Values and morals if practised only within profession may bring in dangerous consequences. The virtues of our values, morals, ethics and skills need to spill over to the society at large, to the entire nation and to the whole world. We as professionals cannot be mute spectators to the ills plaguing the world but instead be responsive and responsible global citizens.
Intolerance is growing. When the whole world is meditating over exercising non-violent options of resolving various internal and international crises, it is strange that we refuse to remember the instances of our own ideals including Buddha and Gandhi. We have a responsibility towards our times and our world. Otherwise, we must be ready to take the blame for the misplaced and misdirected state of affairs our coming generations would be in. This patriotic yet global concern should be the focus of our thought process when we salute our national tricolour and celebrate our Independence Day on August 15. This Day should also remind us that with independence and freedom come added responsibilities, commitments and expectations. This also goes for the autonomy and independence we enjoy as an Institute and as a Chartered Accountant. It is highly satisfying that we have so far been up to the expectations of the Government and society, and we are sure that our indefatigable spirit of independence with responsibility will continue to make us more and more useful to the world at large in all times to come.
Meanwhile, the return filing season is upon us. Taxpayers across the country are grappling with collation of documents/ finalising their accounts to determine the income earned during the previous year. We are sure all of us will be assisting the society in fulfilling this important duty towards our Government and more importantly towards our nation.
Now let you be updated about some of the important developments pertaining to the profession and members.
CA Day Celebrations
We are delighted to inform you that we celebrated 62nd CA Day, the foundation day of our Institute on July 1, in a highly befitting manner with ample show of strength and solidarity. It was heartening to note that the large venue of the main function at the Plenary Hall, Vigyan Bhawan in New Delhi, was overflowing and bustling with members and students who had gathered there to celebrate our indefatigable spirit of excellence and high standing in the society. CA. K. Rahman Khan, Hon’ble Deputy Chairman, Rajya Sabha, and Shri Salman Khurshid, Hon’ble Minister of State (Independent Charge), Ministry of Corporate Affairs, were the Guests of Honour. On this momentous occasion, Shri R. Bandyopadhyay, Secretary, Ministry of Corporate Affairs and CA. T. V. Mohandas Pai, Member of the Board, Infosys Technologies Limited also specially addressed the members. CA. Ajeet Singh S. Bhandari, the topper in the first CA Final Examination held in November 1949, was specially invited to this august function and was felicitated. The aforesaid programme was followed by a special Panel Discussion on Revised Discussion paper on Direct Taxes Code wherein CA. Ved Jain, Past President of ICAI and CA. (Dr.) Girish Ahuja participated as Panelists.
“As the nation embarks on a high growth rate and emerges as an economic power, the profession should prepare itself to play a pro-active and dynamic role in India’s growth. The profession should re-define its role as a watchdog of public expenditure and investment. The motto of the Institute ‘Awake while others sleep’ needs to be followed in thought, deed and true spirit,” said CA. K Rahman Khan, adding that “the ICAI should be the advisory to the Government. We have an obligation to the common man and when we have schemes like NREGA wherein more than Rs. 70,000 crore are going to be spent, the Institute should take up the challenge, offer its services as a social obligation to see as to how these funds are being spent.”
Shri Khurshid was all praise for the profession and its progress, and said that he would like “to look forward to the day when like Neil Armstrong, an Indian accountant from somewhere on the moon would say that he has finally conquered the moon and on that day one would be sending digital audit reports of India’s space stations on the moon”.
CA. T. V. Mohandas Pai said that “the world belongs to those with the intellectual capacity to bring about change. We should be accountants to the world in 10 years from where we are today as accountants to India. With economy going up three times in the next 20 years, the demand for the services of CAs will go up manifold.” He said that “in the next 10-20 years we are going to be judged by the ethics that we carry and the ethics that we demonstrate to everybody in the world and there will be no forgiveness if we fall down,” truly adding that “CAs have potential to be role models for society”.
