Institute of Chartered Accountants of India
Encyclopedia
The Institute of Chartered Accountants of India (ICAI) is a national professional accounting body
of India
. It was established on 1 July 1949 as a body corporate under the Chartered Accountants Act, 1949 enacted by the Constituent Assembly of India
(acting as the provisional Parliament of India
) to regulate the profession of Chartered Accountancy in India. ICAI is the second largest professional accounting body in the world in terms of membership second only to American Institute of Certified Public Accountants
. ICAI is the only licensing cum regulating body of the financial audit
and accountancy
profession in India. It recommends the accounting standards to be followed by companies in India to the National Advisory Committee on Accounting Standards
(NACAS) and sets the accounting standards to be followed by other types of organisations. ICAI is solely responsible for setting the auditing and assurance standards to be followed in the audit
of financial statements
in India. It also issues other technical standards like Standards on Internal Audit
(SIA), Corporate Affairs Standards (CAS) etc. to be followed by practising Chartered Accountants. It works closely with the Government of India
, Reserve Bank of India
and the Securities and Exchange Board of India
in formulating and enforcing such standards.
Members of the Institute are known as Chartered Accountants. However the word chartered does not refer to or flow from any Royal Charter
. Chartered Accountants are subject to a published Code of Ethics and professional standards, violation of which is subject to disciplinary action. Only a member of ICAI can be appointed as auditor of an Indian company
under the Companies Act, 1956. The management of the Institute is vested with its Council with the president acting as its Chief Executive Authority. A person can become a member of ICAI by taking prescribed examinations and undergoing three years of practical training. The membership course is well known for its rigorous standards. ICAI has entered into mutual recognition agreement
s with other professional accounting bodies world-wide for reciprocal membership recognition.
ICAI is one of the founder members of the International Federation of Accountants
(IFAC), South Asian Federation of Accountants
(SAFA), and Confederation of Asian and Pacific Accountants
(CAPA). ICAI was formerly the provisional jurisdiction for XBRL International
in India.
. Apart from this primary function, it also helps various government agencies like RBI
, SEBI
, MCA
, CAG
, IRDA
, etc. in policy formulation. ICAI actively engages itself in aiding and advising economic policy formulation. For example ICAI has submitted its suggestions on the proposed Direct Taxes Code Bill, 2010. It also has submitted its suggestions on the Companies Bill, 2009. The government also takes the suggestions of ICAI as expert advice and considers it favourably. ICAI presented an approach paper on issues in implementing Goods and Service Tax in India to the Ministry of Finance. In response to this, Ministry of Finance has suggested that ICAI take a lead and help the government in implementing Goods and Services Tax
(GST). It is because of this active participation in formulation economic legislations, it has designated itself as a "Partner in Nation Building".
(IFAC), South Asian Federation of Accountants
(SAFA), and Confederation of Asian and Pacific Accountants
(CAPA). ICAI was formerly the provisional jurisdiction for XBRL International
in India. It promoted eXtensible Business Reporting Language (XBRL) India as a section 25 company to takeover this responsibility from it.
of the ICAI is Ya Aeshu Suptaeshu Jagruti (Sanskrit
:या एष सुप्तेषु जागतिॆ). The motto
literally means "a person who is awake in those that sleep". It is a quotation
from the Upanishads (Kathopanishad). It was given to the ICAI at the time of its formation in 1949 by Sri Aurobindo
as a part of its emblem. CA. C. S. Shastri, a Chartered Accountant from Chennai
went to Sri Aurobindo and requested him through a letter to give an emblem to the newly formed Institute of which he was an elected member from the Southern India. In reply to this request, Sri Aurobindo gave him the emblem with a Garuda
, the mythical
eagle in the centre and a quotation from the Upanishad:Ya Aeshu Suptaeshu Jagruti. The emblem along with the motto was placed at the first meeting of the Council of the Institute and was accepted amongst many other emblems placed by other members of the Council.
Apart from its emblem, ICAI also has a separate logo for its members. As a part of a brand
building exercise, ICAI introduced this separate new CA logo for the use of its members in 2007. The logo is free for use by all members of ICAI subject to certain conditions. The logo was launched by the then Minister of Corporate Affairs, Prem Chand Gupta
at the occasion of the Chartered Accountant Day (1 July). Members of ICAI cannot use the ICAI emblem, but they are encouraged to use the CA logo instead on their official stationery.
The Mission of the ICAI as stated by it is: “The Indian Chartered Accountancy profession will be the Valued Trustees of World Class Financial Competencies, Good Governance and Competitiveness.”
prescribed various books which had to be maintained by a Company registered under that Act. It also required the appointment of a formal Auditor with prescribed qualifications to audit such records. In order to act as an auditor a person had to acquire a restricted certificate from the local government upon such conditions as may be prescribed. The holder of a restricted certificate was allowed to practice only within the province of issue and in the language specified in the restricted certificate. In 1918 a course called Government Diploma
in Accountancy
was launched in Bombay (now known as Mumbai
). On passing this diploma and completion of three years of articled training under an approved accountant
, a person was held eligible for grant of an unrestricted certificate. This certificate entitled the holder to practice as an auditor throughout India. Later on the issue of restricted certificates was discontinued in the year 1920.
In the year 1930 it was decided that the Government of India
should maintain a register called the Register of Accountants. Any person whose name was entered in such register was called a Registered Accountant. Later on a board called the Indian Accountancy Board was established to advise the Governor General of India on accountancy and the qualifications for auditors. However it was felt that the accountancy profession was largely unregulated, and this caused lots of confusion as regards the qualifications of auditors.
Hence in the year 1948, just after independence in 1947, an expert committee was created to look into the matter. This expert committee recommended that a separate autonomous association of accountants should be formed to regulate the profession. The Government of India accepted the recommendation and passed the Chartered Accountants Act in 1949 even before India became a republic. Under section 3 of the said Act, ICAI is established as a body corporate with perpetual succession
and a common seal
.
Unlike most other commonwealth countries
, the word chartered does not refer to a royal charter
, since India is a republic
. At the time of passing the Chartered Accountants Act, various titles used for similar profession
als in other countries were considered, such as Certified Public Accountant
. However, many accountants had already acquired membership of the Institute of Chartered Accountants in England and Wales and other Chartered Societies of Great Britain
and were practising as Chartered Accountants. This had created some sort of brand value. This designation inherited a public impression that Chartered Accountants had better qualifications than Registered Accountants. Hence the accountants were very stern in their stand that, the Indian accountancy professionals should be designated only as Chartered Accountants. After much debate in the Indian Constituent Assembly, the controversial
term, chartered was accepted. When the Chartered Accountants Act, 1949 came into force on 1 July 1949, the term Chartered Accountant
superseded the title of Registered Accountant. This day is celebrated as Chartered Accountants day every year.
) and meeting other requirements under the Act and Regulations. A member of ICAI can use the title CA before their names. A member of ICAI may either be an Associate Chartered Accountant (A.C.A.) or a Fellow Chartered Accountant (F.C.A.) based on his experience. Further based on holding Certificate of Practice, they may also be classified as practising and non-practising Chartered Accountants. , the Institute has 161,516 members out of which 94,991 are Associate Chartered Accountants and 66,525 are Fellow Chartered Accountants.
An associate member who has been in continuous practice in India or has worked for a commercial or government organization for at least five years and meets other conditions as prescribed can apply to the Institute to get designated as a "Fellow". A fellow Chartered Accountant is entitled to use the letters FCA. after his name. Responsibilities and voting rights of both types of members remain the same but only fellows can be elected to the Council and Regional Councils of ICAI. Fellows are perceived as enjoying a higher status due to their longer professional experience.
In India an individual Chartered Accountant or a firm
of Chartered Accountants can practice the profession of Chartered Accountancy. After the enactment of the Limited Liability Partnership
Act, 2009 it is expected that in the near future a Limited Liability Partnership (LLP) will be legally allowed to practise. A Bill has already been introduced in the Indian Parliament to give effect to the same. Corporation
, companies
and other bodies corporate are prohibited from practising as Chartered Accountants in India.
and various other statutes in India. Financial statements audited by a chartered accountant are presumed to have been prepared according to GAAP
in India (otherwise the audit report should be qualified). However, not all Chartered Accountants work in audit. Firms of accountants provide varied business services, and many accountants are employed in commerce and industry. Their areas of expertise include financial reporting, auditing and assurance
, arbitration
, risk management
, economics
, corporate finance
, management accounting
, information systems audit, corporate law
, direct tax
, indirect tax
and valuation of businesses
. The Government of India is now planning to open up a new field of practice in social audit of government welfare schemes like MGNREGA and JnNURM
. Apart from the field of professional practice, some CAs work in industry and commerce in financial and general management positions such as CFO and CEO.
