Wednesday, May 9, 2012

ICAI (EIRC) Communique


A Press Meet has been organized by Eastern India Regional Council of ICAI on Wednesday, 9th May 2012 at Hotel Hindustan International, Kolkata.

CA.Jaydeep N. Shah, President, ICAI and CA.Subodh Kumar Agrawal, Vice-President, ICAI, CA. Prasun Kr. Bhattacharyya, Chairman, Eastern India Regional Council along with other Regional Council Members and Central Council Members from Eastern Region were present for the media interaction.

An update on the recent initiatives taken by the Institute for members, students and in various other areas are mentioned below:

1)The Working Group set up by RBI had made recommendations and it was proposed to carry out changes in allotment of bank branch audits of the public sector banks by raising the minimum threshold (advances) limit of branches which will not be subject to audit by statutory auditors. It was mainly proposed that all branches having outstanding advances of Rs20 crore and above as on March 31, 2012, need to be audited for the year 2011-12. And of the remaining(branches having outstanding less than Rs20 crore),one fifth branches were proposed to be selected at random in such a way that all the remaining branches are audited at least once in five years. The proposals were based on the perception that there was no need of extensive branch audit in view of implementation of CBS in all public sector banks.

As a result of several representations made to the concerned authorities and sustained follow up, finally the merit in ICAI stand and viewpoint was considered on the move to reduce extensive audits of branches of Public Sector Bank. The Ministry of Finance has recently decided that all branches having outstanding advances of Rs 6 crore and above as on March 31, 2012, need to be audited for the year 2011-12. And of the remaining (branches having outstanding less than Rs 6 crore), one-third branches are to be selected at random in such a way that all the remaining branches are audited at least once in three years. This is a farsighted decision taken by the government which will ultimately strengthen the cause of corporate governance and public interest in the banking industry.

The earlier move was not in the long-term interest of the banks and the nation. In case, the said proposal would have been approved, the public sector banks would have got exposed to a higher risk by not covering majority number of branches and advances, thereby leaving scope for undetected material misstatements, including frauds, whereas the saving in cost would have been negligible in the hands of the banks. Further, ICAI as a regulator of the auditing profession, firmly believes that such proposal if implemented would have undermined the fair reporting on the state of affairs in public sector banks.

2) ICAI had approached the capital market regulator SEBI and proposed that ICAI can act as an extended arm of the SEBI in monitoring the Market Intermediaries like Brokers, Merchant bankers, depositories, clearing corporations, Mutual Funds, etc. It was also suggested that there should be separate reporting requirement under Companies Auditor Report Order (CARO) for the Listed and Unlisted companies due to public interest involved in the listed companies. ICAI also offered help and involvement in the forensic cell of SEBI to establish and verify disclosures made by companies in their IPO offer documents and also to take up cases related to accounts related financial malfeasance.

3) ICAI, with a view to converge with IFRSs, had formulated the Indian Accounting Standards (Ind ASs), which were approved by the NACAS and, thereafter, by the Ministry of Corporate Affairs(MCA). These Ind ASs have been placed on the website of the MCA. However, the date on which these Standards will come into force is yet to be notified by the Ministry. With a view to continue to remain at par with the IFRSs that are being revised and new IFRSs being issued by the International Accounting Standards Board (IASB), the Institute has initiated the process of revising the existing Ind ASs and issuing new Ind ASs in convergence with the new/revised IFRSs. ICAI will also be revising/issuing new Ind ASs which will be issued by the IASB so that whenever the Government decides to converge with IFRS, the Ind ASs corresponding to the IFRS effective on that date are available.

IASB has undertaken project of revising its Standard on leases. The aim of the project is to develop a new single approach to lease accounting that would ensure that all assets and liabilities arising under lease contracts are recognised in the statement of financial position (balance sheet) of the lessee. The IASB had issued an Exposure Draft of the proposed IFRS in 2010.The ICAI is organising an outreach meeting with IASB to provide inputs from India on the proposed IFRS on Leases on May 09, 2012 at Mumbai. The meeting will be attended by various industry representatives, professionals, other stakeholders and experts on the subject.

Initiatives towards Nation building:

Indira Gandhi Open University (IGNOU)

Netaji Subhash Open University (NSOU)

Bharathiar University (BU)

University of Madras (UNOM)

The biggest issue before the institute is ‘globalisation of Indian accountants’. India is growing at a rapid pace. A lot of FDI is coming into the country, Indian companies are setting up offices abroad, acquiring firms overseas and merging in order to grow bigger and go global. As a part of International initiatives, ICAI would like to have strategic collaborations with more international accounting bodies so that it can provide a global outlook to CA members.ICAI is a founder member of various International professional bodies and is playing a prominent role through its nominees who have worked and are working on the Governing Council as well as various Committees of those bodies.

MoUs/MRAs with various Accounting Bodies: The Institute has signed MoUs/MRAs with various Accounting Bodies namely:

The Institute of Chartered Accountants in England & Wales

The Institute of Chartered Accountants of Australia

CPA Australia

CPA Ireland

Canadian Institute of Chartered Accountants

Association of International Accountants (AIA), UK

This step entails coming together of the two Accounting bodies working in tandem with each other to provide synergy. These agreements facilitate mobility of members across the borders and further strengthen the ties between India and its counterpart in other country. The Institute is also working on a similar agreement with the New Zealand Institute of Chartered Accountants.

Benefits to Overseas citizens of India: A group had been constituted by the Institute 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 licensing of Overseas Citizens of India and to work out the modalities therein. The Group has completed its task and a report including Qualification Bridging Mechanism for Licensing Overseas Citizenships of India registered under Section 7B(1) Citizenship Act, 1955 has been placed before the Council for its consideration and approval. The proposed scheme ,if approved ,will give an opportunity for Overseas Citizen of India (OCIs) Chartered accountant professionals to practice the accountancy profession in India subject to the conditions as laid down in the said scheme of bridging qualification mechanism.

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