ICAI MATTERS

ICAI celebrates its Foundation Day as the Chartered Accountants� Day on 1st July every year. This year, the Chartered Accountants� Day Celebrations of the ICAI will be held at 4.00 P.M. on 1st July, 2013 in the `Plenary Hall�, Vigyan Bhawan, New Delhi. Hon�ble Union Ministers, Shri K. Rahman Khan, Union Minister for Minority Affairs, and Shri Sachin Pilot, Union Minister of State for Corporate Affairs (I/C) will address the gathering.

The said Function would be followed by a Lecture in which Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister, would speak on �Indian Economy � Current Concerns and Future Prospects�.

[Participating members would be eligible for two hour CPE Credit]

(ICAI)

<—- Status as on 10:30PM, 02.01.13 ——>
First count of cc, there is difference of one valid vote

B.—Rank–Name———————— 1st Preference + Other Rounds
No.

12–1— Charanjot Singh Nanda——-2154+1+19+34+83+55+111+108+167-126=2606 (Elect-1)

8—-2— Naveen Gupta———————2009+0+16+25+38+93+67+85+171+16+226-140=2606 (Elect-2)

2—-3— Sanjay ‘Voice of CA’ Agarwal—1753+0+19+23+46+96+83+124+222+23+241-24=2606 (Elect-3)

7—-4— Atul Kumar Gupta—————–1786+0+16+31+57+76+94+111+176+20+260-21=2606 (Elect-4)

6—-5— Sanjiv Kumar Chaudhary——-1915+2+14+35+30+26+37+71+91+5+178+21+4+6=2435

9—-6— Vijay Kumar Gupta————–1649+1+5+19+52+44+51+92+156+14+283+42+8+3=2419

10–7— Vinod Jain————————-1405+0+16+25+37+56+41+108+191+25+226+63+13+7=2213(Elimination in Progress)

15–8— Pankaj Tyagee——————-1359+0+8+16+47+39+50+66+170+19=1774(ELI.)

14–9— S S Sharma———————–1283+3+12+30+33+24+31+60=1476(ELI.)

3—10– Durga Das Agrawal————–752+0+12+8+44+39+44=899(ELI.)

4—11— Sanjay Kumar Agrawal———-581+1+6+8+38+26=660(ELI.)

1—12– M K Agarwal————————569+1+6+12+23=611(ELI.)

5—13– Bhagwan Lal———————–548+0+8+11(ELI.)

11–14– R Nagarajan———————-294+1+2(ELI.)

13–15– R K Gaur—————————171+1(ELI.)

16–16– Ashok Kumar Verma———–13(ELI.)
EXHAUSTED VOTES———————–2+13+20+39+37+51+74+132+1+360+15+5=749
________________________________________
Total————————————–18241 (Diff. of 1 vote as per Returning officer)

<—- Status as on 9:45PM, 01.01.13 ——>
FINAL QUOTA:
——–TOTAL Votes—–InValid Votes—-Valid Votes
Postal——219————24——————195
Ballot—–18238———-0——————18238
Total——18457———24—————–18433
Final invalid————————————-190
Final valid votes—————————–18243

NO. OF SEATS———-6

QUOTA—————260615

<—- Status as on 7:45PM, 01.01.13 ——>
B.NO Pol Centre Voters Voted Voting% Remarks

N-001—ABOHAR 46 25 54.35
N-002—AMBALA 253 136 53.75
N-003—AMRITSAR 454 282 62.11
N-004—BADDI 29 13 44.83
N-005—BAHADURGARH 89 58 65.17
N-006—BALLABGARH 55 45 81.82
N-007—BARNALA 31 22 70.97
N-008—BATALA 36 15 41.67
N-009—BHATINDA 212 123 58.02
N-010—BHIWANI 138 66 47.83