. The elected members of the council are elected under the single transferable vote
system by the members of the institute. The Council is re-elected every 3 years. The Council elects two of its members to be president and vice-president who hold office for one year. The president is the Chief Executive Authority of the Council.
and CA. Jaydeep Narendra Shah is current vice president. It has become a convention in ICAI to elevate the vice president as the president in his subsequent term. Though there is no legal requirement to do so, vice presidents are elevated as presidents on account of their experience acting as vice presidents. Notable past presidents include CA.Y H Malegam, CA. Kamlesh Shivji Vikamsey
(2005–06) CA. T. N. Manoharan
(2006–07), CA. Amarjit Chopra (2010–11),.
The Council maintains a register of all members of the Institute.
Directorate, the Board of Discipline
, and the Disciplinary Committee
form the foundation of the disciplinary process of the Institute. These entities
are quasi-judicial and have substantial powers like that of a Civil Court to summon and enforce attendance or require discovery or production of documents on affidavit
or otherwise. The Disciplinary Directorate is headed by an officer designated as Director (Discipline
). On receipt of any information or complaint
that a member has allegedly engaged in any misconduct
, the Director (Discipline) shall arrive at a prima facie
opinion
whether or not there is any misconduct. If the Director (Discipline) is of the opinion that the misconduct is covered by the items listed in the first schedule of the Chartered Accountants Act, 1949, he shall refer the case to the Board of Discipline. If he is of the Opinion that the case is covered by the Second Schedule or both schedules of the CA Act, he will refer the case to the Disciplinary Committee. If the Board of Discipline finds a member guilty of professional or other misconduct, it may at its discretion reprimand the member, remove the name of the member from the register of members for up to three months or impose a fine up to 1,00,000/-. If the Disciplinary Committee finds a member guilty of professional or other misconduct, it may at its discretion reprimand the member, remove the name of the member from the register of members permanently or impose a fine up to 5,00,000/-. Any member aggrieved by any order may approach the Appellate
Authority.
It should be born in mind that this disciplinary proceeding is not in lieu of or alternative for criminal proceedings in a court. Criminal proceedings against a Chartered Accountant and disciplinary action by ICAI are to separate issues and one need not wait for another to be completed first.
(November 2010) rejected a plea by the two charged auditors to stay the proceedings by the ICAI Disciplinary committee. The court's order came in response to the pleas of the charged auditors seeking a stay on the disciplinary proceedings against them on the ground that it violated their fundamental right
against self-incrimination under Article 20 (3) of the Constitution of India
.
Other publicized actions included, the SEBI referred case of brokerage firm, Karvy, in which the internal auditors, Haribhakti & Co (an associate of BDO). were held guilty of negligence for failing to detect thousands of demat accounts being opened with the same address. The Committee has also taken action against members for alleged irregularities in the books of Maytas
Properties and Maytas Infra and the role played by their auditors.
The names of the members found guilty of misconduct are published in ICAI's website. The ICAI website lists 35 as the number of cases in which enquiry was completed by the Disciplinary Committee in the past one year since February, 2010. The list of members held guilty of professional or other misconduct is published periodically.
s (MRAs).
The CPT or Common Proficiency Test is the first level of Chartered Accountancy examinations. It is an objective type examination and consists of 200 multiple choice questions. CPT covers four basic subjects viz. Fundamentals of Accounting, Mercantile Laws, Economics and Quantitative Aptitude. A person can register for CPT after completing Grade 10 and take the exam after completing High School (Grade 12). Every incorrect answer on the CPT exam carries a 0.25 negative mark. The passing grade for CPT is 100 marks out of 200. CPT exams are held in June and December in paper pencil mode. On-line CPT exams are also conducted periodically.
IPCC or Integrated Professional Competence Course is the second level of Chartered Accountancy examinations. A person can take the IPCC Examination after passing CPT and nine months of study. IPCC has two groups of seven subjects. Group - I consists of four subjects and Group - II of three subjects. A passing grade is awarded if the candidate obtains 40% marks in each subject and 50% in the aggregate in each group.
CA Final Examination is the last and final level of Chartered Accountancy Examinations. It is considered as one of the toughest exam in the world. Any person who has passed both the groups of IPCC, during the last six months of articleship can take the Final Examination. This exam consists of two groups of four subjects each viz. Financial Reporting, Strategic Financial Management
, Advanced Auditing
and Professional Ethics
, Corporate and Allied Laws, Advanced Management Accounting, Information Systems Control and Audit, Direct Tax Laws and Indirect Tax Laws. A passing grade is awarded if the candidate obtains 40% marks in each subject and 50% in the aggregate in each group.
ICAI conducts CPT exams in June and December, IPCC and Final examinations in May and November each year. Examinations are conducted in major cities in India and other countries such as Abu Dhabi
(U.A.E.), Dubai
(U.A.E.) and Kathmandu (Nepal).
ICAI updates content and format of examinations periodically in keeping with technical progress and changes in practice of the profession. The ICAI last revised its training course for membership in 2008.
ICAI has entered into agreements with various universities such as the Indira Gandhi National Open University
, Bharathiar University
and Netaji Subhas Open University
to help CA students acquire a Bachelor of Commerce
(B.Com) degree, writing a few papers to supplement the IPCC.
s or MRAs. ICAI has entered into MRAs with several institutes globally, of equivalent standing, to enable members of those institutes to acquire membership of ICAI and to enable the members of ICAI to gain membership of its counterpart in other country . This is done by granting some exemptions in the regular scheme of examination and training. ICAI currently has MRAs with, Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants in Australia, CPA Australia
and Institute of Certified Public Accountants In Ireland. ICAI is also in process of negotiating MRAs with, Hong Kong Institute of Certified Public Accountants
, Canadian Institute of Chartered Accountants
and Certified General Accountants Association of Canada
.
Certificate Courses on Enterprise Risk Management
, Corporate Governance
, International Taxation
, Forensic Accounting
& Fraud
Detection using IT & CAATs, International Financial Reporting Standards
,
Forex and Treasury Management
, Derivatives
, Valuation and Arbitration
.
Post Qualification Courses such as Diploma Information Systems Audit
(ISA), CPE Course on Computer Accounting and Auditing Techniques (CAAT), Diploma in Insurance
and Risk Management
(DIRM), Management Accountancy
Course (MAC), Corporate Management Course (CMC), Tax Management Course (TMC), International Trade
Laws & World Trade Organisation (ITL & WTO), ERP
Courses on SAP
FA & MA Module, Microsoft Dynamics NAV.
In early 2010, the ICAI placed three of its freshly qualified Associates, at a record annual salary of almost US$
160,000 each, at Singapore-based agriculture supply chain major Olam International
.
(NACAS), the institute was the sole accounting standard setter in India. However NACAS is not an independent body. It can only consider Accounting Standards recommended by ICAI and advise the Government of India to notify them under the Companies Act, 1956. Further the accounting standards so notified are applicable only to companies registered under the companies act, 1956. For all other entities the accounting standards issued the ICAI continue to apply.
with IFRS was made by the Prime Minister of India
Dr. Manmohan Singh by committing in G20 to align Indian accounting standards with IFRS. Thereafter ICAI has decided to converge its Accounting Standards with IFRS for accounting period
s commencing on or after 1 April 2011 in a phased manner as envisaged in the Roadmap to IFRS formulated by the Ministry of Corporate Affairs. For smooth transition to IFRS, ICAI has taken up the matter of convergence with the National Advisory Committee on Accounting Standards
and various regulators such as the RBI
, SEBI
and IRDA
, CBDT. IASB, the issuer of IFRS, is also supporting the ICAI in its endeavours towards convergence.
It has been decided that there shall be two sets of Accounting Standards under the Companies Act. The new set of standards which have been converged with IFRS are now known as Indian Accounting Standards
or Ind AS. The Ministry of Corporate Affairs has notified the 35 Ind AS on 25 February 2011. The text of the 35 Ind AS are now available at the Ministry of Corporate Affairs portal. At the same time The Ministry of Corporate Affairs haven't specified the date of implementation of the same. This reluctance of The Ministry of Corporate Affairs to notify the date even when the proposed date is less than a month away is seen as rooted in the strong lobbying my the Corporates in India to defer the implementation. But the president of ICAI. CA.G.Ramaswamy expects that it will be notified soon and there won't be any deferment.
and other engagements. All Chartered Accountants in India are required to adhere to all these standards. If a Chartered Accountant is found not to follow the said standards he is deemed guilty of professional misconduct. These standards are fully compatible with the International Standards on Auditing
(ISA) issued by the IAASB
of the IFAC
except for two standards SA 600 and SA 299, where corresponding provisions do not exist in ISA.
