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volume 70 no.
1 pages -116 JULY 2021 `100
JOU R NAL OF TH E I NSTITUTE OF CHARTE R E D ACCOUNTANTS OF I N D IA
ICAI - set up by an act of parliament

The Institute of Chartered Accountants of India
Your Thought Leadership

is valuable to ICAI
Inviting Articles, Research papers and Case Studies
#Inspiring Professionals
Could your thought be the next vector in the changing
accounting landscape?
#Control gets a wide berth in the new

accounting age
Write a business success story?
Inbox at [email protected]
#Spreading literacy
Empowering with financial knowledge
#How Sustainable we are?

Enjoy present without compromising future
#Valuation
What do you see when valuing a business?
#Gender Parity
Significant gains are made when gender parity is achieved
#Any other professional topic in mind?

Write and send to [email protected]
3
The Accounting Profession – In It to Win It
I
CAI completes 72 years on first of July, 2021, the perhaps the end of the beginning.” The profession
day celebrated as the Chartered Accountants continues full vigour to the service of nation. In these
day every year with much jubilance. The day challenging times, ICAI has taken several initiatives
is a matter of pride for not only the Chartered to ease out burden on its members and students.
Accountants but for the nation as a whole. First The conduct of examination was postponed
of July is and shall always remain a day to renew and changes were made to accommodate the
our vows to work in public interest and solemnly best interest of students, apart from changes in
maintain the financial decorum of business practical training and soft skill courses. Virtual
and industry. Chartered Accountants with their classes are being provided free of charges to meet
profound multitasking abilities work in the areas of the education needs of the students. Members
finance, audit, laws, taxes, systems and strategy to were also provided benefits of extension of Peer
Review Certificates, waiving-off of condonation fees
charter the businesses to higher growth paths.
due to specific delays and like. Even a simplified
The triumph of the profession is not a result of system is created under Chartered Accountants
some overnight miracle but is culmination of Benevolent Fund to provide financial assistance to
steady hard work of more than seven decades. the members and their families in time of need.
ICAI branches and regional councils are coming
It is result of persistent pursuit of independence,
forward to arrange medical and other facilities for
integrity and excellence that has placed Indian
the members, students and their families. ICAI
chartered accountants in an exalted position not
has also imbibed technology in an unprecedented
only within the country, but across the globe. Right manner in the new normal of work environment to
from the initial stages the Institute was focussed meet the knowledge needs of the members. There
on its agenda for which it was constituted. CA. G.P. are plethora of such actions that have often been
Kapadia, first President of ICAI during the initial covered in the pages of ICAI journal.
period of its formation stated “during the period
of construction, every new institution has to take Success stands on the foundation of
care in organising the activities. Human nature is acknowledgment of shortcomings and deriving
always tempted by speed and whenever a new achievements from lessons learnt. It is imperative
Institution comes into being, there is a desire to to recognise the challenges strewn ahead,
do and achieve everything at the same time. In foresee the hurdles, target the many milestones
this respect, it is my firm belief that instead of ahead and pre-strategise actions to build a
attempting to do everything which Institutions better tomorrow. The accountancy profession
established for forty or fifty years are doing, a new stands to gain from the momentum of change
Institution should believe in a gradual process that envelopes the industry, whether it is the
and try to achieve first a proper working of the Act current fast-paced modern era of technology, the
and the regulations, maintain proper standards of catalytic role played by unbounded globalisation
examination and maintain proper standards for and liberalisation or the substantial highlight on
disciplinary action.” profound transparency and accountability, which
brings the profession in the very central limelight.
This year, the Chartered Accountant day is different The professionals need to evaluate the past, look
as the humanity is grappling with shocks of second inward in order to anticipate what lies ahead
wave of pandemic. Undeterred, the profession and ensure continuity of success, whatever the
remains committed to the Indian economy to circumstances are. The business environment
may be tough or hostile, but the professionals
provide best of services to mitigate the harmful
remain deep-rooted and committed. Afterall, they
aftermath of catastrophic Covid-19. Winston S.
have always been in it to win it!
Churchill once stated “this is not the end, this
is not even the beginning of the end, this is just -Editorial Board ICAI: Partner in Nation Building
www.icai.org THE CHARTERED ACCOUNTANT july 2021 3

