Dear friends,
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Economists across the globe have extended countless
explanations for the recurring trend of economic meltdown, now a part of
business cycle. Uneven sharing of profit, i.e. less return of profit money to
lower and middle level workers, has also been cited as one of the reasons.
Generally it is seen that industries give back less money and, thereby, share
very less profit with their workers in terms of their remunerations than the
goods manufactured by them, i.e. price at which goods are sold at. Industries
share this profit mainly with the top rung of their workers, i.e. management or
policy-/strategy-makers, apart from putting it for fundamental
investments.
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May Day has just passed, but its relevance will always remain.
I wish all stakeholders, including the employees across organisations, a healthy
work environment and a justified payback against their efforts.
I would like to
address the need for inclusive growth, a growth that considers all
stakeholders of a business in the present economic circumstances. It may appear
idealistic to reach a condition called economic democracy, as promoted by
the celebrated economist J. S. Mill, when workers will start electing their
management. But we must respect its spirit as we respect that of the political
democracy. I personally would never like to be seen as rich and immaculate
amidst the poor. Let me recall what the revolutionary poet Shri Avtar Singh Pash
had once said: The most dangerous eye is that which is frigid ice despite
looking at all turbulence of our world, and whose vision forgets to kiss the
world with love… How can we even think of being happy living in castles
amidst the people living in huts? We ourselves say that we like to be among
people who have similar tastes and sensibilities. Why should we not try to drag
more and more people to the class of our tastes and sensibilities? I can never
forget even for a while what Gandhiji asked us, i.e. not to hate sinners but
their sin, probably because people become sinner because of their sin and sin is
a conditional product that could be diverted and corrected. It is this
corrective stand, I would like to pronounce before our stakeholders who are not
limited to accountancy, I am sure.
Let us vow to spread prosperity,
convenience and, yes, love and respect to the people in our vicinity. Our world
at present is badly suffering from imparity and hatred, and we being among the
frontrunners of our society will have to start somewhere for the
cure.
Now, let me update you on some major developments pertaining to our
profession over the last month:
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International
Initiatives
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ICAI and NZICA to Sign MoU: I am happy to inform our
stakeholders that necessary clearances have been obtained from the Ministry of
Corporate Affairs and the Ministry of External Affairs with regard to our MoU
with the New Zealand Institute of Chartered Accountants (NZICA). The NZICA has
suggested signing of the MoU at the CAPA meeting to be held in Beijing on 31st
May, 2012.
International Scenario on Rotation of Auditors:
International Ethics Standards Board for Accountants (IESBA) Code of Ethics
recognises that a threat to professional skepticism is created by the
long-association of an auditor. The concept release on rotation by the IFAC
explores whether mandatory firm rotation is an appropriate way to address that
threat. Recently, Chairman, Ethical Standards Board CA. K. Raghu represented us
in the IESBA meeting held in New York. While discussing the issue of
auditors’ independence and audit-firm rotation in Indian
perspective, it was noticed that many jurisdictions were working on the issue of
rotation to enhance the independence of the auditors. As the issue is currently
being discussed in many countries, I hope that it will be settled in the
forthcoming meetings of IESBA and an international policy and provision on
rotation will soon be formulated for compliance by member
countries.
Launch of ICAI’s Certificate Course on Valuation in
Dubai: I, along with the ICAI Vice-President CA. Subodh Kumar Agrawal,
recently visited Dubai to attend events aimed at promoting brand Indian CA. One
such event was the Annual International Conference organised by the ICAI UAE
(Dubai) Chapter on Global Economy - Poised for a Paradigm Shift in which
we highlighted the feats and potential of Indian CAs. We also started there a
batch of the Certificate Course on Valuation. I must thank CA. S.
Santhanakrishnan for his valuable support in this regard.
World
Accounting Summit: I, along with Vice-President CA. Subodh Kumar Agrawal,
recently represented Indian CA fraternity at the 8th World Accounting Summit in
Dubai on ‘The Emergence of the New Condorsement Approach during the Eurozone
Crisis & Global Turbulence’. I was a speaker on the panel to discuss
what guidance and services the accounting bodies have been providing to their
members through challenging times, along with Mr. Atsu Kato, Vice Chairman,
Accounting Standards Board of Japan, CA. G.Ramaswamy, IFAC Board Member and ICAI
past-President, and Mr. Rashid Rahman, President of Institute of Chartered
Accountants of Pakistan.