All the invited dignitaries not only saw and admired but also felt our large presence. They whole-heartedly acknowledged and commended the achievements of the profession over last more than six decades and were unanimous that next decade will belong to Indian chartered accountants. We assure all of them that we will leave no stone unturned to come up to this expectation of the society and the Government. We humbly express our gratitude to all the dignitaries for their words of praise and encouragement, which will definitely inspire us to serve the society all the more. Our special thanks to the members for making CA Day a grand success. Let’s continue making our presence felt. A detailed report of the CA Day function has been published in this issue of the journal.
Meetings with Various Ministries
Ministry of Labour & Employment:
We recently met Shri P. C. Chaturvedi, Secretary, Ministry of Labour and Employment. We presented him an approach paper dealing with the major schemes run by the Ministry and the role we can play in areas like accrual accounting, internal audit, etc. Shri Chaturvedi shared with us various initiatives taken by his Ministry and the developments thereat. He expressed his grave concern on the tendering process for utilising the services of Chartered Accountants and emphasised that L1, i.e. lowest bidder, can’t be the sole criteria of selecting a professional for a qualitative job. He urged the ICAI to look into the matter and ensure that tendering process, gradually becoming an exploitation tool in the hands of allotting authorities, should not become a bane for the qualitative performance of the chartered accountants. We also deliberated upon constitution of a joint working group of the Institute and the Ministry and both sides considered it as a good mechanism to initiate and continue a meaningful dialogue for the areas of mutual interest. The efforts of CA. Anil Khandelwal, in organising the said meeting are worth mentioning.
Department of Financial Services:
We also met Shri R. Gopalan, Secretary, Department of Financial Services, Ministry of Finance and discussed the issue of autonomy given to public sector banks in respect of appointment of auditors. We, on behalf of the Institute, put forth various alternatives as to how autonomy can be retained within the new framework being implemented from this year i.e. 2010-2011.
We have given suggestions with regard to the need for uniform reporting pattern of concurrent audit, its frequency, the fee structure and the empanelment criteria. We also requested him for increase in audit fee for bank audit, effective from FY 2009-2010. He gave a positive response on both these requests. The Government is looking forward to revise the branch audit criteria for branches under CBS, which may bring down the number of branches to be audited in future. However, the same branches may be subjected to concurrent audit.
Chartered Accountants (Amendment) Bill, 2010
Members may be aware that in order to enable members of the Institute to practise through a new business vehicle i.e. Limited Liability Partnership, consequential amendments in the Chartered Accountants Act, 1949, arising out of the Limited Liability Partnership Act, 2008 became necessary. Accordingly, the inputs of the Institute were called for and also submitted to the Central Government in relation to the amendments that were considered appropriate, followed by oral discussions, specific to the consequential amendments, arising out of Limited Liability Partnership Act, 2008. Thereafter, the Central Government introduced in Rajya Sabha on 28th April, 2010 the Chartered Accountants (Amendment) Bill, 2010, along with two other Bills namely, the Cost and Works Accountants (Amendment) Bill, 2010 and the Company Secretaries (Amendment) Bill, 2010 pertaining to the sister Institutes. The Rajya Sabha, on consideration, referred the Bill to the Parliamentary Standing Committee on Finance for its examination. It is pertinent to mention that the Cost and Works Accountants (Amendment) Bill, 2010 however inter alia contained a proposal regarding change of its name from the Cost and Works Accountants of India (ICWAI) to the Cost and Management Accountants of India (ICMAI), which in no way whatsoever relates to the amendments necessitated by the LLP Act. The Institute was invited to make its submission before the said Parliamentary Standing Committee on 7th July, 2010 and accordingly, suitable presentation/submissions were made by the undersigned along with the Vice President, CA. G. Ramaswamy and the Chairman of the Corporate Laws and Corporate Governance Committee, CA. S. Santhanakrishnan. While submitting our viewpoints on the proposed amendments, arising out of the LLP Act, we have also expressed our concerns over the proposal for change of name of ICWAI to ICMAI. We are actively following up on the matter.
