My Dear Professional Colleagues,
The Indian accounting profession was established in the year 1949 by an Act of Parliament to address the genuine needs of economy with obligations to serve the public interest and society. The profession functions and grows, paralleled by its complex knowledge, skills and well laid out statutory position. In return of the given legal status, our members render their services with the public interest in mind to serve economy and our country. For more than seven decades, the accountancy profession is championed under the edifice in which the public interest is deeply ingrained in its functioning with any action contrary to the public interest can have devastating effect for the various stakeholders. CA. Raghu Nath Rai, past President, ICAI once commented – “In a welfare State, a profession cannot hope to exist unless it promotes and serves public interest. The Council of this Institute has been conscious of such responsibility and from time-to-time has been advising members to assist the Government and Government bodies in the discharge of their functions.” Public interest establishes standard for the Chartered Accountants to strive and work for the benefit of others. The standards should be ingrained in the mindset of professionals such that they become the benchmark upon which all their activities are undertaken. Today, I am proud to acknowledge that tradition of ‘service before self’ that was started in the year 1949 is followed unabated over more than seven decades of our journey. I am equally sure that our present and future generations will always keep this in mind and act for societal duties while discharging their various functions. In this direction, ICAI through its system of education and training to students which continues as professional education post qualification, inculcates best of ethical behaviour in best interest of public. “To educate a man in mind and not in morals is to educate a menace to society.” – Theodore Roosevelt
Positioning the Profession Internationally: Spreading wings
ICAI, the second largest accounting body in the world, has a number of chapters, representative offices and overseas offices helping the Indian accounting profession to reach different parts of the world. In a bid to enhance its global footprints, the ICAI has recently launched two new representative offices and one new chapter. The ICAI Chapters and Representative Offices act as focal point of contact, bringing together ICAI members abroad and enabling effective reach and service to its members. Thus aiding in positioning the ‘Indian Accountancy Profession’ as a ‘Brand’ worldwide for generation of more and more professional avenues for Indian Chartered Accountants and contribution in global economy.
Virtual launch of Chicago Chapter
The 40th Chapter of the Institute of Chartered Accountants of India in Chicago was recently inaugurated at a virtual event on April 24, 2021. The event witnessed the august presence of Mr. Amit Kumar, Hon’ble Consulate General of India, Chicago; CA. Mahaveer Singhvi, IFS, Joint Secretary, Ministry of External Affairs, Government of India; CA. (Dr.) Debashis Mitra, Vice President, ICAI and myself. CA. Vish Arunachalam, Founder Chairman & Director, San Francisco Chapter of ICAI; Ms. Dorri McWhorter, CPA-CGMA, CITP, Chairperson, Illinois CPA Society; Mr. John Gimpert, Regional Director, CFO Leadership Council and Ms. Shweta Baid, Aurora’s 10th Ward, Alderman-elect participated in the event as Guest speaker.
Virtual launch of Hanoi and Ho Chi Minh Representative Offices
The Institute recently also inaugurated two Representative Offices in Hanoi and Ho Chi Minh. Both these Representative Offices were inaugurated at a virtual event on April 2, 2021 in the august presence of Shri Pranay Verma, Ambassador of India to Vietnam and Dr. Madan Mohan Sethi, Consul General of India, Ho Chi Minh City, Vietnam along with CA. Mahaveer Singhvi, IFS, Joint Secretary, Ministry of External Affairs, Government of India; CA. (Dr.) Debashis Mitra, Vice President, ICAI and myself. The event also witnessed the presence of Shri Manoj Barthwal, Chairman, Indian Business Chamber in Ho Chi Minh, Vietnam as guest speaker for the event.
As I pen down this message, I am pleased to share with my fraternity members that Union Cabinet chaired by Hon’ble Prime Minister of India has approved the two Memorandum of Understandings of the ICAI. The MoUs were proposed with the Institute of Chartered Accountants of Australia & New Zealand, and another one with Certified Practicing Accountants Australia. Necessary steps for operationalisation of both these MOUs will be taken soon.
Classification of Non-company entities for applicability of Accounting Standards
Accounting Standards issued by the ICAI are applicable to Non-company entities to whom Ind AS are not applicable. For applicability of Accounting Standards, the ICAI in 2004, prescribed the criteria for classification of entities into level I, Level II and Level III, wherein subsequently minor revisions were made. Level II and Level III non-company entities were classified as Small and Medium sized Entities (SME) to whom certain exemptions/relaxations were provided. In view of the substantial revisions in the threshold limits for classification of Micro, Small and Medium Enterprises (MSMEs) under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, inflation; and considering that the criteria for classification of Non-company entities was laid down long back, the ICAI has revised the criteria to achieve simplification and ease of doing business by these entities. For this purpose, the ICAI has recently issued an Announcement revising the criteria for classification of Non-company entities into four Levels, viz., Level I, Level II, Level III and Level IV which is applicable in respect of accounting periods commencing on or after April 1, 2020. Level IV, Level III and Level II entities are referred to as Micro, Small and Medium size entities (MSMEs). The Announcement which includes details of exemptions/ relaxations to MSMEs and the guidance on transitioning between levels has been published in the internal pages of this issue for your ready reference.
