Dear friends,
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Coming together is a beginning. Keeping together is
progress. Working together is success, so said American industrialist Henry
Ford, and this holds good for our profession as well. Together, each one of us
can make a big difference. Think, if each drop of water were to say that one
drop does not make an ocean, there would be no sea. Yes, you and I do make a
big difference, more so when it comes to financial discipline of our economy.
Let’s come closer to make a bigger difference, particularly in the backdrop of
current global economic scenario and Union Budget 2012-13. I am happy to note
that this year’s budget is quite progressive and pragmatic, and, together with
greater stability and supportive government policies, it will spur
investment-led, sustainable and more inclusive growth. We have also played a
role in shaping this Budget through Pre-Budget Memorandum submitted by us to the
Government. Now, general debate about the Budget is almost over. And thus, it is
time for us to sit up and take stock of the consequent new changes and
challenges pertaining to our area of activity in detail, and move on with
professional panache for which we are known for. Let us update ourselves with
the latest and continue with our professional journey confidently, ethically and
altruistically.
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Chartered accountants symbolise fiscal prudence and discipline,
and with their multi-dimensional capabilities, they can act as catalyst for
economic development. As envisaged and attempted by Union Finance Minister Shri
Pranab Mukherjee, we can take up a proactive role not only to get the nation
back to its pre-crisis growth trajectory but even surpass it to reach
double-digit figures. In our various capacities as ‘total business solution
provider’ including as advisors, consultants and auditors, we can be crucial in
achieving the broader Budget objective of inclusive growth combined with
stronger and more effective public institutions, delivery mechanisms, governance
and reforms. Resultant forthcoming changes will pose new challenges to us
testing our skills, confidence and caliber. Let’s prepare ourselves for that. We
are indeed good at our work, but when Better is possible, Good is not
enough. Here, let’s recall the words of wisdom of our economist Prime
Minister Dr. Manmohan Singh during our Diamond Jubilee celebrations in 2008 who
expressed : Your institute has served our country with great distinction. I
sincerely believe that we cannot be satisfied with the status quo and I
sincerely hope that the best is yet to come and that the next 60 years will be
still more productive, innovative in the service of the people of our great
country...It would be most appropriate for Indian Chartered Accountants to
reaffirm their commitment to the cause of excellence, independence, ethical
conduct and highest standards of professional integrity.
Now, let me
update you on some of the major developments and initiatives pertaining to our
profession in particular and nation in general over the last
month:
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An Update on Branch Audit of Public Sector
Banks for the Year 2011-12
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As you all are aware that based on the recommendation of a
Working Group set up by RBI, it was proposed to carry out changes in allotment
of bank branch audits of the public sector banks by raising the minimum
threshold (advances) limit of branches which will not be subject to audit by
statutory auditors. It was mainly proposed that all branches having outstanding
advances of Rs.20 crore and above as on March 31, 2012, need to be audited for
the year 2011-12. And of the remaining (branches having outstanding less than
Rs.20 crore), one fifth branches were proposed to be selected at random in such
a way that all the remaining branches are audited at least once in five years.
The proposals were based on the perception that there was no need of extensive
branch audit in view of implementation of CBS in all public sector banks. In
this regard, I am extremely happy to inform you that following our hectic and
sustained drive of representations to authorities concerned and meetings with
all top quarters of Indian polity and policy makers, we have been finally able
to make them see merit in our stand and viewpoint on the move to reduce
extensive audits of branches of Public Sector Bank. As such, the Ministry of
Finance has now decided that all branches having outstanding advances of Rs.6
crore and above as on March 31, 2012, need to be audited for the year 2011-12.
And of the remaining (branches having outstanding less than Rs.6 crore),
one-third branches are to be selected at random in such a way that all the
remaining branches are audited at least once in three years.
On
behalf of the profession, I humbly thank the Government for arriving at this
farsighted decision, which will ultimately strengthen the cause of corporate
governance and public interest in the banking industry. I am also grateful for
the understanding and support of all those whom we approached at various levels
of Indian polity, particularly our Rajya Sabha Deputy Chairman CA. K. Rahman
Khan, Union Finance Minister Shri Pranab Mukherjee, Union Corporate Affairs Dr.