SAFA Meetings in Dhaka: We have
effectively put forward the ICAI’s vision, perspective and professional growth
agenda at various meetings of SAFA organised recently in Dhaka. The meeting was
attended by representatives of accountancy bodies from SAARC countries namely
India, Pakistan, Bangladesh, Sri Lanka and Nepal. Vice-President CA. Subodh
Kumar Agrawal, along with Central Council members CA. Nilesh Vikamsey, CA.
Pankaj Tyagee, CA. Vijay Kumar Garg and CA Charanjot Singh Nanda represented
ICAI in these SAFA meetings.
National Standard Setters & AOSSG
Meetings in Kuala Lumpur: Chairman Accounting Standards Board, CA. Manoj
Fadnis and Vice Chairman CA. S. Santhanakrishnan represented ICAI at the meeting
of the National Standard Setters in Kuala Lumpur recently where CA. Fadnis made
a technical presentation on IAS 32 regarding effect on accounting for foreign
currency convertible bonds. Another Central Council colleague CA. Atul C. Bheda
attended the Asian-Oceanic Standards Setters Group (AOSSG) meeting in the same
city, where matters related to foreign currency translation, insurance
contracts, agriculture, leases, etc., were discussed.
International
Conference on Corporate Social Responsibility: I recently represented the
Indian CA fraternity in the International Conference on ‘Making CSR an
Actionable Business Agenda’ in Dubai, which was organised by the Institute
of Directors in association with the ICAI, Federation of Indian Chambers of
Commerce and Industry and others. I chaired and moderated a session on
Strategic Corporate Social Responsibility: Creating Shared Value and put
forward Indian CA profession’s views on this vital area of CSR. Other
distinguished personalities included UAE Minister of Education Mr. Humaid
Mohammed Obeid al Qattami, and Ambassador of India to the UAE Mr. M.K.
Lokesh.
Asian Round Table Meeting in Singapore & XBRL Conference
in Abu Dhabi: Making Indian chartered accountant a matchless professional,
well versed with the latest developments in accounting and related fields, is
high on my agenda. Towards that end, the XBRL, which has vast potential of
providing global opportunities, is one of my focus areas. We at XBRL India have
been spearheading the XBRL revolution in the country with the active
participation of the Ministry of Corporate Affairs (MCA), SEBI, IRDA and RBI.
Taking this drive forward, my Central Council colleague CA. Atul Bheda, who is
also a Director, XBRL India, recently participated in 3rd Asian Roundtable
meeting hosted by Accounting & Corporate Regulatory Authority of Singapore,
which is similar to MCA in India. The meeting deliberated upon the experiences
and issues for XBRL implementation. Alongside the meeting, an XBRL National
Conference was organised wherein CA. Bheda also presented a paper on the XBRL
implementation by MCA in India. Meanwhile, in line with our broader XBRL
objectives, XBRL India Director CA. K. Raghu also attended the Membership
Development Committee meeting of XBRL International, which was organised
alongside the 24th XBRL International Conference at Abu Dhabi. On behalf of the
ICAI, both my central council colleagues made presentations about the
developments in India in various sessions of the Conference.
EFAA
Annual Conference in Rome: My Central Council colleagues CA. Pankaj Tyagee
and CA. Vijay Kumar Garg recently represented ICAI at the European Federation of
Accountants & Auditors (EFAA) Annual Conference at Rome, Italy. The
conference focused on the theme ‘Exploring Business and Professional Ethics for
SMPs and SMEs’. The conference provided an excellent opportunity to the
participants to discuss the strategy as to how SMPs across the regions can come
together and share hands for mutual benefits.
UNCTAD - ISAR Special
High-Level Meeting: My Central Council colleague CA. Bhavna Doshi
represented us at the UNCTAD – ISAR special high-level meeting on Accounting for
Investment and Development in Doha, Qatar. The objective of the meeting was to
raise the awareness of policy makers and other stakeholders about the
fundamental and critical role that accounting and reporting plays in economic
growth, financial stability, facilitating domestic and international investment;
and improved transparency.