4
Contents
In Conversation
VOLUME 70 NO. 1 PAGES -116 JULY 2021 `100
JOU R NAL OF TH E I N STITUTE OF CHARTE R E D ACCOU NTANTS OF I N D IA
july 2021 22 Chartered Accountants

ensure the discipline
IN THIS ISSUE...
of transparency and
accountability, which are
ICAI - SET UP BY AN ACT OF PARLIAMENT
indispensable for the health
and growth of any business :
Shri Mukesh Ambani
UPDATES
9 ICAI in Action
92 Ind AS Alert
94 National Update
VOICE 96 Legal Update
3 Editorial - Legal Decisions
The Accounting Profession – In It to Win It - Circulars and Notifications
6 From the President
MEMBERS Vision - Global Leaders

11 Photographs 27 Continuing to Develop a Successful
& Vibrant Profession
85 Know Your Ethics
- Jelena Misita
87 Opinion - Accounting Treatment of Expenditure Incurred
for Configuration Design Study of Integrated Refinery
Cum Petrochemical Project
30 Accountants and Climate Change
112 Classifieds
- Sanjay Rughani
Leaderspeak
12 Shri M. Venkaiah Naidu, Hon’ble Vice-President of 34 Small and Medium Practice
India Transformation During a Crisis
- Monica Foerster
13 Shri Om Birla, Hon’ble Speaker, Lok Sabha
14 Shri Amit Shah, Hon’ble Minister of Home Affairs
37 Farsighted Approaches to Auditor
15 Shri Prakash Javadekar, Hon’ble Minister Environment, Independence: Responding to
Forest & Climate Change and Information & Global Challenges
Broadcasting - Stavros Thomadakis
16 Shri Ramesh Pokhriyal ‘Nishank’, Hon’ble Minister of
Education 42 CA Profession and Professional
17 Shri Girish Chandra Murmu, Comptroller & Auditor Standards
General of India - CA. (Dr.) Shiwaji Bhikaji Zaware
18 Shri Santosh Kumar Gangwar, Hon’ble Minister of State

(Independent charge), Labour & Employment
19 Sadhvi Niranjan Jyoti, Hon’ble Minister of State for Perspective
Rural Development 54 Brand Building by a Chartered
20 CA. Suresh Prabhu, Hon’ble Member of Parliament, Accountant
Rajya Sabha and Prime Minister’s Sherpa to G 7 and - CA. T. N. Manoharan
G 20
4 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

5
Contents
EDITOR-IN-CHIEF CA. Nihar N. Jambusaria,
volume 70 no. 1 pages -116 JULY 2021 `100
President
JOINT EDITOR CA. (Dr.) Debashis Mitra

Vice-President
MEMBERS CA. Prafulla P. Chhajed
CA. Nandkishore C. Hegde
CA. Chandrashekhar V. Chitale
JOU R NAL OF TH E I N STITUTE OF CHARTE R E D ACCOU NTANTS OF I N D IA CA. Shriniwas Y. Joshi
CA. Aniket S. Talati
CA. Dayaniwas Sharma
CA. Prasanna Kumar D.
59 Improving Audit Quality:

CA. Rajendra Kumar P.
CA. Manu Agrawal
Significance of Independence and CA. Anuj Goyal
CA. Kemisha Soni
Capacity Building CA. Satish Kumar Gupta
- CA. Amarjit Chopra and CA. Atul Kumar Gupta
CA. Pramod Jain
CA. Sabyasachee Dash CA. (Dr.) Sanjeev Kumar Singhal
CA. Charanjot Singh Nanda
Dr. P.C. Jain
63 New-Age Technologies to

CA. Dilip Rodi
CA. Mukesh Singh Kushwah
Overcome the Pandemic Challenges DEPUTY DIRECTOR SHALEEN SUNEJA
- CA. K. Raghu ICAI EDITORIAL SUPPORT DR. Neetu Singh
NIMISHA SINGH
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