M. Veerappa Moily, Chairman of Parliamentary Standing Committee on Finance Shri
Yashwant Sinha, Member of Parliament CA. Piyush Goyal, Secretary, Department of
Financial Services, Shri D. K. Mittal and Reserve Bank of India Executive
Director Shri Vijaya Bhaskar.
The earlier move was not at all in the
long-term interest of the banks and the nation. In case, the said proposal would
have been approved, the public sector banks would have got exposed to a higher
risk by not covering majority number of branches and advances, thereby leaving
scope for undetected material misstatements, including frauds, whereas the
saving in cost would have been negligible in the hands of the banks. Further,
ICAI as a regulator of the auditing profession, firmly believes that such
proposal if implemented would have undermined the fair reporting on the state of
affairs in public sector banks.
This favourable decision of the Ministry
of Finance is an opportunity for us to prove our worth once again and show the
value addition we make through the branch audit to the financial statement of
Banks. Let me also inform you that we are also pursuing both the Government and
the RBI to see the merit in allowing CAs to carry out branch audits of private
sector banks as well. A more detailed update on this whole issue of branch audit
has been published immediately after my message.
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Triumph of
Democracy
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Yet another national event that gave me great satisfaction was
the festival of our democracy, right from its commencement to its culmination,
with high turnout and serpentine queues in Uttar Pradesh, Uttarakhand, Goa,
Punjab and Manipur elections. Irrespective of who won, the ultimate winner has
been our thriving democracy. In the end, it has been the triumph of the people
of India, the aam aadmi who first and foremost voted for
democracy.
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Our International
Initiatives
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Visit to New York: As part of our sustained efforts to
strengthen brand Indian CA globally, I, along with the ICAI Vice President CA.
Subodh Kumar Agrawal, recently visited the New York (US) Chapter of ICAI and
interacted with its office bearers. During the visit, we also had a meeting with
Ms. Arleen Thomas, Senior Vice President, AICPA, to explore the possibility of
developing minimum common exchange programme and organising joint seminars on
international taxation and other emerging issues. We also had meeting with Mr.
Russell Guthrie, Executive Director, IFAC, to explore the possibility of
organising exchange programmes between ICAI and IFAC.
Visit to
Mexico: I, along with Vice President CA. Subodh Kumar Agrawal, recently
attended the International Accounting Education Standards Board (IAESB) meeting
in Mexico. The participants in the meeting discussed the revision of
International Education Standards 2, 3, 4, 6 & 8. The strategy and work
programme of IAESB were also discussed. The meeting focused on establishing a
series of high quality standards and other publications reflecting good practice
in the education, development, and assessment of professional
accountants.
Visit to Dubai: Recently, I and ICAI Vice President
CA. Subodh Kumar Agrawal also visited ICAI Knowledge Village, Dubai, to review
the various activities of Dubai Chapter of ICAI. We also interacted with the
IPCC students there with regard to the IT training and other
classes.
MOSAIC Inaugural Steering Committee Meeting in Jaipur: I
am glad to inform you that we recently organised the MOSAIC (Memorandum of
Understanding to Strengthen Accountancy and Improve Collaboration) inaugural
Steering Committee Meeting in Jaipur, which witnessed a distinguished gathering
of more than 35 delegates from organisations across the world. Mr. Anthony
Martin Hegarty, Chief Financial Management Officer-World Bank, Mr. Dannies
Chisenda and Mr. Kennedy Musonda, Ministry of Finance, Zambia, and Mr. Deborah
J. Williams, Chair-IFAC PAO Development Committee, were some of the dignitaries
present on the occasion. I, on behalf of ICAI, highlighted the significance of
such an MoU between the IFAC and the international donor community that provides
foundations for increasing the capacity of professional accountancy
organisations and improve the quality of financial management systems in
emerging economies. We have proposed to the IFAC, Chair PAODC and the august
audience that we could host the permanent secretariat for the MOSAIC MoU
Steering Committee. The meeting included a comprehensive discussion on the goals
and objectives of the MOSAIC MoU cooperation and establishment of MOSAIC
Steering Committee and MOSAIC secretariat for the purpose of monitoring and
evaluation of the donor community.
