CA Amresh Vashisht

Our profession did not anticipate much of what has happened after Satyam, which has sufficiently concerned about the growing loss of credibility of the profession. Everyone is talking about the role and responsibility of Auditors. Company law and income tax are the two main resource legislation, which decide the fate of the profession, but now both the legislation are looking towards the profession with red eyes. The latest income tax amendments in section 288 regulate the appearance by “authorized representatives” before any income-tax authority or the Appellate Tribunal. Sub-clause (viii) of the Explanation of section 288(2), as amended by the Finance Act 2015, provides that a chartered accountant is eligible to be an “authorized representative” subject to many terms and conditions. No opportunity is being lost by the legislation to cover the profession of Chartered Accountancy.

Auditors Independence is the talk of the town. More and more statements, quotes, books, guidelines shall thrust upon the definition of the independent auditor. Every stakeholder knows that selecting an independent auditor that meets a company’s expectations and needs are paramount to effective corporate governance, effective Tax management and effective political governance. Many talk about the independent auditor and look towards independent auditor with a great hope that such auditors would act with due diligence and care without compromising independence. The latest amendments clearly show a way to the profession that an auditor who is not independent cannot meaningfully discharge his functions of protecting the interest of revenue by remaining fair. There is no problem of concept of Independent auditor with the auditor fraternity. They are very much ready to deliver and fulfill the expectations of the stakeholders.

Is it justified that new 51 a rule states that if an auditor has contributed more than Rs 50000/- to a charitable institution, he can’t represent the charitable institution before the Income Tax Authorities. Now in the eyes of law, he shall lose his independence as he is a substantial contributor to that charitable institution. Though the reality is just an opposite of it, If a Chartered accountant gives a donation of Rs. 50000/- and thereafter if he represents the case, HE will be more vigilant and will see towards the accounts, taxation, the conduct of the institution with more open eyes. One more coincidence which may take place is that that if an auditor cum tax consultant find the working of any charitable institution impressive but he can’t be a contributor of Rs. 50000/- towards the charity because it will lose his tax consultancy.

Now it has been taken as granted that if the auditor is a related person, the independence, authenticity and bona fide of such Audit Report shall be compromised. An auditor is expected to discharge his duties with full independence and without compromising the interest of revenue. In the absence of reliability of an audit report signed by interested /related person, not only the reliability of the report suffers but may also aid in tax evasion.

All the Chartered Accountants, if true to their calling, have the independent outlook and the high standards of performance attributed to them as professionals. Many courts have given due respect to the audit report and have held that without having any positive material on record, audit report submitted by the Accountant cannot be disregarded. The authenticity of books of accounts is accepted on the basis of audit reports. Reference may be made to the decisions in CIT v. Regional Kisan Gramin Bank (2014) 42 578 (Allahabad); CIT v. U.P. State Food & Essential Commodities (2013) 39 106 (Allahabad); Madanani Construction Corporation Pvt. Ltd. v. CIT (2008) 296 ITR 45 (Gau).

Are Chartered Accountants really independent? All stakeholders recognize chartered accountants as independent who are not in fact independent. Our profession is under intense congressional scrutiny by the latest amendments. The amendments in Company law 2013 and Finance Act 2015 are heading towards a single object to achieve independence and integrity of the auditor. The process of appointing, assessing, and compensating the independent auditor is an important activity. It is the independent auditor’s responsibility to perform a high-quality audit.

But the foremost point is the appointing procedure. No one talks about this. No literature is available where the appointment procedure has been considered as a vital element to achieve auditors independent. In present circumstances there is 100% failure in the appointing procedure of the professional opportunities. The profession is directly in line of fire because the appointing procedure of the auditor is not leading the profession into right direction nor the profession will ever achieve the independent auditor.

independent-auditorThe appointment procedure is the mother of the independent auditor. How can an independent auditor be born without a mother? It’s not possible so when we shout about achieving Auditors Independence, are we making fools of everyone? Yes, as long as we shall not deal with the appointing mechanism in all kinds of auditors, it’s wrong to admit being complied with auditor independence.