Professional accounting body
A professional accounting body is a organization or association of accountants in a particular jurisdiction. Usually a persons needs to be a member of such professional accounting body to hold out to the public of the jurisdiction as an accountant...
of India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
. It was established on 1 July 1949 as a body corporate under the Chartered Accountants Act, 1949 enacted by the Constituent Assembly of India
Constituent Assembly of India
The Constituent Assembly of India was elected to write the Constitution of India, and following independence served as the nation's first Parliament.-Nature of the Assembly:...
(acting as the provisional Parliament of India
Parliament of India
The Parliament of India is the supreme legislative body in India. Founded in 1919, the Parliament alone possesses legislative supremacy and thereby ultimate power over all political bodies in India. The Parliament of India comprises the President and the two Houses, Lok Sabha and Rajya Sabha...
) to regulate the profession of Chartered Accountancy in India. ICAI is the second largest professional accounting body in the world in terms of membership second only to American Institute of Certified Public Accountants
American Institute of Certified Public Accountants
Founded in 1887, the American Institute of Certified Public Accountants is the national professional organization of Certified Public Accountants in the United States, with more than 370,000 CPA members in 128 countries in business and industry, public practice, government, education, student...
. ICAI is the only licensing cum regulating body of the financial audit
Financial audit
A financial audit, or more accurately, an audit of financial statements, is the verification of the financial statements of a legal entity, with a view to express an audit opinion...
and accountancy
Accountancy
Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in...
profession in India. It recommends the accounting standards to be followed by companies in India to the National Advisory Committee on Accounting Standards
National Advisory Committee on Accounting Standards
National Advisory Committee on Accounting Standards is a body set up under section 210A of the Companies Act, 1956 by the Government of India. It Advises the Central Government on the formulation and laying down of accounting policies and accounting standards for adoption by companies...
(NACAS) and sets the accounting standards to be followed by other types of organisations. ICAI is solely responsible for setting the auditing and assurance standards to be followed in the audit
Financial audit
A financial audit, or more accurately, an audit of financial statements, is the verification of the financial statements of a legal entity, with a view to express an audit opinion...
of financial statements
Financial statements
A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
in India. It also issues other technical standards like Standards on Internal Audit
Internal audit
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk...
(SIA), Corporate Affairs Standards (CAS) etc. to be followed by practising Chartered Accountants. It works closely with the Government of India
Government of India
The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
, Reserve Bank of India
Reserve Bank of India
The Reserve Bank of India is the central banking institution of India and controls the monetary policy of the rupee as well as US$300.21 billion of currency reserves. The institution was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of...
and the Securities and Exchange Board of India
Securities and Exchange Board of India
The Securities and Exchange Board of India is the regulator for the securities market in India.-History:It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament...
in formulating and enforcing such standards.
Members of the Institute are known as Chartered Accountants. However the word chartered does not refer to or flow from any Royal Charter
Royal Charter
A royal charter is a formal document issued by a monarch as letters patent, granting a right or power to an individual or a body corporate. They were, and are still, used to establish significant organizations such as cities or universities. Charters should be distinguished from warrants and...
. Chartered Accountants are subject to a published Code of Ethics and professional standards, violation of which is subject to disciplinary action. Only a member of ICAI can be appointed as auditor of an Indian company
Company
A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...
under the Companies Act, 1956. The management of the Institute is vested with its Council with the president acting as its Chief Executive Authority. A person can become a member of ICAI by taking prescribed examinations and undergoing three years of practical training. The membership course is well known for its rigorous standards. ICAI has entered into mutual recognition agreement
Mutual recognition agreement
A mutual recognition agreement or MRA is an international agreement by which two or more countries agree to recognize one another's conformity assessments....
s with other professional accounting bodies world-wide for reciprocal membership recognition.
ICAI is one of the founder members of the International Federation of Accountants
International Federation of Accountants
International Federation of Accountants is the global organization for the accountancy profession. IFAC has 164 member and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants employed in public practice, industry and commerce, government, and academe...
(IFAC), South Asian Federation of Accountants
South Asian Federation of Accountants
SAFA is a forum of professional accounting bodies in SAARC Region .It works in the public interest and towards broad economic development of the region....
(SAFA), and Confederation of Asian and Pacific Accountants
Confederation of Asian and Pacific Accountants
The Confederation of Asian and Pacific Accountants represents national professional accounting organisations in the Asia-Pacific region....
(CAPA). ICAI was formerly the provisional jurisdiction for XBRL International
XBRL International
XBRL International is the international standards organization which develops and maintains the XBRL Specification. It is a not-for-profit consortium of agencies and companies internationally, working together to build the XBRL language standard, and support and promote XBRL's adoption. As of...
in India.
Role
The Institute of Chartered Accountants of India was established under the Chartered Accountants Act, 1949 passed by the Parliament of India with the objective of regulating accountancy profession in India. ICAI is the second largest professional accounting body in the world in terms of membership second only to AICPA. It prescribes the qualifications for a Chartered Accountant, conducts the requisite examinations and grants license in the form of Certificate of PracticeProfessional certification
Professional certification, trade certification, or professional designation, often called simply certification or qualification, is a designation earned by a person to assure qualification to perform a job or task...
. Apart from this primary function, it also helps various government agencies like RBI
Reserve Bank of India
The Reserve Bank of India is the central banking institution of India and controls the monetary policy of the rupee as well as US$300.21 billion of currency reserves. The institution was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of...
, SEBI
Securities and Exchange Board of India
The Securities and Exchange Board of India is the regulator for the securities market in India.-History:It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament...
, MCA
Ministry of Corporate Affairs (India)
The Ministry of Company Affairs is an Indian government ministry. It is charged with administering the Companies Act 1956 and other acts related to Indian private sector. It is responsible mainly for regulation of Indian enterprises in Industrial and Services sector. The current minister of...
, CAG
Comptroller and Auditor General of India
The Comptroller and Auditor General of India is an authority, established by the Constitution of India, who audits all receipts and expenditure of the Government of India and the state governments, including those of bodies and authorities substantially financed by the government. The CAG is...
, IRDA
Insurance Regulatory and Development Authority
The Insurance Regulatory and Development Authority is a national agency of the Government of India, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements...
, etc. in policy formulation. ICAI actively engages itself in aiding and advising economic policy formulation. For example ICAI has submitted its suggestions on the proposed Direct Taxes Code Bill, 2010. It also has submitted its suggestions on the Companies Bill, 2009. The government also takes the suggestions of ICAI as expert advice and considers it favourably. ICAI presented an approach paper on issues in implementing Goods and Service Tax in India to the Ministry of Finance. In response to this, Ministry of Finance has suggested that ICAI take a lead and help the government in implementing Goods and Services Tax
Goods and Services Tax (India)
The Goods and Services Tax is a value added tax to be implemented in India by April 2012. It will replace all indirect taxes levied on goods and services by the Indian Central and State governments...
(GST). It is because of this active participation in formulation economic legislations, it has designated itself as a "Partner in Nation Building".
International Affiliations
ICAI is a founder member of the International Federation of AccountantsInternational Federation of Accountants
International Federation of Accountants is the global organization for the accountancy profession. IFAC has 164 member and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants employed in public practice, industry and commerce, government, and academe...
(IFAC), South Asian Federation of Accountants
South Asian Federation of Accountants
SAFA is a forum of professional accounting bodies in SAARC Region .It works in the public interest and towards broad economic development of the region....
(SAFA), and Confederation of Asian and Pacific Accountants
Confederation of Asian and Pacific Accountants
The Confederation of Asian and Pacific Accountants represents national professional accounting organisations in the Asia-Pacific region....
(CAPA). ICAI was formerly the provisional jurisdiction for XBRL International
XBRL International
XBRL International is the international standards organization which develops and maintains the XBRL Specification. It is a not-for-profit consortium of agencies and companies internationally, working together to build the XBRL language standard, and support and promote XBRL's adoption. As of...
in India. It promoted eXtensible Business Reporting Language (XBRL) India as a section 25 company to takeover this responsibility from it.