SAFA Meetings in Delhi: ICAI
Vice President CA. Subodh Kumar Agrawal recently attended the 20th meeting of
SAFA Board held in New Delhi. The meeting was attended by representatives of
accountancy bodies from SAARC countries namely India, Pakistan, Bangladesh, Sri
Lanka, Nepal and Maldives. Extensive discussions were held for the development
of accounting profession in the region. A new taskforce to address the risk and
challenges to the accountancy profession in SAARC region in the context of
various developments taking place has also been
constituted.
India-Netherlands Joint Working Group Meeting in
Delhi: I am happy to inform our stakeholders that we recently participated
in the meeting of the India- Netherlands Joint Working Group on Corporate
Governance and Corporate Social Responsibility in New
Delhi.
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Our Initiatives for
Members
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Meeting with Shri Yashwant Sinha: I would like to share
that I, along with the ICAI Vice-President CA. Subodh Kumar Agrawal, recently
met the Chairman of Parliamentary Standing Committee on Finance Shri Yashwant
Sinha, in connection with our concerns regarding the Companies Bill, 2011 and
submitted a memorandum.
Initiative for Service Tax Practice: The
major shift in taxing services based on the “negative list” would lead to at
least 25 per cent more assessees being covered under the levy of service tax in
the coming year. The simplification of the returns would lead to the onus of the
compliance being shifted to the tax payer. This would require that professionals
are equipped to advise and assist the service providers as well as the service
receivers [under reverse charge] to register, pay and file returns. The
challenges for a person liable to pay the tax would be to examine the
applicability of the threshold limit, coverage under exclusion/inclusion,
coverage under exemption, availing of appropriate credit, choosing of abatement
[partial exemption of value], resolution of disputes, recommending of
disclosures as the onus of compliance would be with the person liable to pay and
general compliance with the rules. This would also require the members of the
profession to update themselves on the changes and their effect on the
clients.
To this objective, we have planned to have a special a two-day
course on “Enabling Service Tax Practice” for Chartered Accountants in practice
at all branches for those who wish to start in this value additive area of
practice. For those who have already started in any of the areas of indirect
tax, mainly in VAT or service tax, a Certificate Course [6 weekend - 12 days] is
planned in different Tier 1 and Tier 2 cities in all regions. Further, a
post-budget memorandum would be placed before CBEC incorporating the
clarifications/amendments needed on scores of issues.
New Group
Formed: In response to a communication from the MCA regarding the European
Union’s request and our reiteration on the possible roadmap for liberalisation
in the accountancy sector, we have decided to send an interim reply to the
Ministry. Keeping in view the sensitivity of the matter, we have decided to
constitute a ‘Group to establish ICAI’s view on the EU Request List and possible
liberalisation roadmap’ under the convenorship of our Central Council colleague
CA. Manoj Fadnis to complete the task by 31st March, 2012, and establish our
view on the EU Request List and the possible liberalisation roadmap. Please be
assured that we are not going to compromise on the interests of Indian
accountancy profession.
Residential Programme on Masters in Business
Finance: I am happy to share the information that we launched the second
batch (2011-12) of the one-week residential programme of Certificate Course on
Masters in Business Finance and successfully concluded the same at the Centre of
Excellence in Hyderabad in two groups in February–March 2012.
Capacity
Building: Due to changes in the economic environment which has thrown open
more challenges and opportunities for professionals, it is imperative to build
capacities of small and medium firms in order to enable them to face and take
advantage of this competitive environment. Towards this end, we will soon
organise a series of workshops and conferences to educate the members, create
awareness among them and address the apprehensions in their mind regarding
capacity-building measures like LLPs, networking, mergers and management
consultancy services in corporate form. We will also identify the disadvantages
and challenges being faced by members while resorting to such consolidation
processes and take remedial measures. Also, many initiatives will be taken to
explore other areas of capacity building like venture capital and tie-ups with
banks for availability of funds at cheaper rates.