Ensuring Effective Convergence with IFRS
The members must be aware that we are making persistent efforts to meet the timelines laid down by the Ministry of Corporate Affairs for convergence with IFRS starting from 1st April 2011. Formulation of IFRS-converged Accounting Standards in time is the most significant milestone in this direction, which is at advanced stage. Exposure Drafts of all the Accounting Standards have already been issued. Most of these Standards have also been considered by the Council of the ICAI after duly considering the comments received. These Standards are being considered by the National Advisory Committee on Accounting Standards (NACAS) simultaneously. It is expected that all the Standards would shortly be ready for notification by the Government.
Simultaneously, we are proactively going on with our concerted nation-wide drive to provide education and training to all the stakeholders concerned for proper implementation of IFRSs. For this purpose, IFRS Certificate Course and IFRS e-learning Course are being undertaken. As many as 38 batches of IFRS Certificate Course have been completed and around 2000 members have undergone this course. In addition to this, we are dedicatedly continuing with the large-scale IFRS awareness campaign in collaboration with the Ministry of Corporate Affairs. As part of this mega campaign, 14 workshops have been organised in different parts of the country which have been attended by more than 850 delegates.
Our Suggestions on DTC Accepted
The ICAI had submitted its suggestions on the issues arising from the Direct Taxes Code (DTC) to the Ministry of Finance, after detailed consideration and deliberation of the proposals contained in various chapters of the Code at high level meetings of the Direct Taxes Committee of the Institute and its study groups. A Revised Discussion Paper on DTC has been released by the CBDT on 15th June, 2010, taking into consideration the vital and critical issues raised by various stakeholders on the DTC. Eleven significant issues have been considered and each issue is discussed in a separate chapter of the Revised Discussion Paper. It is extremely satisfying to note that six of the eleven significant issues identified in the Revised Discussion Paper (RDP) are as per the specific suggestions of the ICAI. These include our representation made on issues such as MAT, EEE, and income from house property, etc. A gist of the RDP as well as the formal suggestions submitted to the Ministry of Finance on 30th June 2010 is given in this issue of the Journal. Certain follow up presentations and representations have also been made by the ICAI before the top officials of the Ministry of Finance and Ministry of Corporate Affairs and have been very well received.
Constitution of Groups
Group for Revision of Recommended Scale of Fees:
We have constituted a group under the convenorship of Council member CA. S. Santhanakrishnan for revision of recommended scale of fees chargeable for the work done by the members of the Institute. As members would appreciate, the revision of the recommended scale of fees is the need of the hour to ensure appropriate compensation for the unmatched skills, quality and hard work the members put in while performing their duties as a Chartered Accountant. We are sure this will further enhance the quality of our services to the society.
Group to Study Guidelines of MPLAD Scheme:
We have recently constituted a Special Group to study the Guidelines of Members of Parliament Local Area Development (MPLAD) Scheme of Central Government and to recommend areas for improvement with regard to Accounts and Audit part of the scheme. The Group will review the existing provisions, procedures and formats prescribed under the MPLAD scheme with regard to accounts, audit and utilisation certificate so as to make them more effective and helpful in achieving the objectives of the MPLAD scheme. The Special Group will also examine the need for preparation of a manual for audit under the scheme so as to ensure quality, uniformity and consistency of the audit procedures to be applied with reference to MPLAD scheme.
Enlarging the Vision of the Profession
Members would appreciate that our profession is all set to take a giant leap forward in near future and, as such, it is high time that we give shape to a holistic long-term vision of our profession. In this regard, we have launched a futuristic initiative of hosting a series of interactive workshops with the key stakeholders of the profession in various regions of the country. These workshops are aimed at eliciting and gathering quality inputs from the key users of the services of Chartered Accountants to design and enlarge the Vision Statement of the Institute for the profession of Chartered Accountancy. In order to make the vision development process more participative and to develop a shared vision for the profession, we invite you all to become a part of the profession’s vision by participating in this exercise and take the profession to newer heights. Taking this initiative forward, we recently attended a Vision Interactive Workshop at Jaipur. The elite discussion group at the workshop discussed and deliberated the various issues related with the changing facets of the Indian Chartered Accountancy profession with regard to the ever-sophisticating expectations from the members, the quality of CA students, their training and education, the evolving paradigm and new avenues for the profession. The workshop was a great success in terms of the range and quality of inputs received from the participants, and the positive enthusiasm witnessed amongst the participants was indicative of the way to go for the profession and its members.
