got exposure in as many such areas as possible. This is the time that we should encourage our articled assistants to help them reap full benefits of Secondment scheme as per Regulation to increase their versatality. We are sure this will help our articled assistants grow into all-round multi-dimensional professionals.
Strengthening Examination System
We are known for having set very high standards for the CA examination. And now we are going to further upgrade our examination. As part of the process, we are strengthening our panel of examiners and paper-setters with professionals/academicians/resource persons for all the papers in the CA IPCE and Final (New Course) examinations, particularly for Indirect Tax Laws, Advanced Auditing and Professional Ethics, Information Systems Control and Audit, Information Technology, Advanced Management Accounting, Strategic Financial Management, and Direct Tax Laws. All professionals, who have the requisite proficiency and expertise in above-mentioned subjects, may send in the duly-filled Empanelment Form to the Institute. The form has been hosted on the ICAIs website.
Novel Initiative for Needy Students
On our recent visit to Jaipur, we had the occasion to visit a hostel run by certain firms of CAs for the benefit of students who hail from rural background. We also learnt that a large number of those students not only qualified the CA examinations but also found place in merit lists. This goes on to prove the need to support economically-challenged and rural students. This novel initiative for the students is indeed laudable. We need more and more members to come forward to support such initiatives and students in the larger interest of the profession.
Boosting the CA Benevolent Fund
Charity begins at home but should not end there, is the saying which is worth taking note of by us today - particularly when we have scores of families of deceased professional brethren and those suffering from terminal/serious ailments in our fraternity who are in dire need of financial assistance. It is our duty to support and stand by them in times of distress. And the Chartered Accountant Benevolent Fund offers an excellent opportunity to do that in an organised and systematic manner. The CABF is an initiative by the CAs for the CAs, which has aided 586 needy families in the last five years (2004-09) giving out a total of Rs. 3,56,79,277 as help and support. However, presently the corpus of the fund is not adequate to cater to the needs of all the families in distress and, therefore, it becomes our urgent requirement to boost and bolster this fund, which is not possible without your generosity and support. We are happy to note that many members are coming forward to help this noble cause. In the recent visit of the undersigned to some of the branches, an appeal in this regard got extremely positive response and we wish to place on record our gratitude for commitment for donation of Rs. 25 lakh by members of Jaipur, and actual contribution of Rs. 2.5 lakh by members of Karnal. But, much more is desired. I call upon all of you to join this benevolent initiative and make CABF integral part of your socio-professional duty. More than 94,500 members have already joined as life members of CABF, but what is needed is that all of us not only become life members but also contribute more than the minimum stipulated amount and continue to contribute in future as well. Life subscription of the fund is for Rs. 2,500 and ordinary subscription is for Rs. 250 per annum payable in favour of Chartered Accountant Benevolent Fund. We will duly acknowledge the donors by publishing the photographs of those contributing Rs. 1 lakh and above, and by publishing the names of those contributing Rs. 5,100 or more in the journal on monthly basis. Remember that charity, howsoever trifle to us, can be utterly precious to our brethren in need. Lets make CABF a thriving movement for CAs welfare, nationally as well as internationally.
My approach has all along been to achieve overall growth in the professional avenues coupled with the image-building exercise that ultimately will take the profession to new heights. Progress is impossible without change. So lets change our outlook, set our vision very high and start thinking ahead of our times for a brighter future. My fervent hope is that the next decade belongs to the Indian accountants. And for that purpose, we are committed to produce professionally dynamic chartered accountants fully equipped to meet the challenges.
With Best Wishes, Yours sincerely CA. Amarjit Chopra President New Delhi, March 24, 2010