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President's Message - July 2015 - (01-07-2015)
Dear Friends,

I extend my heartfelt warm regards and wishes to all of you on the eve of Chartered Accountants’ Day, which we celebrate every year on 1st July. However, we shall celebrate this Day to celebrate the fearlessness, integrity and ever-vigilant consciousness that are the integral aspects of Indian chartered accountants’ character. It was on 1st July 1949 that The Institute of Chartered Accountants of India got established with 15 selected and 5 Government-nominated members in its Council, and the noble accountancy profession was constitutionally recognised, more than six months before our Country got its Constitution.

This day also calls for celebrations of the spirit in our forefathers who had fought with a conviction for the dignity of accountancy profession. Let us start our celebrations by giving our sincere respect, credit and recognition to them. Let us remember those who were responsible for the birth and development of chartered accountants’ profession in India. It is because of them what we are, where we are and how we are.

President, ICAI

The Indian Accountancy Board set up in 1932 to regulate the accountancy profession and constituted after the Indian Companies’ (Amendment) Act, 1930 came into force, had 16 members selected from all provinces-namely, Bombay, Bengal, Madras, United Province, Punjab, Central Province and Burma. Few among us would be aware that it was the Board’s Expert Committee appointed in 1948, which had examined the tentative scheme of an autonomous body for accountancy education under the chairmanship of Shri C. C. Desai, who was then Secretary to the Ministry of Commerce, Govt. of India. The Committee had the privilege of drafting the Chartered Accountants Bill. Then it was this Committee that had decided to call the special Act as Chartered Accountants Act. Let me inform all of you-three of our past-Presidents, CA. G. P. Kapadia, CA. S. B. L. Vaish and CA. N. R. Mody, were part of that Committee. CA. M. S. Krishnaswami and CA. S. N. Banerjea, also part of that Committee, became the members of first Council of our Institute. Expert Committee’s Chairman Shri C. C. Desai also came on to our first Council, as Government-nominated member.

It was again the Expert Committee that had officially brought about the much-desired parity among various practitioners of accountancy; it said that accountants in India would be called Chartered Accountants and no other designation would be used in India.

Let us accept that there is always a multitude of planning, decisions and efforts behind a landmark accomplishment. Therefore we are required to recognise each of them and celebrate each and every effort that was made towards the birth and development of our profession. On this CA Day, we can afford to stop for a while and remember our ancestors and seniors and their contribution. Let us pay our sincere regards to them.

Let me now address some of the most important developments that have taken place in the Institute relating to accountancy profession over the past one month:

ICAI Prepares for its Mega International Conference

As you know, the mega International Conference of ICAI has been decided to be held in the historic city of Indore at its Brilliant Convention Centre on 7th-9th August 2015, on the theme of Accountancy Profession: Spearheading Excellence. In the Conference, accounting leaders across the globe will share their wisdom and enlighten the participants. I would request the members to take active part in this academic event, which additionally offers 14 hours of CPE credit to them. Moreover, you will get to know the city of Indore which is the commercial capital of the State of Madhya Pradesh.

ICAI at Meetings of International Accounting Regulators

Meetings of international accounting forums help us keep abreast of the latest developments on globallytested best professional practices. Participating in such meetings like the following helps us in getting a better understanding of various accounting organisations’ views on local challenges.

IFAC Board Meeting: I along with the ICAI’s nominee on IFAC Board CA. K Raghu had the privilege to attend the recently-concluded meeting of the Board of International Federation of Accountants, which primarily focused on its engagement with Independent Standards Setting Boards on Audit & Assurance, Education and Ethics to clarify and reinforce the independence of these Boards. These Boards inter alia presented priority areas for the Work-Plan 2015-16. IFAC's continual drive for risk identification, assessment, mitigation and risk management for keeping a tab on global risk and control environmental issues confronting accounting profession for restoring its credibility were also discussed.

CAPA Meetings: I along with the ICAI Vice-President CA. M. Devaraja Reddy also attended the meetings of Confederation of Asian and Pacific Accountants (CAPA), which included meetings of CAPA’s Public Sector FM Committee, CAPA Board, among others. We also interacted with the representatives of Accounting Standards Board of Japan, The Japanese Institute of Certified Public Accountants and XBRL Inc., to discuss the possibilities of collaboration on mutual professional interests.

Constitution of Companies Law Committee

Ministry of Corporate Affairs has recently constituted a Companies Law Committee to make recommendations to the Government on issues arising from the implementation of the Companies Act, 2013 and to examine the recommendations received from the Bankruptcy Law Reforms Committee, the High Level Committee on CSR, the Law Commission and other agencies, while recommending the suggestions.

