Decoupling ICAI

When the demonetization of Rs 500 & Rs 1000 was announced by Prime Minister Sri Modiji of India on a nationally televised address, even I was watching the same in Abu Dhabi at my residence (Presently in India) and I couldn’t believe that these 2 denominations of notes are no more legal tender, so what was running in the mind that all the monies hoarded will not come back in to picture and we were informed that RBI will make a killing of almost Rs 500,000 lakh crores because that was a reasonable estimate made by them to the quantum of Black money in the system. Everybody rejoiced in this step from lower-class to middle-class people with the exception of the richer strata of society.

What actually happened?

Once the demonetization was announced, there was a window to deposit the old currency from 8-11-2016 till 30-12-2016, but to the surprise of RBI almost 97 % of the circulated money by way of Rs 500 & Rs 1000 came back into the fold of RBI

According to a 2018 report from the Reserve Bank of India, approximately 99.3% of the demonetized banknotes, or ₹15.30 lakh crore (15.3 trillion) of the ₹15.41 lakh crore that had been demonetized, were deposited with the banking system, leading analysts to state that the effort had failed to remove black money from the economy. The banknotes that were not deposited were worth ₹10,720 crores as per the report of RBI.

Which made look the entire episode of demonetization a flop show, not to mention the hardships caused to the common man and the Indian economy, I still remember Mr. Prashant Jain of HDFC Mutual fund saying in his address to CA’s In Abu Dhabi that the pain of demonetization will last till 2nd & 3^rd quarter of the year 2017 but it lasted much longer.

The ruling establishment felt that Professional Accountants helped the Rich/Upper-middle-class to subvert the demonetization by various methods like buying gold with the old currency, converting the money thro places of Gatherings and the major part was converted thro Cooperative banks and in some cases with the active participation of Bankers both in PSU & Private sector banks that still were not under “ Core Banking ” and some of the major entries were backdated running into crores, remember we have around 97,517 cooperative banks in India. The income tax department sent many notices to people across India who had deposited the money clandestinely but I did not hear much thereafter.

Since the ruling establishment felt that their entire exercise has gone kaput, you know the famous address of our Prime minister on 1-07-2017 the day GST was launched, and also to commemorate CA Day where he came down heavily on the disciplinary body of ICAI, and immediately thereafter steps were taken for the formation of NFRA to look into the various aspects of Auditing standards and Reporting for the listed & unlisted companies based on turnover and size. This was the first step to undermining us.

The continuous rise in Bank frauds mostly in PSU banks was another feather in the cap that highlighted the geometric progression rise of frauds in the bank, so with or without Audits the rise in the frauds had a steady increase in the frauds causing damage to the Banking sector & the Indian economy.

Let us quickly go through the figures given by RBI on Financial Frauds (In Crores)

So the ruling establishment felt that we have to do bring about certain changes in the Indian accounting system because at its present status it has failed to deliver the goods and IIA is the brainchild of this brainstorming session.

The main feature of IIA ( Indian Institute Of Accounting )

Yesterday I was going through the draft proposal of the said Act notified in Gazette.

1) There will be an entrance exam after class 12

2) Admission will start with the Cutoff Marks based on the Entrance test

3) It will be a 5 Years course with Twin Qualifications

4) After completion of the course you will be given a license in India to practice as a CPA – Certificate to Practice Accountant, do not confuse it with American CPA which stands for – Certified Public Accountant. So here we have a parallel body to us.

5) IIA’s will be established similarly on the lines of IIT & IIM & National School of Law – Bangalore.
(In Brief)

6) This course will be open to all including Foreigners to attract the best.

7) There are separate rules for How to establish the IIAs?

So now there are 2 schools of thought within ICAI and the central committee is set to deliberate on 5-04-2022 in Mumbai with the active participation of the Past 25 Past presidents of ICAI and the present Central Council Committee.

1) To accept the ground reality and move on

2) To urge the Government of India to establish ICAI University and bring about all IIA under the purview of ICAI which is felt to be a farfetched Idea and the Government is not likely to accept this suggestion.

I happened to go through the Standing committee on finance – 45th report dated 21-03-2022 presented in Lok Sabha and laid in Rajya Sabha and the constituents draw eminent personalities from both Lok Sabha and Rajya Sabha I am sure the Government of India is in no mood to relent and looks like the monopoly of our institute will be decoupled with the entry of IIA. So let us accept the reality. ICAI is pressing for the Chairman of the disciplinary committee to be a member of its own fraternity and even this request will not be heeded looking at the mood of the present establishment.