My dear professional colleagues,
ICAI celebrates 73rd Foundation Day on July 1 every year which is widely celebrated as Chartered Accountants Day (CA Day). A very hearty congratulation to all colleagues!
At the Institute of Chartered Accountants of India, we take immense pride and honour on the successful completion of 72 years of its judicious and efficacious operations – made possible by the cooperation and hard work displayed by our Past Presidents, ICAI Council, office bearers from Regional Councils, Branches, Overseas Chapters and Representative Offices, the employees, fellow CA members and all our aspiring students over the years. We are also thankful to the Government and other stakeholders for their continuous support to the activities of ICAI. We have indeed come a long way from where we started; hence, I would like to thank all our stakeholders who have tremendously contributed to the deepening of ICAI’s roots, strengthening its foundation and elaborating its reach. The milestones crossed, laurels earned and achievements realised – discussed periodically in our journal issues- are a collaborative effort of each one of you.
This CA Day brings with it an opportunity to not just reminisce the success attained in the past, but also consider and plan better for the future, so that the accounting profession can continue facilitating the growth of the industry and the economy. Contemporary era of fast technology, automation and robotics has revolutionised business administration and accounting processes. Inclusion of new technologies in all future planning and conception of more efficient auditing processes is imperative for staying in sync with the dynamic environment and retaining ICAI’s competitive edge.
Apart from technology, there are many other developments taking place in the profession; one being placing concern for people and planet over profits. There is an urgent need to recognise the role that green accounting can play in redefining businesses’ contribution to sustainable development and rebuilding ecological balance. Mahatma Gandhi said – “What we are doing to the forests of the world is but a mirror reflection of what we are doing to ourselves and to one another.” The Institute of Chartered Accountants of India believes that accountancy profession can play a monumental role in coordinating the actions of the industry with the seventeen goals adopted by United Nations in its 2030 Agenda for Sustainable Development. These SDGs hold the promise of not just a cleaner and greener future, but also greater equitable development. Green accounting, by permitting more accurate estimation of expenditure borne on protection of environment as well as costs necessary to compensate for the negative impacts of economic growth, successfully links physical resource accounts with financial statements and ensures a more expedited fulfilment of the SDGs.
Meeting by the Ministry of Finance on New Income Tax e-filing Portal
The Ministry of Finance, Government of India organised a meeting on 22nd June to review the glitches and issues related to the new Income Tax e-filing portal which has been facing issues ever since its launch on 7th June, 2021. The meeting was chaired by Smt. Nirmala Sitharaman, Hon’ble Minister of Finance & Corporate Affairs and graced by Shri Anurag Singh Thakur, Hon’ble Minister of State for Finance & Corporate Affairs. Also, present were Shri Tarun Bajaj, Revenue Secretary, Shri Jagannath Mohapatra, CBDT Chairman and top Finance Ministry officials. Earlier, the Ministry of Finance had asked ICAI to constitute a task force of seven representatives to look into the technical glitches / issues being faced on the new Income Tax portal. Accordingly, taking cognizance of the matter, a team of 7 members was constituted to analyse the issues being faced. Considering the sensitivity ICAI made full efforts to identify the challenges and submissions were made on different issues being faced by professionals and assesses. The officials from CBDT and Infosys were very receptive about the issues being conveyed. They assured that the issues will be taken care of and shall be resolved at the earliest. We believe this consultative process will be completed in a phased manner and problems will be resolved on daily basis. Members may note that for tax audit report the utility is expected in the 1st week of July, 2021.
ICAI takes pride in its service to the nation, as during the meeting, we have been asked to provide continuous support and inputs to CBDT and Infosys, in resolving the issues that are being identified. The Income Tax Department said that the new portal is aimed at making compliance more taxpayer-friendly, however, the technical glitches shall be addressed fast, for convenience of all.
Financial and Tax Literacy Drive – VITIYA GYAN
The ICAI has been taking numerous initiatives to update the knowledge of the members of the Institute in the areas of professional relevance. This time, however, the Institute is launching a Financial and Tax Literacy Drive – Vitiya Gyan – ICAI Ka Abhiyaan, to educate people on basics of tax laws, accounting and various aspects of the financial system in India and the ways to manage personal finances, financial well-being and tax compliances with the goal of increasing compliance and reducing the knowledge gap in the society. Highlight of the drive is that education will be imparted in different vernacular languages using the lucid language, innovative learning with experiential activities, financial calculators and multilingual site for citizens of our country and it shall go a long way towards educating people of all strata of society.
I urge members and students to come forward and join this drive as volunteers for making it a national drive www.vitiyagyan.icai.org.