The undersigned along with CA. Rajkumar S. Adukia, Council member, attended the International Innovation Network (IIN) Conference held in New York on July 12-14, 2010. While the undersigned made the presentation on recent initiatives of ICAI relevant to its members, CA. Rajkumar S. Adukia made presentation on recent initiatives of ICAI for students. Apart from ICAI, Institute of Chartered Accountants of Scotland, New Zealand, Australia, Ireland, American Institute of Certified Public Accountants and Canadian Institute of Chartered Accountants shared their recent initiatives on varied subjects. The conference was a wonderful experience as it has provided us different ideas for the development of accountancy profession and different initiatives we could take for the benefit of our members and students. During the visit, a programme was also organised by our New York Chapter wherein the undersigned addressed the members there. The Deputy Consulate General of India in New York Dr. A. M. Gondane also attended the programme. Here we are happy to note that our New York Chapter has recently got unique distinction of being represented by a lady Chair – CA. Aradhana Aggarwal. We heartily congratulate her on this feat. It is worth mentioning that incidentally the Secretary of this Chapter is also a woman – CA. Lalita Potluri. Indeed our women members are now empowered and second to none.
The undersigned visited Canada on July 15-16, 2010 for attending IFAC meetings and Meeting with the Canadian Institute’s functionaries. During the visit, we met Toronto Chapter office bearers and positively responded to their concerns regarding professional matters in Canada. Given our thrust on achieving bilateral co-operation with the major accountancy bodies and in process providing membership recognition avenues to the ICAI membership, we have continued our dialogue for bilateral recognition of qualification with different countries. Our efforts have been that our members are able to get the best possible leverage as is available to similarly placed accountancy bodies.
We have been, for quite some time, in talks with CICA and we have requested CICA to provide the status of a designated and recognised accounting body as per their terminology whereby our members would be able to take up the specified examination as is available to fully recognised bodies under their parlance. Some headway has been made on this front but few contentious issues remain to be resolved. However, it is hoped that there will be a positive outcome in next few months. While the dialogue still continues, due to sensitivity of the process undergone, not much further detail could be shared at this stage but let me reassure you that the aim is to see that the best possible framework accrues for ICAI. It goes without saying that these processes are generally long drawn and one has to take into account the domestic regulatory structure before agreeing for a final outcome.
During the Canada visit, undertaken along with ICAI Vice President CA. G. Ramaswamy and Additional Secretary Rakesh Sehgal, we also had the occasion to meet Ms. Preeti Saran, Consulate General of India, Toronto and apprised her of the bilateral dialogue and the possible way forward for ICAI in vogue of specified enactments bill i.e. The Ontario Bill 158, The Accounting Professions Act, 2009, which inter alia prohibits the use of the designation “Chartered Accountant” contained within the Bill 158.
New Base Rate Concept
Indian banking entered a new era on July 1, 2010, incidentally coinciding with CA Day, when an improved method of pricing loans was finally activated. We welcome the move to a transparent Base Rate that will act as a benchmark for the pricing of all loans dished out by banks. This transition from the Benchmark Prime Lending Rate (BPLR) to the base rate system is targeted to increase transparency in lending rates and help small borrowers negotiate better rates with banks. Consequently, SMEs with healthy credit profiles will now be able to negotiate far better rates with banks. The new regime shall see an increased credit flow to small borrowers, also because of the fact that the earlier stipulation of BPLR as the ceiling rate for loans up to Rs. 2 lakh has been withdrawn. Banks with competitive base rate and efficient treasury operations are well placed to benefit from the new scenario. However, we also believe that the base rate should not be considered a final destination, but only a necessary stop on the long road to the development of a vibrant term money market in India. The base rate does, for now, offer hope of becoming a benchmark interest rate in India. But the financial sector regulators need to move ahead to create the conditions where India gets a robust money market where interest rates across tenures are decided by price discovery. We are sure members will help the SMEs and the society at large reap maximum benefits out of the new Bank Base Rate system.