68 ICAI Code of Ethics- Marching ICAI Bhawan, Post Box No.7100, Indraprastha Marg,
Ahead of Times New Delhi-110002, Tel: +91 (11) 39893989.
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79 ICAI – Contributing to Societal Goals
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109 Scholarship for CA Students The Institute of Chartered Accountants of India (ICAI)
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From the President
6
This CA Day brings with it an opportunity

to not just reminisce the success
attained in the past, but also consider
and plan better for the future, so that
the accounting profession can continue
facilitating the growth of the industry and
the economy. Contemporary era of fast
technology, automation and robotics has
revolutionised business administration
and accounting processes. Inclusion of
new technologies in all future planning
and conception of more efficient auditing
processes is imperative for staying in
sync with the dynamic environment and
retaining ICAI’s competitive edge.
Apart from technology, there are many
other developments taking place in the
profession; one being placing concern
for people and planet over profits.
There is an urgent need to recognise the
role that green accounting can play in
redefining businesses’ contribution to
sustainable development and rebuilding
CA. Nihar N. Jambusaria ecological balance. Mahatma Gandhi
President, ICAI said – “What we are doing to the forests
of the world is but a mirror reflection
My Dear Professional Colleagues, of what we are doing to ourselves and to one
another.” The Institute of Chartered Accountants
ICAI celebrates 73rd Foundation Day on July
of India believes that accountancy profession can
1 every year which is widely celebrated as
From the President
play a monumental role in coordinating the actions

Chartered Accountants Day (CA Day). A
of the industry with the seventeen goals adopted by
very hearty congratulation to all colleagues!
United Nations in its 2030 Agenda for Sustainable
At the Institute of Chartered Accountants Development. These SDGs hold the promise of not
of India, we take immense pride and just a cleaner and greener future, but also greater
honour on the successful completion of equitable development. Green accounting, by
72 years of its judicious and efficacious permitting more accurate estimation of expenditure
operations - made possible by the borne on protection of environment as well as costs
cooperation and hard work displayed by our necessary to compensate for the negative impacts
Past Presidents, ICAI Council, office bearers from of economic growth, successfully links physical
Regional Councils, Branches, Overseas Chapters resource accounts with financial statements and
and Representative Offices, the employees, fellow ensures a more expedited fulfilment of the SDGs.
CA members and all our aspiring students over the
years. We are also thankful to the Government and Meeting by the Ministry of Finance on New
other stakeholders for their continuous support to Income Tax e-filing Portal
the activities of ICAI. We have indeed come a long The Ministry of Finance, Government of India
way from where we started; hence, I would like to organised a meeting on 22nd June to review the
thank all our stakeholders who have tremendously glitches and issues related to the new Income Tax
contributed to the deepening of ICAI’s roots, e-filing portal which has been facing issues ever
strengthening its foundation and elaborating its since its launch on 7th June, 2021. The meeting
reach. The milestones crossed, laurels earned and was chaired by Smt. Nirmala Sitharaman, Hon’ble
achievements realised - discussed periodically in Minister of Finance & Corporate Affairs and graced
our journal issues- are a collaborative effort of each by Shri Anurag Singh Thakur, Hon’ble Minister of
one of you.

From the President
7
State for Finance & Corporate Affairs. Also, present I urge members and students to come forward and
were Shri Tarun Bajaj, Revenue Secretary, Shri join this drive as volunteers for making it a national
Jagannath Mohapatra, CBDT Chairman and top drive www.vitiyagyan.icai.org.
Finance Ministry officials. Earlier, the Ministry of
Finance had asked ICAI to constitute a task force Excellence in Sustainability Reporting
of seven representatives to look into the technical Awards
glitches / issues being faced on the new Income In the evolving world, it is essential for the
Tax portal. Accordingly, taking cognizance of the business to imbibe actions favouring sustainability.
matter, a team of 7 members was constituted Sustainability is focused on meeting our present
to analyse the issues being faced. Considering needs without compromising the ability of future
the sensitivity ICAI made full efforts to identify generations to meet their needs. For business, the
the challenges and submissions were made on concept of sustainability is built on three pillars:
different issues being faced by professionals and environmental, social and governance. ICAI has a
assesses. The officials from CBDT and Infosys were strong tradition of service to the public interest and
very receptive about the issues being conveyed. to the Indian economy and is sensitive to emerging
They assured that the issues will be taken care of needs of ecology. ICAI through Sustainability
and shall be resolved at the earliest. We believe this Reporting Standards Board has a mission to
consultative process will be completed in a phased formulate comprehensive, globally comparable,
manner and problems will be resolved on daily and understandable standards for measuring
basis. Members may note that for tax audit report and disclosing non-financial information about
the utility is expected in the 1st week of July, 2021. an entity’s progress towards United Nations
Sustainable Development Goals 2030. In
ICAI takes pride in its service to the nation, as
From the President