ICAI-MCA Investor
Awareness Programmes: It is heartening to share with our stakeholders that
we have conducted altogether 78 MCA-ICAI investor awareness programmes within a
short span of two weeks in February 2012 through resource persons encompa-ssing
almost all states of our nation.
Campus Placement Programme: I am
happy to inform you that we are presently conducting a campus placement
programme for newly-qualified chartered accountants for a period of
February-March 2012 at 17 centres across the nation. Details of this programme
are available at www.cmii.icai.org. We are getting very encouraging response
from a good number of organisations. Further, we have recently organised
Orientation Programme for Newly Qualified Chartered Accountants at 11 cities
across the nation while similar programmes were held in March
2012.
WIRC Members’ Meet & Orientation Programme: Recently, I
had the opportunity to attend, along with the ICAI Vice-President CA. Subodh
Kumar Agrawal, the Orientation Programme of WIIRC members, successfully
organised by the WIRC of ICAI. All 27 branches of WIRC participated in the
programme. Representatives of the branches made some valuable comments and
suggestions. I sincerely hope to include these in our work plan for the
profession. A Members’ Meet was also organised by the WIRC which was attended by
its members in large. We did our best to address their queries and concerns as
far as possible. We also used that occasion to interact with all the new office
bearers of the WIRC.
Bhoomi Pujan at Surat Branch of ICAI: Keeping
up with the agenda of strengthening the infrastructure of accountancy
profession, I recently attended the bhoomi pujan ceremony at the Surat
Branch of ICAI and laid the foundation stone of its building. The occasion was
marked by the presence of our Central Council Members CA. Mahesh Sarda, CA.
Dhinal Shah, CA. Rajkumar S. Adukia, CA. Sanjeev Maheshwai, WIRC Chairman CA.
Durgesh Kabra, the then Branch Chairman CA. H. Tosniwal and the members and
office bearers of the Branch.
Educational Materials on Ind AS 1, 2
& 37: Let me inform all our stakeholders that we have recently issued
the educational material on Ind AS 1, ‘Presentation of Financial Statements’,
Ind AS 2, ‘Inventories’ and Ind AS 37, ‘Provisions, Contingent Liabilities and
Contingent Assets’. So far about our 3,950 members have been successfully
trained in the 100-hour intensive training programme of the IFRS Certificate
Course held across the nation. Currently IFRS Certificate Course batches are
being conducted at Bangaluru and Dubai.
Boosting the CA Benevolent
Fund: “Charity begins at home but should not end there,” is the
saying which is worth taking note of by us today- particularly when we have
scores of families of deceased professional brethren and those suffering from
terminal/serious ailments in our fraternity who are in dire need of financial
assistance. It is our duty to support and stand by them in times of distress.
And the Chartered Accountant Benevolent Fund offers an excellent opportunity to
do so in an organised and systematic manner. The CABF is an initiative by the
CAs for the CAs, which has aided 971 needy families in the last five years
(2007-08 to 2011-12). However, presently the corpus of the fund is not enough to
cater to the needs of all the families in distress. Therefore, it becomes an
urgent requirement to boost and bolster this fund, which is not possible without
your generosity and support. I call upon all of you to join this benevolent
initiative and make CABF an integral part of your socio-professional duty. More
than 1,07,540 members have already joined as life members of CABF, but what is
needed is that all of us not only become life members but also contribute more
than the minimum stipulated amount and continue to contribute in future as well.
Life subscription of the fund is for Rs.2,500 and ordinary subscription is for
Rs.500 per annum payable in favour of ‘Chartered Accountant Benevolent Fund’.
Remember that charity, howsoever trifle to us, can be utterly precious to our
brethren in need. Let’s make CABF a thriving movement for CAs’ welfare,
nationally as well as internationally. Remember that a candle loses nothing
by lighting another candle.
