The profession of chartered accountants (CA) is regulated by the Institute of Chartered Accountants of India (ICAI), the oldest out of the three professional Institutes in the country, the other two being the Institute of Cost and Works Accountants of India and the Institute of Company Secretaries of India. The ICAI has also the largest number of members, all professionally qualified and certified to be so only after completing the prescribed number of years in articleship, albeit after getting through the rigorous examinations.
Apart from checking and signing annual accounts, CAs are in demand to prepare income-tax returns and to appear before the income-tax authorities. As such it seems a great disservice to the profession that it has received a raw deal from the Companies Bill 2009, now before a Parliamentary Standing Committee.
Powers not enhanced
The Bill does not enhance the powers and duties of CAs. True, chief financial officer (CFO) has been included as one of the key managerial personnel of a company. But no special qualifications have been prescribed for the CFO; company secretaries and cost accountants are obliged to have the prescribed qualifications. Does it mean that the CFO need not be a chartered accountant?
A welcome provision is the omission of a meaningless provision in the 1956 Act, stipulating that the appointment or reappointment of an auditor has to be approved by members in general meeting by a special resolution, in the cases of companies in which not less than 25 per cent of the subscribed capital is held singly or by a combination by i) a public financial institution or a Government company or Central Government or any one State Government, or ii) any financial or other institution established by any Provincial or State Government holding not less than 51% of the subscribed share capital, or iii) a nationalised bank or an insurance company carrying on general insurance business .
A new chapter XVII, Registered Valuers, has been included providing for valuation by registered valuers. Persons eligible to qualify as valuers are chartered accountants, cost and works accountants, company secretaries or other persons possessing qualifications as may be prescribed. There is no logic in recognising company secretaries as valuers. It is also beyond reason how a CA or cost accountant can value a property or machinery without the help of expert engineers.
The powers of the High Court in respect of sick companies are proposed to be transferred to a Tribunal. In turn, the Tribunal can appoint administrators, inter alia, to ascertain the possibility of revival and rehabilitation. Here also CAs are clubbed with members of sister institutes and such other professionals for consideration for appointment as administrators.
Auditor of company
One of the unkindest cuts is that the auditor of a company, necessarily a CA, shall not render such services as accounting and book-keeping, internal audit, design and implementation of any financial information system, actuarial, investment advisory, investment banking, rendering of outsourced financial services, and management services. If financial statements are not filed with the Registrar of Companies (RoC) within the prescribed time, the incumbent in charge of accounts and finance is not liable under the 1956 Act. In contrast, the CFO shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than Rs 1 lakh which may extend to Rs 5 lakh, or with both.
Overall, more of shocks than sops for CAs.
please clarify the status
The role of CFO is very vide & he/she must possess multideciplinary qualification & experiance. Hence the CFO must be aqualified member of any two of the three Institutes such as ICAI,ICWAI & ICSI. Hence in no way it should be domain of members of one Institutes.
Moreover same is the case of appointment of statutory auditors the Govt. should review the role of all the three institutes & in my opinion the stutory audit report for large corporates say having turnover more than 100 crores be signed jointly by members of ICAI & ICWAI. This will have a better control particularly in the matter of consumption of raw material & valuation of closing stock.