its endeavour to benchmark global best
during the meeting, we have been asked to
practices in Sustainability Reporting, this
provide continuous support and inputs to CBDT
year ICAI has instigated Sustainability
and Infosys, in resolving the issues that are being
Reporting Awards. The objectives of this
identified. The Income Tax Department said that initiative are to recognise, reward and
the new portal is aimed at making compliance encourage excellence of businesses in
more taxpayer-friendly, however, the technical integrated reporting and to recognize
glitches shall be addressed fast, for convenience initiatives of businesses with their
of all. transformative contribution.
Financial and Tax Literacy Drive - VITIYA RBI’s New Norms – A Right Step to Enhance
GYAN Independence and Audit Quality
The ICAI has been taking numerous initiatives The new norms issued by the RBI for Appointment
to update the knowledge of the members of the of Statutory Central Auditors (SCAs) and Statutory
Institute in the areas of professional relevance. Auditors (SAs) of Commercial Banks, Urban
This time, however, the Institute is launching a Co-operative Banks (UCBs) and Non-banking
Financial and Tax Literacy Drive - Vitiya Gyan – Financial Companies (NBFCs) including Housing
ICAI Ka Abhiyaan, to educate people on basics Finance Companies (HFCs) is a welcome step
of tax laws, accounting and various aspects of as they are expected to enhance audit quality,
the financial system in India and the ways to auditor independence and strengthen corporate
manage personal finances, financial well-being governance. The norms are aimed to harmonize
and tax compliances with the goal of increasing various entities in the financial sector with respect to
compliance and reducing the knowledge gap in the appointment of auditors bringing transparency
the society. Highlight of the drive is that education in the selection and will result in enhanced audit
will be imparted in different vernacular languages quality. This is more so considering the increased
using the lucid language, innovative learning with public interest in these entities with their size and
experiential activities, financial calculators and spread throughout the nation.
multilingual site for citizens of our country and it
ICAI has always stood for Joint Audit as the concept
shall go a long way towards educating people of all
for improving audit quality and reliability apart
strata of society.

From the President
8
from having fresh perspective from new firms. between audit firms and create market demand for
Further, the joint audit will ensure due continuity audit quality. The AQMM v1.0 is recommendatory
in the audit process during rotation. At the same initially and later on ICAI will review the date from
time rotation of audit firms after three years is which it would become mandatory. ICAI would be
already prevalent in Public Sector Banks and it releasing AQMM v1.0 on July 1, coinciding with CA
was introduced in large companies on completion Foundation Day as a right step to enhance audit
of five-year cycle by The Companies Act, 2013 quality.
which proved to be effective. Similar rotation of
audit firms in other large intermediaries of banking Amendment in Rule 38A of the Companies
and financial sector, will surely result in improved (Incorporation) Rules, 2014
audit quality apart from having fresh perspective. The Ministry of Corporate Affairs, as part of its ease
Now Joint audits are mandatory for RBI-regulated of doing business initiatives has amended the Rule
entities with assets size of over `15,000 crore. 38A of the Companies (Incorporation) Rules, 2014
Small and medium practicing CA firms will now relating to Application for registration of GSTIN,
have more scope of getting these bank and NBFC ESIC registration, EPFO registration, profession
audits assignments. Further, new rule that caps tax registration and opening of bank account vide
the number of audits, mandates for an audit firm, its notification dated June 07, 2021. The Ministry
irrespective of the asset size – as clarified by the of Corporate Affairs has introduced the facility to
RBI through its recent Frequently Asked Questions take shops and establishment registration at the
(FAQs) for April 27 circular will also benefit these time of incorporation itself through filing of e-form
local SMPs. AGILE-PRO-S (formerly known as AGILE-PRO).
The proposed restrictions on audit/non-audit
****
services for related entities are largely aligned with
the Code of Ethics of the Institute and the principles Swami Vivekananda had once correctly remarked,
in the Companies Act, 2013 in this regard. “Arise, awake, and stop not till the goal is
reached.” It is this determination, perseverance
Enhancing Audit Quality and never-say-die attitude that has allowed the
Institute to reach the heights it has attained today.
In continuation of my previous communication,
The Institute of Chartered Accountants of India has
I wish to inform that the Audit Quality Maturity
From the President
always propagated the idea that if one falls behind,