N-011—CHANDIGARH 266
N-012—CHANDIGARH 235
Total—N011 – N012 1024 501 48.93

N-013—IMA, ITO 1350 601 44.52

N-014—MALAVIYA SMRITI 999 532 53.25

N-015—GHALIB 493
N-016—GHALIB 463
N-017—GHALIB 334
Total—N015-N017 2799 1290 46.09

N-018—HINDI BHAWAN 1185 642 54.18

N-019—ISI, LODHI ROAD 1196 347 29.01

N-020—NPC, LODHI ROAD 781 304 38.92 3 votes tendered

N-021—NCUI, AUGUST KRANTI MARG 413
N-022—NCUI, AUGUST KRANTI MARG 405
N-023—NCUI, AUGUST KRANTI MARG 380
N-024—NCUI, AUGUST KRANTI MARG 411
Total—N021-N024 4407 1609 36.51

N-025—AMBEDKAR BHAWAN 366
N-026—AMBEDKAR BHAWAN 508
N-027—AMBEDKAR BHAWAN 537
Total—N-025-N027 2840 1411 49.68

N-028—ICAI, VISHWAS NAGAR 466
N-029—ICAI, VISHWAS NAGAR 432
Total—N028-N029 1921 898 46.75

N-030—ABHINAV PUBLIC SCHOOL 593
N-031—ABHINAV PUBLIC SCHOOL 626
N-032—ABHINAV PUBLIC SCHOOL 589
N-033—ABHINAV PUBLIC SCHOOL 475
Total—N030-N033 4537 2284 50.34

N-034—TAGORE, MAYAPURI 520 2 votes tendered
N-035 TAGORE, MAYAPURI 601 13 votes tendered
N-036 TAGORE, MAYAPURI 416 1 votes tendered
Total N034 – N036 3830 1553 40.55 incl tv

N-037—FARIDABAD 296
N-038—FARIDABAD 302
N-039—FARIDABAD 235
Total—N037-N039 1409 833 59.12

N-040—FATEHABAD 60 52 86.67
N-041—FIROZEPUR 61 25 40.98

N-042—GURGAON 391 5 votes tendered
N-043—GURGAON 373
N-044—GURGAON 427
Total—N042-N044 3213 1196 37.22

N-045—HISAR 315 175 55.56
N-046—HOSHIYARPUR 82 45 54.88
N-047—JAGADHARI 169 107 63.31
N-048—JALANDHAR 445 306 68.76
N-049—JAMMU 238 156 65.55
N-050—JHAJJAR 25 15 60.00
N-051—JIND 46 23 50.00
N-052—KAITHAL 74 38 51.35
N-053—KANGRA 38 10 26.32
N-054—KARNAL 227 131 57.71
N-055—KHANNA 56 33 58.93
N-056—KURUKSHETRA 72 41 56.94

N-057—LUDHIANA 360
N-058—LUDHIANA 367
Total—N057-N058 1133 727 64.17

N-059—MALERKOTLA 29 20 68.97
N-060—MANDI DABWALI 26 20 76.92
N-061—MANDI GOVINDGARH 90 72 80.00
N-062—MANSA 44 22 50.00
N-063—MOGA 54 30 55.56
N-064—MOHALI 238 119 50.00
N-065—MUKTSAR 38 22 57.89
N-066—NABHA 27 13 48.15
N-067—NARNAUL 57 34 59.65
N-068—NARWANA 27 10 37.04
N-069—PALWAL 43 30 69.77
N-070—PANCHKULA 407 189 46.44
N-071—PANIPAT 331 207 62.54
N-072—PARWANOO 27 14 51.85
N-073—PATHANKOT 53 36 67.92
N-074—PATIALA 254 141 55.51
N-075—PHAGWARA 78 51 65.38
N-076—RAJPURA 41 32 78.05
N-077—RIWARI 111 74 66.67
N-078—ROHTAK 243 125 51.44
N-079—SANGRUR 82 48 58.54
N-080—SHIMLA 102 33 32.35
N-081—SIRSA 112 80 71.43
N-082—SOLAN 47 17 36.17
N-083—SONEPAT 204 108 52.94
N-084—SRINAGAR 60 21 35.00

