President's Message - April 2011

Dear friends,

When the first Finance Minister of India, Shri R. K. Shanmukham Chetty, presented the first budget of the country soon after our independence, on 26th November, 1947, he was conscious of the responsibilities that face(d) the custodian of the finances of India at this (that) critical juncture. He, therefore, was fully conscious of the fact that any policy of stabilisation must aim not merely at the increase of production of both consumer and producer goods but also at the pegging of money incomes at an agreed and accepted level so that the increased volume of trading resulting from the increase of production may neutralise the inflationary effects of the large volume of uncovered money income. For him, if a policy was to be carried out successfully, it would require an appreciation of the situation by labour and its wholehearted co-operation.

Now when the present Finance Minister of India Shri Pranab Mukherjee presented the Budget 2011-2012, amidst uncertainties and rapid changes added with some opportunities and many challenges and economy back to its pre-crisis growth trajectory, he talked about his three still-relevant priorities of sustaining high growth trajectory, making development more inclusive, and improving our institutions, public delivery and governance practices. He visualised this Budget as a transition towards a more transparent and resultoriented economic management system in India. In fact, he informs about the endeavours of bringing administrative procedures concerning taxation, trade and tariffs and social transfers on electronic interface towards making the procedures free of discretion and bureaucratic delays and setting a tone for a vibrant and more efficient economy.

Project Parivartan is making similar endeavours of bringing a hassle-free, efficient and comparatively paperless administrative system in the Institute. In fact, improving the IT-enabled processes scores high on my agenda. We have to walk with the time. Is there an option Of late, especially since last couple of years, both the government and the corporate sectors have acknowledged our significant contribution in nation-building and have wished we would continue further in the direction. We would do everything possible to consolidate this image of our profession further, and I would personally ensure that our fraternity lives up to its image of independence and integrity to the fullest.

In line with our adherence to autonomy and integrity in principle, let us observe some of the recent significant developments that have brought us further closer to the mission vis- -vis our profession:

Meetings with Regulators/Government Officials

Meeting with Union HRD Minister: Consequent to our last meeting with Union HRD Minister Shri Kapil Sibal in January 2011, we were recently invited by Ms. Vibha Puri Das, Secretary of Department of Secondary & Higher Education in the Ministry of HRD, for a discussion on implementation of accounting standards in educational institutions. Meeting was attended by myself along with the ICAI Vice-President CA. Jaydeep Narendra Shah and past-President CA. Amarjit Chopra among others from ICAI and senior officials from the Ministry, which included PS to HRD Minister Shri V. Uma Shankar, Financial Advisor and Additional Secretary Shri S. K. Ray, and Joint Secretary Shri Amarjit Singh. We made a brief presentation titled Role of Professionals: Paving way for Excellence in Higher Education on our role and measures we would take to enhance transparency and accountability. We informed the Ministry how we plan to increase the role of CA professionals by involving them in teaching subjects like IFRS, taxation, auditing, etc. The Ministry has expressed its keen interest in implementing all relevant accounting standards in the context of all central as well as state universities. It further expressed its wish for a workshop of Vice-Chancellors of universities to be conducted for spreading awareness on latest professional areas of concerns. It was proposed to form a working group where there would be four nominations from the Ministry, two each from higher education and schools respectively. I would like to specifically thank Shri Shankar for this praiseworthy effort.

Meeting with Secretary, Department of Financial Services: It was matter of satisfaction for us that I along with past-President CA. Amarjit Chopra recently met Shri Shashi Kant Sharma, Secretary, Department of Financial Services at the Ministry of Finance. The meeting was quite cordial, where Shri Sharma expressed his keen interest in understanding the procedure being followed at present in the appointment of statutory auditors in public-sector banks. He was quite impressed by our organisational structure and our impeccable record in rendering services to society and showed his willingness to meet the members of our Council. Among others, appointment of single tax auditor for the whole bank and guidelines on managing risks and code of conduct in outsourcing of financial services covering outsourcing of internal audit were also discussed.

I am also pleased to inform here that the State Bank of India has decided not to implement its proposal of appointment of singletax auditor for the whole bank and has instead agreed to revert to the system which was in vogue last year.

Submission of Report on Convergence to MCA: We have submitted a preliminary report to the Ministry of Corporate Affairs, which was prepared by a study group formed in the Institute in response to a request made by the Ministry to us to carry out an in-depth study to locate issues involved in convergence between Companies Bill, IFRS, GST and DTC, and to prepare a background material clearly indicating the purpose and deliverables for all the regulators and stakeholders.