Independence refers to the mental attitude of a Chartered Accountant in approaching a task. It deals with the actual and the perceived ability to act with integrity and objectivity. The appearance of an independent mental attitude is as important to an auditor as the attitude itself. To us, mental attitude is primary and our appearance secondary. So a mental attitude constitutes the whole of independence. An auditor which is being appointed to the task is by a feeding hand and if he decides to bite a feeding hand, then only he is honest, objective and of independent behavior. Everyone thinks the concept of independent is vital to successful audit practice, then why the allotment or appointment procedures are being taken up in a casual approach.

There are approx 50000 Chartered Accountant firms out of which 40000 are in real time practice. Is it difficult to regulate the 40000 firms with the centralized allotment procedure? In a country , where we are heading towards 1.25 billion aadhar cards digitally attached to their banking accounts and operating it to reimburse the few hundred rupees of subsidy in their account by auto route. Can’t this country regulate and allot the audits to these 40000 firms through a transparent way. Each and every audit allotment is defective and unfair.

The attacks are many. The government is ready with the weapons of mass destruction. Here mass destruction is for the poor accounting professionals. They are ready to hit the auditors. The protection, management which is in the hands of our regulator ICAI has totally failed to raise its voice against the deliberate attempts on the Chartered accountants. Likewise, our government is fully ready to take on its enemy with the strength of their weapons; we see the following threats to our professional practice.


1. SURYA is Intercontinental-range Multiple independently targetable reentry vehicle (MIRV) with a range of 8000-12000 KM is under development stage. In our profession, we have a tendering process to kill our independence. The tenders are being floated with their own wish list of terms and conditions. The accounting professionals are not able to cope with the tender invitation and are seeking it as low as Re 1 per audit. This tendering process shall have the same effect as Surya shall have in the enemy camp.


2. AGNI- VI is a Submarine-launched with an intercontinental – range (probable MIRV) having a range of 6000 to 8000 KM is under development stage. In our profession, now we are having a system of autonomy for Central auditor’s appointment in the case of PSU banks. The chairman/ Boards/ Audit Committee is free to choose any of the eligible audit firms as Central auditors of the bank, It’s in the hands of those you are at the helm of affairs that they can choose anyone of their choice. This procedure shall have the same deadly effect on the enemy as of Agni VI.


3. AGNI-V, Intermediate to Intercontinental-range Tested successfully for 5000 to 8000 KM.In our profession, the corporate auditors are being appointed by the shareholders of the company. Technically, this is the big lie. The management decides the auditor take its auditor’s eligibility letter to act as an auditor and then take the name to the meeting of the shareholders and get them approved. This appointment is also an accommodating appointment because there is nothing which suggests that the appointment is an independent one. It’s in the hands of those you are at the helm of affairs in the capacity of the board of Directors as they can choose anyone of their choice. This procedure shall have the same deadly effect on the enemy as of Agni V.


4. AGNI-IV, Intermediate-range Tested successfully for 4000 KM. In our profession, the branch auditors are being appointed by the staff of the concerned bank. The staff gets a voluminous list of auditors from RBI and selects the auditor at their choice. Members at large approach them to get the allotment of audits. This appointment is also an accommodating appointment as being begged by auditors and there is nothing which suggests that the appointment is an independent one. It’s in the hands of those you are at the helm of affairs at the lower capacity as they can choose anyone of their choice. This procedure shall have the same deadly effect on the enemy as of Agni IV.


agni-ii-missile5. AGNI –III Intermediate range 3500 to 5000 KM deployed to safeguard the territories of the country. In our profession, the concurrent auditors are being appointed by the staff of the concerned bank for favour, for money and for other interests. This is going on uninterrupted for the last 60 years. No challenge from the regulator which is a mute spectator to this on going wrong practice. This appointment is also an accommodating appointment as being unethically obtained by auditors and there is nothing which suggests that the appointment is an independent one. It’s in the hands of those you are at the helm of affairs at the lower capacity as they can choose anyone at their sweet will. This procedure shall have the same deadly effect on the enemy as of Agni III.