Total 38700 18238 47.13

Excluding Postal Ballots : 219

Standing position : Northern Regional Council

B.—RANK–Name————————- 1st Preference
No.
31….1—Gopal Kumar Kedia—————1162
17….2—Vishal Garg————————–1058
22….3—Swadesh Gupta——————–872
13….4—Hans Raj Chugh——————-842
14….5—Deepak Garg————————809
10….6—Radhey Shyam Bansal———–800
8…..7—Manoj Kumar Bansal————–747
38….8—Rajinder Narang——————-702
2…..9—Rajesh Kumar Agrawal———–661
5…..10—Alok Krishan————————–625
35….11—Pramod Kumar Maheshwari—620
1…..12—Harit Agrawal————————-605
15….13—Gaurav Garg————————-519
12….14—Raj Chawla————————–518
4…..15—Ajit Kumar—————————–506
30….16—Ashwani Kumar Kathpalia——-505
34….17—Vivek Khurana———————-460
3…..18—Sunil Kumar Agrawal————–442
36….19—Rakesh Makkar——————–437
6…..20—Yogita Anand————————-409
19….21—Satish Goyal————————-401
16….22—Sumit Garg—————————372
33….23—Rashmi Kshetrapal—————344
11….24—Jagmohan Singh——————-324
44….25—Anil Tayal—————————–309
23….26—Alok Jain——————————300
32….27—Man Mohan Kejriwal————–294
28….28—Nitin Kanwar————————-290
39….29—Rajender Arora———————286
9…..30—Puneet Kumar Bansal————-278
29….31—Anil Kapur—————————-204
7…..32—Tarun Arora—————————203
43….33—Sanjay Kumar Singhal———–193
20….34—Deepak Gupta———————-170
26….35—Vineet Jain—————————150
40….36—Rajiv Kumar————————-132
21….37—Jitender Gupta———————-116
27….38—Kuber Nath Jha———————99
42….39—Maldeep Singh Sekhon———-91
41….40—Sunil Kumar Rastogi————-84
25….41—Sumnish Kumar Jain————-76
24….42—Gaurav Jain————————–73
37….43—Mukesh Kumar Jain————–45
45….44—Ashwani Tayal———————-32
18….45—Ashvani Goyal———————–22

—————————————————–
TOTAL—————————————-18187

Business Standard Economy Policy News

The Institute of Cost Accountants of India (ICAI) is planning to set up 1,000 cost management accounting (CMA) support centres across the country in the next 12 months.

�We are planning to open one centre in each district across the country. Around 300 such centres are ready to be launched by next week,� ICAI president M Gopalkrishnan told mediapersons here on Monday.

The demand is so huge that we are not able to meet the requirement. According to a study done by the government three years ago, there is a demand for one million CA professionals a year. Seeing the demand, we are setting up the CMA support centres and also planning to train 500,000 students in the next two years,� he said.
The main objective of the centres will be to train students from rural, semi-urban, and Tier-III and Tier-IV cities. The centres will be opened through the help of various educational institutions and other eligible organisations and enable the students to get practical training in IT, taxation, corporate law and other areas.

Launching a new advanced course � Performance Management and Appraisal System � at ICAI�s Hyderabad centre of excellence, he said, �This course is aimed at meeting the growing demand of cost accounting professional in the country. Through the short-term course, we can train many students on capacity-building with hands-on experience.�

ICAI has plans to launch two more courses � business valuations and corporate restructuring and corporate treasury and risk management � by September this year.

Gopalkrishnan pointed out that the demand for accounting professionals was growing leaps and bounds.

The institute has also plans to start short-term courses at industry-level for mid-level managers. It has set up a committee to do a survey to find out areas which needs to be focused on.

Business Standard Economy Policy News

The government said on Monday accounting regulator Institute of Chartered Accountants of India (ICAI) has found irregularities in the operations of certain multinational audit firms in the country.

