Success is a journey, not a destination, so goes the saying which is true for our profession too. We should not rest with success but instead should sustain it as a continuous journey to ultimate excellence - season after season. April and May are the months of hectic and breathless activity in a chartered accountants office, with the March year end closing of the financial statements and the pressures from all the clients, especially publicsector banks and listed company clients, to get their financial statements audited on a priority basis. Friends, indeed its the time that tests our resource management skills. But more importantly, it is the time that tests our grip not only on the understanding of client and its business environment, but also our understanding of the sacrosanct Engagement and Quality Control Standards and our ability to apply them in the face of the pressures exerted by clients and others.
Moment of Pride for Profession
It was a moment of pride for the profession, when the ICAI past-President CA. T. N. Manoharan was conferred with the Padma Shri at the hands of Honble President of India Smt. Pratibha Devisingh Patil on April 7, 2010, in Trade and Industry category. It was highly satisfying, inspiring and encouraging to see the contributions of one of our professional bretheren being recognised at the highest echelon of Indian polity. While we have already felicitated him, we congratulate CA. Manoharan for this accomplishment and wish him all the best for his future endeavours.
Hard as that task might appear in some cases, we should never forget that the auditing standards are the hallmark of the highest quality in our work and our commitment to serve the public interest. In fact, it is our only safeguard in the face of undue criticism that we auditors sometimes face on account of expectation gap. We need to send a clear and strong message to our clients, and, more importantly, to the members of audit teams who actually work at the grassroots level, that we cannot simply make compromises on that account. For your convenience and ready reference, the ICAI has made available the complete text of the auditing standards on its website under the link titled Resources. I urge you to please refer to and apply the standards (as applicable) in all your audit and assurance engagements. It is also my earnest request to you to remain alert to the announcements regarding new auditing standards that appear on the Institute website and get published in our Journal. In addition to complying with the auditing standards, it is also necessary that you actively participate in the auditing standard setting process by sending your comments on the exposure drafts of auditing and other engagement standards issued by the Auditing and Assurance Standards Board (AASB) from time to time. Please see this as an opportunity to share your wealth of knowledge and experience with the Institute for the benefit of the members at large as well as a platform to raise any concerns that you perceive in application of the proposed standards. This will help the Institute bring about standards which are firmly rooted in the ground realities and are amenable both to application and enforcement without, obviously, compromising on the need to be at par with the globally-accepted best practices and to be fair and objective to all the stakeholders in the financial reporting process, especially the common man.
Now let you be updated on major developments pertaining to the profession over the past one month:
As part of our drive to raise the global standing of the Indian CAs, we recently organised an eventful and enlightening visit to the Gulf region, which is the work zone of a sizeable number of our members.
Dubai-Abu Dhabi Visit: Honble Mr. Salman Khurshid, Minister of State (Independent Charge), Ministry of Corporate Affairs and Minority Affairs headed a delegation to Dubai and Abu Dhabi, which also included Mr. R. Bandyopadhyay, Secretary Ministry of Corporate Affairs. ICAI Vice President CA. G. Ramaswamy and the undersigned also accompanied them. The objective of the visit was to highlight the role played by Indian CAs in UAE and other parts of world, and promote the brand Indian Chartered Accountant.
Addressing a programme on the theme Accountancy Profession in New Economic Order, which was attended by more than 450 Indian CAs, the minister spoke highly of the Indian accountancy profession and said that he had come to the region after 10 years just to promote the Indian CA profession. Reminding Indian CAs that they owed an obligation to their country and their alma mater, he urged the members and the Indian community to keep the Indian flag flying high. The Consul General of India at Dubai Mr. Sanjay Verma was also present on the occasion. The minister also addressed the Indian Business Professionals Council and the members meet to apprise them of various initiatives by the Government of India in regard to corporate governance and related issues. The ICAI membership shared with the minister, various issues that are currently affecting the ICAI members working at the UAE like induction of local partners and non-recognition of chartered accountants as a graduate level programme. The minister assured to take up the ICAIs case with the Ministry of Labour at the UAE.
