President's Message - November 2011 - (31-10-2011)
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Dear Friends,
In my message, this time, I would like to recall Shri V. Narhari Rao,
the first Comptroller and Auditor General of independent India, who
had come to our headquarters in Delhi, on the occasion of the First
Conference of Chartered Accountants of India, on 5th April, 1954, to
deliver the last distinguished talk of the Conference on the Role of
an Accountant and Auditor in National Economy. Through his words of
wisdom and with his underlying objective to secure independence and
integrity for the profession, Shri Rao had urged the members to remain
responsible and courageous during discharge of their professional
duties. That was quite relevant and reinforcing for the profession
considering the formative years that the profession was passing
through. Quite humbly, on behalf of our forefathers in profession, I
would like to acknowledge that we had started our journey quite
courageously with a just sense of integrity, and we have come really a
long way following the same courage and integrity through the good and
bad times of economy.
The gap between our knowledge and our wisdom always surprises me. I
would urge our stakeholders to explore how to bridge this gap and
achieve a hundred percent correspondence between them. Our endeavours
should aim to create a better and more beautiful world around us, so
that we could exist in a graceful cohesion. To me, the culmination of
all human studies must be to create a better and beautiful world
around us. I would like to call out the members of my profession to
work in unison towards achieving this universal goal.
Let us get updated with some recent and important developments in the
profession that have taken place in the past one month:
International Initiatives
It is true that we are at crossroads between volatile business
environment and economy and subsequent changes being made in
accountancy. But I personally feel better when I contemplate over the
way we have been responding for quite some time to the needs of the
contemporary business environment of our nation. Our membership has
grown really big, i.e. 1,82,000 at present, and this demands a
responsible vision and growth from the profession and its
stakeholders. Internationally too, we have been growing in all
possible directions logically while carrying CSR attitude all the time
with us. I, along with the ICAI Vice-President CA. Jaydeep N. Shah,
visited the Abu Dhabi, Dubai, Muscat and Doha Chapters of the
Institute recently towards leveraging our international linkages and
initiatives with regard to our profession:
First Foreign IT-Training Centre Opened in Dubai: At Dubai Chapter of
the Institute, we have set up an IT-training (ITT) centre, our first
such initiative outside the country, which was inaugurated by the
Indian Corporate Affairs Minister, Dr. M. Veerappa Moily, who praised
our role in the economic growth of our nation while appreciating our
proactive partner-innation- building endeavours including that for new
Companies Bill under preparation and for new reporting framework under
XBRL. The event was also addressed by the Indian Ambassador in U.A.E.,
H. E. Shri M. K. Lokesh and the Counsel General of India in Dubai, H.
E. Shri Sanjay Verma. They appreciated that the Dubai Chapter of ICAI
is among the most efficient and proactive professional fora in Dubai.
This ITT centre would facilitate, I must appreciate, in empowering our
students abroad in completing their articleship and IT training
outside India. The Indian Business Professional Council (IBPC) also
hosted a programme in the honour of Dr. Moily.
Knowledge Sharing Forum in Doha: Our Doha Chapter recently organised a
well-conceptualised and well-attended ‘annual knowledge-sharing forum’
event and held a seminar on Strategic Decision Making, Project
Financing and Green Building Concept. The event further strengthened
the esteemed position that Indian professionals occupy in Qatar in
particular and the entire Gulf region in general. On the occasion, I
updated the gathering on the proposed reforms in the regulations
governing the profession in India and abroad and bright possibility of
ICAI partnering with the Qatari authorities in forming an accounting
body that will regulate the profession of accounting and auditing in
Qatar. I emphasised on the need of corporate social responsibility and
putting something back into the society in line with Qatar’s 2030
Vision of diversifying the local economy. Vice-President CA. Jaydeep
N. Shah was also the Guest of Honour on the occasion.
International Seminar on Sustainability and Growth in Abu Dhabi: In
Abu Dhabi, we attended the 23rd Annual International Seminar with the
theme Towards Sustainability and Growth of our Abu Dhabi Chapter held
recently at the Armed Forces Officers Club, where the Ambassador of
India in U.A.E., H. E. Shri M. K. Lokesh, was the Guest of Honour and
Dr. Tayab Kamali, Vice Chancellor, Higher College of Technology, and
Group CEO, Centre of Excellence for Applied Research and Training, was
the Chief Guest. I acknowledged that the words sustainability and
growth were important in the context of bringing transparency through
corporate governance, and that we would play an important role in the
implementation of corporate governance. I asserted that we chartered
accountants, known for quality services, were fully committed and
involved in the country’s growth. Other speakers included ICAI
past-President CA. Amarjit Chopra, among others, who spoke on the
status of IFRS implementation in India. Issues affecting the corporate
world, including leadership, sustainable growth, etc., were discussed
too. The Seminar also included an interesting panel discussion on The
Shift of Power from West to East.
