While presenting the Annual Budget for 1956-1957, the then Union Finance Minister Shri C. D. Deshmukh had said: It is enough to state broadly my view that by means of the First Five Year Plan we have laid sound foundations for a more massive superstructure in building up the country’s economy. He went on to present the vision of his mission which is relevant even today: The problem is not merely one of raising the statistical average of per capita incomes which could easily be a will of the wisp; it is one of raising the lowest incomes and of opening out to the younger generation avenues of growth and advancement that will bring out the best in them. For this, the present generation has to make sacrifices. It has to work harder and it has to abstain from asking for immediate returns. He always considered our profession a Public Service. He had advised us to follow high ideals amidst an abundance of pressures and temptations, besides carrying out our statutory responsibilities to report on accounts to the shareholders. I keep his advice in high regard: it is essential to be ceaselessly vigilant…because of the greatly enlarged sphere of our activities.
In fact, when the great philosopher Shri Aurobindo says: The truth sits veiled behind the appearance, selfabsorbed; there is in all things, without exception, “That which is conscious in these conscious & unconscious existences, that which is awake in those who sleep”, we are instantly reminded of our conviction about the consciousness that we must possess while carrying out our professional responsibilities. He informs us about the weaknesses of human beings that we may be a reasoning animal, but our conclusions spring from our preferences, prejudices and passions. It is, therefore, necessary for us to rise above these preferences, prejudices and passions and come up to the expectations of our time.
We need to be quite watchful about the way we conduct ourselves in profession so that we could augment the public trust in the profession and its performance. Moreover, the profession now needs to be more and more communicative to the public about its roles, duties and responsibilities in the national economy, and members of the profession need to be in strict compliance with the existing Code of Ethics, so that the gap between our image and identity gets reduced. Our motto thatwe have to be awake in those who sleep becomes quite functional in this context, as it demands us to update our technical skills and develop the scope of auditing processes. We must continue our professional journey on this note with a vigilant attitude.
Let me update our stakeholders now with some recent and important developments in the profession that have taken place in the past one month:
IFAC Council and Edinburgh Group Meetings and ICAI Nominees in IFAC: I attended the IFAC events in Berlin, Germany, recently along with the Vice-President CA. Jaydeep N. Shah, and Additional Secretary of the ICAI. I take pride to inform our stakeholders that our Institute has been able to retain its Board position at the IFAC. My candidature as Board member of IFAC was approved by the Nominating Committee after a detailed interview and was ratified by the IFAC Board as well. The matter, however, came up for election at the recently concluded IFAC Council meeting, wherein out of seven candidates I secured the highest number of affirmative preferences. The Board position to ICAI is a testimony to our growing stature amongst the global accounting fraternity and the international forums and the role played by ICAI in the India’s economic momentum. I also feel satisfied to acknowledge that another ICAI nominee, my colleague and ICAI Vice- President CA. Jaydeep N. Shah has been nominated to the International Accounting Education Standards Board (IAESB) of IFAC. Coinciding with the IFAC events, the Edinburgh Group meeting was also held, focusing on SMP issues. IFAC events provided an apt forum to the ICAI functionaries to discuss our various initiatives with the global accounting bodies.
Visit of IAASB Chairman and IAASB Executive Director: Recently, Prof. Arnold Schilder, Chairman, International Auditing & Assurance Standards Board (IAASB) and Mr. Jim Sylph, Executive Director, Professional Standards, IAASB visited India. During the visit, the IAASB delegation interacted with regulatory bodies like RBI, SEBI, C&AG, MCA and the ICAI on various issues, including recent global financial crisis and the auditing profession, quality of audits, convergence with international auditing standards, issues relating to auditing standards in India, perspective of the various regulators on the expectations of the stakeholders from auditors, how the regulators and the auditing profession can work together towards a more resilient world economy and protection of the investors. In particular, the delegation met the Minister of Corporate Affairs Dr. M. Veerappa Moily, MCA Secretary Shri Naved Masood and Deputy C&AG Shri A. K. Awasthi to discuss the issues of mutual interests. The IAASB delegation also interacted with the members of the Auditing and Assurance Standards Board of ICAI at the meeting of the Board held on 22nd November, 2011 at New Delhi.
As a part of the Institute’s initiatives to create more awareness among the members about Standards on Audit, to encourage their compliance and implementation, the first phase of e-learning on Standards on Audit was launched by the IAASB delegation, comprising ten standards. Work on developing e-learning on the remaining standards is in full swing. We also released three publications, “Handbook of Auditing Pronouncements 2011 Edition”, “Guidance Note on Certification of XBRL Financial Statements” and “Guide to Audit of Complex Financial Instruments”, during the visit of the IAASB delegation.