Interest Rate Benchmark Reform
Considering the uncertainty about the future of some existing Interest Rate Benchmark Reform such as Interbank Offered Rates (IBORs) globally, necessary amendments were earlier made to relevant Ind AS. In order to provide necessary guidance in this regard to the entities that do not apply Ind AS including banks, the ICAI has issued an Announcement to address the matter on an urgent basis. The Announcement has provided temporary exceptions to Hedge Accounting prescribed under Guidance Note on Accounting for Derivative Contracts due to Interest Rate Benchmark Reform. An entity shall apply the temporary exceptions stated in the Announcement for annual periods beginning on or after 1st April 2020 till the time uncertainty regarding new rates exists.
Review of Education and Training
In order to update the system of education and training with the objective to enable aspiring Chartered Accountants to acquire contemporary competence which the profession requires a “Committee for Review of Education and Training (CRET)” is set up from time to time. The committee reviews the adequacy of the existing systems in the context of the emerging requirements and the changing environment. On account of changes necessitated due to implementation of National Education Policy, 2020, increasing emphasis on corporate governance and business ethics, opening up of new professional avenues and technological developments it has been decided to initiate the work of reviewing the system of education and training. The review would be done through a comprehensive consultative process involving academicians, regulators, industry, parents, members and other stakeholders of the accountancy profession.
Interactive Meeting with the ICAI Past- Presidents from Western Region
Recently, myself and Vice-President had the opportunity to have the experience and vision of past-Presidents of the ICAI from Western region shared by them during an interactive program organised by the WIRC. On our part we shared with them the major initiatives undertaken for the benefit of profession at large during the recent past, also the action plan of the year 2021-22 to create opportunity for the profession and also for contribution of ICAI to the society and Government in these challenging times. Their words of wisdom and guidance will certainly be very helpful in the further course of action.
Promoting Financial and Tax Literacy
It is rightly remarked, an investment in knowledge accrues the best interest. In an increasingly risky environment, it is important to make well-informed financial decisions. Generally, common man and even small corporate not having access to professional advice, sometimes lacks financial literacy which is otherwise necessary to make decisions in their own best interests and running affairs while becoming suitably tax compliant. While educated persons are more informed, they may not possess right combination of literacy in financial and tax matters. The knowledge in the area of accountancy and finance is complex and highly specialised. It is important that all individuals have a basic understanding in the area of finance so that they are empowered to take right financial decision, make better investments, pay proper taxes, etc.
The Institute has always reiterated the importance of knowledge-sharing for not just individual enrichment but all-round social benefit. In this direction, as I informed in my earlier communication in March 2021, we have formed a group to support the cause of financial and tax literacy. As different members of ICAI go on to specialise in different domains, it is important to exchange ideas, thoughts, plans, suggestions and other nuances of financial information, so as to build on our knowledgebase in the form of National Financial Resource Centre, in a compounding fashion and holistically develop the community. ICAI firmly believes that financial knowledge is directly correlated with self-beneficial financial behaviour and must be encouraged.
Put in your Best Efforts for Indian Economy
The Indian economy moving ahead relentlessly has immense potential. The economy has displayed high resilience and is able to move ahead through thick and thin. Withstanding all odds, overcoming economic challenges accentuated by prolonged pandemic, India is able to garner an all-time high of 1,23,902 crore, as GST collections in March, 2021. The collections are 27% higher than the corresponding month in the previous year and are 14% higher in January-March quarter FY21 versus the full fourth quarter for FY20.
Incidentally, when the pains of pandemic were fading, the corona virus is spreading with increased severity. Akin to the seas characterised by high tides and low tides, the day by dusk and dawn, the wheel of life continues to cycle through the good and bad, one instant after another. We are sure this second bout of the virulent spread will also be over soon. As members of accounting profession, I request you to take all precautions including vaccination as suggested by the government to save human life and take best actions to safeguard the business and economy.
As I conclude, I wish you all a very happy Akshaya Tritiya, Eid al-Fitr, and Buddha Purnima.
Stay safe, stay healthy. Best wishes.
CA. Nihar N. Jambusaria