Business Standard Economy Policy News

The government on Monday said the decision on awarding punishment to ex-Pricewaterhouse partner S Gopalakrishnan and V S Prabhakar Gupta, former internal audit head, involved in the accounting fraud at Satyam Computer, is likely to be taken up by accounting regulator ICAI at its next meeting.”The decision on awarding punishment to S Gopalakrishnan and V S Prabhakar Gupta is likely to be taken by the disciplinary committee of the ICAI (Institute of Chartered Accountants of India) at its next meeting,” minister of state for corporate affairs R P N Singh said in a written reply in Rajya Sabha.

Business Standard Economy Policy News

The latest guidance note brought out by the Institute of Chartered Accountants of India (ICAI) on accounting in real estate transactions may delay revenue bookings by realty companies and erode their profitability.

According to the note, initial revenues from a project can be recognised only when all critical approvals are in place, and 25 per cent of the project is sold. At least 10 per cent revenue realisation is yet another recommendation by ICAI.

The note applies to revenue recognition in projects which will commence on or after April 1, 2012, and also to projects which have started but revenue recognition will start on or after Arpil 1,2012.
Although such GNs are recommendatory in nature, they become accounting norms by default, auditing firms say.

�In most cases the revised GN may require deferral of revenue until the stated criteria are met. Hence for companies with a lot of projects at nascent stage, top line and bottom line may get impacted considerably,� said V Venkataramanan, partner, accounting advisory services at global audit and advisory firm KPMG.

At present, property developers start recognisng revenues at different stages of construction. The range is anything between 20 and 30 per cent of completion of a project. While the country�s largest realty developer DLF starts recognising revenues after 30 per cent of construction is complete, Unitech starts it at 20 per cent.

The different methods followed by realty companies rendered it difficult for investors to compare the financials of those companies. The new threshold of 25 per cent is expected to bring uniformity in accounting practices and bridge the gap in comparison, say analysts.

�Now all real estate companies have to adhere to the new norms,� said a senior executive of Godrej Properties which used to start booking revenues after 20 per cent of the project is constructed.

The note also excludes land costs in the calculation of minimum threshold of 25 per cent. This too is likely to impact the revenue recognistion of real estate companies such as DLF, Parsvnath Developers and others who include land costs while recognising revenues in their books.

�Unless your project is 25 per cent complete, you can not include land costs in the recognition of revenues,� says S Bhaskaran, chief financial officer at Bangalore-based Sobha Developers.

Adds a senior finance executive at DLF: �It is a question of phasing of your revenues. It will be lower at the beginning and higher at the middle and at the end,� the executive said.

According to property developers, the delay in recognition of revenues coupled with fixed costs such as salaries, interest charges, depreciation and marketing, which constitute 20-25 per cent of revenues, could erode profitability of companies.

�When you recognize less revenues and costs remain the same, profits will be lesser,� said a CFO of a Mumbai-based developer who did not want to be quoted.

At a time when real estate developers are battling falling sales, declining profits and rising costs, the new note could put more pressure on developers.

�Generally, the revised GN is expected to impact most of the real estate developers adversely and overall, could put pressure on most real estate developers,� says KPMG�s Venkataramanan.

However, Vishal J Shah, executive director, PricewaterhouseCoopers India, believes that though there could be a short term impact, in the long run, the removal of accounting discretion will set in a common base of comparison and evaluation for investors, lenders, customers and the other stakeholders.

�This would bring in a lot more confidence and greater interest from the stakeholders, particularly from foreign private equity and REIT (real estate investment trust) investors. The GN could become a key catalyst in bringing a positive image makeover for the Industry hit by the overall economic slowdown,� he said.

Business Standard

Symphony Ltd has been announced as the winner of ‘ICAI Award for Excellence in Financial Reporting,’ by the Institute of Chartered Accountants of India in the category of manufacturing sector for the report of FY 2009-10 was handed over by M Veerappa Moily, union minister for corporate affairs, Government of India at Chennai.