Model – Version 1.0 (AQMM v1.0) has been
one must run faster but never surrender or stop.
finalised. This Model includes the following
After all, great things take time to manifest. Setting
dimensions of audit maturity organised
goals and consistently working towards them helps
into three sections:
charter one’s course in the right direction and inch
a) Practice management – operation, closer to success. Through ICAI’s 72 years of
splendid performance, it has learnt the importance
b) Human resource management, and
of making the most of every opportunity and rising
c) Practice management-strategic/functional. to all odds. I urge all to never forget that the sweet
taste of victory will always heal the wounds of
The AQMM v1.0 is a cross-functional evaluation the battle; as long as one continues to tirelessly
model for practicing firms covering engagement pursue excellence. Follow your passion, work
teams, firm leadership, IT helpdesks, human with dedication with the virtues of independence,
resources team, administration department, legal integrity and excellence.
cell and the management information systems desk
of the firm. The AQMM v1.0 has been developed Stay safe, stay healthy. Best wishes.
after deep international research on systems to
enhance audit quality and widespread outreach
activities to have inputs from stakeholders have
been conducted across India. I am hopeful that this
capacity building measure of ICAI will significantly
empower the firms to be able to improve their CA. Nihar N. Jambusaria
audit quality. The Audit Quality Indicators should President, ICAI
raise more questions, bring about competition New Delhi, 25th June, 2021

Developments
9
ICAI in Action
Exposure Draft of the Amendments in the process, in order to remain converged with
IND AS Taxonomy IFRS Standards, the Ind AS needs to be issued/
revised corresponding to the IFRS Standards.
Ministry of Corporate Affairs (MCA) has mandated
Accordingly, whenever any amendments are
the filing of financial statements in XBRL format
made or new IFRS Standard/IFRIC is issued
for the specified class of companies. XBRL
by the IASB, the Accounting Standards Board
taxonomy covers the requirements of Accounting
of the ICAI considers and issues amendments
Standards, Companies Act and MCA specific
to Ind AS. While doing so, keeping in view the
requirements. XBRL taxonomy, based on the
Indian conditions and circumstances, wherever
Indian Accounting Standards (Ind AS) and Ind AS
considered appropriate, necessary changes
compliant Schedule III requirements has already
are also proposed to the Ind AS. In this regard,
been notified for filing of financial statements in
the Accounting Standards Board has issued
XBRL format and the specified class of companies
the following Exposure Draft corresponding
are successfully filing their financial statements in
to amendments in IFRS Standards for public
XBRL format. In view of implementation of Ind AS
comments with the last date of comments being
116, ‘Leases’ applicable from the financial year
July 1, 2021:
2019-20, and amendments in other Ind ASs, CSR
Rules, etc (applicable from FY 2019-20 & 2020- • Definition of Accounting Estimates -
21), Ind AS XBRL taxonomy has been amended Amendments to Ind AS 8, Accounting Policies,
for financial reporting purposes. Changes in Accounting Estimates and Error
In order to endorse transparency, objectivity, For details, please visit – https://www.icai.org/
independence and participation of stakeholders, post/ed-of-definition-of-accounting-estimates-
the draft amendments in Ind AS taxonomy amendments-to-indas8
have been exposed for public comments. The
comments are invited on any aspects of the Exposure Draft for Amendments to the
Exposure draft. In addition to the comments on Guidance Note on Accounting for Derivative
amendments in the Taxonomy, other suggestions Contracts w.r.t. IBOR Phase 2 Replacement
for any inclusion/deletion of any element are also Issues
invited for overall improvement of the Taxonomy
or any area where any difficulty is faced by the Interbank Offered Rates (IBORs), e.g., LIBOR,
Companies while filing. TIBOR, NIBOR, etc. play an important role in global
financial markets and index (benchmark) a variety
For details, please visit – https://www.icai. of financial products including derivatives. Market
org/post/ed-of-the-amendments-in-the-indas- developments have undermined the reliability of
taxonomy. some existing benchmarks. Consequently, some
Exposure Draft of Definition of Accounting major interest rate benchmarks will cease to be
Estimates - Amendments to Ind AS 8, published across the globe after December 2021.
Accounting Policies, Changes in Accounting The ongoing reform in IBOR, will impact the
Estimates and Errors way financial information is accounted for in the
financial statements. Under Accounting Standards
The Indian Accounting Standards (Ind AS) are (AS), the relevant guidance with regard to hedge
based on the IFRS Standards issued by the accounting is prescribed under the Guidance
International Accounting Standards Board (IASB). Note on Accounting for Derivative Contracts
In this regard, it may be noted that IFRS Standards issued by the ICAI in year 2015. To address the
are being issued/revised by the IASB from time accounting issues necessary exceptions to the
to time. As the convergence is a continuous hedge accounting have been prescribed as under:

Developments
10
• Phase 1 - Pre-replacement issues-deals with the provisions of Investor Education and

issues affecting financial reporting in the Protection Fund Authority (Accounting, Audit,
period during which there is uncertainty about Transfer and Refund) Rules, 2016 to introduce
the timing or the amount of interest rate the manner of transfer of shares under section
benchmark-based cash flows. 90(9) of the Companies Act 2013 to the Investor
Education and Protection Fund.
• Phase 2 - Replacement issues-deals with
issues affecting financial reporting when the For details, please visit –https://resource.cdn.icai.
uncertainty regarding the timing and the org/65096clcgc140621.pdf
amount of interest rate benchmark-based cash Complete virtual MCS/Advanced ITT and
flows is resolved and hedging relationships are become a member - Golden Opportunity for
affected as a result of the reform.. CA Final passed students
The Accounting Standards Board (ASB) of ICAI In view of the Covid pandemic, it has been decided
invites comments from public on limited aspect to provide a once in a lifetime opportunity to
of the Exposure Draft. students who have qualified CA final exam but are
For details, please visit – https://www.icai.org/ unable to apply for Membership of the Institute
post/ed-for-amendments-to-the-guidance-note- due to non completion of MCS/Adv. ITT Course.
on-accounting-for-derivative-contracts. They can now undergo the MCS/Adv. ITT Course
through virtual mode anytime, anywhere through
Amendment in Investor Education and the https://virtualmcs.icai.org/ portal and apply for
Protection Fund Authority (Accounting, membership of ICAI at the earliest.
Audit, Transfer, and Refund) Rules, 2016
For details, please visit – https://www.icai.org/
The Ministry of Corporate Affairs vide its post/one-time-golden-opportunity-for-ca-final-
notification dated 09 th June 2021 has amended exam-passed-students.

Photographs
11
ICAI President CA. Nihar N. Jambusaria, ICAI Vice-President CA.