6. AGNI –II, Medium Range 2000 to 3000 KM, deployed. In our profession, the concurrent auditors are being appointed by the management of the concerned bank. They allot the 15 branches to one auditor from a list received from NABARD. They give the ¾ days to complete the assignment. If anyone raises some reservation of questioned the procedure they qualify them for termination. They appoint the new one and get it signed at a prescribed time by hook or crook. This appointment is also an accommodating appointment as being unethically obtained by auditors and there is nothing which suggests that the appointment is an independent one. It’s in the hands of those you are at the helm of affairs at the lower capacity as they can choose anyone at their sweet will. This procedure shall have the same deadly effect on the enemy as of Agni II.


7. Agni –I short to medium range 700-1250 KM, deployed and ever ready to protect the country. In our profession, the auditor is having formal and informal contacts which give the referrals, he is associated with the various social networks, the old clients introduce there known people to the auditors and above all the relative place an important role in establishing a practice and appointments to the small enterprises. This appointment is also an accommodating appointment as being appointed by referrals and there is nothing which suggests that the appointment is an independent one. This procedure shall have the same deadly effect on the enemy as of Agni I.


8. This is the only audit, which gives independence to auditors. The appointment comes through auto route based on the well established open calculation of weight age of seniority, the term of term establishment, association with the firm, the test of genuinely with the compensatory figures from the firm and were appointed by an independent authority i.e C&AG. Yes, here the auditor appointment is an independent one.

It is not uncommon these days to hear expressions of grave concern within our profession about loosing its shine, compromises with unethical acts and a general decline in intra profession courtesy. At the same time, We Chartered accountants are being surfaced in every stringent amendment. We are being addressed as irresponsible in dealing with the economic affairs of the country. These concerns have led some to worry that our professionalism is either dead or teetering on the brink of extinction. At least this phenomenon is true for the sole proprietors or small firms operating across the country because of being shunted out from the professional opportunities. Weapon details @ Wikipedia.

(About the Author- Author was Member of ICAI- Regional Research Committee 2013-14 and ICAI- Committee For Direct Taxes 2011-12 and can be reached at email or on phone Phone: 0 1 2 1-2 6 6 1 9 4 6. Cell: 9 8 3 7 5 1 5 4 3 2 having office at 1 1 5, Chappel Street, Meerut Cantt, UP, INDIA)

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Qualification: CA in Practice
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Location: Meerut, Uttar Pradesh, IN
Member Since: 17 Jun 2018 | Total Posts: 99
Author was Member of ICAI- Regional Research Committee 2013-14 and ICAI- Committee For Direct Taxes 2011-12 and can be reached at email or on phone Phone: 0 1 2 1-2 6 6 1 9 4 6. Cell: 9 8 3 7 5 1 5 4 3 2 having office at 1 1 5, Chappel Street, Meerut Cantt, UP, INDIA) View Full Profile

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  1. CA S.KRISHNAN says:

    it is long awaited thought and issue brought at the right time to kindle the ideas of fellow CA’s.well done the writter.

  2. vswami says:

    Craving leave to dilate (and share more sporadic thoughts):