IAASB NSS Meeting: My Central Council
colleague CA. Abhijit Bandyopadhyay represented ICAI at the IAASB NSS meeting at
New York. The prime focus of discussion at the meeting was “audit reporting”
viz. how to strengthen the audit report so as to enhance its value to a wide
array of stakeholders and reduce the expectation gap by giving timely
information on possible problem areas to auditee.
IFAC PAO Development
Committee Meeting: My predecessors, Past Presidents CA. Amarjit Chopra and
CA. G. Ramaswamy represented the Indian CA fraternity at the IFAC PAO
Development Committee meeting and the Pan African Federation of Accountants
Pre-General Assembly Conference at Tunisia. The PAODC meeting primarily focused
on developing the capacity of accountancy profession and updating on activities
of other IFAC boards and committees.
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Initiatives for
Government
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Standing Committee on Higher Education and Research Bill,
2011: As you may be aware that recently Ministry of Human Resource
Development has released The Higher Education and Research Bill, 2011. We
were invited by the Ministry to appear before the Standing Committee on Human
Resource Development (Chaired by Hon’ble Oscar Fernandes, Member of Parliament)
to share our perspective on the proposed model of higher education at national
level. It may not be out of place to mention that the ICAI is proposed to be
made part of the General Council so as to advise the proposed National
Commission on Higher Education and Research on accountancy education in India.
Recently, myself, accompanied by Vice-President CA. Subodh Kumar Agrawal,
Secretary Shri T. Karthikeyan and Board of Studies Director Shri Vijay Kapur
attended the Standing Committee meeting in this regard. We explained to the
Standing Committee about the high position attained by the ICAI in national and
international perspective. We also shared our thoughts as to the difficulties in
regulating the entire education activity through a seven member
commission.
ICAI Organises Workshop for Tamil Nadu Finance
Department: After successful conduct of training programmes for officials of
the Finance Department during April-December 2011, we would be holding a
workshop on Role and Responsibilities of Nominee Directors in the Board of
Government Companies in the last week of May 2012 on request from the
Finance (BPE) Department of the Government of Tamil Nadu, to help their senior
officials in keeping pace with the new developments in corporate governance. I
am sure that such endeavours will take our brand-building exercise
forward.
Suggestions Contained in ICAI’s Post-Budget Memoranda
Accepted: We had submitted the Post-Budget Memorandums, 2012 on Indirect
Taxes and Direct Taxes to the Government, and I am really happy to note that
some of our suggestions have been accepted.
Indirect Taxes:
The Post-Budget Memorandum on Indirect Taxes, preparation of which was
coordinated by Chairman Indirect Taxes Committee CA. Madhukar Hiregange, was
duly taken note of by the Government. The suggestions which were accepted
included the one on ‘specifying time limit for deemed notices issued under
sub-Section (1A) of Section 73 of the Finance Act, 1994,’ and ‘Repair and
maintenance contracts under works contracts service’. Further, amendment
relating to the exclusion of transactions, which are deemed to be sale of goods
in terms of Article 366(29A) of the Constitution namely works contract, lease or
hire of goods and temporary transfer of the right to use any goods had been
suggested by the Committee in its comments sent to the CBEC on Revised
Concept Paper on Taxation of Services Based on Negative
List.
Direct Taxes: Chairman Direct Taxes Committee CA.
Sanjay Agarwal coordinated Post-Budget Memorandum on Direct Taxes, which was
seriously considered by the Government. Apart from the members and officials of
CBDT, a copy of the Post-Budget Memorandum had also been submitted to Shri
Gujaral, Revenue Secretary, Shri Yashwant Sinha, Chairman, Parliamentary
Standing Committee on Finance, and Shri. S. S. Palanimanickam, Minister of State
(Revenue). Besides this, a copy of the same had also been sent to
CCIT’s/DGIT’s/DIT’s for their consideration and feedback. I am happy to
acknowledge that many of our suggestions pertaining to direct taxes have been
accepted. A statement about the suggestions accepted has been hosted on the ICAI
website too.
Request to RBI for Amendments in Provisions on
Independence of Auditors: On the issue of conflict of interest, in case an
existing internal auditor having been offered statutory audit assignment by the
same bank accepts the same after relinquishing the internal audit assignment, we
have decided to request and pursue RBI to amend its circular dated 1st January,
2010, in the light of the provisions mentioned in the Guidance Note on
Independence of Auditors.
