The Institute of Chartered Accountants of India (ICAI) has been busy preparing accounting standards to align Indian accounting practices with globally-accepted International Financial Reporting Standards (IFRS) by April 2011. In an interview, the institutes president Amarjit Chopra talks to Joe C Mathew about a host of issues, from regulation to investigations. Excerpts:
How successful has ICAI been in coming out with new accounting standard drafts that are IFRS-compatible?
IFRS has actually taken up most of the councils (the supreme governing body of ICAIs elected members) time this year. We are well ahead of time and our job to prepare the draft standards is almost over. In addition to the 31 accounting standards finalised so far, we have also brought out the exposure drafts (which need further consultation) for most sectors. Even the ones that were considered very complex, accounting standards for agriculture, for instance, are in the exposure draft stage now.
You have been saying that once chartered accountants (CAs) are allowed to form limited liability partnership (LLP) firms, India will witness the birth of global advisory firms comparable to PricewaterhouseCoopers (PwC), KPMG, Deloitte and Ernst & Young. Now that the Bill allowing ICAI members to form such LLPs are expected to be passed soon, when do you see this happen?
It will happen. I will not say it will be of the size of PwC, but people have shown interest in coming together to form such firms. They are mostly from the southern and western parts of the country. There will be firms that will come together. There can be company secretaries; there can be ICWAs, MBAs. Automatically once this happens, size will increase and services offered by one firm will also turn multi-disciplinary.
Why the south and the west?
In central India and the north, we dont find such a tendency to come together. The kind of professionalism that is there in the other parts of the country is not there. In the northern side, you may have pockets where you may see such developments, Delhi and Chandigarh for instance, but may not be pervasive throughout the region. On the other hand, in the west, you have a large number of places, Vadodara, Pune, Mumbai, Ahmedabad Same is the case with the south.
How do you respond to the demand to bifurcate the role of the regulator and standard setting agency from bodies such as ICAI?
I would maintain my position that the institute should have the dual role as a regulator as well as a standard setting body. Both are important, as a regulatory role only complements your academic role.
Do you think the corporate affairs ministry agrees with you?
I dont think the ministry is keen to bifurcate it. See, there can always be committees and discussion groups. There can also be recommendations, but whether the government accepts it or not is a different issue. There are some other countries also where these systems exist and the dual responsibilities are successfully carried out by the institutes.
You have said that disciplinary action against erring members will be faster. Has it really happened?
As you know, court interference is there in several cases and we have no control over such cases. But wherever courts have not interfered, we are going ahead. We have completed almost 50 cases this year. This includes seven-eight public interest cases relating to the banking sector. It is too premature to give details but we will be taking up the reports of the disciplinary committee in our council meeting soon. We do intend covering more than 100 cases this year. We want to include the Satyam case also this year and if there is no further court intervention, we will be ready with our report by the year-end. To me, Satyam (accounting fraud) is closest to my heart, as I want to showcase it (by taking disciplinary action against its auditors if they are found to be guilty) to say there has been no delay from the institute.
In what stage is your disciplinary committees inquiry into Satyam scandal?
All of them (ICAI members who were associated with Satyam audit) have got bail and we have issued notices to them. In one of the cases, we could not go ahead as the person had got a stay from the court. The hearing in this case will happen on October 18. Another person, who is on bail now, has written to us that he cannot move out of Hyderabad (due to legal restrictions). So, we are going to have a hearing in Hyderabad (instead of Delhi). Two others had gone to the Delhi High Court seeking a stay, but it was not granted. So, we are going ahead with the proceedings.
It is known that you are conducting an independent inquiry into the Indian Premium League controversy. Any updates? We are looking if there have been any auditing discrepancies in the case of all eight franchises. We should be able to communicate something to you soon.