New Draft Takeover Regulations
The Takeover Regulations Advisory Committee of the SEBI, constituted under the Chairmanship of Shri C. Achuthan, submitted its report for public comments on July 19, 2010. The Committee has suggested comprehensive changes in the existing regulations like open offer trigger hiked to 25 per cent from 15 per cent, clarity on indirect acquisitions, open offer for 100 per cent shares of target company instead of 20 per cent at present, exemption from open offer obligations, governance issues, mode of payment, calculating the offer price, option to delist, etc. The suggestions, having far reaching repercussions, and needs to be carefully analysed before their implementation. You are requested to submit your comments on the draft regulations for our review and consideration at email@example.com so that broad consolidated view on the same may be framed and submitted to the SEBI.
New Hi-Tech Version of e-Journal Launched
We are happy to inform you that as part of our concerted drive to serve you better, we have launched a new latest hi-tech version of our e-Journal which gives a feeling as if the surfer is browsing through the journal in hard copy, turning page after page. The latest technology adopted has made our online journal more user-friendly and convenient for net-savvy by ensuring easy search, navigation, downloads, e-mail facility, etc. Further, in the new version of e-journal, you can also ‘listen’ the contents. We hope that our e-Journal will attract greater number of readers.
Your comments and suggestions on this new initiative are welcome. However, for the added and alternative convenience of surfers, we will continue to host the journal in the PDF format as well.
Taking the Tradition of Convocations Forward
Taking our relatively new tradition forward, we have scheduled convocation programmes at various regions this year too. We hope that these special programmes to confer the Certificate of Membership to the young Chartered Accountants, for the period from September 2009 to February 2010, will not only promote professional camaraderie amongst the young torch bearers of the profession but will also strengthen the professional bonding, sense of attachment and belongingness with the alma-mater. These programmes are being organised in five regions. The convocation programmes for Western Region has been scheduled for 29th and 30th August in Mumbai and Baroda respectively. The programmes for Southern Region will be organised on 23rd and 25th August in Chennai and Bangalore respectively. Similar programme for Eastern Region will be held in Kolkata on 12th August while the programmes for Central Region will be held on 19th and 22nd September at Jaipur and Kanpur respectively. The first Convocation programme for Associate Members for the period September, 2009 to February, 2010 for Northern Region was successfully held at New Delhi on 20th July, 2010 wherein about 500 certificates were conferred to the new enrolled Associate Members. Secretary Ministry of Corporate Affairs Shri R. Bandyopadhyay was the Chief Guest on the occasion. The second convocation ceremony of the Northern region will be organised on 14th August at Ludhiana. It has been decided that every region will have two convocations — one at Regional Headquarters and another in a city to be rotated.
Pay Revision for ICAI Employees
We are happy to note that we have been able to come to an agreement on the major terms of pay revision for a section of employees consequent to recommendations of Sixth Pay Commission, and the pay revision has already been effected. We are hopeful that we shall be able to implement the proposed pay revision for the remaining employees very shortly so that the employees of the Institute get a boost in their morale and are motivated to work towards achieving the goals of the organisation in particular and nation in general. We are optimistic that with the current pay revision in place, we shall be able to attract and retain the talent necessary in today’s knowledge driven environment.