Later on, the Minister of Corporate Affairs along with the Secretary, MCA, met H.E. Sheikh Nahyan Bin Mubarak Al Nahyan, Minister of Higher Education and Scientific Research at his palace. He was highly supportive of the ICAI initiative for a customised programme for the UAE nationals and promised full government support and backing in the matter. Dr. Tayab A. Kamali, Vice Chancellor, the Higher Colleges of Techonology (HCT) was also present during the meeting. During the visit, we had extensive discussions, including with Dr. Saeed Hamad Al-Hassani, Director General, Ministry of Higher Education and Scientific Research, with regard to the ICAIs initiatives to promote international curriculum in the nature of the mid-tier certification programme for the UAE nationals and providing all technical knowhow to set up an Institute of Accounting Technicians tailormade to their needs. We agreed to soon have an MoU in this regard. This move would spread goodwill and support to the ICAI membership present in the Middle East and North Africa (MENA) region. While children of the Indian diaspora will be able to undertake the CPT and IPCC coaching at such Institute, the UAE nationals would get a world-class professional programme to excel in the emerging financial markets within the region.
The delegation also interacted with Mr. Ahmed Humaid Al Tayer, Governor of Dubai International Financial Center, and both sides agreed to explore the common areas on which they can work together in public interest.
Oman Visit: We also visited Oman for exploring the possibilities of promoting and developing accounting profession in Oman. There, a conference on Financial Recovery & Challenges Ahead organised by our Muscat Chapter, was quite a success with more than 350 delegates attending it. Ambassador of India to Oman Mr. Anil Wadhwa was the Chief Guest on the occasion, who promised full support in promotion of brand Indian CA. Chairman, College of Banking & Financial Studies (CBFS) of Oman Mr. Iqbal Ali Khamis Al Lawati also addressed the gathering. It was particularly heartening for us to know that Indian CAs hold key positions in that region.
We also separately met the Chairman, CBFS, and other high officials to consider the opportunities to develop professional capabilities. The meeting with CBFS, which is the sponsor for our Muscat chapter, was pathbreaking as it allowed both sides to formulate the operational strategies for carrying forward the broad framework of bilateral co-operation as envisaged in the MoU signed with them in 2008. The CBFS chairman highly appreciated the services being rendered by Indian CAs in that region and called for a long term relationship between the ICAI and the CBFS for development of accountancy profession. We have decided that the ICAI will assist the CBFS after a need-based analysis of the local competency needed in designing a country specific Accounting Technician programme. While this model would be by and large structured on the lines of the Accounting Technician programme being offered by the ICAI; it would have the local customisation and the range of subjects to have these incumbents trained in specific skill set to meet the growing demand of the local market. We have decided to start our CPT programme in Oman as well, which shall be available to all nationals albeit the programme for chartered accountancy would be targeted in addition to the normal contemplated international programme.
Here, we must acknowledge the excellent support extended by the Muscat Chapter Chairman, CA. Yashpal Mehta and his team to our visit.
The ICAI Vice President addressed our Doha Chapter on issues arising out of Indian budget in the presence of Mrs. Deepa Gopalan Wadhwa, Ambassador of India at Doha, and other dignitaries.
Australian Delegation Visit: Meanwhile, a delegation comprising Mr. Graham Meyer, CEO, The Institute of Chartered Accountants in Australia (ICAA), and Mr. Bill Palmer, Director Asia, ICAA, visited the ICAI recently to further strengthen the relationship between the ICAI and the ICAA. During their visit, they had meetings with Mr. R. Bandyopadhyay, the Secretary, MCA, and Mr. Sunil Verma, the Deputy C&AG of India, in addition to the ICAI President and its other functionaries. Discussions were held to work more closely in future for mutual benefit. Thrust was laid on improving the networking ties between the members of the two institutes. We have agreed to host a joint event of Australia, India, Hong Kong, Singapore and New Zealand on emerging accounting and auditing issues either in Singapore or India. Such an event would be first to be organised jointly by the multiple accounting institutes across the globe. To further augment the bilateral relationships and the MoU entered into between the ICAI and the ICAA, it has been decided to work towards recognising each others CPE programmes, which would benefit the membership of both the Institutes. It was also decided that on the local law/taxation specific regime, both the institutes would provide focused training programme in consultation with each other at either end.