(Dr.) Debashis Mitra with Shri Pratap Chandra Sarangi, Hon’ble
ICAI President CA. Nihar N. Jambusaria and Central Council
Union Minister of State for MSME, Animal Husbandry and
member CA. Satish Kumar Gupta in a meeting with Hon’ble
Dairying & Fisheries, during International MSME Day Celebrations
Union Finance Minister Smt. Nirmala Sitharaman, Revenue
at ICAI Bhawan, New Delhi. Also seen in picture Central Council
Secretary Shri Tarun Bajaj and Secretary, MCA Shri Rajesh Verma
Members CA. Dheeraj Kumar Khandelwal, CA. Hans Raj Chugh,
to discuss about newly launched Income Tax Portal (22.6.2021)
CA. Chandrashekhar Vasant Chitale, CA. Pramod Jain and CA.
Rajesh Sharma. (27.06.2021)
ICAI President CA. Nihar N. Jambusaria and ICAI Vice-President

CA. (Dr.) Debashis Mitra signing MOU with Qatar Financial
Centre. Also seen in picture Central Council Members CA.
Dayaniwas Sharma, CA. Aniket S. Talati, Shri Vijay Kumar Jhalani,
(Govt Nominee), CA. Anuj Goyal, CA. (Dr.) Sanjeev Singhal, CA.
Chandrashekhar Vasant Chitale and CA. Manu Agrawal. Shri
Manoj Pandey, Joint Secretary, Ministry of Corporate Affairs,
Government of India joined the event virtually as Special Guest.
From the QFC Mr. Kamal Naji, Chief Project Officer; Yousuf
Mohamed Al-Jaida, Chief Executive Officer, QFC ; Guest of
Honour Dr. Deepak Mittal, Hon’ble Ambassador of India to the
State of Qatar and CA. Nirlep Bhatt, Chairperson, Doha Chapter
of the ICAI joined virtually from Qatar.
ICAI President CA. Nihar N. Jambusaria and ICAI Vice President CA. (Dr) Debashis Mitra in the kind presence of Hon’ble High
Commissioner of India to Ghana, H.E Mr. Sugandh Rajaram and Joint Secretary, Ministry of External Affairs, Government of India CA.
Mahaveer Singhvi, at e-Inauguration of 42nd Chapter of ICAI at Accra, Ghana and two Representative Offices at Gabon (Libreville) &
Ivory Coast (Abidjan) in Africa (10.06.2021)
ICAI President CA. Nihar N. Jambusaria alongwith

his Council colleagues CA. Rajesh Sharma and CA.
Hans Raj Chugh at a Vaccination Camp organised
by NIRC. Also seen in picture NIRC Chairman CA.
Avinash Gupta (12.06.2021)

Leaderspeak
12
Shri M. Venkaiah Naidu, Hon’ble Vice-President of India

Leaderspeak
13
Shri Om Birla, Hon’ble Speaker, Lok Sabha

Leaderspeak
14
Shri Amit Shah, Hon’ble Minister of Home Affairs

Leaderspeak
15
Shri Prakash Javadekar, Hon’ble Minister Environment, Forest & Climate Change and Information & Broadcasting

Leaderspeak
16
Shri Ramesh Pokhriyal ‘Nishank’, Hon’ble Minister of Education

Leaderspeak
17
Shri Girish Chandra Murmu, Comptroller & Auditor General of India

Leaderspeak
18
Shri Santosh Kumar Gangwar, Hon’ble Minister of State (Independent charge), Labour & Employment

Leaderspeak
19
Sadhvi Niranjan Jyoti, Hon’ble Minister of State for Rural Development

Leaderspeak
20
CA. Suresh Prabhu, Hon’ble Member of Parliament, Rajya Sabha and Prime Minister’s Sherpa to G 7 and G 20

1193
ce
ellen
Exc
and
ence, In
tegrity
Lal Kitab Khata to
end
Ind
ep
Computerised Accounting
maintained. The Book included a chapter
“the business of keeping up accounts in
the office of accountants.” Over centuries
the system of accounting evolved in India
to reach Lal kitab Khata system used by the
Indian merchants across India.
Today there is a metamorphic change as

there is no need to write accounts by hand.
In modern times accounting involves using
technology on computers and accounting
software programs to systematize financial
system. Technological tools are leveraged to
automate processes as modern accounting
software programs create checks and
balances. Account finalisation has become
simpler and faster.
In the digital accounting there is electronic