I am happy that as ICAI President I have been nominated as a member on this Committee, which reflects the Ministry’s faith in our profession. The Committee has already met recently for the first time. To have wider opinion, I would request you to share your views and suggestions with us on the Companies Act, 2013.

Relaxation in Number of Audits

You would be glad to know that the long-awaited notification to exempt private companies under Section 462 of the Companies Act, 2013 has been recently issued by the Ministry of Corporate Affairs. The ICAI has highlighted a need for a clarification in this regard on various occasions, although there was no apparent need to put a cap on the number of audits of small and medium companies.

ICAI for Accounting Reforms in Indian Railways

On our Government’s encouragement and its own initiatives of moving beyond its traditional contributions to economy, the ICAI has been extending its technical and infrastructural support towards the accounting reforms of various Government offices, i.e. moving from cash to accrual system of accounting, after assessing the tremendous positive impact on national financial reporting. Let me inform you that the ICAI had taken up the agenda of accounting reforms in the Indian Railways in the beginning of this year. It had undertaken a Pilot Project at its Ajmer Division and Workshop, helping them in migration from cash to accrual system of accounting, which is underway.

I am happy to inform that Indian Railways has sought further support in carrying out a comprehensive review of its costing system. Already we have submitted a detailed proposal in that regard. Discussions with the Indian Railways are at an advanced stage with respect to a pilot project on the implementation of accrual system of accounting addressing the costing aspects at its production unit. We are proud to serve as per our commitment and extend all possible support to the Indian Railways in its ongoing and all future initiatives of accounting reforms.

ICAI’s Advisory on Caution against Fake Websites and Bachelor & Masters Programmes in Chartered Accountancy

The Institute has issued an advisory with regard to the existence of a fake website, www.icaindia.net.in, which is deceptively similar to the ICAI’s official website, i.e. www.icai.org. I would request all of you to know that the information hosted on that website is without the knowledge and authority of ICAI and that of our stakeholders. In another instance, a university at Churu (Rajasthan), OPJS University, has announced to conduct Bachelor and Masters programmes in Chartered Accountancy, which is in contravention of the CA Act. ICAI has already initiated appropriate legal action against these cases. I would request all members and students to be aware of such fake websites and promises made by institutions in future, since this may go against their professional interests.

Extending Relief to ICAN towards Earthquake Tragedy

As you know, recently a devastating earthquake had rocked Nepal leaving more than 8,000 persons dead and several other thousands homeless besides destroying the property of lakhs of people of Nepal. It is our responsibility to come forward and help them in this hour of crisis. If you recall, we had helped Nepal in forming their Institute of Chartered Accountants of Nepal (ICAN). We must not forget that many chartered accountants settled in Nepal are our members and 4,000-plus students in Nepal are pursuing our CA course. Against our appeal to our members and students to extend help to their beleaguered brothers and sisters from Nepal, we have so far collected an amount of about 12 lakh. We have opened a bank account exclusively for the purpose of depositing such donations, so that the same can be effectively transferred to the ICAN.

High-Level Committee on Tax Laws

Recently, the ICAI had been invited for a meeting with the High-Level Committee on Tax Laws formed by the Department of Revenue, Ministry of Finance, wherein the issues relating to MAT on FIIs and also required changes in MAT provisions by virtue of applicability of Ind AS (Indian Accounting Standards) were discussed at length. The Committee has agreed for a series of meetings to discuss the same in minute details, and requested us to flag other important issues in direct, indirect or international tax laws which require immediate action by the Government.

Additionally, suggestions of the ICAI were sought by the Government on the draft ALP rules and accordingly submissions were made.

ICAI Launches a New Certificate Course

As you know, the ICAI had recently launched a new Certificate Course on Wealth Management and Financial Planning in order to address the knowledge management of CA professionals. This Course aims to develop their skills on productive management of wealth and technical know-how for devising effective investment strategy and help them in better understanding of the principles involving the said management and strategy. I am happy to inform that the first batch of this course has already been concluded successfully in Mumbai with high accolades.

Cover of June 2015 Issue of Journal

I wish to clarify before all our stakeholders that the cover page of the June 2015 issue of the journal was all about an artist’s depiction of the ICAI’s global role in inclusive growth of the profession as stated in the caption of cover page. The global political map including India’s, therefore, was only an artistic representation and in no manner that depicted the exact political boundaries. Perceived deviation from the exact political map was purely incidental. Still since I have gathered that this artistic depiction has hurt some of our readers’ sentiments, I on behalf of the Institute sincerely regret this act. Let me assure you that the Editorial Board of the Institute has already taken the desired corrective and preventive measures in this regard.