Helping in Implementation of IFRS
As the members are aware, the ICAI is going ahead full steam for convergence with IFRS from 1st April 2011 to meet the timelines set by the Ministry of Corporate Affairs in its announcements on Roadmap for companies for application of IFRS - converged Accounting Standards for certain class of larger and listed companies in Phase I from 1st April 2011, Phase II companies from 1st April 2013 and rest of the listed companies from 1st April 2014, and Roadmap for Insurance Companies from 1st April 2012 and for scheduled commercial banks, certain urban cooperative banks and Non-Banking Finance Companies from 1st April 2013. One of the endeavours of the ICAI in this direction is formulating Accounting Standards fully converged with IFRSs. The ICAI plans to complete the formulation of drafts of all Accounting Standards by end of June 2010. These are being considered by the National Advisory Committee on Accounting Standards (NACAS) simultaneously. Thus, it is expected that the Government will be able to notify the same thereafter.
For proper implementation of the IFRSs, it is imperative that education and training is provided to all concerned. As such, the ICAI has undertaken the task of training its members, corporates and other stakeholders with converged accounting standards. For this purpose, last year, IFRS Certificate Course was started. Till date 32 batches have been completed and seven batches are in process. More than 1800 members have already undergone this course. In addition to the Certification Course, IFRSs e-learning Course has been started. By the time this communique reaches you, we would have begun, in collaboration with the Ministry of Corporate Affairs, a large-scale IFRS awareness drive from 29th April 2010, to hold workshops at 58 places in the country, to equip the ICAI members and other stakeholders on the essentials of Indian Accounting Standards converged with International Financial Reporting Standards (IFRS).
Partner in Nation Building
We are happy to inform you that as part of our initiative to assist the Government of India, the ICAI has entered into an MoU with the Central Board of Excise and Customs (CBEC) on 31st March 2010 to act as a facilitator for their Automation of Central Excise and Service Tax (ACES) project under which our practising members will provide facility of e-filing of returns and documents to central excise and service tax assessees through certified facilitation centres (CFCs). A certified facilitation centre is a facility other than the physical front offices or facilitation centres of the CBEC, which will be set up and operated by practising chartered accountants in individual capacity or as proprietor or firm. The MoU opens a new professional avenue to the members in practice. This initiative will immensely benefit the government, the profession and industry. With this MoU, the members can not only provide services as envisaged, but can also provide other services on request of the assessees. It will also facilitate the capacity building of our members. Queries relating to the setting up of CFCs may be sent to email@example.com. The salient features of the MoU have been hosted on the ICAI website.
Meeting with Gujarat CM
We had a meeting with Gujarat Chief Minister Shri Narendra Modi wherein we requested him to review the provisions of Gujarat VAT Act, 2003 in the light of the Supreme Court judgement of May, 2008 whereby only chartered or cost accountants are considered eligible to audit. Further, services of chartered accountants were offered for conversion of accounts of local bodies to accrual based accounting system for an efficient and transparent financial reporting system. Moreover, to bring transparency and objectivity in the allotment process, it was proposed to have a panel of chartered accountants/firms based in Gujarat sourced from multipurpose panel prepared by the Institute on an annual basis.
Capacity Building Initiatives
This year we are paying special attention on strengthening the ICAIs initiatives to enlarge visibility of the CA profession and to rejuvenate practice portfolio of small and medium practitioners. We are working for consolidation of the CA firms through networking mergers and for setting up management consultancy services by popularising effective consolidation of the CA Firms. The focus is on enriching the CA firms through capacity building. It is proposed to conduct a survey to create a database of CA firms engaged in different professional areas. The intention is to help create Indian global brand in the field of accountancy.
