Share this page:

Diamond Jubilee Inaugural Function
Speech by
Shri P. Chidambaram, Union Finance Minister
1st July 2008


 am very happy to join you in the Diamond Jubilee Celebrations of the Institute of Chartered Accountants of India. I extend my best wishes on this occasion to the Institute, its Members and students.

The ICAI is a statutory body responsible for regulation and development of profession of Chartered Accountancy. In this process, the Institute not only produces world class Chartered Accountants but also sets the benchmark for high quality of financial reporting for commercial entities. The Institute has also played a significant role in providing policy inputs to the Government in the areas of fiscal reforms, financial sector reforms and public finance. I thank you for the cooperation and support that you have extended to Government, especially during my current tenure as Finance Minister, and I look forward to your continued support and advice.
Diamond Jubilee is a solemn, yet proud, occasion. While the profession at large celebrates its glorious existence over the last 60 years, it is an opportune time to reflect on the past and also plan for the future. I learn that the Institute is organizing a conference tomorrow on the theme of “Chartered Accountancy Profession in Retrospect and Prospect”. I would urge you to explore the role of the profession in national economic development, particularly on how the accounting profession can support the Central Government in ensuring that outlays are translated into outcomes and the benefits of various programmes actually reach the intended beneficiaries.
The Indian economy has recorded splendid growth in recent years. Simultaneously we have taken measures to reform the tax laws and their administration. This has resulted in substantial increase in resource mobilization from direct as well as indirect taxes. The tax to GDP ratio had increased from 9.2 per cent in 2003-04 to 12.8 per cent in 2007-08 and is projected to rise to 13 per cent in 2008-09 according to the Budget estimates. However, there is scope for better tax compliance and larger tax revenues. I would, therefore welcome suggestions from the Institute for widening the tax base, increasing voluntary compliance, simplification and rationalization of tax laws, and enhancing efficiency of tax administration.
Our endeavour is to provide a tax regime that is moderate, efficient and friendly to the tax payer. As you are aware, we have taken a number of initiatives for streamlining tax administration. The message from our side is simple and clear: those who comply with the tax laws will be treated with courtesy and respect and will be facilitated to pay their taxes; those who evade or violate the tax laws will be tracked down and asked to face the consequences under the law. As chartered accountants, you should convey the same message to your clients and advise them that it is in their interest as well as in the interest of the nation that they comply with tax laws.
Government has already announced its decision to introduce Goods and Services Tax by the year 2010. There is considerable progress in preparing a roadmap for introducing the GST. We will value the suggestions that the Institute is able to provide on the approach to introducing the Goods and Services Tax.
Financial inclusion of those who still do not have access to formal sources of finance is a major challenge before us. Chartered Accountants are spread throughout the length and breadth of the country. They can play a vital role in promoting financial inclusion by creating awareness among the people about financial literacy and encouraging them to join the formal financial system. They can educate the masses about micro finance and other innovative initiatives being taken by the Government, NABARD and other institutions.
High quality financial reporting lends credibility to the financial markets. The institute has done commendable work in prescribing Accounting Standards. Ensuring compliance with the Accounting Standards while preparing the financial statements is the responsibility of the management of the enterprise. It is the duty of the members of the Institute to examine whether the Accounting Standards are complied with in the presentation of financial statements covered by their audit. I urge members of the Institute to be diligent in the exercise of their duty because a true and fair presentation of accounts is the basis of good corporate governance and a sound financial information system.
The International Financial Reporting Standards issued by the International Accounting Standards Board are increasingly being recognised as Global Reporting Standards. More than hundred countries, including the countries of the European Union, Australia and Russia, currently require the use of IFRSs in their countries. Countries such as China, Canada and the United States of America have also taken up convergence projects. I compliment the Institute for the efforts made in benchmarking accounting, auditing and ethical standards in India with the International standards and pursuing the programme for full convergence by the year 2011. I request the Institute to also focus on enhancing the capacity of preparers, users and auditors of the financial statements for ensuring effective compliance with the new requirements.
Emergence of a knowledge economy and developments in information technology have redefined world trade and commerce. The forces of globalization are not only breaking down borders but also opening numerous opportunities for Indian Chartered Accountants. The profession of Chartered Accountancy should develop the ability to cope with the changing economic and business environment. The domestic accounting firms in India should take up effective capacity building measures in order to equip themselves to face competition from international accounting firms. I commend the Institute for its initiative in taking up Continuing Professional Education (CPE) projects.
Indian Chartered Accountants are considered among the best in the world and are in demand. The Institute should promote movement of accountants and accounting services from India to various parts of the world. The non-tariff and other barriers coming in the way of such cross-border movement should be taken up with countries that impose such barriers. In the ultimate analysis, services such as accounting will – and should – become truly global so that excellence is recognized and rewarded anywhere in the world.
Apart from excellence in the profession, adherence to high ethical standards is also an essential condition for growth and development of any profession. I have been told that ethical standards of the chartered accountancy profession are as stringent in India as in any other country. The true test, however, lies in the application and enforcement of these standards. We cannot have rigorous standards and soft enforcement. There should be a speedy, transparent and participatory method of redressing grievances of clients and customers against the members of the profession. In these matters, perception is as important, if not more important, than the reality. You must do everything to retain the faith and confidence of the people in your profession.
I once again compliment the Institute of Chartered Accountants of India and wish you success in your endeavours.
Thank you.

    Quick Links