Business Standard

After two years of investigation, the verdict is in. The Institute of Chartered Accounts of India (ICAI) has found Satyam�s former chief financial officer Srinivas Vadlamani and PWC auditor Srinivas Talluri, who signed the company�s financial audit, guilty of professional misconduct in the Rs 8,000-crore Satyam fraud � the biggest such case in India Inc.

It was in 2009 that the accounting regulator set up a special disciplinary committee, comprising six members, to look into the fraud in Hyderabad-based IT firm.

Confirming the development, ICAI President G Ramaswamy said today the committee had concluded its hearings and submitted its final report on January 3. �They have found both the accused guilty of professional misconduct,� he told Business Standard. �We will proceed to take necessary action. We have also informed them about these findings.�
These two have been found guilty on three counts: failing to conduct proper due diligence of the accounts, gross negligence of their work and violating the ICAI�s code of conduct. The institute has been probing the Satyam case since January 2009 and has already served notices to several persons in connection with the case.

ICAI is likely to impose a financial penalty on the two, though the quantum is not known. The regulator is also contemplating barring these professionals from carrying out any further professional duties. But, Ramaswamy said ICAI would give them �one more hearing before taking a final call� on the matter.

Srinivas Vadlamani was CFO of the Satyam Computer Services (now Mahindra Satyam) at the time when its founder chairman B Ramalinga Raju admitted to fudging the account books of the company. ICAI has been probing the Satyam case since January 2009, and has already served notices to several persons in connection with the case.

Earlier this month, the institute had barred two Lovelock and Lewes auditors from practice for life and slapped penalty ofRs 5 lakh each for their role in the accounting scam.

ICAI has, in fact, been criticised for inaction in the Satyam case, but now these findings and action is likely to also be a face saver for the regulator of audit fraternity. It has always maintained that Satyam was a corporate goveranance failure first and then an accounting failure.

Following admission of fraud by Raju, 57, the scam was probed by different agencies including CBI, the Serious Fraud Investigation Office and the Securities and Exchange Board of India besides ICAI. The IT company was later taken over by Tech Mahindra, which has renamed it as Mahindra Satyam. The two are now in the process of getting merged.

In an earlier investigation, ICAI had also found four auditors from Price Waterhouse, Bangalore � S Gopalakrishnan, P Shiva Prasad and C H Ravindranath besides

Talluri �prima facie guilty� of professional misconduct.

Business Standard

Accounting regulator the Institute of Chartered Accountants of India (ICAI) today said it would decided the case concerning former CFO of Satyam Computer in the Rs 14,000-crore accounting scam within a week.

“The disciplinary committee of ICAI will take a decision based on the available documents against ex-Satyam CFO. The report will be finalised by the Committee with a week’s time,” said president of ICAI G Ramaswamy.
Srinivas Vadlamani was CFO of the Satyam Computer Services (now Mahindra Satyam) at the time when its founder chairman B Ramalinga Raju admitted to fudging the account books of the company.
The institute has been probing the Satyam case since January 2009 and has already served notices to several persons in connection with the case.

Earlier this month, ICAI had barred two Lovelock and Lewes auditors from practice for life and slapped penalty of Rs 5 lakh each for their role in the accounting scam.

In 2009, ICAI had set up a 6-member special committee to look into the fraud in Hyderabad-based IT company.

Following admission of fraud by Raju, the scam was probed by different agencies including CBI, the Serious Fraud Investigation Office (SFIO), the Securities and Exchange Board of India and ICAI.

The IT company was later taken over by Tech Mahindra, which has renamed it as Mahindra Satyam.

The Institute of Chartered Accountants of India (ICAI) today said it had sought clarification from Reliance Anil Dhirubhai Ambani Group companies Reliance Natural Resources Ltd (RNRL) and Reliance Infra (R-Infra) on the issue of �misclassification� in their accounts as pointed out by the Securities and Exchange Board of India (Sebi).