Motto and mission
The mottoMotto
A motto is a phrase meant to formally summarize the general motivation or intention of a social group or organization. A motto may be in any language, but Latin is the most used. The local language is usual in the mottoes of governments...
of the ICAI is Ya Aeshu Suptaeshu Jagruti (Sanskrit
Sanskrit
Sanskrit , is a historical Indo-Aryan language and the primary liturgical language of Hinduism, Jainism and Buddhism.Buddhism: besides Pali, see Buddhist Hybrid Sanskrit Today, it is listed as one of the 22 scheduled languages of India and is an official language of the state of Uttarakhand...
:या एष सुप्तेषु जागतिॆ). The motto
Motto
A motto is a phrase meant to formally summarize the general motivation or intention of a social group or organization. A motto may be in any language, but Latin is the most used. The local language is usual in the mottoes of governments...
literally means "a person who is awake in those that sleep". It is a quotation
Quotation
A quotation or quote is the repetition of one expression as part of another one, particularly when the quoted expression is well-known or explicitly attributed by citation to its original source, and it is indicated by quotation marks.A quotation can also refer to the repeated use of units of any...
from the Upanishads (Kathopanishad). It was given to the ICAI at the time of its formation in 1949 by Sri Aurobindo
Sri Aurobindo
Sri Aurobindo , born Aurobindo Ghosh or Ghose , was an Indian nationalist, freedom fighter, philosopher, yogi, guru, and poet. He joined the Indian movement for freedom from British rule and for a duration became one of its most important leaders, before developing his own vision of human progress...
as a part of its emblem. CA. C. S. Shastri, a Chartered Accountant from Chennai
Chennai
Chennai , formerly known as Madras or Madarasapatinam , is the capital city of the Indian state of Tamil Nadu, located on the Coromandel Coast off the Bay of Bengal. Chennai is the fourth most populous metropolitan area and the sixth most populous city in India...
went to Sri Aurobindo and requested him through a letter to give an emblem to the newly formed Institute of which he was an elected member from the Southern India. In reply to this request, Sri Aurobindo gave him the emblem with a Garuda
Garuda
The Garuda is a large mythical bird or bird-like creature that appears in both Hindu and Buddhist mythology.From an Indian perspective, Garuda is the Hindu name for the constellation Aquila and...
, the mythical
Hindu mythology
Hindu religious literature is the large body of traditional narratives related to Hinduism, notably as contained in Sanskrit literature, such as the Sanskrit epics and the Puranas. As such, it is a subset of Nepali and Indian culture...
eagle in the centre and a quotation from the Upanishad:Ya Aeshu Suptaeshu Jagruti. The emblem along with the motto was placed at the first meeting of the Council of the Institute and was accepted amongst many other emblems placed by other members of the Council.
Apart from its emblem, ICAI also has a separate logo for its members. As a part of a brand
Brand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...
building exercise, ICAI introduced this separate new CA logo for the use of its members in 2007. The logo is free for use by all members of ICAI subject to certain conditions. The logo was launched by the then Minister of Corporate Affairs, Prem Chand Gupta
Prem Chand Gupta
Prem Chand Gupta is the cabinet minister in Ministry of Company Affairs of India. He is a member of the Rashtriya Janata Dal and is an elected Member of Parliament representing the state of Bihar in the Rajya Sabha.- References :...
at the occasion of the Chartered Accountant Day (1 July). Members of ICAI cannot use the ICAI emblem, but they are encouraged to use the CA logo instead on their official stationery.
The Mission of the ICAI as stated by it is: “The Indian Chartered Accountancy profession will be the Valued Trustees of World Class Financial Competencies, Good Governance and Competitiveness.”
History
The Companies Act, 1913 passed in pre-independent IndiaBritish Raj
British Raj was the British rule in the Indian subcontinent between 1858 and 1947; The term can also refer to the period of dominion...
prescribed various books which had to be maintained by a Company registered under that Act. It also required the appointment of a formal Auditor with prescribed qualifications to audit such records. In order to act as an auditor a person had to acquire a restricted certificate from the local government upon such conditions as may be prescribed. The holder of a restricted certificate was allowed to practice only within the province of issue and in the language specified in the restricted certificate. In 1918 a course called Government Diploma
Diploma
A diploma is a certificate or deed issued by an educational institution, such as a university, that testifies that the recipient has successfully completed a particular course of study or confers an academic degree. In countries such as the United Kingdom and Australia, the word diploma refers to...
in Accountancy
Accountancy
Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in...
was launched in Bombay (now known as Mumbai
Mumbai
Mumbai , formerly known as Bombay in English, is the capital of the Indian state of Maharashtra. It is the most populous city in India, and the fourth most populous city in the world, with a total metropolitan area population of approximately 20.5 million...
). On passing this diploma and completion of three years of articled training under an approved accountant
Accountant
An accountant is a practitioner of accountancy or accounting , which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources.The Big Four auditors are the largest...
, a person was held eligible for grant of an unrestricted certificate. This certificate entitled the holder to practice as an auditor throughout India. Later on the issue of restricted certificates was discontinued in the year 1920.
In the year 1930 it was decided that the Government of India
Government of India
The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
should maintain a register called the Register of Accountants. Any person whose name was entered in such register was called a Registered Accountant. Later on a board called the Indian Accountancy Board was established to advise the Governor General of India on accountancy and the qualifications for auditors. However it was felt that the accountancy profession was largely unregulated, and this caused lots of confusion as regards the qualifications of auditors.
Hence in the year 1948, just after independence in 1947, an expert committee was created to look into the matter. This expert committee recommended that a separate autonomous association of accountants should be formed to regulate the profession. The Government of India accepted the recommendation and passed the Chartered Accountants Act in 1949 even before India became a republic. Under section 3 of the said Act, ICAI is established as a body corporate with perpetual succession
Perpetual succession
In company law, perpetual succession is the continuation of a corporation's or other organization's existence despite the death, bankruptcy, insanity, change in membership or an exit from the business of any owner or member, or any transfer of stock,etc....
and a common seal
Company seal
A company seal is an official seal used by a company. Company seals were predominantly used by companies in common law jurisdictions, although in modern times, most countries have abrogated the use of seals.Traditionally, the seal was of some legal significance because the affixing of the seal...
.
Unlike most other commonwealth countries
Commonwealth of Nations
The Commonwealth of Nations, normally referred to as the Commonwealth and formerly known as the British Commonwealth, is an intergovernmental organisation of fifty-four independent member states...
, the word chartered does not refer to a royal charter
Royal Charter
A royal charter is a formal document issued by a monarch as letters patent, granting a right or power to an individual or a body corporate. They were, and are still, used to establish significant organizations such as cities or universities. Charters should be distinguished from warrants and...
, since India is a republic
Republic
A republic is a form of government in which the people, or some significant portion of them, have supreme control over the government and where offices of state are elected or chosen by elected people. In modern times, a common simplified definition of a republic is a government where the head of...
. At the time of passing the Chartered Accountants Act, various titles used for similar profession
Profession
A profession is a vocation founded upon specialized educational training, the purpose of which is to supply disinterested counsel and service to others, for a direct and definite compensation, wholly apart from expectation of other business gain....
als in other countries were considered, such as Certified Public Accountant
Certified Public Accountant
Certified Public Accountant is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA...
. However, many accountants had already acquired membership of the Institute of Chartered Accountants in England and Wales and other Chartered Societies of Great Britain
Great Britain
Great Britain or Britain is an island situated to the northwest of Continental Europe. It is the ninth largest island in the world, and the largest European island, as well as the largest of the British Isles...
and were practising as Chartered Accountants. This had created some sort of brand value. This designation inherited a public impression that Chartered Accountants had better qualifications than Registered Accountants. Hence the accountants were very stern in their stand that, the Indian accountancy professionals should be designated only as Chartered Accountants. After much debate in the Indian Constituent Assembly, the controversial
Controversy
Controversy is a state of prolonged public dispute or debate, usually concerning a matter of opinion. The word was coined from the Latin controversia, as a composite of controversus – "turned in an opposite direction," from contra – "against" – and vertere – to turn, or versus , hence, "to turn...
term, chartered was accepted. When the Chartered Accountants Act, 1949 came into force on 1 July 1949, the term Chartered Accountant
Chartered Accountant
Chartered Accountants were the first accountants to form a professional body, initially established in Britain in 1854. The Edinburgh Society of Accountants , the Glasgow Institute of Accountants and Actuaries and the Aberdeen Society of Accountants were each granted a royal charter almost from...
superseded the title of Registered Accountant. This day is celebrated as Chartered Accountants day every year.