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Initiatives towards Social
Responsibility
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Orienting Media in Finance/Accountancy Scenario and
Reporting: An orientation programme for the media fraternity was recently
organised in Delhi to make them aware of the evolving accountancy/financial
services sector in the country and knowledge dissemination on financial
management and regulatory policies. The objective was to enable media
professionals to comprehend the financial matters/policies and report these in a
simple format for the understanding of common man. Some 30 media professionals
comprising editors, correspondents, reporters, etc., from print as well as
visual media including The Times of India, Economic Times, HT Mint, CNBC TV
18, Business Today, Money Today, Business Standard, Business Bhaskar, Punjab
Kesari, etc., attended the programme. Eminent speakers included Padma Shree
Awardee and ICAI past-President CA. T. N. Manoharan and another ICAI
past-President CA. Ved Jain.
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Initiatives for
Profession
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Interaction with CBEC Chairman: We recently had detailed
discussions on issues of professional interest with CBEC Chairman Shri S.K. Goel
when he visited ICAI and addressed us. CBEC Joint Secretary Shri V. K. Garg was
also present at the meeting. As you may know, the amendments in Service Tax
Rules, along with Point of Taxation Rules, 2011 have withdrawn the facility of
payment of service tax on receipt basis, which affect CA firms (firms whose
value of taxable services exceeds Rs. 50 lakh). We impressed upon Shri Goel that
this would create a lot of hardship for our members and requested him to extend
the facility of payment of service tax on receipt basis to all the CA firms. We
also took up transitional issues with Shri Goel. As you may be aware, for CAs,
the Point of Taxation (POT) till 31-03-2012 was determined on receipt basis. The
POT is also made as a basis of determining the rate of tax under Service Tax
Rules, 1994. Consequent to the same, a position has arisen that even in cases
where services are provided as well as invoice was raised prior to 31st March
2012 [at old rate of 10.3%], the professionals (which include Chartered
Accountants) have to pay service tax at the higher rate of 12.36%. As such,
additional 2.06% has to be paid though the same has not been billed nor could be
recovered from the clients. We brought to the notice of Shri Goel that this
would create hardships for the CAs and thus, relief may be granted to Chartered
Accountants from this additional burden by making appropriate changes. We also
made a pitch for parity between CAs and lawyers as both the professionals
provide similar services when it comes to legal consultancy and representational
services. Shri Goel has taken our points of request in right earnest and has
promised to look into the issues.
Meeting with Union Minister Mukul
Vasnik: I, along with my Central Council colleague CA. Vijay Garg, recently
met Union Minister for Social Justice and Empowerment Shri Mukul Wasnik and
discussed various matters of professional and national interest. We offered the
involvement and services of the Institute and its members to his ministry in
various capacities, to which he expressed keen interest. It was proposed to hold
a secretary level meeting to discuss the areas in which the Ministry can use the
services of ICAI and its members. We also invited him to address our Council, to
which he was quite positive.
Meeting with Odisha CM Naveen
Patnaik: As part of our guided efforts to promote professional involvement
across various levels of governance in Central and State governments, as also to
expand infrastructural base of our profession, I, along with Vice President CA.
Subodh Kumar Agrawal and Bhubaneswar Branch Chairman CA. Rajendra Kumar Das met
Odisha Chief Minister Shri Naveen Patnaik and discussed as to how more and more
services of the CAs can be utilised by the state government. Principal Secretary
of Finance Department of Government of Odisha Shri Jugal Kishore Mahapatra, and
Past Chairmen of Bhubaneswar Branch CA. Prashant Shekhar Panda and CA. Sarat
Kumar Sahu were also present at the meeting. We also specifically discussed
allotment of land for proposed ICAI’s centre of excellence in Bhubaneswar. He
showed keen interest in our proposals and I am quite hopeful of a positive
outcome. Separately, we also met the Chief Secretary, Government of Odisha, Shri
Vijay Kumar Patnaik to discuss these issues.
Meeting with IBA Chairman
MD Mallya: I recently met Indian Banks Association Chairman Shri M. D.