BoS Knowledge Portal:
The Students’ page on the ICAI website provides information about various activities of the Board of Studies. However, it is very important that the information is categorised in a systematic and synchronised manner so that the students are able to search and access the desired information with a click of the mouse. Accordingly, the contents of the Students’ page have been restructured. A new link BoS Knowledge Portal has been created on the new page besides other CA course related information. BoS Knowledge Portal has been envisioned as a single webpage access to all publications of Board of Studies. The students can view the contents in a Portable Document Format [PDF] that provides an easy screen-viewing and printing options. Study Material, Revision Test Papers, Suggested Answers, and Practice Manuals for all courses, Supplementary Study Material, Model/Mock Test Papers, Select Cases, Guidance Notes and Notifications/Circulars, etc. can also be downloaded free of charge. We are sure that this initiative of Board of Studies will go a long way in providing latest material to students at their door steps on timely basis.
Transfer/Termination of Articleship:
The Council of the Institute at its recently concluded meeting, in view of the difficulties being faced by members and students, has decided to permit transfer/termination of articles without any restrictions during first year of articleship training. Home transfer during subsequent period shall be allowed on case to case basis for which conditions have been laid down. Transfer of parents has also been added as a justified ground on which termination can be permitted. Requests for transfer not accompanied by the consent of the Principal shall not be accepted. A detailed announcement in this regard has been hosted on the website of the Institute and has also been published in this issue of the Journal and the Students’ Journal.
Monitoring of Training:
In the recently-held meeting of the Council, we had the occasion to discuss the insensitiveness of the articles towards the articleship training. We are unanimous in our concerns in this regard and want to ensure that this is stopped at its initial occurrence. We must tell our future professional torchbearers that they must realise and rise to the occasion; otherwise the time will dilute our strong and invaluable heritage and professional dignity. We also realise that this trend cannot be stopped without the support of our members who are responsible for their proper training and maintenance of records in respect thereof.
Examination Results – A Mixed Bag:
The results of the latest CA Final Examination (May, 2010) and Common Proficiency Test-Paper Pencil Mode (June, 2010) are out. Overall, the results have been a mixed bag. While the results of CA Final Examination are disappointing, the results for CPT are satisfying. Nevertheless, we heartily congratulate all those who have passed the examinations. Our special compliments to the rank holders.
We are pained to take note of the poor performance in the CA Final Examination. It is a matter of grave concern for all of us. We are comprehensively analysing the results and suitable remedial measures will be taken in near future. However, students need not feel disheartened as to me the word ‘no’ means ‘next opportunity’ and the word ‘end’ means ‘efforts never die’. It seems that overdependence on private coaching, which does not meet the requirements of the changed pattern of examination, and the insensitiveness towards practical training, have also been contributory factors of the poor results. We have been constantly reiterating that students should take both their articleship training and studies more seriously. Practical training would immensely benefit the students in their examinations as well as in gaining experience. Nevertheless, we assure the students to undertake all the measures to mitigate their hardships.
At the same time, we would like to clear the myth caused by the rumours spread by various parties with vested interests with regard to release of results by ICAI based on demand and supply factors. It has never happened in the history of ICAI that a student, who is otherwise passing, has ever failed. Also, it is worthwhile to note that when economy was in the slowdown mode, the results were much better compared to the present when the economy is in much better shape. It clearly goes on to show that the results are based only on the performance of the students rather than any extraneous factors.
The CPT results, overall, are satisfactory but the better was expected. A total of 27.55% (35168) out of 127643 students have passed the examination. What is heartening to note is the large number (43979) girls appearing for examination. Not only this, the girls have outperformed boys with a pass percentage of 31.72% (13950) compared to 25.36% (21218) of the boys. We hope that the results will be even better in times to come.
To conclude, let’s stress on the need for change in our professional outlook in tune with changing times, if we want to call the next decade as the decade of Indian Chartered Accountants. Change is constant, it is signal for rebirth. By changing the inner attitudes of our minds, we can change the outer aspects of our lives. The only thing we must not change is our commitment to our professional ethos and ethics. Let’s optimise our independence with responsibility, integrity and professional panache.
Happy Independence Day!
CA. AMARJIT CHOPRA
July 27, 2010