Membership
Members of the Institute are known as Chartered Accountants. Becoming a member requires passing the prescribed examinations, three years of practical training (known as articleshipArticled clerk
An articled clerk, also known as an articling student, is an apprentice in a professional firm in Commonwealth countries. Generally the term arises in the accountancy profession and in the legal profession. The articled clerk signs a contract, known as "articles of clerkship", committing to a...
) and meeting other requirements under the Act and Regulations. A member of ICAI can use the title CA before their names. A member of ICAI may either be an Associate Chartered Accountant (A.C.A.) or a Fellow Chartered Accountant (F.C.A.) based on his experience. Further based on holding Certificate of Practice, they may also be classified as practising and non-practising Chartered Accountants. , the Institute has 161,516 members out of which 94,991 are Associate Chartered Accountants and 66,525 are Fellow Chartered Accountants.
Associates and fellows
Any person who is granted membership of the Institute becomes an Associate Chartered Accountant and is entitled to use the letters A.C.A. after his name. Generally associates are usually members of the Institute with less than 5 years of experience after which they become entitled to apply for being a fellow member. Some associate members, particularly those not in practice, often voluntarily chose not to apply to be a fellow due to a variety of reasons.An associate member who has been in continuous practice in India or has worked for a commercial or government organization for at least five years and meets other conditions as prescribed can apply to the Institute to get designated as a "Fellow". A fellow Chartered Accountant is entitled to use the letters FCA. after his name. Responsibilities and voting rights of both types of members remain the same but only fellows can be elected to the Council and Regional Councils of ICAI. Fellows are perceived as enjoying a higher status due to their longer professional experience.
Practising Chartered Accountants
Any member wanting to engage in public practice has to first apply for and obtain a Certificate of Practice from the Council of ICAI. Only members holding a Certificate of Practice may act as auditors or certify documents required by various tax and financial regulatory authorities in India. Once a member obtains a Certificate of Practice, his responsibility to the society increases manifold. The ethical principles applicable to a practising CA provided in first and second schedule of the Chartered Accountants Act, 1949 are more rigorous than the ones applicable to non-practising CAs or both.In India an individual Chartered Accountant or a firm
Partnership
A partnership is an arrangement where parties agree to cooperate to advance their mutual interests.Since humans are social beings, partnerships between individuals, businesses, interest-based organizations, schools, governments, and varied combinations thereof, have always been and remain commonplace...
of Chartered Accountants can practice the profession of Chartered Accountancy. After the enactment of the Limited Liability Partnership
Limited liability partnership
A limited liability partnership is a partnership in which some or all partners have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP one partner is not responsible or liable for another partner's misconduct or negligence. This is an important...
Act, 2009 it is expected that in the near future a Limited Liability Partnership (LLP) will be legally allowed to practise. A Bill has already been introduced in the Indian Parliament to give effect to the same. Corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
, companies
Company
A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...
and other bodies corporate are prohibited from practising as Chartered Accountants in India.
Role of Chartered Accountants
Chartered Accountants enjoy a statutory monopoly in audit of financial statements under the Companies Act, 1956, Income Tax Act, 1961Indian Income Tax Act, 1961
The Income-tax Act, 1961 is the charging Statute of Income Tax in India. It provides for levy, administration, collection and recovery of Income Tax. The Income Tax Act is the most complex statute in India. It is also subject to many criticism. This is because the Act has lost it original structure...
and various other statutes in India. Financial statements audited by a chartered accountant are presumed to have been prepared according to GAAP
Gaap
In demonology, Gaap is a mighty Prince and Great President of Hell, commanding sixty-six legions of demons. He is, according to The Lesser Key of Solomon, the king and prince of the southern region of Hell and Earth, and according to the Pseudomonarchia Daemonum the king of the western region and...
in India (otherwise the audit report should be qualified). However, not all Chartered Accountants work in audit. Firms of accountants provide varied business services, and many accountants are employed in commerce and industry. Their areas of expertise include financial reporting, auditing and assurance
Financial audit
A financial audit, or more accurately, an audit of financial statements, is the verification of the financial statements of a legal entity, with a view to express an audit opinion...
, arbitration
Arbitration
Arbitration, a form of alternative dispute resolution , is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons , by whose decision they agree to be bound...
, risk management
Risk management
Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities...
, economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, corporate finance
Corporate finance
Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize shareholder value while managing the firm's financial risks...
, management accounting
Management accounting
Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control...
, information systems audit, corporate law
Corporate law
Corporate law is the study of how shareholders, directors, employees, creditors, and other stakeholders such as consumers, the community and the environment interact with one another. Corporate law is a part of a broader companies law...
, direct tax
Direct tax
The term direct tax generally means a tax paid directly to the government by the persons on whom it is imposed.-General meaning:In the general sense, a direct tax is one paid directly to the government by the persons on whom it is imposed...
, indirect tax
Indirect tax
The term indirect tax has more than one meaning.In the colloquial sense, an indirect tax is a tax collected by an intermediary from the person who bears the ultimate economic burden of the tax...
and valuation of businesses
Valuation (finance)
In finance, valuation is the process of estimating what something is worth. Items that are usually valued are a financial asset or liability. Valuations can be done on assets or on liabilities...
. The Government of India is now planning to open up a new field of practice in social audit of government welfare schemes like MGNREGA and JnNURM
Jawaharlal Nehru National Urban Renewal Mission
Jawaharlal Nehru National Urban Renewal Mission is a massive city modernisation scheme launched by the Government of India under Ministry of Urban Development. It envisages a total investment of over...
. Apart from the field of professional practice, some CAs work in industry and commerce in financial and general management positions such as CFO and CEO.
Council of the Institute
The management of the affairs of the Institute is undertaken by a Council constituted under the Chartered Accountants Act, 1949. The Council consists of 32 elected fellow members and up to 8 members nominated by the Government of IndiaGovernment of India
The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
. The elected members of the council are elected under the single transferable vote
Single transferable vote
The single transferable vote is a voting system designed to achieve proportional representation through preferential voting. Under STV, an elector's vote is initially allocated to his or her most preferred candidate, and then, after candidates have been either elected or eliminated, any surplus or...
system by the members of the institute. The Council is re-elected every 3 years. The Council elects two of its members to be president and vice-president who hold office for one year. The president is the Chief Executive Authority of the Council.
Presidents
ICAI's first president was CA. G. P. Kapadia (1949 to 1952). CA.G.Ramaswamy is the current president of ICAIICAI
ICAI may stand for* Institute of Chartered Accountants of India* Institute of Chartered Accountants in Ireland* ICAI, Instituto Católico de Artes e Industrias of the Comillas Pontifical University in Madrid, Spain....
and CA. Jaydeep Narendra Shah is current vice president. It has become a convention in ICAI to elevate the vice president as the president in his subsequent term. Though there is no legal requirement to do so, vice presidents are elevated as presidents on account of their experience acting as vice presidents. Notable past presidents include CA.Y H Malegam, CA. Kamlesh Shivji Vikamsey
Kamlesh Shivji Vikamsey
Kamlesh Shivji Vikamsey is an Indian Chartered Accountant and a past president of Institute of Chartered Accountants of India & also the Past President of The Confederation of Asian and Pacific Accountants .-Childhood and education:...
(2005–06) CA. T. N. Manoharan
T. N. Manoharan
Padma Shri T. N. Manoharan is an Indian Chartered Accountant and a former president of Institute of Chartered Accountants of India .-Career:...
(2006–07), CA. Amarjit Chopra (2010–11),.
Regional Councils
The Institute also has five Regional Councils that assist it in its functions:- The Northern India Regional Council (NIRC)
- The Western India Regional Council (WIRC)
- The Central India Regional Council (CIRC)
- The Eastern India Regional Council (EIRC)
- The Southern India Regional Council (SIRC)
The Council maintains a register of all members of the Institute.