Discussion on Issues related with e-Filing at CPC: Our Central Council colleague and Chairman of Direct Tax Committee of the Institute, CA. Sanjay K. Agarwal, recently visited Centralised Processing Centre (CPC) in Bengaluru and had an interaction with the Commissioner of Income Tax, CPC, Shri Sanjay Verma. During the discussion, CA. Agarwal pointed out the problems associated with e-filing and processing of returns. He also presented a proposal to set up groups to study the specific problems related to e-filing and possible solutions to such problems. This interactive session was followed by a special address of Shri Verma in the Bengaluru Branch of SIRC of the Institute.

Meeting with CBDT Chair: This is to inform our stakeholders that I along with the ICAI Vice-President CA. Jaydeep N. Shah, our Central Council colleague CA. Sanjay K. Agarwal and the ICAI Secretary Shri T. Karthikeyan met the Chairman of Central Board of Direct Taxes, Shri Sudhir Chandra, recently. We offered to the CBDT to assist them in framing rules of Direct Taxes Code Bill, 2010.

International Initiatives

Meetings of IFAC Board and Edinburgh Group: It is important to let you know that I had the opportunity to attend the Edinburgh Group of IFAC and IFAC Board meetings recently in New York along with the ICAI past-President CA. Ved Jain. Among others, status of the IFAC, whether a standard-setting body or an independent body, was discussed, and if various standard-setting Boards of the IFAC are part of the IFAC, which is important with regard to management and control of the IFAC; our ICAI can have similar debate in future. Reconstitution of the Planning and Finance Committee was also discussed in the meeting. At the meeting of the Edinburgh Group, an informal group of IFAC to represent the issues of small and medium practitioners, we took note of the decision of the Planning and Finance Committee to revisit membership dues formula. We also discussed on the preparation of a three-year budget instead of one-year budget.

Joint Programme of ICAEW-ICAI: Our Institute came together with ICAEW with whom we have a qualification recognition arrangement in form of an MoU signed in 2008. In order that more and more of our members could take benefit of the existing arrangement, we along with the ICAEW organised a joint programme in Chennai recently, which aimed at discussing the benefits of the MoU, roadmap to membership and opportunities for further collaboration between the two institutions. More than 100 participants attended the programme.

Meeting with Australia s Minister-Counsellor: I also happened to meet the Australia s Minister-Counsellor Mr. Matt Crooke recently and, during the meeting, we agreed to work towards a joint exercise on the implementation of IFRS, Australia s delegation to India and the Commonwealth Accounting Forum.

Joint Programme with ISAR-UNCTAD in May: I am pleased to announce that we would be holding a joint programme with ISAR-UNCTAD in May 2011 as part of a country-level roundtable to discuss the measurement methodology for capacity in relation to high-quality corporate reporting in India. We would be keen to provide all-possible support for the said-programme in India.

MCA Secretary Addresses ICAI Council

It is our privilege that Ministry of Corporate Affairs Secretary Shri D. K. Mittal recently came to the Institute and addressed its Central Council Meeting. While praising the endeavours and steps that the profession has taken so far, he expressed his appreciations over the positive role of the profession. He hoped that the Institute will continue to contribute in the national growth and economy. During the meeting, I on behalf of the Council requested Shri Mittal that the revised Scheduled VI should be made applicable to all companies whose financial year commences on or after 1st April, 2011, to which he readily agreed. This reflects on not only his grasp over the issue concerning corporates and professionals alike, but also on his decision-making prowess and proactive attitude. He advised us to explore the opportunities available to the Indian CAs in the African countries and also to enter into MoU with accounting bodies in that part of the world. I am sure, Shri Mittal and his Ministry will continue to support the vision and mission of our profession and its cause in future too. During the meeting, the Goverment nominees Shri Anil Agarwal and Shri Siddharth Birla also praised the noteworthy contributions made by the Institute for the Indian economy and for accounting profession in India.

Interactive Meeting Focusing Services of the Institute

All stakeholders of the Institute will be happy to know that, very recently in my interactive meeting with all Secretaries to the Committees and Heads of the Departments of the ICAI, I happened to discuss my Action Plan 2011-2012 and the possible methodologies on how to implement that in the Institute. The thrust of the meeting was also to increase the services offered to our members and students using the ITenabled systems. It was decided to make the CPE programmes more useful, create infrastructure for the Institute s Branches, increase students registration, expedite our disciplinary mechanism further, strengthen examination systems, and to chiefly focus on the implementation of IFRS, DTC and GST. I further suggested them that they should play a proactive and key role in bringing issues before their respective Committees.