ICAI Committed to GST Implementation

I am happy to acknowledge that we are now closer to the biggest-ever tax reforms since independence, as the Lok Sabha has approved the Constitution (122nd Amendment) Bill relating to Goods and Service Tax (GST), which aims to replace a patchwork of levies by the Central and State Governments with a single nationwide tax on goods and services while integrating the state economies. Arguably, the GST will increase the GDP of the country broadening the tax base, reducing litigation and streamlining the existing tax structure. It is estimated that India may gain $15 billion a year with the implementation of GST. The single and unified Indian market resulting from GST will make our economy stronger by boosting tax collections and employment.

Recently, we organised a successful two-day National Conference on GST & Indirect Taxes in New Delhi, which was inaugurated by the Chairman of Empowered Committee of State Finance Ministers on GST, Shri K. M. Mani. During the conference attended by 350-plus participants, Shri Mani launched the GST wheel, an innovative initiative of ICAI, a compilation of various professional opportunities that the phase of GST will bring in for our members. He lauded our endeavours (e.g. programmes, publications, webcasts, etc.) in this regard. He said that the ICAI has established itself as a premier accounting body while maintaining high accounting, auditing and ethical standards. Let us gear up and prepare strong grounds for the upcoming new tax landscape of our nation.

Convocations Held in Chennai, Pune and Jaipur

It is said that with a right mix of education and our determination, we can change our present and set right our future. Our education and profession has the power to inspire its students and members to become the people of ethics and integrity, which today is an urgent requirement. To celebrate the happiness of our newlyqualified members and present the Certificates, we hold convocations. Incidentally, this also serves the purpose of developing their bonding with the existing professional fraternity. Convocations 2015-16 have been recently conducted in Chennai, Pune and Jaipur in this month. I am really happy that we are witnessing an enthusiastic participation of new members. I congratulate all the successful candidates and sincerely wish them a fulfilling professional life ahead.

Let’s Prepare for Tax Audit as a National Duty

The tax audit season has begun which gives us enough opportunity to test and make the best use of our expertise to the core. "Taxes are what we pay for civilised society" and these are “fuel which move the wheels of growth and progress,” rightly go the sayings. In this backdrop, the Chartered Accountants have been mandatorily entrusted with a very important responsibility to keep the wheel of growth running by ensuring compliance of provisions of Income-tax Act and Rules thereof of certain class of assessees by way of Tax Audit. As such, it becomes an important national and social duty of CAs in India, which has to be performed in the actual spirit of the legislative intent behind introduction of tax audit to the expectation of both the clients and the Government. To perform this onerous task efficiently and effectively, let us go by the ICAI Guidance Note on Tax Audit under Section 44AB of Income-tax Act, 1961. I wish you all the success in most effective completion of Tax Audits.

ICAI initiative under Swachh Vidyalaya Abhiyaan

As you know, the Government of India has launched Swachh Vidyalaya Abhiyaan with an aim to provide separate toilets for boys and girls in all government schools throughout the country. Central public-sector undertakings governed by the Ministries of Power, Coal and New and Renewable Energy has undertaken the job of constructing new toilets as well as repairing the existing dysfunctional ones using their CSR funds. Union Minister of Power, Coal and New and Renewable Energy Shri Piyush Goyal had desired that the physical outcome of such activities be suitably verified and the services of the Chartered Accountants be availed for this purpose on a pro bono basis. With an identity of a partner in nation building, we had published an announcement in this regard asking our members to confirm their interest in supporting the aforesaid initiative of our Government. More than 600 members have expressed their interest confirming the profession’s commitment to the nation.

These were some of the highlights from the recent developments in the accountancy profession which I wanted to share with all of you.

At this stage, when we are completing 66 years of our glorious existence, I would like to admit before all of you that we have really come a very long way since 1949. I feel proud of the way we have grown and got acceptance and recognition globally. We are not just the second largest accounting body of the world, but also among the global institutions that offer the most relevant and comprehensive accountancy education to its followers and practitioners. The number of Branches and overseas Chapters is rising. Our international associations are expanding. Let me salute each and every stakeholder of the profession who has responsibly contributed for this success.

While I feel contented while looking at the state where Indian accountancy today is, I would never ever like to let this contentment come in the way of our ongoing endeavours. Accountancy profession in India will continue to take initiatives and measures in order to contribute and regulate the robust Indian economy.

Personally, a successful journey always comprises countless smaller steps which may consist of successes and failures. Failures make us wiser in our journey while strengthening the relevance of success. When we respect our failures by learning from them, we become stronger. According to Elbert Hubbard, there is no failure except in no longer trying. I always believe in moving on whether it is success or failure. Therefore, it is not just about what happens with us but, in fact, what we do when that happens with us. Ultimately, we will have to create a space for ourselves beyond our defeats and wins.

Let us begin our day with a conviction to add, create, and move ahead.

Best wishes

CA. Manoj Fadnis
President, ICAI

New Delhi, June 22, 2015
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