Code of Ethics
The Institute has a detailed code of ethics and actions in contravention of such code results in disciplinary action against the erring members. The Institute publishes a Members Hand book containing the Chartered Accountants Act 1949, Chartered Accountants Regulation 1988, Professional Opportunities for Members - an Appraisal, Code of Ethics and Manual for members. These together form the basis of regulation of the profession. The Council also has a Peer Review Board that ensures that in carrying out their professional attestation services assignments, the members of the Institute (a) comply with the Technical Standards laid down by the Institute and (b) have in place proper systems (including documentation systems) for maintaining the quality of the attestation services work they perform.Disciplinary process
The DisciplinaryDiscipline
In its original sense, discipline is referred to systematic instruction given to disciples to train them as students in a craft or trade, or to follow a particular code of conduct or "order". Often, the phrase "to discipline" carries a negative connotation. This is because enforcement of order –...
Directorate, the Board of Discipline
Discipline
In its original sense, discipline is referred to systematic instruction given to disciples to train them as students in a craft or trade, or to follow a particular code of conduct or "order". Often, the phrase "to discipline" carries a negative connotation. This is because enforcement of order –...
, and the Disciplinary Committee
Committee
A committee is a type of small deliberative assembly that is usually intended to remain subordinate to another, larger deliberative assembly—which when organized so that action on committee requires a vote by all its entitled members, is called the "Committee of the Whole"...
form the foundation of the disciplinary process of the Institute. These entities
Entity
An entity is something that has a distinct, separate existence, although it need not be a material existence. In particular, abstractions and legal fictions are usually regarded as entities. In general, there is also no presumption that an entity is animate.An entity could be viewed as a set...
are quasi-judicial and have substantial powers like that of a Civil Court to summon and enforce attendance or require discovery or production of documents on affidavit
Affidavit
An affidavit is a written sworn statement of fact voluntarily made by an affiant or deponent under an oath or affirmation administered by a person authorized to do so by law. Such statement is witnessed as to the authenticity of the affiant's signature by a taker of oaths, such as a notary public...
or otherwise. The Disciplinary Directorate is headed by an officer designated as Director (Discipline
Discipline
In its original sense, discipline is referred to systematic instruction given to disciples to train them as students in a craft or trade, or to follow a particular code of conduct or "order". Often, the phrase "to discipline" carries a negative connotation. This is because enforcement of order –...
). On receipt of any information or complaint
Complaint
In legal terminology, a complaint is a formal legal document that sets out the facts and legal reasons that the filing party or parties In legal terminology, a complaint is a formal legal document that sets out the facts and legal reasons (see: cause of action) that the filing party or parties In...
that a member has allegedly engaged in any misconduct
Misconduct
A misconduct is a legal term meaning a wrongful, improper, or unlawful conduct motivated by premeditated or intentional purpose or by obstinate indifference to the consequences of one's acts....
, the Director (Discipline) shall arrive at a prima facie
Prima facie
Prima facie is a Latin expression meaning on its first encounter, first blush, or at first sight. The literal translation would be "at first face", from the feminine form of primus and facies , both in the ablative case. It is used in modern legal English to signify that on first examination, a...
opinion
Opinion
In general, an opinion is a subjective belief, and is the result of emotion or interpretation of facts. An opinion may be supported by an argument, although people may draw opposing opinions from the same set of facts. Opinions rarely change without new arguments being presented...
whether or not there is any misconduct. If the Director (Discipline) is of the opinion that the misconduct is covered by the items listed in the first schedule of the Chartered Accountants Act, 1949, he shall refer the case to the Board of Discipline. If he is of the Opinion that the case is covered by the Second Schedule or both schedules of the CA Act, he will refer the case to the Disciplinary Committee. If the Board of Discipline finds a member guilty of professional or other misconduct, it may at its discretion reprimand the member, remove the name of the member from the register of members for up to three months or impose a fine up to 1,00,000/-. If the Disciplinary Committee finds a member guilty of professional or other misconduct, it may at its discretion reprimand the member, remove the name of the member from the register of members permanently or impose a fine up to 5,00,000/-. Any member aggrieved by any order may approach the Appellate
Appeal
An appeal is a petition for review of a case that has been decided by a court of law. The petition is made to a higher court for the purpose of overturning the lower court's decision....
Authority.
It should be born in mind that this disciplinary proceeding is not in lieu of or alternative for criminal proceedings in a court. Criminal proceedings against a Chartered Accountant and disciplinary action by ICAI are to separate issues and one need not wait for another to be completed first.
Recent actions
One of the most recent (2009–10) public actions of The ICAI Disciplinary Committee was proceedings for professional misconduct against two auditors from the firm Price Waterhouse partners for wrongly auditing and inflating the financial statements of Satyam Computer Services Limited. The Supreme Court of IndiaSupreme Court of India
The Supreme Court of India is the highest judicial forum and final court of appeal as established by Part V, Chapter IV of the Constitution of India...
(November 2010) rejected a plea by the two charged auditors to stay the proceedings by the ICAI Disciplinary committee. The court's order came in response to the pleas of the charged auditors seeking a stay on the disciplinary proceedings against them on the ground that it violated their fundamental right
Fundamental rights
Fundamental rights are a generally-regarded set of entitlements in the context of a legal system, wherein such system is itself said to be based upon this same set of basic, fundamental, or inalienable entitlements or "rights." Such rights thus belong without presumption or cost of privilege to all...
against self-incrimination under Article 20 (3) of the Constitution of India
Constitution of India
The Constitution of India is the supreme law of India. It lays down the framework defining fundamental political principles, establishes the structure, procedures, powers, and duties of government institutions, and sets out fundamental rights, directive principles, and the duties of citizens...
.
Other publicized actions included, the SEBI referred case of brokerage firm, Karvy, in which the internal auditors, Haribhakti & Co (an associate of BDO). were held guilty of negligence for failing to detect thousands of demat accounts being opened with the same address. The Committee has also taken action against members for alleged irregularities in the books of Maytas
Maytas
Maytas refers to a group of companies founded by B. Ramalinga Raju. It includes Maytas Properties and Maytas Infra Limited.-Maytas Properties:...
Properties and Maytas Infra and the role played by their auditors.
The names of the members found guilty of misconduct are published in ICAI's website. The ICAI website lists 35 as the number of cases in which enquiry was completed by the Disciplinary Committee in the past one year since February, 2010. The list of members held guilty of professional or other misconduct is published periodically.
Request for more power
Many of the recent financial frauds and scams relate to organizations that had multinational accounting firms as their auditors. These multinational firms cannot legally practice in India but they are practising in India by subrogate means, operating through tie-ups with local firms, though the partners involved are from India, since only a member of the Institute can be an auditor of an Indian entity. The example for this is an elaborate list, Price Waterhouse in case of Global Trust Bank Scam, again Price Waterhouse in Satyam Computer Services Limited scam, Ernst and Young in the Maytas case. ICAI lacks jurisdictional powers to punish these or for that matter any firm, as under its current regulations it only has the power to proceed against individual members. The Institute has asked the Ministry of Corporate Affairs, Government of India to grant additional powers so that it may proceed against firms whose partners or employees are frequent offenders. ICAI also has sent a proposal to the Government of India to amend the Chartered Accountants Act, 1949 in order to enable to it to impose a fine of 1,00,00,000/- on audit firms if they are found guilty of colluding with companies to commit a fraud.Qualification
A person is eligible to apply for membership either by passing all three levels of examinations prescribed by ICAI and completing three years of practical training or by availing themselves of exemptions under Mutual Recognition AgreementMutual recognition agreement
A mutual recognition agreement or MRA is an international agreement by which two or more countries agree to recognize one another's conformity assessments....
s (MRAs).
Examination
The Chartered Accountancy course is designed to combine theoretical study with practical training. The Chartered Accountancy course is considered to be one of the rigorous professional courses in India with only 10-15% of the students passing in every attempt . , the institute has 874,694 students, studying various levels of the Chartered Accountancy Course. The Chartered Accountancy examinations are divided into three levels.The CPT or Common Proficiency Test is the first level of Chartered Accountancy examinations. It is an objective type examination and consists of 200 multiple choice questions. CPT covers four basic subjects viz. Fundamentals of Accounting, Mercantile Laws, Economics and Quantitative Aptitude. A person can register for CPT after completing Grade 10 and take the exam after completing High School (Grade 12). Every incorrect answer on the CPT exam carries a 0.25 negative mark. The passing grade for CPT is 100 marks out of 200. CPT exams are held in June and December in paper pencil mode. On-line CPT exams are also conducted periodically.
IPCC or Integrated Professional Competence Course is the second level of Chartered Accountancy examinations. A person can take the IPCC Examination after passing CPT and nine months of study. IPCC has two groups of seven subjects. Group - I consists of four subjects and Group - II of three subjects. A passing grade is awarded if the candidate obtains 40% marks in each subject and 50% in the aggregate in each group.