Seminar on Economic Growth in Muscat: We were also at the Muscat
Chapter of the Institute to attend a one-day CPE event recently, where
I delivered a key note address at the seminar titled Adding Value to
Economic Growth. CA. Shah also addressed the participants on the
occasion.
Initiatives towards Nation-Building
Meeting with SEBI Chairman: I had the opportunity to meet the SEBI
Chairman Shri U. K. Sinha recently. We requested him to prescribe,
through the listing agreement, independent internal audit by the
external professional firm of chartered accountants for all listed
companies. Alternatively, in case the corporate entity has its own
internal audit department, we suggested him to mandate for external
monitoring of the compliance of standards of the internal audit system
by independent firm of chartered accountants. Further, we also made a
suggestion regarding the need for a Standard Audit Manual for
inspection of mutual funds, which could address the shortcomings and
improve quality in the inspection of mutual funds and bring uniformity
in reporting the same.
Independent Directors Meeting in Mumbai: I also attended the
interactive meeting of independent directors organised by the ICAI
from public- and private-sector banks, and financial institutions
along with the Vice-President CA. Jaydeeep N.Shah and various Council
members. Shri T. M. Bhasin, Chairman & MD, Indian Bank, was the Chief
Guest and meeting was attended by the 30 independent directors of
various banks and financial institutions. This meeting, successfully
hosted by WIRC of the Institute, provided a platform to independent
directors to share their rich experiences on new emerging concepts in
banking sector like risk management, internal control system,
effectiveness of audit committee, etc.
Workshop on Financial Statements of Corporates in Mumbai: I along with
the Vice-President CA. Jaydeep N. Shah, past-President CA. Amarjit
Chopra, and my Central Council colleague CA Manoj Fadnis, among
others, attended the Workshop on Analyzing Financial Statements of
Corporates under IFRS recently held at the RBI Central Office in
Mumbai, which was organised by the Centre for Advanced Financial
Research and Learning, promoted by RBI. I addressed the efforts made
by the Institute in formulation of the Ind ASs (Indian Accounting
Standards) converged with the IFRSs and the steps being taken towards
the preparation of frequently asked questions on Ind AS. Smt. Usha
Thorat, Director, CAFRAL, and CA. Prabhakar Kalavacherla, Board
Member, International Accounting Standards Board, also addressed at
the Workshop. Presentations on would-be financial statements under Ind
ASs were made. An interesting observation was that the companies which
were hitherto following the correct accounting principles will not
have a significant impact on their top line and the bottom line on
adopting the Ind AS. I sincerely acknowledge the efforts of Shri Ravi
Mohan, Chief General Manager, RBI and member, Accounting Standards
Board of ICAI.
Dr. M. S. Ahluwalia Delivered V. Sankar Aiyar Memorial Lecture at
ICAI: I wish to inform you that I attended the V. Sankar Aiyar
Memorial Lecture in Chennai recently, which was delivered by Dr.
Montek Singh Ahluwalia, Deputy Chairman, Planning Commission. Dr.
Ahluwalia’s lecture on Economic Reforms for Inclusive Growth, was
well-appreciated, especially his thought-provoking references to the
mission to serve the society, particularly its economically-weaker
sections. I am confident that our country will touch great heights of
glory under his noble guidance. Dr. Ahluwalia suggested us not to
change minds about market economy just because there was a loss of
faith in the industrialised countries. Shri Mani Shankar Aiyar, Member
of the Rajya Sabha, in the memory of whose father this Lecture was
organised, presented the introductory remarks. We suggested on the
occasion that all flagship programmes of the government should be
audited by the chartered accountants. Dr. Isher Judge Ahluwalia,
Chairperson, Board of Directors, Indian Council for Research on
International Economic Relations, was also present on the occasion.
More Training Programmes in Accounting Concepts: I find it
professionally gratifying to communicate that, in line with our joint
endeavour with the office of C&AG of India to organise training
programmes on accounting concepts for the officials of autonomous
bodies, we recently conducted a training programme in Ahmedabad. Shri
K. P. Sasidharan, Director General, Autonomous Bodies, Office of C&AG
of India, among others, was present during the programme, which was
attended by more than 120 participants including the officials of
autonomous bodies of Rajasthan and Gujarat, and members of the
profession. Another such programme was conducted in Bangalore, which
was inaugurated by Shri K. P. Sasidharan and attended by about 185
participants including the officials of autonomous bodies of Tamil
Nadu, Karnataka and Puducherry.