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Partner in Nation
Building
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Revival of Group for In-house Development of Taxonomies:
I have revived the Group for In-House Development of Taxonomies under the
convenorship of our Council colleague CA. Atul C. Bheda. The Group will develop
a draft taxonomy for the Commercial and Industrial Companies (C&I) as per
the revised Schedule VI to the Companies Act, 1956 and relevant law besides
developing a taxonomy guide explaining the taxonomy for the convenience of the
users. The taxonomy, in addition to presentation/calculation/label link bases,
shall also comprise the definition, reference and formula link bases. The Group
will also document the taxonomy and provide a taxonomy viewer so that the same
can be viewed in tree hierarchy format.
Removing Hardships with Regard
to TDS Return: We have been making suitable representations to the CBDT and
other appropriate bodies on various issues. Recently, it has been brought to our
notice that demand notices are being served on the deductors on account of
various possible reasons. The said matter was placed by us before the Central
Direct Taxes Advisory Committee in its meeting, which was chaired by the Union
Finance Minister Shri Pranab Mukherjee. Considering the fact that there may be
other difficulties which are being faced owing to rectification of TDS returns,
we have been requested to compile all such difficulties being faced by the
assessees and discuss the same with appropriate authorities. We also raised the
issues like our submissions on Tax Accounting Standards, guidelines for
empanelment of auditors for special audit under section 142(2A), etc., at the
meeting, which was also attended by Shri S. S. Palanimanickam, Minister of
State, Ministry of Finance, Shri Laxman Das, CBDT Chairman, other senior
officials of CBDT, and nonofficial members from FICCI, ASSOCHAM, Federation of
Association of Small Industries of India. Our Central Council colleague CA.
Sanjay Kumar Agarwal was nominated from ICAI for the meeting.
Training
Programme for ITAT Officers: We are organising a training programme for ITAT
officers in Bhopal. I am sure that this initiative will help in bettering the
governance in general and sharpening the skills of ITAT officers in particular.
More such programmes are in the offing.
Accounting Standards in
Government Educational Institutions: The working group comprising the
members of ICAI and the Ministry of HRD on Implementation of Accounting
Standards in Educational Institutions of Department of Higher Education has
recommended that all educational institutions, which generally follow diverse
accounting practices and different basis of accounting, should be mandated to
apply accrual basis of accounting and Accounting Standards issued by the ICAI.
We have also recommended fund-based accounting for earmarked/designated funds.
We have stressed that all educational institutions should follow a common format
for presentation of its general purpose financial statements to ensure proper
accountability, financial discipline, end-use of funds and to meet the needs of
stakeholders. We have also proposed that the Ministry of Human Resource
Development, in coordination with ICAI, organises capacity building programme to
train the staff of educational institutions.
Reserve Bank of India
Meeting on CDR: A meeting of Working Group to Review the Existing Prudential
Guidelines on Restructuring of Advances by Banks/ Financial Institutions was
recently held in Mumbai. In the meeting, comprehensive discussions were held in
the area of corporate debt restructuring (CDR), bringing clarity to the existing
guidelines on restructuring of advances and sharing of experiences regarding
cases of restructuring undertaken and success ratio thereof. In the meeting, the
ICAI Vice President CA. Subodh Kumar Agrawal presented the views of
ICAI.
Union Budget Interactive Session: The ICAI Vice- President
CA. Subodh Kumar Agrawal was invited as Chief Guest in ‘Union Budget Interactive
Session’ organised by the Swadeshi Research Institute, Kolkata.
Chairman
of Parliamentary Standing Committee on Finance Shri Yashwant Sinha was the main
speaker in the programme. Key aspects of the Budget 2012- 13 were discussed
threadbare in the programme. On the occasion, the Vice President also raised the
views of ICAI on the proposal of RBI for raising the minimum threshold
(advances) limit of the branches which will not be subject to statutory audit,
issues in the new Company Bill and on the definition of the word ‘Accountant’ in
the Report of Standing Committee on Finance on Direct Taxes Code Bill, 2010
(DTC).