The meeting was also addressed by the Chairman of the Singapore Indian Chamber of Commerce and Industry, CA. R. Narayanamohan, who informed the participants about the industry functions and economic environment in Singapore. He also commented on the professional opportunities available in Singapore and the skill-set required to avail the same.

Infrastructural Initiatives

Another Hardayal Library Renovated in Delhi: I am happy to inform that the Institute, as a part of its social responsibility and to provide library facilities to CA students, has undertaken to manage and maintain Hardayal Library at six locations in Delhi/New Delhi in collaboration with the Municipal Corporation of Delhi. The first library was inaugurated at the Chandni Chowk. Now, the second library has also been inaugurated by Hon ble Mayor of Delhi, Shri Prithvi Raj Sawhney, in the presence of Shri O. P. Kohli, former Member of Parliament (Rajya Sabha), Dr. Harsh Vardhan, former Minister of Health & Education, Government of Delhi, Shri Devender Kumar, Municipal Councillor, and Shri Yashpal Arya, Secretary, Hardayal Municipal Library. From ICAI, I had the privilege to witness this inauguration along with my Central Council colleague CA. Vinod Jain and the NIRC Chairman CA. Rajesh Sharma among others. The facilities made available at the library include an air-conditioned hall with wellequipped library and spacious reading area.

Bhoomi Poojan at Amritsar Branch: It is a matter of satisfaction that bhoomi poojan of the land purchased by the Amritsar Branch was recently performed, which I along with the ICAI Vice President CA. Jaydeep N. Shah and my Central Council colleagues CA. Pankaj Tyagee, CA. Charanjot Singh Nanda and CA. Naveen N. D. Gupta attended. Shri Navjot Singh Sidhu, the Lok Sabha member from Amritsar, was the chief guest.

Purchase of Land for Ernakulam Branch: I along with the ICAI Vice President CA. Jaydeep N. Shah visited the Ernakulam Branch of SIRC with regard to the execution of the agreement for the purchase of land for the Branch. We also addressed the members at the Branch and attended the Seminar on Direct Tax Code organised by the Branch.

Initiatives for Members

It has been my prime agenda to empower our members and strengthen their bonds with corporate sector. Learning opportunities will have to be increased and consolidated. In context of challenging economic scenario ahead, it becomes all the more necessary that our members play a proactive role in various capacities including advisors, consultants, auditors, etc., and help their organisations in attaining growth. I strongly feel that our members must have strong bonds with trade and industry associations.

Special Examinations for Members of Foreign Accounting Bodies: Towards our professional recognition internationally, we had entered into MRAs/ MoUs with ICAEW, ICA Australia, CPA Australia, CPA Ireland and CICA in the past. With all necessary policies ready under the MRAs/MoUs, we are, therefore, ready to carry out registration and conduct special examinations with effect from July 2011 for the members of the above-said five accounting bodies who want to become members of the ICAI. Study materials have already been released in this regard. Details regarding the examinations are printed elsewhere in the Journal.

ICAI-ARF as Research Centre: Accounting Research Foundation (ARF), established by the ICAI in 1999 as a core research body with facilities to undertake research in the area of accounting, auditing, capital markets, fiscal policies, monetary policies, etc., is ready to enroll research scholars to conduct research in the above-said fields related to accounting. We are also amidst the process of entering into agreements with top universities to facilitate and award research scholars PhD degree for their research under the ARF.

Workshop on Indirect Tax Proposals: I am happy to acknowledge that we recently organised a workshop on Indirect Proposals of the Union Budget 2011-2012 at our head office, which was addressed by the CBEC Chairman Shri S. Dutt Majumder. Among others, Shri Y.G. Parande, Member, Shri V. K. Garg, Joint Secretary (TRU), and Shri Roopam Kapoor, Officer on Special Duty participated from the CBEC. Participants interacted with the members and experts from the field of indirect taxes. My Central Council colleague CA. Bhavna Doshi gave a presentation on core issues arising out of Union Budget 2011-2012.

Certificate Courses: With a goal to facilitate our members with contemporary, advanced and professional knowledge, we started many certificate courses for post-qualification skill development of our members. I wish to inform you that new batches of Certificate Course on International Taxation, Enterprise Risk Management and Arbitration are scheduled to commence in various cities across the country very soon. The details about the same are published elsewhere in the Journal. I urge all the members to take benefit of all the Certificate Courses and all other courses conducted by the Institute. I am also pleased to inform that new Certificate Courses on Indirect Taxes and Concurrent Audit were approved and would be launched very soon.