�We have sought clarifications as to why this consent order has gone. If the consent order had not mentioned the accounts, we would not have sought clarifications,� ICAI President Amarjit Chopra said.
Last month, Sebi had passed a consent order, saying its probe had revealed that prima facie RNRL and R-Infra were responsible for misrepresenting the nature of investments in yield management certificates/deposits and profits and loss accounts thereof, in their annual reports for 2006-07, 2007-08 and 2008-09.

The ministry of corporate affairs may allow companies to retain their audit firms for seven years instead of a maximum consecutive term of five years, as recommended by the parliamentary standing committee on finance in August.
However, individual auditors working on behalf of these firms may not be so lucky. The ministry is likely to cut their term from the currently proposed five years to a maximum of four years.

The changes are meant to make the draft Companies Bill 2009 more industry friendly. Industry bodies such as CII had strongly opposed the move to impose frequent rotation of auditors. The Bill is expected to be tabled in Parliament during the Budget session early next year.

The Hindu

Deloitte to invest $100 m

NEW DELHI: Global consulting major Deloitte on Monday said it had drawn up plans to invest $100 million in India in the next three years and hire about 3,000 people as part of its fast track expansion plans.

Deloitte said it plannws to employ about 18,000 people � up 20 per cent from present � in India by the year 2012.

�India is an extremely important market for Deloitte. As opportunities in the new economic environment emerge, the consulting major’s focus on hiring, developing and deploying the best talent in the region, will help clients capitalise on these new market initiatives,” Deloitte Global CEO Jim Quigley told reporters here.

Mr. Quigley also made a case for India to open up its market and allow global audit firms to practice here, besides providing consulting and advisory assistance.

�I urge the Indian authorities to give a serious thought to allowing global audit firms to practice here. It is for the betterment of accounting professionals. A mutual recognition is required out of foreign direct investment,” he remarked.

Deloitte, is one of the four big accounting firms in the world.

The Hindu

Corporation Bank inks pact with ICAI

MANGALORE: Corporation Bank on Wednesday signed an MoU with The Institute of Chartered Accountants of India (ICAI) to offer a specially designed scheme (Corp CA) to cater to the various financial needs of chartered accountants. Chartered Accountants, including those having less than three years experience, can avail themselves of finance for construction of office premises, for furniture and fixture, fittings of office equipment, computers and other accessories, for working capital through the scheme.

The Economic Times

Govt mulls new laws to make global audit firms accountable

NEW DELHI: The government is considering changes in laws to make multinational audit firms responsible for professional wrongdoings by their Indian affiliates. Currently, domestic laws do not allow regulatory action against the global network of such firms, even if their Indian affiliates are found guilty of professional negligence.

�You (the global network) can�t say that you are not responsible,� corporate affairs minister Salman Khurshid said in an interview. �If an associate firm does something wrong … will the liability rest with the firm doing the audit in India or will the liability go back to the firm with the same name globally?� he said.

The ministry of corporate affairs recently held a series of discussions with multinational audit consultants on ways to bring in greater accountability to their operations in country. The country�s accounting regulator, Institute of Chartered Accountants of India, is taking up the issue at international fora to gather support for the move to expand accountability of the global networks outside the country.

Global consultancy firms, which work in India through informal tie-ups with local entities, have escaped accountability under Indian laws as they are registered in a different jurisdiction and function as an independent legal entity separate from the local network firms.

The government has been studying various ways and means by which it can imbibe greater transparency and accountability in the functioning of audit firms ever since the Satyam scandal saw the involvement of an associate firm of the UK-based PricewaterhouseCoopers (PwC).

The move may not go down well with global firms such as PwC, Deloitte Touche Tohmatsu, KPMG and Ernst & Young � known as the Big Four.

�Foreign professionals don�t want to audit in India. They audit through Indian firms that are attached to them. Now for us to say that associate firms will not do the audit is too late in the day,� said Mr Khurshid.