Excellence in Sustainability Reporting Awards
In the evolving world, it is essential for the business to imbibe actions favouring sustainability. Sustainability is focused on meeting our present needs without compromising the ability of future generations to meet their needs. For business, the concept of sustainability is built on three pillars: environmental, social and governance. ICAI has a strong tradition of service to the public interest and to the Indian economy and is sensitive to emerging needs of ecology. ICAI through Sustainability Reporting Standards Board has a mission to formulate comprehensive, globally comparable, and understandable standards for measuring and disclosing non-financial information about an entity’s progress towards United Nations Sustainable Development Goals 2030. In its endeavour to benchmark global best practices in Sustainability Reporting, this year ICAI has instigated Sustainability Reporting Awards. The objectives of this initiative are to recognise, reward and encourage excellence of businesses in integrated reporting and to recognize initiatives of businesses with their transformative contribution.
RBI’s New Norms – A Right Step to Enhance Independence and Audit Quality
The new norms issued by the RBI for Appointment of Statutory Central Auditors (SCAs) and Statutory Auditors (SAs) of Commercial Banks, Urban Co-operative Banks (UCBs) and Non-banking Financial Companies (NBFCs) including Housing Finance Companies (HFCs) is a welcome step as they are expected to enhance audit quality, auditor independence and strengthen corporate governance. The norms are aimed to harmonize various entities in the financial sector with respect to the appointment of auditors bringing transparency in the selection and will result in enhanced audit quality. This is more so considering the increased public interest in these entities with their size and spread throughout the nation.
ICAI has always stood for Joint Audit as the concept for improving audit quality and reliability apart from having fresh perspective from new firms. Further, the joint audit will ensure due continuity in the audit process during rotation. At the same time rotation of audit firms after three years is already prevalent in Public Sector Banks and it was introduced in large companies on completion of five-year cycle by The Companies Act, 2013 which proved to be effective. Similar rotation of audit firms in other large intermediaries of banking and financial sector, will surely result in improved audit quality apart from having fresh perspective. Now Joint audits are mandatory for RBI-regulated entities with assets size of over 15,000 crore. Small and medium practicing CA firms will now have more scope of getting these bank and NBFC audits assignments. Further, new rule that caps the number of audits, mandates for an audit firm, irrespective of the asset size – as clarified by the RBI through its recent Frequently Asked Questions (FAQs) for April 27 circular will also benefit these local SMPs.
The proposed restrictions on audit/non-audit services for related entities are largely aligned with the Code of Ethics of the Institute and the principles in the Companies Act, 2013 in this regard.
Enhancing Audit Quality
In continuation of my previous communication, I wish to inform that the Audit Quality Maturity Model – Version 1.0 (AQMM v1.0) has been finalised. This Model includes the following dimensions of audit maturity organised into three sections:
a) Practice management – operation,
b) Human resource management, and
c) Practice management-strategic/functional.
The AQMM v1.0 is a cross-functional evaluation model for practicing firms covering engagement teams, firm leadership, IT helpdesks, human resources team, administration department, legal cell and the management information systems desk of the firm. The AQMM v1.0 has been developed after deep international research on systems to enhance audit quality and widespread outreach activities to have inputs from stakeholders have been conducted across India. I am hopeful that this capacity building measure of ICAI will significantly empower the firms to be able to improve their audit quality. The Audit Quality Indicators should raise more questions, bring about competition between audit firms and create market demand for audit quality. The AQMM v1.0 is recommendatory initially and later on ICAI will review the date from which it would become mandatory. ICAI would be releasing AQMM v1.0 on July 1, coinciding with CA Foundation Day as a right step to enhance audit quality.
Amendment in Rule 38A of the Companies (Incorporation) Rules, 2014
The Ministry of Corporate Affairs, as part of its ease of doing business initiatives has amended the Rule 38A of the Companies (Incorporation) Rules, 2014 relating to Application for registration of GSTIN, ESIC registration, EPFO registration, profession tax registration and opening of bank account vide its notification dated June 07, 2021. The Ministry of Corporate Affairs has introduced the facility to take shops and establishment registration at the time of incorporation itself through filing of e-form AGILE-PRO-S (formerly known as AGILE-PRO).
Swami Vivekananda had once correctly remarked, “Arise, awake, and stop not till the goal is reached.” It is this determination, perseverance and never-say-die attitude that has allowed the Institute to reach the heights it has attained today. The Institute of Chartered Accountants of India has always propagated the idea that if one falls behind, one must run faster but never surrender or stop. After all, great things take time to manifest. Setting goals and consistently working towards them helps charter one’s course in the right direction and inch closer to success. Through ICAI’s 72 years of splendid performance, it has learnt the importance of making the most of every opportunity and rising to all odds. I urge all to never forget that the sweet taste of victory will always heal the wounds of the battle; as long as one continues to tirelessly pursue excellence. Follow your passion, work with dedication with the virtues of independence, integrity and excellence.
Stay safe, stay healthy. Best wishes.
– CA. Nihar N. Jambusaria
New Delhi, 25th June, 2021