ICAI Representation in XBRL International: I am pleased to inform you that ICAI Vice-President CA. Jaydeep N. Shah has been appointed a member of the Nominations Committee of XBRL International, while my Central Council colleagues, CA. Abhijit Bandyopadhyay and CA. K. Raghu have been appointed members of the Finance and Human Resource Committee, and the Membership Development Committee of XBRL International respectively. The aforementioned positions have been decided by the Member Assembly of XBRL International at its International Conference held in October 2011. Decision regarding the other two nominations of the ICAI is likely to be taken hopefully in December 2011. Here I also wish to inform you that XBRL initiatives of the ICAI will be showcased in a big way at our forthcoming International Conference.
SAFA-EFAA Joint Initiative: I am happy to inform that the South Asian Federation of Accountants (SAFA) representing accountancy in the SAARC region and European Federation of Accountants and Auditors (EFAA) representing SMPs of the Europe have decided to come together to share their expertise for the benefit of SMPs of both the regions. A two-day joint Seminar on SAFA-EFAA Alliance was organised recently in New Delhi, where the MoU between SAFA and EFAA was signed in the august presence of Hon’ble Secretary, Ministry of Corporate Affairs, Shri Naved Masood, with an objective to create a common platform for sharing knowledge resources for the benefit of SMPs and help the members of both the regions for establishing a professional network.
Capacity-Building in Maldives: I take pride in informing you that the Research and Information System (RIS) for Developing Countries, an autonomous research institution established and funded by the Ministry of External Affairs, has approached us and requested us to provide capacity-building programmes for accounting technicians in Maldives. It is important to mention that the Government of India is extending a full-stage services and technology cooperation facility arrangement to the Government of Maldives. In this regard, I called on the Chairman of RIS, Mr. Shyam Saran, former Foreign Secretary, recently and had discussions on our proposed arrangement which could be offered to the relevant stakeholders in Maldives. It was also discussed that these programmes would have an interface and, for this, option of running a part of these courses in India through our Centre of Excellence, etc., would also be explored. We have asked the RIS to indicate the nodal point for recipients of these services, so that focused discussions could be held.
Submission of Report on Admitting Membership of Overseas Citizens of India: A group had been constituted under the convenorship of my Central Council colleague CA. Sanjay K. Agarwal to consider appropriate steps for identifying a qualification-bridging mechanism in line with the arrangements in place for MoU/MRAs with various international accounting bodies and feasibility of considering provision to be prescribed for admitting membership of overseas citizens of India and to work out the modalities. I would like to inform that the said group has completed its task and its report has been submitted.
Application of the definition of ‘financial liability’ in IAS 32 to FCCBs: In a meeting of our Accounting Standards Board held recently in Mumbai, IASB member CA. Prabhakar Kalavacherla was invited for a discussion on the carve-outs made in Indian Accounting Standards (Ind AS). He suggested that India would meet greater success in getting its point of view accepted by the IASB if it prioritises the issues to be taken up at a time with the IASB rather than taking all issues at the same time. It was, accordingly, suggested to first send the issue regarding application of the definition of ‘financial liability’ to Foreign Currency Convertible Bonds (FCCBs), to the IFRS Interpretation Committee so that the amendment made by India in the definition as presently done in Ind AS 32, Financial Instruments: Presentation, could be avoided. Further, for greater effectiveness, other carve outs such as that related to giving an option to defer foreign currency gains and losses in respect of long term foreign currency items as provided in Ind AS 21, The Effects of Changes in Foreign Exchange Rates, can be taken up along with other countries such as South Korea. The Accounting Standards Board is examining the suggestions made at the meeting.
Towards Constitution of Working Groups of AOSSG: A teleconference of the Working Group of AOSSG on the proposed limited revisions to IAS 41, on Agriculture, regarding scoping out Bearer Biological Assets (BBAs) out of IAS 41 and scoping the same in IAS 16, Property, Plant and Equipment, was held recently leading to another teleconference between India, Malaysia, and Japan, during which it was suggested that, in the Issues Paper on Agriculture to be sent to the IASB, two paragraphs on alternative Indian approach should be included, and that a covering letter should be written by the AOSSG to the IASB Chairman in this regard. Accordingly, a letter has been sent to the IASB. Another teleconference was held to discuss India’s suggestion to constitute Working Groups of AOSSG on Rate Regulated Activities and Extractive Activities, where India, Japan and Australia participated and decided to initially constitute taskforces instead of the working groups to carry out research by the interested countries in the AOSSG region. Thereafter, the taskforces can be upgraded to working groups on requirement basis. For this purpose, India would take a lead in the taskforces and few other countries are being identified to join in this endeavour.
