Dear Professionals,
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If your actions inspire others to dream more, learn more, do more and become more, you are a leader.
I not only subscribe to these words of wisdom by former American
President John Quincy Adams personally but also endorse the same for all
of you collectively. It is with this frame of mind that I have put our
professional ‘Leadership and Influence’ high on my agenda for
this year while
marching towards new frontiers. The need of the hour is
to hold the element of ‘Leadership and Influence’ very high while
exploring new professional horizons and paradigms with our time-tested
tradition of professional excellence, ethics and integrity in the
service to our nation.
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As
endorsed by the founding fathers of our nation, we have been
successfully assuming the mantle of leadership and influence in the
fiscal discipline of the country as partners in nation building since
the ICAI's inception in 1949. My aim is to augment that exalted position
of leadership, particularly through our role as regulator and
facilitator to government, professional fraternity and society at large.
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Peter F. Drucker says: Management is doing things right; leadership is doing the right things.
While we know how to do the things right with dedication and integrity,
we also need to be in leadership roles in order to do things right in
the best interest of national and world economy. “Chartered Accountants:
Partners in National Development” - These words of acknowledgement and
recognition used by our visionary former President of India, Dr. A. P.
J. Abdul Kalam for Indian Chartered Accountant fraternity amply sum up
the great role, power and potential of the Accountancy profession in the
country.
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Leadership, Our Way!
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As endorsed by the founding fathers of our nation, we
have been successfully assuming the mantle of leadership and influence
in the fiscal discipline of the country as partners in nation building
since the ICAI’s inception in 1949. My aim is to augment that exalted
position of leadership, particularly through our role as regulator and
facilitator to the government, professional fraternity and society at
large. To this effect, our Disciplinary Committee, Ethical Standards
Board, Financial Reporting Review Board and Peer Review Board are
putting extra efforts to fulfil the ever increasing expectations of our
stakeholders.
Further, taking our leadership role forward, we
have intensified our mutual interactions with Ministry of Corporate
Affairs, Ministry of Finance, Ministry of Human Resource Development,
Reserve Bank of India, Securities and Exchange Board of India and
Insurance Regulatory and Development Authority besides a host of other
government departments.
These initiatives are a part of our
special drive to augment the society’s trust in us and establish our
professional leadership, thought leadership and ethical leadership &
influence in all the emerging fiscal arenas with global orientation. In
the current scenario, I foresee a plethora of opportunities in the garb
of emerging challenges for the profession. Let me share with you some
immediate avenues where we can leave a mark of our leadership and
influence...
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Convergence with IFRS Offers a Big Opportunity
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I am sure you will agree with me that understanding
the immense benefits of convergence to IFRS and its implications is one
of the most important business imperatives today. You will appreciate
that this convergence will bring us a golden opportunity to
comprehensively reassess financial reporting and a clean sheet of paper
approach to financial policies and processes, while helping our economy
at large, including our industry and investors. Our capital markets
will be more robust, and there will be a new flow of foreign investments
into our country.
Weighing these and many more benefits of
convergence, we recently have finalised a new roadmap for implementation
of the Indian Accounting Standards (Ind AS) converged with the IFRS and
submitted the same to the MCA for its consideration. The new Companies
Act, 2013 has also introduced various new provisions, including the
requirement to prepare Consolidated Financial Statements, which would
also facilitate implementation of Ind AS converged with IFRS.
This
scenario opens a big window of global opportunity for us as Chartered
Accountants. Post-convergence, services of IFRS-trained Indian
accounting professionals will be in great demand globally.
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Impact of Companies Act, 2013
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Further, in the new Companies Act, 2013, a host of
opportunities have emerged for us. We welcome the provisions of the new
Act for the potential it holds and particularly for bringing more
transparency and accountability to our economy. In view of the changing
economic environment, this Act is a great achievement as it intends to
improve the governance and regulation in the companies. While we commend
it, we also have our fair share of concerns. I would like touch upon
some very important issues here…
(1) Fraud Reporting:
The new Act provides that if an auditor of a company, in the course of
the performance of his duties as an auditor, has reason to believe that
an offence involving fraud is being or has been committed against the
company by officers or employees of the company, he shall immediately
report the matter to the Central Government. It is felt that the
provisions thereof are apparently quite onerous from the statutory
auditors’ perspective.