New Edition of Guidance Note on Audit of Banks: To help our members in carrying out quality bank audits, we have recently released the 2011 edition of the Guidance Note on Audit of Banks to give effect to the important regulatory changes brought out by the RBI since 2009 on critical aspects of banking operations, generally, and the financial statements of banks, in particular. Change in auditing standards has also been incorporated in the Guidance.

Initiatives for Students

Changed Eligibility Criteria for CA Course: It is a matter of delight to inform that the Ministry of Corporate Affairs has conveyed its approval to the Resolution passed by our Council under Regulation 205 to mitigate the difficulties faced by those students who have completed diploma or vocational courses and are pursuing graduation course. Now, students who have not passed 12th but have completed two years of higher education shall be able to pursue the CA Course. I would like to place on record my appreciations to Dr. T. V. Somanathan, Joint Secretary, Ministry of Corporate Affairs, for expediting the approval in the minimum-possible time. I am sure Dr. Somanathan will continue to support our endeavours towards taking the profession to greater heights.

Campus Placement Programme for Newly-Qualified CAs: Under campus placement organised in 2011- 2012, so far 5,375 candidates have participated across the country. Orientation Programmes were organised at 17 centres across India. Prominent organisations including public limited companies, public sector undertakings, banks, etc., participated seeking more than 500 candidates and selected the candidates offering lucrative compensations. Job offers were made to 535 candidates at the placement programmes held in the first phase of campus interviews at smaller centres, and the highest salary offered was Rs. 9.05 lakh per annum by the ICICI Bank. In its second phase, similar programmes were organised at six bigger centres, i.e. Bangalore, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi. 143 recruiting entities participated and job offers were made to 926 candidates. Highest salary under international posting was made by Olam International, i.e. US $ 120,000 to US $ 150,000 per annum and, under domestic posting, it was offered by ITC (Metro), i.e. Rs. 13.92 lakh per annum.

Towards MoU with University of Madras: To provide our students and members with a great learning opportunity, I along with the ICAI Vice-President CA. Jaydeep N. Shah met the University of Madras Vice- Chancellor Col. (Dr.) G. Thiruvasagam recently. We discussed about entering into an MoU to provide opportunity to our members and students to pursue courses like PhD and Masters and Bachelors in Commerce and Management to be awarded by University of Madras.

Online Examination Portal: Online examination portal has emerged as one of our important success stories with as many as 1,01,546 out of a total of about 2,50,000 students opting for online exam forms for May 2011 and with 66,764 out of about 78,000 students appearing at the final exams.

I would like to unconditionally express my sincere concerns over humanity coming under crisis in Japan due to tsunami devastations and nuclear mishaps. Some of us appear to be worried that this might lead to an economic crisis but what this present crisis in Japan may lead to in future must be a matter of secondary concern for all of us. Let us first concentrate our efforts on what we can do to reach and help out the people of Japan at present. Let us sincerely hope that the crippled reactor complex in Fukushima would not aggravate further. Later, we should also contemplate over the way we are approaching development. Violence of development using unjust and unethical methods can be fatal, let us understand. Our desire for such an unjust and unethical development will bring in more of such crises to us. We need to be more responsible in defining our vision. Saint-poet Thiruvalluvar, in his Thirukkural (Sacred Couplets), offers his wisdom on the sanctity of means of achieving growth: The wealth acquired with knowledge of the proper means and without foul practices will yield virtue and happiness. And further on justification of resources, he offers: (we) should rather avoid than seek the accumulation of wealth which does not flow in with mercy and love. We can not turn away from our social responsibility. Amount of credit from socialisation on the profit & loss account of our life is too astronomical to be paid back and to turn away. We have to give back. We should do this at least to justify our existence.

Let us as representatives of accountancy profession demonstrate our responsible conduct to the world and our conviction to stick to ethics and integrity. Let us be more responsible in everything we do. Our members must be busy in scheduling and planning their audit work starting from 1st April, which marks the beginning of the audit season. It is business time, folks! Audit season has started and it s time when assessees will rush to their auditors to get their audit done in time and their auditors would work hard and responsibly to meet the deadlines of their clients while rearing to avert any unreasonable delay from their side. It is clearly a challenge all the more for auditors, especially when international crises and upheavals result in instability of financial markets across the world. I am sure our members (auditors) will continue to act responsibly and follow the tradition of integrity and the code of ethics while helping their clients with clarity in disclosures and reporting. Amen!