Mallya (who is also chairman and managing director of Bank of Baroda) and
discussed a range of issues concerning the profession, including bank branch
audit and concurrent audit. I also impressed upon him that there was a crucial
need for sharing with the ICAI the technological advancements and upgradations
being made by the banks, so that the ICAI members can be made aware and be
trained with respect to these developments, for the ultimate benefit of the
banks and other stakeholders. He was quite positive on this
proposal.
Meeting with Secretary, Dept. of Public Enterprises: I,
along with Vice-President CA. Subodh Kumar Agrawal, recently had a meeting with
Secretary of Department of Public Enterprises Shri O. P. Rawat and discussed
various issues of professional and national interest. We offered him the quality
services of the Institute in various areas and initiatives of the Department of
Public Enterprises. He has showed keen interest in our proposal.
ICAI
Membership and Studentship Strengthened: I am glad to inform you that
strength of membership and students has been increasing massively, leading our
Institute to greater eminence and stature. Number of members has touched a
figure of 1,94,690. It is noteworthy to acknowledge here that we have received a
good response from our members to the General Amnesty Scheme introduced by us to
restore the membership in retrospection, and a total of 732 members have so far
responded and got benefited by this Scheme. Student strength has also increased
and reached a massive 9,19,884.
Representation to Forward Markets
Commission: We have sent a representation to Forward Markets Commission
(FMC) Chairman Shri Ramesh Abhishek regarding audit/ inspection of books of
accounts of commodity exchanges and its members and fees thereof. FMC is a
regulatory and statutory body set up in 1953 under the Forward Contracts
(Regulation) Act, 1952, which is overseen by the Ministry of Consumer Affairs,
Food and Public Distribution, Government of India.
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Initiatives for
Members
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Orientation for DIRM-Qualified Members: We recently
organised an orientation programme for the members who qualified in the DIRM
Technical Examination, in Mumbai. It was inaugurated by my Central Council
colleague CA. Nilesh S. Vikamsey. I, along with the Vice-President CA. Subodh
Kumar Agrawal and my other Central Council colleague CA. Charanjot Singh Nanda
also addressed the participants. Here, I am happy to inform that suggested
answers for the DIRM Technical Examination held in November 2011 have been
hosted on the ICAI website for the members pursuing the DIRM
course.
Implementation Guide to Risk-Based Audit Released: We have
recently released Revised Implementation Guide to Risk Based Audit of
Financial Statements providing comprehensive guidance primarily on
implementing the auditing standards relating to understanding the entity and
assessing the risk of material misstatements, audit planning, responding to
assessed risks beside fraud considerations. Meanwhile, considering the
importance and need of internal auditors to have updated knowledge of the global
standards and initiatives related to the corporate social responsibility, we
have come out with “Guide on Internal Audit of Corporate Social
Responsibility’ under the guidance of Chairman Internal Audit Standards
Board CA. Rajkumar S Adukia. Besides, a ‘Technical Guide on Internal audit of
Tendering Process’ has also been released for the guidance of the members
and other stakeholders.
ISA Eligibility Tests Conducted: We
conducted ISA eligibility tests at 38 centres across India and Nepal recently. A
total of 1,859 candidates took the tests. ISA professional training classes have
already been started in India in Lucknow, Raipur, Jamnagar, Jodhpur, Nagpur,
Delhi, Mumbai and Latur besides in Sri Lanka.
Approaching
Public-Sector Banks: We have sent communications to the chairmen and
managing directors of all public-sector banks across the nation, impressing upon
them to utilise the services of CAs and CA firms for their various internal
assignments.
Certificate Courses: I am happy to inform you that to
enhance the capabilities of the members and encourage specialisations by them,
we are conducting Certificate Courses on ‘Concurrent Audit’, ‘Enterprise Risk
Management’, and ‘Internal Audit’ in Hyderabad, Delhi, Mumbai,
Chennai and Kolkata. A one-day workshop on Tender Audit was also organised
recently in Delhi for the benefit of our members.
Initiatives for
Ethical Professional Practice: Our Ethical Standards Board has recently
taken various decisions for better professional practice. On the issue whether a
chartered accountant in practice can sign the revised transfer pricing report
which was certified by some other chartered accountant without having his
permission to sign the same, it has been decided that she/he will not be signing
a revised transfer pricing report but will be issuing a fresh and separate
independent report and should, therefore, satisfy himself before issuing such a
report.