CA Final Examination is the last and final level of Chartered Accountancy Examinations. It is considered as one of the toughest exam in the world. Any person who has passed both the groups of IPCC, during the last six months of articleship can take the Final Examination. This exam consists of two groups of four subjects each viz. Financial Reporting, Strategic Financial Management
Strategic financial management
Strategic financial management refers to study of finance with a long term view considering the strategic goals of the enterprise. Financial management is nowadays increasingly referred to as "Strategic Financial Management" so as to give it an increased frame of reference....
, Advanced Auditing
Financial audit
A financial audit, or more accurately, an audit of financial statements, is the verification of the financial statements of a legal entity, with a view to express an audit opinion...
and Professional Ethics
Professional ethics
Professional ethics encompass the personal and corporate standards of behaviour expected of professionals.- Professional ethics :Professional people and those working in acknowledged professions exercise specialist knowledge and skill...
, Corporate and Allied Laws, Advanced Management Accounting, Information Systems Control and Audit, Direct Tax Laws and Indirect Tax Laws. A passing grade is awarded if the candidate obtains 40% marks in each subject and 50% in the aggregate in each group.
ICAI conducts CPT exams in June and December, IPCC and Final examinations in May and November each year. Examinations are conducted in major cities in India and other countries such as Abu Dhabi
Abu Dhabi
Abu Dhabi , literally Father of Gazelle, is the capital and the second largest city of the United Arab Emirates in terms of population and the largest of the seven member emirates of the United Arab Emirates. Abu Dhabi lies on a T-shaped island jutting into the Persian Gulf from the central western...
(U.A.E.), Dubai
Dubai
Dubai is a city and emirate in the United Arab Emirates . The emirate is located south of the Persian Gulf on the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates, after Abu Dhabi...
(U.A.E.) and Kathmandu (Nepal).
ICAI updates content and format of examinations periodically in keeping with technical progress and changes in practice of the profession. The ICAI last revised its training course for membership in 2008.
Articled and industrial training
After passing Group - I of IPCC, a candidate must undergo a rigorous 3 year on-the-job training as article or audit assistant, articleship. Only members in practice are entitled to engage such assistants. The Institute strictly governs through Regulations, the stipends, working hours and working conditions of such assistants. Articles provide CA firms a steady supply of motivated assistants while providing the students with invaluable on-the-job training. Audits are normally conducted by partnering senior and junior assistants with a supervising partner of the firm. This provides steady increase in the depth and variety of experience to the Articled Assistants. During the last year of articleship, a student may opt for industrial training instead. Industrial training can be for a period of 9 to 12 months and has to be completed under the supervision of an existing CA member employee of a financial, commercial or industrial organization. Over the years several cases of abuse of the system such as articles being made to work long hours, work without pay/delayed payments, or being made to perform personal tasks for their Principals, some faking their training (also called dummy articles, i.e. not going to the office but spending time studying at home or in coaching classes) led the institute to start enforcement of rules and regulations in the interest of the profession. Chartered Accountants may not provide coaching classes during working hours, as students are expected to apply themselves wholly to practical training in that time. An article may complain to the Disciplinary Committee against a member or firm for non-compliance with regulations.GMCS
General Management and Communication Skills Course or GMCS is a 15 day mandatory course and was introduced in 2002 to improve business communication, presentation and interpersonal skills of Chartered Accountants. Completion of the course is a pre-requisite for obtaining membership and can be taken during the last 12 months of Articleship, after completing the IPCC examinations.Other qualifications and certifications
With the introduction of IPCC scheme of exams, ICAI also introduced the Accounting Technician Course. Any person who passes Group-I of IPCC and completes one year of practical training under a member can apply for an Accounting Technician Certification. After obtaining the certificate the person can designate himself as an Accounting Technician. This Certification was introduced to help a large number of students who were unable to complete the CA Final Examinations and obtain membership.ICAI has entered into agreements with various universities such as the Indira Gandhi National Open University
Indira Gandhi National Open University
The Indira Gandhi National Open University , known as IGNOU is a national university with its headquarters in New Delhi, Delhi, India. Named after former Prime Minister of India, Indira Gandhi, the university was established in 1985 with a budget of 2000 crore, when the Parliament of India passed...
, Bharathiar University
Bharathiar University
Bharathiar University is a postgraduate university in Coimbatore, Tamil Nadu, South India. Named after Tamil poet Subramania Bharathiar, the university was established in February 1982 and was recognized by the University Grants Commission in 1985....
and Netaji Subhas Open University
Netaji Subhas Open University
Netaji Subhas Open University is an open university imparting distance education in eastern India. It is the 58th largest university in the world.-History:...
to help CA students acquire a Bachelor of Commerce
Bachelor of Commerce
A Bachelor of Commerce is an undergraduate degree in commerce and related subjects. The degree is also known as the Bachelor of Commerce and Administration, or BCA...
(B.Com) degree, writing a few papers to supplement the IPCC.
Mutual Recognition Agreements
The second method of obtaining membership is through Mutual Recognition AgreementMutual recognition agreement
A mutual recognition agreement or MRA is an international agreement by which two or more countries agree to recognize one another's conformity assessments....
s or MRAs. ICAI has entered into MRAs with several institutes globally, of equivalent standing, to enable members of those institutes to acquire membership of ICAI and to enable the members of ICAI to gain membership of its counterpart in other country . This is done by granting some exemptions in the regular scheme of examination and training. ICAI currently has MRAs with, Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants in Australia, CPA Australia
CPA Australia
CPA Australia is one of three professional accounting bodies in Australia, the others being the Institute of Public Accountants and the Institute of Chartered Accountants of Australia....
and Institute of Certified Public Accountants In Ireland. ICAI is also in process of negotiating MRAs with, Hong Kong Institute of Certified Public Accountants
Hong Kong Institute of Certified Public Accountants
The Hong Kong Institute of Certified Public Accountants is the professional accounting body of Hong Kong.Its main responsibilities are:*Registration and regulation of profession accountants in Hong Kong....
, Canadian Institute of Chartered Accountants
Canadian Institute of Chartered Accountants
The Canadian Institute of Chartered Accountants was incorporated by a Private Act of the Canadian Parliament in 1902. This Act, now known as the Canadian Institute of Chartered Accountants Act, was last amended in 1990 to reflect the CICA’s current mandate and powers.Working in collaboration with...
and Certified General Accountants Association of Canada
Certified General Accountants Association of Canada
The Certified General Accountants Association of Canada is the umbrella organization for Certified General Accountants. CGA-Canada represents 73,000 members and students living and working in Canada, and more than 80 countries around the world...
.
Courses for members
ICAI provides various professional certifications for its members. Some of them are as follows:Certificate Courses on Enterprise Risk Management
Enterprise Risk Management
Enterprise risk management in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives...
, Corporate Governance
Corporate governance
Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
, International Taxation
International taxation
International taxation is the study or determination of tax on a person or business subject to the tax laws of different countries or the international aspects of an individual country's tax laws. Governments usually limit the scope of their income taxation in some manner territorially or provide...
, Forensic Accounting
Certified Forensic Accounting Professional
Certified Forensic Accounting Professional is a person who has undergone training to become an expert in the field of forensic accounting, forensic auditing, litigation support and investigative accounting....
& Fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
Detection using IT & CAATs, International Financial Reporting Standards
International Financial Reporting Standards
International Financial Reporting Standards are principles-based standards, interpretations and the framework adopted by the International Accounting Standards Board ....
,
Forex and Treasury Management
Treasury management
Treasury management includes management of an enterprise's holdings, with the ultimate goal of maximizing the firm's liquidity and mitigating its operational, financial and reputational risk. Treasury Management includes a firm's collections, disbursements, concentration, investment and funding...
, Derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
, Valuation and Arbitration
Arbitration
Arbitration, a form of alternative dispute resolution , is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons , by whose decision they agree to be bound...
.
Post Qualification Courses such as Diploma Information Systems Audit
Information technology audit
An information technology audit, or information systems audit, is an examination of the management controls within an Information technology infrastructure. The evaluation of obtained evidence determines if the information systems are safeguarding assets, maintaining data integrity, and operating...
(ISA), CPE Course on Computer Accounting and Auditing Techniques (CAAT), Diploma in Insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
and Risk Management
Risk management
Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities...
(DIRM), Management Accountancy
Management accounting
Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control...