While PwC was not involved directly in the audit of erstwhile Satyam Computer Services, its local associates Price Waterhouse and Lovelock & Lewes did the audit for the Hyderabad-based firm. While investigations are going on against the local firms, PwC has escaped the scrutiny of Indian laws. PwC refers to the network of member firms of PricewaterhouseCoopers International (PwCIL). A PwC spokeswomen refused comment for the story.

ICAI has been raising this issue at different international fora, but hasn�t found many takers for the proposed changes. �There has to be a mechanism, which would ensure that the network is held accountable for professional negligence committed by firms that are part of it,� said ICAI president Amarjit Chopra.

Global accounting firms such as KPMG, E&Y and Deloitte also have informal tie-ups with Indian firms to do audit in India. While Deloitte and PwC has similar names for their consulting and the audit divisions in India, KPMG and E&Y have tie-ups with domestic firms that do not share the parent�s name. For instance, KPMG has a tie-up with a domestic firm by the name of BSR & Co, while E&Y works through SR Batliboi & Co.

The global firms are not willing to buy the government�s plan. �Each country should rely upon its own set of regulations and oversight to take care of any audit failure, rather than getting into each others� jurisdiction,� an auditor with a global firm said, seeking anonymity.

Business Standard Economy Policy News

Bidding era for auditors to end

The government is likely to ask all departmental enterprises and agencies, such as the National Highways Authority of India (NHAI), to dispense with the system of tender-based appointment of internal auditors.

Instead, the Comptroller and Auditor General of India (CAG) and the Institute of Chartered Accountants of India (ICAI) will jointly finalise a panel of eligible audit firms for different categories of projects and entities, based on the project size, number of locations and turnover. For each category, there will be a fixed fee and the agencies will be free to select any auditor from the panel.

For instance, the CAG-ICAI team will formulate eligibility criteria for audit firms to participate in auditing projects that come under various categories such as: up to Rs 100 crore, Rs 100-200 crore and Rs 200-500 crore, and empanel firms for each sector. The minimum fee for each sector will also be fixed by the joint mechanism that will be set up by CAG and ICAI. This, government officials said, will help reduce instance of unhealthy auditing practices.

ICAI has been complaining that many of its members are quoting unrealistically low amounts and this opens up the possibility of them colluding with the agency whose projects are being audited.

The institute had recently raised the issue with CAG and other government agencies, such as the Planning Commission, seeking a change in norms. It had pointed out that agencies such as NHAI and the Organising Committee for Commonwealth Games were following the system of awarding audit work to firms that quoted the lowest fees, known as L1 in official parlance.

�We have raised our concerns about issues such as deposit of earnest money and the system of L1 tenders, as chartered accountants� are professionals whose services cannot be sought in that manner,� Amarjit Chopra, president of ICAI, said. According to him, �acceptance of lowest tender is not desirable in all the cases, as there could be compromise on (auditing) quality�.

CAG, officials said, had in turn discussed the matter with the Planning Commission, which has said that it is not averse to the proposal. The new mechanism is expected to be in place over the next six months.

The Economic Times

PSUs may get audit deadlines

NEW DELHI: The government is set to fast track the process of updating and finalising accounts of public sector units in order to get a correct picture of their financial health before it decides a roadmap for them.

The department of public enterprises is considering a proposal to reduce the period of audit pendency for public sector undertakings (PSUs) to seven years, before their accounts are taken up for an finalisation.

The move assumes significance in the wake of several public sector units �� primarily at the state level �� having a lax approach towards finalising their accounts, some of which are pending for over two decades.

As on September 2009, 14 central PSUs had their accounts in arrears for periods ranging from 2 to 13 years and over 600 operational state PSUs whose accounts are in arrears for periods ranging from 1 to 25 years.

The �rational cut-off� of the pendency period will give the government an opportunity to formulate a proper strategy to fix a time limit within which the accounts of the firms could be updated, said a senior government official on conditions of anonymity.