Amendments to Listing Agreement
Many of you may be aware that the SEBI vide its circular, dated 5th April 2010, has made certain amendments to the Listing Agreement. By these amendments, the SEBI has reduced the timeline for publishing the audited annual results on standalone as well as consolidated basis from 90 days to 60 days from the end of the financial year for those entities which opt to submit their audited annual financial results in lieu of the last quarter unaudited financial results with Limited Review. It has also been decided that in respect of all listed entities, limited review/statutory audit reports submitted to the stock exchanges shall be given only by those auditors who have subjected themselves to the peer review process of the ICAI and who hold a valid certificate to this effect.
We are sure that these changes, as made by the SEBI, will bring in uniformity in the Reporting of financial results by all listed entities and would definitely be in the interest of all the stakeholders. We fully support the move. However, as these amendments have been made in the beginning of April 2010 and immediately applicable for the year ended 31st March 2010, we have represented to the SEBI to ensure that there is no undue pressure on both auditor and/or auditee to complete the audit. SEBI has been requested to defer the applicability of the said amendment by six months so that there is sufficient notice for not only the audit firms but also the listed entities to plan their affairs accordingly.
Appointment of Tax Auditors in Public Sector Banks
Reserve Bank of India, vide its circular no. DBS.ARS.BC.No.3/08.92.001/ 2007 -08 dated 25th July, 2007, followed by the circular no. Ref.DBS.ARS.BC. No.09/ 08.92.001/ 2009-10 dated 31st December, 2009 allowed all publicsector banks to appoint at branch/head office level, any CA firm as their tax auditor at a reasonable fee with approval of their Board/ ACB. In pursuant to these circulars, the State Bank of India decided to appoint a single firm of chartered accountants as its tax auditor, and not to allot tax audit assignment to the existing branch/central auditors. As soon as this came to our knowledge, the matter was taken up with the senior officials of the SBI and we convinced them to get the tax audit done from the existing branch auditors. However, in the process, the SBI brought down the tax audit fee to 7.5 per cent from the existing rate of 15 per cent of the branch audit fee. They were requested to reconsider the said proposal, as it might have significant implications in terms of proper observance of generally-accepted auditing procedure by a firm not associated with the statutory audit of the bank. Also, such a proposal may be counter productive because SCAs and SBAs having familiarity with the bank have an edge in performing the assignments.
It is our endeavour to make the ICAI hitech in such a way that it comprehensively caters to the needs of its members, students and other stakeholders just at the click of a mouse. Our ongoing Project Parivartan is one such path breaking initiative aimed at improving e-governance in the ICAI. We have made important headway on this front. The goal is to create an integrated IT system for catering to the entire community of chartered accountants and students irrespective of their geographical locations through the Internet. Further, as you know, a full-fledged Information Technology Directorate has been set up to bring all the IT activities under one umbrella and to facilitate coordination and optimum use of the IT resources for the benefit of members and students.
Launch of ICAI e-Sahaayataa
In order to provide prompt services to the expanding base of members and students, the ICAI is launching its e-Sahaayataa service on June 1, 2010. The e-Sahaayataa shall act as the only e-channel for the entire base of members and students of the Institute and other stakeholders of the profession at large wherein all their queries/complaints/ grievances pertaining to the day-to-day working shall be acted upon and resolved by the ICAI within 3 to 7 days from the date of their receipt. The main purpose of this service is to eliminate the operational bottlenecks and smoothen the flow of the education process of chartered accountancy. It will provide timely services to all the stakeholders of the profession throughout the globe with a motto of zero tolerance for pendancy. This is a major initiative of the ICAI wherein the complete history of the query/complaint/grievance from the date of entering it into the system till the date of resolving it shall be available for future reference. In this service, the user has an option of reopening the query/complaint/ grievance in case of dissatisfaction from the service provided. The demo version of the e-Sahaayataa shall be uploaded on the ICAI website from 10th May 2010 to 15th May 2010 for your valuable inputs and suggestions for improvement. After incorporating such inputs and suggestions, the e-Sahaayataa shall be officially launched and will be fully operational from 1st June 2010.