On the issue whether a CA in practice can establish a TIN
facilitation centre (TIN FC), it has been decided that a
chartered-accountant-in-practice may establish a TIN–FC. However, it is not
permissible for her/him to establish a TIN-FC under franchise from other entity
which is already a TIN–FC.
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Initiatives for
Students
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e-Learning: Education and training of students has been
my prime endeavour. Towards that objective, I am happy to announce availability
of the following twin online facilities for the benefit of CPT Students,
particularly those in small towns where quality coaching is not available: (a)
Revamped bi-lingual (English & Hindi) e-Learning Modules for CPT Course are
now available at www. CAShiksha.com which can be accessed free of cost on
self-registration on the said site; and (b) Online Self- Assessment Quiz for the
CPT Course to enable students make a self-assessment of their preparation for
the forthcoming, examination, chapter-wise and subject-wise. This online
facility is available on the Institute’s website, which enables the students to
assess their preparations quickly. Moreover, every time a different set of
questions would appear on the screen as and when students take the tests.
Further, we have also hosted additional e-Learning Modules on General Economics
subject of CPT which shall prove to be of great help to the students in their
preparation. I would earnestly encourage CPT students to make best use of these
twin online facilities for better preparation for
examinations.
Conventions/Conferences: We are organising National
Conventions for students covering all the regions and major cities in June, July
and August. A mega International Conference for CA Students is being held in
Nagpur on 13th & 14th July, 2012, offering a unique opportunity for Indian
students to interact with overseas students and share experiences and learning.
An All India Students Conference is also being organised in Baroda on 6th and
7th July, 2012. Some of the other National Conventions for CA Students which are
scheduled for June to July, 2012 are at Ghaziabad (23rd and 24th June),
Hyderabad (28th and 29th June), Vasai (30th June and 1st July), Jaipur (9th and
10th July), Kolkata (14th and 15th July) and Indore (21st and 22nd July). I
request the members to encourage their articled assistants to not only be
present in these conferences but also contribute papers which will go a long way
in sharpening their speaking skills.
Faculty Development
Programme: With a view to strengthen the CPT Coaching Classes at various
places, we recently successfully organised 2nd CPT Faculty Development Programme
at the Centre of Excellence in Hyderabad. As many as 97 faculty members from
different branches participated in the programme. I am confident that through
this initiative, Regional Councils and Branches would organise more and more
classes for CPT students.
Orientation Programme for Chairmen of
Students Associations: An orientation programme was organised in Hyderabad
recently to enhance awareness amongst the Chairmen of Students’ Associations and
Branches of Students’ Association about activities to be organised by them for
students. The programme was attended by 67 members apart from officials from
various Regions and Branches and my Central Council colleagues CA. Nilesh S.
Vikamsey, CA. Madhukar N. Hiregange, CA. J. Venkateswarlu and CA. Devaraja
Reddy.
CA May 2012 Examinations: We successfully conducted
Chartered Accountants Examinations of May 2012. A total of 2,52,542 candidates
were admitted to appear the examinations, i.e. 83,319 CA Final, 1,43,970 IPCE
and 25,253 PCE. The examinations were held at 343 centres in 135 cities of India
and 4 cities abroad. I wish these students all the success in these
examinations.
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Before I conclude, let me acknowledge that our Government has
taken a much-required and right step of implementing the Right to Education
Act and has raised many relevant questions before the responsible and
privileged of our nation, indicating especially at their responsibility towards
the underprivileged of the nation. At least, it has started a debate. It is up
to us as to how we respond and take forward this cause. Being associated with an
academic institution and, particularly, with its studies wing for years, I have
been strongly in support for our students’ access to education and training
while critically agreeing to the American Gandhi Martin Luther King, Jr. that
the function of education is to teach one to think intensively and to think
critically, and that the goal of true education is intelligence plus
character. The most fundamental need of the hour, thus, would be to provide
people with an accessible education system, if we want to see our coming
generations truly intelligent and with character.
May this Act empower
all government and private schools, and control all existing irregularities in
their systems! Let us be educated and educate all others around us.
Best
wishes,
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CA. Jaydeep Narendra Shah
President, ICAI
New
Delhi, May 24, 2012 |
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