(2) Rotation of Auditor:
‘Rotation of Auditors’, a nascent concept across the world, has now
been rightly restricted only to a certain class of companies, leaving
close to 90% of the companies outside the scope of Rotation of Auditors.
(3) Number of Audits:
On the issue of the cap of 20 companies that can be audited, we firmly
believe that limiting the number of companies that can be audited by an
auditor is not advisable. With technological advancements, CAs will be
able to cater to the audit needs of a much larger number of companies. A
representation in this regard has been submitted by us to the MCA.
(4) NFRA:
We welcome the development that NFRA (National Financial Reporting
Authority) provisions, that will give rise to multiplicity of
regulators, have been kept on hold. While this gives us time to address
our concerns, we are also hoping the MCA to see merit in our regulations
and thereby avoid imposing, overlapping regulatory domains and
responsibilities. The ICAI must retain its role to monitor accounting/
auditing practices since it has already been taking action against its
erring members.
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Transition to Companies Act, 2013- ICAI as a Facilitator
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I feel that though the Companies Act, 2013 is broadly
a welcome way forward for India, its implementation and impact pose
daunting challenges to professionals, including us. As such, the need of
the hour is to take these challenges in our professional stride and
leverage them to our advantage. Here, I must assure you that we at the
ICAI are completely in sync with the situation and have charted a
definitive and timebound course of action to help our professionals be
at the forefront of this transition.
The first and foremost task
before us is to make our members familiar with intricacies, new concepts
and procedures introduced for the first time in the law. This is being
taken care of through a chain of seminars, teleconferences and new
publications besides leveraging technology in the form of e-book,
videos, and webcasts to reach maximum audience.
Another challenge
is to provide necessary guidance to our members for critical areas like
reporting of frauds, rotations of auditors, corporate social
responsibility expenditure accounting, cap on number of audits, etc.
I am pleased to inform that our respective committees have already been
activated in this regard. For instance, an expert group has already
been formed to examine fraud reporting provisions, identify practical
implementation issues and develop appropriate implementation guidance
for the auditors at the earliest to help us meet the requirements of
Section 143(12) and the related Rules. Further, the secondary impacts of
the new law are also being analysed and duly covered in our areas of
activities.
Last but not the least, we are also preparing
ourselves for the opportunities that will come to us in the form of CSR
Audit, Internal Audit, and Independent Directorship for our members,
etc. All this was discussed threadbare at a special meeting of the
Council, and I am sure that with our collective effort and effective
collaboration, we will put ourselves in the leadership role on this new
professional frontier.
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Concerns on Proposed Definition of ‘Accountant’ in DTC 2013
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While I am happy to note new professional horizons
having emerged in newer realms of India’s knowledge economy, I am
concerned at the proposed limiting of our scope in the recently released
draft Direct Tax Code (DTC), 2013. Please note that all of us in the
Council are very much aware and alive to the deep anxiety, apprehension
and dismay gripping our fraternity following questionable dilution of
the term 'accountant' in the DTC, 2013, which opens the hitherto
exclusive and specialised tax audit practice and some other
certifications to certain other professionals too. We strongly oppose
the relevant Clause 88 & 320(2) of this draft as these defy
the very logic and trust with which tax audit was put in the CAs'
domain under Section 44AB of the present Act.
Audit reports,
specifically Tax Audits, Transfer Pricing Audit, Report as per Section
115JB/115JC and the like demand deep understanding and knowledge of
accounting and relevant laws of compliance, which can be catered to only
by the CAs, given their high-quality training, expertise, special
aptitude, long experience and professional panache. CAs have been very
ably and deftly doing these assignments for years, as can be vouched by
the authorities themselves. It is a fact that various provisions in the
Income-tax Act, 1961 under which Chartered Accountants have been given
the responsibilities to undertake audit and certification of accounts of
various entities have the emphasis on "audit" of the relevant accounts
which is the exclusive domain of Chartered Accountants.
Through a
representation to the Ministry of Finance, we have placed on record our
concerns not only for the profession, but for the country as a whole
since issuance of audit certificates by persons having limited knowledge
of audit of accounts will not only be professionally incorrect and but
will raise many concerns including causing huge revenue leakages. Rest
assured, we are taking our concerns to the highest level of Indian
polity to make the government to see the merit of our stand on the
issue.