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Initiatives for
Students
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Preparing Students for CA Examination: As you are aware,
we had embarked on organising mock tests for the students through the Regional
Councils and Branches since last year. Continuing the practice, the tests papers
for the mock tests for the May 2012 Examination have been sent to all Regional
Councils and Branches asking them to organise the tests twice i.e. in March and
April. A rigorous follow-up is also being done to ensure that maximum number of
students can benefit from this initiative. Further, we have revised our booklet
titled How to face CA Examination and hosted it on our
website.
Four-Week Residential Programme: As part of our focused
efforts to make our students become a cut above the rest, we are organising a
four-week residential programme on professional skills development focusing
particularly on communication and leadership skills, and personal traits for
effective functioning in business organisation at our Centre of Excellence in
Hyderabad. Two batches of 40 participants each will be trained in April, and
then, in May-June 2012. With such programmes, I look forward to taking the
professional skills of our students to the next level, in sync with the present
and the future.
Drawing Students to Accounting Stream: As part of
our efforts to attract brightest of students to accounting stream, we have
decided to participate in education fairs at various cities, including Education
Boutique 2012 in Ahmedabad, Bengaluru, Chennai, Chandigarh, Hyderabad, Thane and
Patna. We will also participate in educational exhibitions called Horizon
organised in eight citities of Kerala where ICAI has its
branches.
Review of CA Syllabus: As informed to you in my last
message, CA students are very high on my priority list. As also included in my
action plan for this year, I have resolved to align Indian accountancy education
with the emerging imperatives in line with global best practices. An
all-encompassing and experience-rich education for students is one of my main
goals. In this regard, I am happy to inform you that we are having a
comprehensive review of our syllabus for CA course.
Joint Seminars on
FDI and IFRSs: It is satisfying to note that we are constantly organising
seminars and workshops jointly with various universities in our nation on
contemporary issues of accountancy and commerce. Recently, one such seminar was
held jointly with the Bharati Vidyapeeth Deemed University, Pune, on Foreign
Direct Investment in Retail Sector, which was attended by faculty engaged in
teaching of accountancy and finance, research scholars, and postgraduate
students of accountancy and commerce. Another such seminar was organised jointly
with the Shivaji University, Kolhapur, on International Financial Reporting
Standards.
Code of Conduct for CA Students Soon: It is my
earnest endeavour to inculcate an added sense of discipline and responsibility
in respect of academic matters, personal conduct and ethical value-based
learning habits among our students, which is very essential for impeccable
future of our profession. As such, we are in advance stages of finalising a
Code of Conduct for CA students during the period of practical training
and, also while pursuing PCC/IPCC, prior to registration for practical training.
The Code will also apply to the students who have completed practical training
but not yet passed Final examinations. I am sure this move will go a long way in
shaping the future of our students and the profession.
I am sure these
developments and initiatives will go a long way in boosting our
profession.
Before I conclude, let us remind ourselves that knowing is
not enough; we must simplify the knowledge and apply it to the fullest
satisfaction of our clients and other stakeholders. Knowledge is a process of
piling up facts; wisdom lies in their simplification with creativity. Technical
skill is the mastery of complexity, while creativity is the mastery of
simplicity.
Let’s always keep in mind that with the hard work, dedication
and intricate knowledge we can reach pinnacle of your chosen area of
professional activity. Remember: man at the top is usually someone who has
been in the habit of going to the bottom of things. Knowing ‘how to…’ is
important to execute a job but knowing ‘why’ and ‘what’s to be done’ is all the
more important, for this is the trait of a visionary. If you do little things
well, you’ll do big ones better. “We are what we repeatedly do. Excellence,
then, is not an act, but a habit,” rightly says the ancient Greek
philosopher Aristotle, and this saying aptly fits our profession. It is widely
believed that a honey bee visits two million flowers to collect 500 mg of honey.
So, our workload is nothing as compared to them. Let’s draw inspiration from
words of wisdom by American businessman Donald Mcintosh Kendall: The only
place where success comes before work is in the dictionary. Therefore, keep
working. I extend all of you my best wishes for an allround
success.
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CA. Jaydeep Narendra Shah
President, ICAI |