Meeting with Minister of State: Recently I, along with ICAI Vice-President, met Shri V. Narayanaswamy, Minister of State in the Ministry of Personnel, Public Grievances & Pension, and Prime Minister’s Office. We apprised him of the activities of the Institute and its role in development of accountancy profession in India and globally, and also invited him for our International Conference to be held shortly.
Meeting with President ITAT: I met the recentlyelected President of Income Tax Appellate Tribunal (ITAT), Shri G. E. Veerabhadrappa, and congratulated him on assuming new office. On this platform, I would like to acknowledge before our accounting fraternity and congratulate Shri Veerbhadrappa, also our member, for bringing yet another glory to our profession in public service of our nation.
Meeting with CBEC Chairman: I also had an opportunity to meet the Central Board of Excise & Customs Chairman, Shri S. K. Goel, recently along with the ICAI Vice-President CA. Jaydeep N. Shah and my Central Council colleague CA. Bhavna Doshi.
Initiatives towards Nation-Building
BANCON 2011 in Chennai: I am pleased to inform that I recently attended the annual bankers’ conference BANCON 2011 – Gateway to a Defining Decade on the themeCatalysing economic growth by unlocking financial savings, successfully and jointly organised by Indian Overseas Bank and Indian Banks’ Association in Chennai. I addressed the august audience on the topic Capturing Opportunities in India’s Gen Next. On the sidelines of the conference, I also interacted with many bankers and the officials of the RBI highlighting the active role that we chartered accountants can play in banking sector in particular and national economy in general.
Awareness Programmes on Challenges in Public Finance & Government Accounting: I am happy to acknowledge that we are organising awareness programmes on Rising to the Challenges in Public Finance & Government Accounting to identify opportunities for our members in public finance and Government accounting, to assist in developing public finance structure and to ensure appropriate sectoral allocation for inclusive growth and economic development. We have organised such programmes in Dehradun, Ghaziabad and Noida, where eminent faculties exchanged their views on amendments of service tax, problems of indirect taxation, wealth tax policy, taxation of real estate transaction, XBRL, among others, with the participants.
MSHRC Request for Training in Accounts & Finance: It is satisfying to inform that Shri Mafiul Hussain, Secretary, Maharashtra State Human Rights Commission (MSHRC), recently met my Central Council colleague CA. Anuj Goyal in Mumbai with regard to a proposal from MSHRC requesting to avail our services for capacity building of his officials in maintenance of accounts and improving the financial discipline of the Commission.
Meeting with Secretary, Financial Services, Ministry of Finance: I had an opportunity to meet Shri D.K. Mittal, Secretary, Department of Financial Services, Ministry of Finance, recently along with the ICAI past-President and Chairman of Professional Development Committee CA. Amarjit Chopra wherein we discussed various issues of mutual professional interest. In respect of the issue of managerial autonomy given to Boards of the public-sector banks for appointment of auditors, I would like to inform that the Reserve Bank of India has gone ahead with the Roadmap and as suggested therein, the complete list of eligible Central Statutory Auditors has been sent to banks for the purpose. We are in the process of making suitable representations in this regard.
Towards a Crusade for Spreading Ethics in Profession: We have been constantly engaged in spreading awareness about the Code of Ethics and preparing ways to familiarise our members with it across the nation. We have been holding programmes, seminars and workshops on various ethical subjects for the members, and we ensure that all Branches/Regional Councils hold at least one such programme in a quarter, i.e. four in a year. So far, 28 programmes have been conducted in the current year. Further, we have also introduced a regular column on Ethics, Know Your Ethics, in our journal.
Guidelines on Conversion to LLPs: As per the recent Council decisions, guidelines for conversion of CA firms into LLPs and constitution of separate LLPs by the practicing chartered accountants have been finalised which are applicable for conversion of CA firms into LLPs or formation of new LLPs by the members-in-practice of the Institute subject to the provisions of the Limited Liability Partnership (LLP) Act, 2008 and Rules & Regulations framed there under. These guidelines came into effect from 4th November, 2011, and will certainly help the members and CA firms for conversion/formation of LLPs and rendering professional services through LLP Model. The said guidelines are available on the website of the Institute and have been published in this issue of the Journal. The name of the LLP shall be approved by the Registrar for LLP and after issuance of certificate of incorporation of LLP by the Registrar for LLP, the LLP name will be required to be registered with the ICAI like registration of firms with ICAI.