    At least some of the real life situation targeted at and subjected to criticism by the writer, a co-member of the profession, notwithstanding that he is now in employment , not in ‘practice’ (open to correction, if mistaken),– mild or otherwise- e.g. the role and contribution of the government and ICAI (referred to as ‘our regulator’) require to be re-looked into/reviewed, apart by the writer himself, by the whole of the rest in practice or employment.
    Should the measures lately thought of and introduced, in the name and under the style of ‘regularization’ – an inclusive concept to cover and take within its ambit also measures aimed at, of ‘reformation’ or ‘rationalization’, -if objectively viewed- that is, from the viewpoint of the interests of the ‘served community’, being the paymasters of the CAs engaged, those could not be rightly scoffed at or ridiculed on a whole sale basis. On the concept of ‘regularization’, this has come to surface lately, albeit in a different yet not unrelated context. Anyone of the learned readers, – if not averse but willing to volunteer and spare serious thoughts , not only to simple or obvious, but also to extremely brain teasing angles of any problem or predicament – besides so many available in public domain,- may have a peep into and mindfully consider the usefulness or otherwise of the thoughts exchanged in the published articles – (2015) 53 and 56 (pgs. 408 and 398). By doing so, hopefully that should help the right- minded members of the fraternity in realizing as to why the field of both audit – statutory or tax audit- and tax practice, closely related and connected to each other, in which those are widely engaged , demands or warrants painstaking exercise of a much better degree of ‘diligence’, – if not the ideally expected or aspired for, – the highest standard.
    < Over to the writer and the rest , for a further insightful deliberation and incisive conclusion in a wholesome (out of BOX) manner

  3. CA. M. Lakshmanan says:

    Except appointment by C & AG all other auditors are appointed by audittee themselves, where there is no in-dependency at all. But who is to bell the cat? We, the practicing CAs, have to create an opinion about this anomaly and our elected representatives have to take steps to make our profession independent.

  4. CA Ashok V. Barbole says:

    Almost everyone experience the issue of independence what CA has but it requires lion’s heart to express it publicly…Thank you very much sir for raising the grave concern with so much details and facts…

  5. vswami says:

    An independently read , and objectively viewed, the valuable golden thread, nay two of it, passed through the fabric of the entire length of the forthright write-up cannot be prudently over sighted; or bypassed without offending one’s own common sense quotient or inner conscience. The reference is to the twin/inseparable concepts namely, integrity’ and ‘independence’ that have been underlined explicitly or otherwise in more than one context. Further, as stressed , a simplistic change in procedure for appointment or do so through any other external authority other than the entity for whose purpose appointed, by itself may hold no solution to the real life situations or problems faced. For, the largely obtaining apprehension or fear of eventual damage to the image of professionalism or ultimate extinction, cannot be wished away to the hilt, escept through strict adherence to self -discipline and self- regulation by everyone in practice. One, however, may wish and venture to supplement the underlying line of reasoning; that is, to stress that the suggestions made, hidden or otherwise, for salvaging the image are not to be taken to apply or as addressed to only the external auditors. But, on the contrary, those are of every relevance to all other CAs, in employment, e.g. as internal audit party or in any other capacity, as well.
    .While on the topic, it may be worth taking a note of certain other related angles as covered in published articles in the media; for instance, in Business line.

    May have, if so wish, more to add.

  6. Mukesh Kapoor says:

    Born as independent citizens we are not free from influence and control as CAs. I wonder who mooted the concept of tendering for professional services? Why our Institute is a mute spectator to the issue wherein the quality of work may be compromised by those quoting Rupee One as a professional fee? There is one instance which I would like to mention here where Rupee One was quoted by a firm of structural engineers without compromising on the quality. The firm restored the glory of Taj Hotel, Mumbai after the 26/11 carnage and havoc caused by the terrorists. Our L- 1 quotations are generally based on the benefits which may fall in our lap in future. Where is the independence of the assignment? We profusely shower praise and show our gratitude to those who are instrumental in appointing us as their Auditors. Qudos to those who are working to restore the reputation of our profession.

  7. sivasubramanian.c says:

    true , try to change to betterment of future.
    thanks as one of member of this profession, to the writer of this column to expose the real concern of many.

  8. CA Amresh Vashisht says:

    @ Manish, Fortunately, I am not from NIRC. Yes, I am getting many funny news from there. Taxguru may not allow the election gossip here. I belong to CIRC. Visit a website above and be a part of our movement.