Two Publications for Investor Awareness Programmes: I am glad to
inform that, with regard to our responsibility towards the investors
of our country, we have got the two informative booklets, First steps
to Investing -A Beginner’s Guide and Primer for First time and
Existing Investors, translated in Punjabi, Gujarati,Telugu and
Assamese languages under the guidance of my Central Council colleague
CA. Vinod Jain, which were developed by the Ministry of Corporate
Affairs for distribution in the investor awareness programmes. We have
brought out the same in English version too. Copies of those
translations were presented by the Institute to Dr. M. Veerappa Moily,
Hon’ble Minister of Corporate Affairs, during an Investors’ Meet 2011
held recently.
Professional Developments
Meeting with CBDT Chairman: As you are aware, the CBDT had recently
issued a discussion paper on Tax Accounting Standards that are
proposed to be followed for the purpose of computing taxable income.
In order to discuss the issues arising from that, I recently had a
meeting with the CBDT Chairman Shri M. C. Joshi, along with my Central
Council colleague CA. Sanjay Agarwal. Concerns that I raised during
the meeting were well-received by the CBDT Chairman, who requested us
further to submit the detailed suggestions in this regard. We will
submit the same shortly.
Delhi High Court Upholds ICAI Decision: I wish to acknowledge before
our stakeholders with satisfaction that Delhi High Court has upheld
Institute’s decision to bar an auditor of Global Trust Bank (GTB) from
practising accountancy for five years. We had found him guilty of
professional misconduct as auditor during 2000-2001. As you know, it
was then that the 1993-formed bank was on the verge of collapse due to
reckless lending. Although, a single bench of the High Court had
quashed our order in the past. After our appeal against the same, the
verdict eventually came out in support of our disciplinary proceedings
against him. The Court has also clarified that the procedures
prescribed by the unamended Chartered Accountants Act, 1949, i.e.
Sections 21, 22 and 22A, would be applicable to all pending
proceedings in information case and not the procedure prescribed after
the amendment made by the Chartered Accountants (Amendment) Act, 2006.
We can now initiate an inquiry against an accused on the basis of
information or complaint.
ICAI Proposes Norms in Internal Audit: Realising that quality is one
of the fundamental assumptions of internal audit and there has been a
steep rise in attention on internal audit, we have till date issued 17
Standards on internal audit to cover the basic principles and practice
of internal audit and establish the basis for its performance
evaluation. To enable the internal auditors in performing quality
audit, I wish to inform our stakeholders that the Council of the
Institute has recently decided that wherever the Standards on internal
audit are being complied with, internal audit reports may mention that
the audit has been conducted in accordance with the Standards issued
by the Institute. We are also in dialogue with the Ministry of
Corporate Affairs in this regard and have recommended making it
mandatory for all companies to mention in their internal auditor’s
report that the audit has been conducted in accordance with the
Standards on internal audit issued by the Institute. I am sure that
this change would promote credibility and consistency in the internal
audit reports.
ISA Faculty Meet at Centre of Excellence Hyderabad: I am happy to
inform our stakeholders that we recently organised the ISA Faculty
Meet at Centre of Excellence Hyderabad, where eminent and expert
faculties from all over the country participated. This event gave me
an opportunity to interact personally with each of the faculty
participants there. Hopefully, a new revised and an updated curriculum
of the ISA course will be released shortly to help our members at
large.
ICAI Corporate Forum to be held in Bangalore: To provide our members
in profession and industry a platform to interact, and to appreciate
our members who have done exceptionally well in professional/ social
milieu, I wish to inform our stakeholders that we will now be
organising our 5th Corporate Forum in December 2011 in Bangalore,
which will have a series of events like Career Ascent, Gulf Campus,
Financial Services Expo, Corporate Conclave, ICAI Awards, etc. The
Infosys Chief Mentor, Shri N. R. Narayana Murthy, has agreed to head
the jury for the ICAI Awards. The Awards ceremony will take place at
the magnificent and historic Bangalore Palace. Details about
application process for nomination, deadline, etc., can be collected
online from the Institute’s website and also published elsewhere in
the journal. In this regard, I wish to acknowledge the efforts made by
my Central Council colleague CA. K. Raghu in planning and
conceptualising this mega event.