Students are high on the list of our priorities this year and we are constantly working for their all-round development. As part of this drive, it is gratifying to announce that we will soon release practice manuals consisting of model questions and answers of all subjects, which will help our students in strengthening their fundamentals of those subjects. Till this January, manuals of only three subjects were published. We take pride in announcing formally that a BoS Knowledge Portal has been created to provide our students, in electronic form, with study material, revision test papers, suggested answers, supplementary study material, model/mock test papers, etc. Students must take full benefit from this portal to prepare for examinations. Under Gyandarshan, special lectures on Accounting Standards 30, 31 and 32, and on Standards on Auditing were organised for our students.
It is a matter of pleasure for us to announce that, in May 2010, there will be crash courses in Quantitative Aptitude, Economics, Accounting and Mercantile Law for CPT students. While we take such effective measures for our students, a dynamic participation should come from the beneficiary. I am sure our efforts and their participation will be quite productive together.
Our Institute has signed MoUs with the Bharathiar University, the Netaji Subhas Open University and the Indira Gandhi National Open University. The students and members must take full advantage of these MoUs otherwise the very purpose of having such arrangements gets defeated. While a number of other universities have also requested us for similar MoUs, we are pondering over the justification for such tie-ups when not many students and members are taking benefit of such arrangements. We call upon you to take advantage of such arrangements in larger numbers so that we feel encouraged to have similar tie-ups with more universities of repute for your benefit.
We are happy to take note of good response to our latest February-March campus placement programme. In all, 94 recruiting organisations participated and offered jobs to 1411 newly-qualified chartered accountants. The improving employment and the pay packages that are offered by the companies show universal acceptance of our young members in industry. Companies are offering lucrative financial packages to employ fresh chartered accountants. The best offer made was to 11 candidates, which is $ 1.5 lakh (about Rs. 70 lakh) for international posting. In spite of this lucrative offer only seven candidates actually accepted the offer. We have also planned to have special placement programme in the month of June for the experienced chartered accountants as well.
However, irrespective of good response from industry and zero-unemployment among CAs, we need to do soul-searching as to why not 100 per cent of young CAs participating in our campus placement programme are being picked up by companies. Although the trends are quite positive as percentage of jobs offered vis--vis attended candidates has jumped to 48 per cent in comparison to meagre 27.52 per cent in the last campus, still a lot is needed to be done on this front. We plan to increase the number of companies participating in campus placement process and will take all necessary measures to ensure 100 per cent placements in such programmes. We also propose to put a condition that no less than Rs. 5 lakh package is offered to our young members in our campus placement programmes.
Activities in the Regions
As part of our drive to strengthen the ICAI infrastructure, reach and services to members, students and society at large, we recently inaugurated yet another branch of the ICAI, at Ratlam in Madhya Pradesh. About 300 members attended the programme, which was very well organised and deserves all the appreciation from us.
An orientation programme of the officebearers of 39 branches of CIRC of the ICAI was also organised at Indore where we emphasised on observing financial discipline at the branch level. It was heartening to see that office bearers of all the 39 branches were present during the programme. These orientation programmes, organised every year, provide a platform for direct interaction with all management levels of the Institute and enhance our branch level efficiency.
Before concluding, we would like to remind you that the primary qualification of a chartered accountant must be his commitment to a lifetime of learning, unlearning and relearning, and to change with times. In a time of fastpaced changes it is the learners who inherit the future. Knowledge, skills and experience may not be enough unless we develop wisdom to use them. These days people seek knowledge, not wisdom. Knowledge is of the past, wisdom is of the future, so goes a saying, which is worth taking note of in the present times.