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Flexi Working Portal for Women Members
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I am happy to inform you that taking our special
drive for the empowerment of Women CAs for this year forward, we have
recently launched a Flexi Working Portal for women members ( http://womenportal.icai.org/).
It will provide them a platform where they can explore suitable
opportunities with option for part time jobs, jobs with flexi-hours or
jobs with work-from-home facility. It will also help industry to tap
talent pool which might not be accessible otherwise in the normal
course. I request you to post your job requirement(s) having the
option to work part-time or flexi-hours on this portal. I may emphasise
that providing part-time/flexi hours option will be very cost effective
to our practicing members especially SMPs who look for additional human
resources during peak audit season like corporate audit, bank audit, tax
audit, etc. I also request to all our women members looking for such
flexi working opportunities to post their resume on the portal at the
earliest. |
Taking Chairmen of Regional Councils and Branches Along
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I believe in the power of ‘us’ and in the collective
pursuit of continuous improvement, not only because these lead to
performance gains but also effectually unify a professional community as
remotely spread and diverse as ours. It is in that spirit that I hold
the leaders of our regional councils and branches in high esteem. As
such, converting that spirit into productive action, over the last month
I personally met the chairmen of all our five regional councils and 147
branches.
I utilised the occasions to not only learn from and
draw on their experiences and vision but also orient them with the broad
ICAI Vision, Mission and our Action Plan for 2014-15. The idea was to
take them firmly along on the illustrious ongoing journey of our
profession and the ICAI. I am highly satisfied with these meetings which
provided me great inputs that will be help me steer our profession on
the path of glory more effectively.
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Success of ICAI Knowledge Gateway and Mobile App
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I am happy to share with you that our path-breaking
recent initiatives-‘ICAI Knowledge Gateway’ and ‘ICAI Mobile
Application’ have received an overwhelming response from our
stakeholders. More than 45,000 users have so far visited the Knowledge
Gateway while about 89,000 users have downloaded the ICAI Mobile
Application, and the count goes on. An overwhelming majority of our
Mobile App respondents have given it five and four star ratings
respectively.
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CRET Set for Reforms in CA Curriculum
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My vision is that accountancy profession and its
enabling force–accountancy education, need to constantly go hand in hand
with academic, technological and economic advancements globally. I have
always believed that the ICAI needs to be vigilant to this need of the
hour, and do a periodic review of the CA education and training schemes.
As such, we have recently constituted CRET (Committee on Review of
Education and Training). I am sure this will go a long way in
benchmarking our CA education with the best in the world.
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Three Non-Standing Committees Formed
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I would like to re-emphasise that I see our alma
mater ICAI more as a ‘facilitator’ than a regulator. As such, in line
with my Action Plan for this year, we have set the ball rolling to make
ICAI and its enabling base more robust in terms of ‘Human Resource’,
‘Infrastructure’ and ‘Technology’. Three specialised and focused
non-standing committees- ‘HR Transformation Committee’, ‘Infrastructure
Development Committee’ and ‘Technology Development Committee’ have been
formed to take ICAI capabilities and competence to the next level of
excellence. These will aim to set and follow high standards of
responsive and responsible Human Resources of the ICAI, broaden and
strengthen the infrastructure base for the profession, and put members
and students on a new technology roadmap. I invite your valuable
suggestions on these initiatives.
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ICAI Network gets Bigger
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I am delighted to let you know that expanding the
reach of accountancy profession in India, we have set up two more
branches in the Southern India Regional Council of ICAI at Anantapur and
Kurnool, which fall in the state of Andhra Pradesh. I am sure these
branches will give our profession’s network an added strength.
By the time you will be reading this, you must already be celebrating Spring and May Day.
Let me congratulate all of you on that, which is celebrated on 1st May
every year by many nations to honour labour, and by many others to
welcome the Spring season that brings bright sun and happy sky to us.
Seasons change for good of all. Likewise, we too should keep changing in
tune with times for the good of our society and nation at large. In
fact, I would like you to be ‘persons of all seasons’ and ‘leaders of
change’. Let’s imbibe the spirit of a professionally relevant saying: A leader is one who knows the way, goes the way, and shows the way.
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With warm personal regards,
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CA. K. Raghu
President, ICAI
New Delhi, April 23, 2014 |