The proposal was discussed at a recent meeting of the department of public enterprises, Comptroller and Auditor General of India (CAG), ministry of corporate affairs and the Institute of Chartered Accountants of India (ICAI).

The meeting thought it best that the pendency gap be reduced and appropriate guidance be prepared to audit the PSU accounts to the latest financial year.

While the proposal is at a nascent stage, the ICAI �� which is the apex body of auditors in the country �� has been asked to prepare a guidance format that will be required to bring down the pending period audit and update them to the latest date.

�It is a matter of concern that so many PSUs take critical financial decisions in the absence of required financial information,� said Amarjit Chopra, ICAI president. He said that the accounts-in-arrears beyond a certain period, for example seven years, would not be considered, which will then be adjusted through appropriate guidance for the auditors

The Economics Times

Forged audits at SMEs; ICAI tracks spread

The Institute of Chartered Accountants of India (ICAI) has unearthed cases of financial statements and audit reports of certain companies with forged signatures of auditors, sparking off fear of a larger menace that may have hit the country�s auditing fraternity.

At a time when the government is going all out to set right the audit profession, cases of forged audit reports have put the regulator on the defensive.

The cases reported so far relate to forged signatures and misuse of the seal of chartered accountants in annual accounts and tax audit reports of companies, said an ICAI official. ICAI is the country�s apex body looking into the functioning of auditors. While the cases include names of small and mid-level firms, the regulator is exploring chances of a larger spread of the forgery network.

The cases, though limited in number, have raised doubts over authenticity of financial reports, the official said, requesting anonymity. However, he refused to share details of the firms whose name and seal have been compromised due to the scam.

A special group has been constituted to look into the cases and suggest measures that can effectively handle such fraudulent practices. The matter, which was also discussed at the institute�s council meeting, has highlighted the need for stringent action against those found guilty. The law provides for penalty for a person who falsely represents himself as a member of the ICAI. �The council has proposed imprisonment of up to five years for any person found guilty of such a practice,� said the official.

The regulator is also planning to expand its random scrutiny for company audit statements in order to find out the veracity of the statements. The ICAI already has in place the process of random checks of financial statements of companies.

The ministry of corporate affairs, which is the administrative ministry for the ICAI, is mulling extensive reforms to bring more transparency in the auditing process and make auditors more accountable for their work.

The ICAI

Firms can�t keep assets secret:Icai

Companies may have to provide detailed information including details of financial assets, the complete list of shareholders and directors to the Institute of Chartered Accountants of India (Icai) if the government accepts the amendments to Chartered Accountants (CA) Act 1949 suggested by the institute. The institute has sought powers to summon information from companies.

Under the laws, Icai has the powers to call for information only from its members and not from companies directly. The government is reviewing amendments to the CA Act, 1949.

Icai president, Amarjit Chopra told Financial Chronicle, �We have suggested that the provisions in the CA Act 1949 be amended to give us more powers so that the committee of Icai are allowed to summon information from companies directly wherever in public interest.�

The CA institute is also seeking a review of the punishment for erring audit firms whose partners have committed repeated acts of gross negligence or fraud.

�We have proposed that in case a partner of an audit firm commits repeated acts of gross negligence or colludes with the management to defraud shareholders and creditors, the particular practice that the partner is in should be banned,� said Chopra.

When asked whether revoking the license of the firm would also be considered, Chopra said that it could be limited to the particular segment where the misdemeanor has taken place. �Why should the license for the entire firm be revoked and the entire firm be punished when it�s the partner in the said practice that has committed the act?�

�So for instance if it is the partner of the tax practice that has committed gross negligence then there should be a ban on tax practice and not for the entire firm which makes the partner of the audit firm suffer too. There could also a punishment such as banning the firm from auditing listed companies or imposing a fine,� Chopra added.

GK Kedia & Company�s managing partner Gopal Kumar Kedia said that at present in case of defaults, Icai has a right to revoke the certificate of practice from one day to lifelong depending on the magnitude of the ban.