  9. CA Amresh Vashisht says:

    Thanks all for your wonderful words. @ Akshay I am affirming believer that to see a wrong and not to expose it, is to become a silent partner to its continuance. I am exposing their wrong deeds since long. Elections were not the factor when I started my yahoo group. In the last eleven years exposed many of their ill conceived projects. All men profess honesty as long as they can. To believe all men honest would be folly. To believe none so is something worse.
    I am running a group of 24267 chartered accountants as on date since 2004. In eleven years the voice of this group has united raised to obstruct their wrong pathways. We worked for Bank audit and also exposed crores of frauds by the top functionary.

    Certainly, I shall work in this matter with full seriousness. Please Trust me. I am an ordinary practicing Chartered Accountant but somehow raised myself to question them, their wrong doings and forced some guys to mend their ways.

    They are not doing, anything as they have put their vested interest forward. There is no need to say much on the topic, the emails of CCM Tarun Ghia and CCM Adhukia are enough to expose their collective wrong doings.

    A special thanks to Kanoi ji for adding missile pick and a Red Stamped approval on my article.

    My articles were also published in the Institute Journals & CIRC news letters. Once again , Thanks for inspiring words.

  10. Manish says:

    I eagrly wait for articles, they are just so thoughtful and worthy of a read. Waiting for your article on NIRC election chaos.

  11. CA Gaurav Raichura says:


    Very True. It should happen that auditees should list themselves online and CA data base should also be online. Then based on matching geographical area of clients and CAs, online and random allotment of audit should be done.

    Its for sure that long exercise is required for this procedure.

  12. CA Ajai Bajpai says:

    Full Agree with ideas and views,

    I want to add further to this that the private Sector appointing the auditor of their choice and some how or in any way those so called Independent auditors are related to these companies and the report given by the auditor can not be called as Independent auditors report.

    A Centralized system (Exp. CAG) should be their from the Independent auditor will appoint so that he will discharge his/her responsibility independently and by this systems the new CA in practice will also get the audit.

  13. Sandeep Kedia says:

    I believe you have hit bulls eye.I believe this should be the case, as this will usher in an unprecedented transparency in the work of the professional involved.

    Till the time this does not happen the so called big firms will continue to exploit gullible Companies and the rest of the professional fraternity will continue to languish at the bottom of the pyramid

  14. CA Kumar Mohan Kar says:

    Fully agree with the concern. Institute has to take up the matter strongly with the Govt. Also members should be more cautious in their audit approach to be independent and protect themselves. Govt. should come out with some clear guidelines in the Companies Act on the appointment procedure to really keep the independency of the auditor. I hope our institute and the people directly actively relating to the practicing profession can through some light on this to the present Govt. In my view if the audit fee calculation should be done with some scintific process and simillarly siginning partners experience on the particular company and industry to evalulate really on the company affairs, etc. Mean to say a codified guidline for the auditor to behave indendently.


  15. Abhinav says:

    Very much agreed sir and i hope every member will agree, but what Institute have done in this way is not known to any member this issue is being raised by you and other members as well at different platforms but ICAI is silent or have discussed this issue but found no solution for fair appointment ? Do u have any idea about this sir.

  16. Avinash Mahamuni says:

    Dear Sir,

    Excellent and thought provoking article.

    The question is when will ICAI take strong initiatives to restore the independence of auditors??


    CA Avinash Mahamuni


    I agree with your view that the appointment procedure is the mother of the independent auditor, in my opinion there for appointment of auditor shall be under the control of the Institute. Without which there cannot be independence. Unless we take accessory steps to protect the independence, we will be loosing the glory of the profession.

  18. ca rd badoniya says:

    There must be a questioner set for every audit. This questioner must be prepared by the appointing authority. This Questioner is must in the case of govt audit.

  19. Akshay says:

    Truly agreed Sir. Now let me also ask you a question:-

    “Why our voted leaders do not act in this matter. I mean to say that, the office bearers of ICAI should act on this and ask the Government to make the system of appointment of Auditors more transparent and independent”

    Now, you are also contesting the elections. Will you work in this matter with full seriousness?

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