Course (MAC), Corporate Management Course (CMC), Tax Management Course (TMC), International Trade
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...
Laws & World Trade Organisation (ITL & WTO), ERP
Enterprise resource planning
Enterprise resource planning systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application...
Courses on SAP
SAP AG
SAP AG is a German software corporation that makes enterprise software to manage business operations and customer relations. Headquartered in Walldorf, Baden-Württemberg, with regional offices around the world, SAP is the market leader in enterprise application software...
FA & MA Module, Microsoft Dynamics NAV.
Placement
The Institute maintains a placement portal on its web site for qualified members and partially qualified students. This is supplemented with campus placement events and advertising through its professional journals and website.In early 2010, the ICAI placed three of its freshly qualified Associates, at a record annual salary of almost US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
160,000 each, at Singapore-based agriculture supply chain major Olam International
Olam International
Olam International Limited is a leading global integrated supply chain manager and processor of agricultural products and food ingredients, sourcing 20 products with a direct presence in 65 countries and supplying them to over 11,000 customers....
.
Technical standards
ICAI formulates and issues technical standards to be followed by Chartered Accountants and others. Non-Compliance of these standards by the members will lead to disciplinary action against them. The technical standards issued by ICAI includes, Accounting Standards, Audit and Assurance Standards, Standards on Internal Audit, Corporate Affairs Standard, Accounting Standards for Local Bodies, etc..Accounting Standards
, the Institute of Chartered Accountants of India has issued 32 Accounting Standards. These are numbered AS-1 to AS-7 and AS-9 to AS-32 (AS-8 is no longer in force since it was merged with AS-26). Compliance with Accounting Standards issued by ICAI has become a statutory requirement with the notification of Companies (Accounting Standards) Rules, 2006 by the Government of India. Before the constitution of the National Advisory Committee on Accounting StandardsNational Advisory Committee on Accounting Standards
National Advisory Committee on Accounting Standards is a body set up under section 210A of the Companies Act, 1956 by the Government of India. It Advises the Central Government on the formulation and laying down of accounting policies and accounting standards for adoption by companies...
(NACAS), the institute was the sole accounting standard setter in India. However NACAS is not an independent body. It can only consider Accounting Standards recommended by ICAI and advise the Government of India to notify them under the Companies Act, 1956. Further the accounting standards so notified are applicable only to companies registered under the companies act, 1956. For all other entities the accounting standards issued the ICAI continue to apply.
Convergence with IFRS
The inception of the idea of convergence of Indian GAAPGaap
In demonology, Gaap is a mighty Prince and Great President of Hell, commanding sixty-six legions of demons. He is, according to The Lesser Key of Solomon, the king and prince of the southern region of Hell and Earth, and according to the Pseudomonarchia Daemonum the king of the western region and...
with IFRS was made by the Prime Minister of India
Prime Minister of India
The Prime Minister of India , as addressed to in the Constitution of India — Prime Minister for the Union, is the chief of government, head of the Council of Ministers and the leader of the majority party in parliament...
Dr. Manmohan Singh by committing in G20 to align Indian accounting standards with IFRS. Thereafter ICAI has decided to converge its Accounting Standards with IFRS for accounting period
Accounting period
An accounting period is a period with reference to which United Kingdom corporation tax is charged. It helps dictate when tax is paid on income and gains...
s commencing on or after 1 April 2011 in a phased manner as envisaged in the Roadmap to IFRS formulated by the Ministry of Corporate Affairs. For smooth transition to IFRS, ICAI has taken up the matter of convergence with the National Advisory Committee on Accounting Standards
National Advisory Committee on Accounting Standards
National Advisory Committee on Accounting Standards is a body set up under section 210A of the Companies Act, 1956 by the Government of India. It Advises the Central Government on the formulation and laying down of accounting policies and accounting standards for adoption by companies...
and various regulators such as the RBI
Reserve Bank of India
The Reserve Bank of India is the central banking institution of India and controls the monetary policy of the rupee as well as US$300.21 billion of currency reserves. The institution was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of...
, SEBI
Securities and Exchange Board of India
The Securities and Exchange Board of India is the regulator for the securities market in India.-History:It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament...
and IRDA
Insurance Regulatory and Development Authority
The Insurance Regulatory and Development Authority is a national agency of the Government of India, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements...
, CBDT. IASB, the issuer of IFRS, is also supporting the ICAI in its endeavours towards convergence.
It has been decided that there shall be two sets of Accounting Standards under the Companies Act. The new set of standards which have been converged with IFRS are now known as Indian Accounting Standards
Indian Accounting Standards
Indian Accounting Standards, abbreviated as Ind AS are a set of accounting standards notified by the Ministry of Corporate Affairs which are converged with International Financial Reporting Standards. These accounting standards are formulated by Accounting Standards Board of Institute of Chartered...
or Ind AS. The Ministry of Corporate Affairs has notified the 35 Ind AS on 25 February 2011. The text of the 35 Ind AS are now available at the Ministry of Corporate Affairs portal. At the same time The Ministry of Corporate Affairs haven't specified the date of implementation of the same. This reluctance of The Ministry of Corporate Affairs to notify the date even when the proposed date is less than a month away is seen as rooted in the strong lobbying my the Corporates in India to defer the implementation. But the president of ICAI. CA.G.Ramaswamy expects that it will be notified soon and there won't be any deferment.
Audit and Assurance Standards
ICAI has issued 43 Engagement and Quality Control Standards (formerly known as Auditing and Assurance Standards) covering various topics relating to auditingFinancial audit
A financial audit, or more accurately, an audit of financial statements, is the verification of the financial statements of a legal entity, with a view to express an audit opinion...
and other engagements. All Chartered Accountants in India are required to adhere to all these standards. If a Chartered Accountant is found not to follow the said standards he is deemed guilty of professional misconduct. These standards are fully compatible with the International Standards on Auditing
International Standards on Auditing
International Standards on Auditing are professional standards for the performance of financial audit of financial information. These standards are issued by International Federation of Accountants through the International Auditing and Assurance Standards Board .-Respective responsibilities:*ISA...
(ISA) issued by the IAASB
International Auditing and Assurance Standards Board
The International Auditing and Assurance Standards Board is the independent standard setting body which issue auditing, review, other assurance related services and quality control standards to be applied by the global auditing profession...
of the IFAC
International Federation of Accountants
International Federation of Accountants is the global organization for the accountancy profession. IFAC has 164 member and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants employed in public practice, industry and commerce, government, and academe...
except for two standards SA 600 and SA 299, where corresponding provisions do not exist in ISA.
See also
- The Chartered Accountants Act, 1949The Chartered Accountants Act, 1949The Chartered Accountants Act, 1949 is a statute enacted by the Parliament of India to regulate the profession of Chartered Accountants in India. It was enacted by the Constituent Assembly of India which was acting as the provisional Parliament of India in 1949...
- Institute of Cost and Works Accountants of IndiaInstitute of Cost and Works Accountants of IndiaThe Institute of Cost and Works Accountants of India is a premier professional accountancy body established on May 28, 1959 under the Cost and Works Accountants Act, 1959 enacted by the Parliament of India to regulate the profession of Cost Accountants in India.The ICWAI is a Founder Member of...
- Institute of Company Secretaries of IndiaInstitute of Company Secretaries of IndiaThe Institute of Company Secretaries of India is statutory professional body constituted under the Company Secretaries Act, 1980 passed by the Parliament of India. ICSI is the only recognized professional body to develop and regulate the profession of Company Secretaries in India...
- Indian Institutes of ManagementIndian Institutes of ManagementThe Indian Institutes of Management , are graduate business schools in India. They were set up with the objective of providing management education and to assist the industry through research and consulting services. The IIMs award diplomas and not degrees.- Institutes :Indian Institute of...
- Indian Institutes of TechnologyIndian Institutes of TechnologyThe Indian Institutes of Technology are a group of autonomous engineering and technology-oriented institutes of higher education. The IITs are governed by the Institutes of Technology Act, 1961 which has declared them as “institutions of national importance”, and lays down their powers, duties,...
- National Institutes of TechnologyNational Institutes of TechnologyThe National Institutes of Technology , are a group of higher education engineering institutes in India. Comprising thirty autonomous institutes, they are located in one each major state/territory of India. On their inception decades ago, all NITs were referred as Regional Engineering Colleges ...
External links
- Official website of ICAI : www.icai.org
- Official journal of ICAI : The Chartered Accountant
- Students journal of ICAI : The Chartered Accountant Student