Guidance Note on Certification of XBRL Financial Statements: The
Ministry of Corporate Affairs had vide their circulars of July 2011
required that the XBRL financial statements be certified by a
professional, inter alia, a chartered accountant. This certification
requirement is appearing in the Forms 23AC-XBRL and 23ACA-XBRL
notified by the Ministry to upload the XBRL financial statements under
MCA 21. I am glad to inform you that we have recently released the
Guidance Note on Certification of XBRL Financial Statements, which has
been developed to help the chartered accountants effectively and
efficiently carry out these certification engagements in the most
value added manner. The Guidance Note, among other things, provides
guidance on the duties and responsibilities of the management vis a
vis the chartered accountant with respect to the XBRL mode financial
statements as well as the detailed procedures to be undertaken by the
chartered accountants to provide the assurance sought under Forms
23-AC XBRL and 23- ACA XBRL. This is also been hosted on the
Institute’s website.
Residential Certificate Course on Internal Audit: I am pleased to
inform you that we recently launched the first batch of the
Residential Certificate Course on Internal Audit at the Centre for
Excellence in Hyderabad, which aims to deliver a programme dealing
with the issues that impact internal audit profession at present and
in future. The Course will help our members in acquiring knowledge on
the theory and practice of internal audit and its allied functions and
on our role in them, and how these impact contemporary business
enterprises. Duration of the Course is 200 hours comprising ten
classroom days, case-study preparation, self study and e-learning.
Classroom sessions will cover contemporary topics including internal
controls, corporate governance, risk management, etc. To strengthen
the content and add value to the course, group assignments and case
studies have also been incorporated.
Infrastructure Initiatives
Ahmednagar and Udaipur Branch Buildings Inaugurated: I am happy to
inform that I recently inaugurated the buildings of the Ahmednagar
Branch of the WIRC and the Udaipur Branch of CIRC, in the presence of
the Vice-President CA. Jaydeep N. Shah and my Central Council
colleagues, among others.
Laying Foundation Stone of Trichur Branch: I am glad to inform our
stakeholders that I happened to lay the foundation stone for the
building of the Trichur Branch of the Institute recently. CA. K.
Shanmukha Sundaram, SIRC Chairman, was also present on the occasion.
Best Wishes for Forthcoming CA Examinations
When this issue reaches you, an estimated two and half lakh students
might have started appearing at the November 2011 Chartered
Accountants Examinations of our Institute at 345 examination centres
in India as well as abroad. I would like to extend my heartiest wishes
to them and hope that they would perform well and come out with flying
colours.
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Acclaimed ontologist G. K. Chesterton associates education with the
soul of a society. Will Durant calls it a transmission of
civilization. Political activist Emma Goldman considers it our effort
to unlock the wealth of sympathy, the kindness and generosity hidden
in the soul of a child. To me, education must enable us to deal with
the existing differences and indifferences in our society and with the
situations that drive us away from the world of sympathy, kindness and
generosity. If we are educated, we will always move towards a unified
society. Therefore, if we are not united, there has to be some flaw
somewhere in our being educated or in the process of our education.
Carl Rogers, one of the founding fathers of psychotherapy research, is
ready to call a person educated on a condition if we have learnt how
to learn and change. In the same context, now, we will be able to
understand why Al McGuire, a well-known basketball coach, said: I
think everyone should go to college and get a degree and then spend
six months as a bartender and six months as a cabdriver. Then they
would really be educated. Education is in fact a patient and an
ongoing process where we simply are required to be diligent.
All educational degrees or diplomas should prepare us to be ready to
learn for the rest of our lives. Acclaimed social psychologist Erich
Fromm justifiably asks: Why should society feel responsible only for
the education of children, and not for the education of all adults of
every age? Education is not just about books, colleges or
institutions. We start feeling the presence of education in our lives
when we finish up with our formal education and we deal with the
realities of life. We will never precisely realise its presence in our
life unless we reflect on the way we carry out our work, the way we
approach a problem, or, the way we think about the processes that run
around us. I am sure this is what Albert Einstein meant by when he
said: Education is what remains after one has forgotten everything he
learned in school. I would like to advocate this understanding and
propagate this around us and among all my readers: let us not miss a
chance to learn after our formal learning is over.
We are a country of numerous faiths and beliefs, and, with pride, I
admit that we quite agreeably always celebrate and rejoice with the
people of all faiths in their moments of joy. In keeping up with the
true spirit of celebrations, I would like to extend my best wishes on
behalf of the Institute to all towards the celebrations on Id-ul-Zuha
(also Id-ul-Adha or Bakr-Id) and on Guru Nanank Jayanti (founder of
Sikh faith Guru Nanak Dev’s birthday). May the prayers offered and
greetings shared by the devotees bring further happiness and peace to
the people of our nation! Amen!
Best wishes
CA. G. Ramaswamy
President, ICAI
October 24, 2011