Filings of Financial Statements in XBRL: As you are kindly aware that the Ministry of Corporate Affairs has switched from normal e-filings to XBRLfilings of financial statements for a certain class of companies from this year. The filings in XBRL mode have started and the due date is 30th November, or, 60 days from the due date whichever is later. I urge the members of profession to complete the certification of their corporate clients at the earliest, so that the filings can be made by the due date.
ICAI Awards for Excellence in Financial Reporting: For the annual competition ICAI Awards for Excellence in Financial Reporting, this year, a record number of about 225 entities have participated in various categories. As per the procedure, these entities pass through a robust three-tier evaluation process, i.e. evaluation of annual reports on the basis of compliance with accounting standards and relevant applicable laws, etc., evaluation by the Shield Panel and, eventually, that by an independent jury.
Christ University Offers MPhil/PhD: I am quite happy to inform you that the Christ University, Bangalore, has approved the eligibility of our members to pursue the MPhil/PhD programme in its disciplines of Commerce and Management that include interdisciplinary areas, subject to MPhil/ PhD regulations of the University.
Support CABF Initiative: This is my appeal to all my stakeholders to come actively forward to support and contribute to the CABF (Chartered Accountants Benevolent Fund) initiative of the Institute towards the cause of the profession and its members. It provides financial assistance to our members in distress for fundamental needs including sustenance. You should know that contributions to CABF are exempted under Section 80(G) of the Income-tax Act, 1961.
Auditorium Inaugurated in Bhilai: I recently inaugurated an auditorium at our Bhilai Branch with a capacity for 225 persons and complete soundand echo-proof interior with WiFi. It is a matter of pride for us that this auditorium is currently one of the biggest auditoriums in the state of Chattisgarh.
Initiatives for Students
Best Wishes to All 2.5 Lakh Students: About 2.5 lakh students (83000, 131000 and 36000 students for Final Examinations, IPC Examinations and PC Examinations respectively) have appeared in the Institute’s November 2011 Chartered Accountants Examinations at 345 centres including three centres abroad. All the examinations were conducted without any inconvenience or issue. The Examination Department is fully geared up to evaluate the answer books and declare the results in time. I wish all students would pass the examination with flying colours.
Recommendations for Amendment of Regulation 28E(1)(b): It has also been decided to recommend for amendment of Regulation 28E(1)(b), whereby the study for IPCC would be reduced from existing nine months to eight months to make candidates eligible to appear in the Integrated Professional Competence Examination (IPCE) from the date of Registration for IPCC.
Review of CA Syllabus: We have taken a muchdesired initiative and formed a Committee as per direction of the Council to review comprehensively our syllabus for CA course curriculum that has not been undertaken since 2006.
Orientation Content for GMCS I & II: We recently deliberated on the proposed contents of Orientation Programme for GMCS-I and GMCS-II and finalised the same. All the necessary initiatives have been taken to prepare the course material for these courses along with a trainer’s manual as soon as possible.
Winter is a time for making new promises and finding wayss of keeping up the old ones. We get more time for ourselves in this season. American author Ruth Stout had said: …only in the winter…can you have longer, quiet stretches when you can savor belonging to yourself. I realise, all of us feel that it also is time for creating comfort and warmth for our friends, family and loved ones.
However, I do realise that concerns of the impoverished of our nation, who are in dire need of resources during winters for survival, must be first on our agenda. We come across numerous incidents how the crises strike these citizens across the nation during winters. According to a Japanese proverb, one kind word can warm three winter months. Think, then, what one kind act can do. For example, in the beginning of winters, we normally discard our old winter clothes. This time, we can hand over those clothes in person to the people on pavements. This gesture of ours will generate warmth literally as well as metaphorically for those fellow citizens. We must do something for our fellow citizens being on the stronger side of our society. This will be our return against our social debt to society. Such acts make our society capable, happy and warm.
When it is summer, we want rainy season to arrive. When we get bored of the rainy days, we want them to be over. In the peak winter, we yearn for spring. Actually we start missing whatever we lose; we love to have whatever is not with us. This is a basic human instinct. Weather in itself is a lesson, i.e. we should learn from our past, face our present and prepare ourselves for future. I would like to recall the beautiful inspiring lines written by the English poet P. B. Shelley, which exude hope and trust:…O, wind, If Winter comes, can Spring be far behind?
While we leave our fate to the time to be positive and bright, we can be tough on ourselves to turn our fate positive and bright for the society we live in.
May we all stakeholders of the profession join hands in this mission!
CA. G. Ramaswamy
November 23, 2011