capture, formation, and transmission of
Ancient records show accounting and financial information of business. There is
business tracking existed in the most basic big transformation in the way accounts are
forms from thousands of years back in maintained and finalised in comparison
history. Early references of accounting are to what was a few decades back. The
found in Babylonia and Egypt around 4000 modern accounting systems automate the
BC confirming that maintenance of accounts calculations making the basic tasks simpler
is as old as civilization. Initially clay tablets and reducing the chances of errors. There
were used to record the transaction. is also gradual shift to triple entry system of
Egyptians used accounts to record the bookkeeping which presents a framework
safe keeping of gold and the valuables for a new and complex way to do accounting.
in treasures. In Babylonia accounts were In the triple-entry accounting system, all
used by businessmen to uncover losses accounting entries are cryptographically
due to fraud and inefficiency. In India, 230 sealed by a third entry and thus, it works
BC , Kautilya a minister in Chandragupta’s as a deterrent towards manipulations and
dynasty wrote a book titled “Arthashastra” financial frauds.
explaining how account records are to be

22
In Conversation
Chartered Accountants ensure the discipline of
transparency and accountability, which are
indispensable for the health and growth of any
business : Shri Mukesh Ambani
Mukesh Dhirubhai Ambani, Chairman and Managing Director of the most valuable Indian
company Reliance Industries Ltd. shares his thoughts with ICAI Journal – The Chartered
Accountant. Mukesh Ambani, epitome of success, is a Chemical Engineer from the Institute
of Chemical Technology, Mumbai and MBA from Stanford University in the US. He initiated
Reliance’s backward integration journey – from textiles to polyester fibres and further onto
petrochemicals and petroleum refining, and going upstream into oil and gas exploration and
production. He created multiple new world-class manufacturing facilities involving diverse
technologies that have raised Reliance’s petrochemicals manufacturing capacities from less
than a million tonnes to about 21 million tonnes per year.
He also led Reliance’ development of infrastructure facilities and implementation of a pan-
India organized retail network spanning multiple formats and supply chain infrastructure.
He led and established one of the world’s most expansive 4G broadband wireless network
offering end-to-end solutions that address the entire value chain across various digital
services in key domains of national interest, such as education, healthcare, security, financial
services, government-citizen interfaces, and entertainment.
His success stories are vast and many, and any attempt to write them in these pages will
fall short for want of space. We take pride to having conversed with him and have his most
intrigue thoughts and vision on Indian economy and accountancy profession. Following is
the interview...
Q1. Moving from petrochemicals to digital businesses that could enable India to become
sphere to retail must have been a complex an economic powerhouse and reclaim its rightful
and intriguing experience. What was the position in the league of global powers.
driving thought behind Reliance’s entry
into telecom, digital and retail business? It is this belief, this conviction, this commitment
to transforming India that went into the creation
A. My father Dhirubhai Ambani founded Reliance of our Retail business and Jio.
on the principles of investing in transformational
businesses of the future, investing in future Through Reliance Retail, we are in an inclusive
technologies, and investing in Indian talent. partnership with small merchants to bring
Creating wealth for the nation and improving the enormous benefits to both consumers and
quality of life for all Indians were the foundational producers. Through Jio, we have laid the
ideals of Reliance. And we have followed these foundation for India’s digital transformation
evergreen principles while growing Reliance as a by building an advanced digital infrastructure
world-class enterprise. capable of providing the most affordable digital
services to Indians.
We realised very early that the Fourth Industrial
Revolution would be the greatest driver of Q2. Micro, small medium enterprises are
change in the 21st century; that data-driven being seen as a cure to the pandemic
technologies such as AI, Blockchain, AR, VR, related economic challenges. What are
Cloud Computing and Robotics would transform your views on the potential of the sector?
lives, livelihoods and lifestyles across the planet How do you compare and contrast the
in ways unimagined. We were convinced that by competitiveness of the sector with presence
leveraging these technologies, we could build of large corporations?

23
In Conversation
Indian entrepreneurs are far more ambitious and
capable than people of my generation.
If India aspires to become
My message to entrepreneurs is that the time
an economic superpower, it has come to widen your perspectives and start
is important that its MSMEs thinking beyond the boundaries of our nation.
While formulating a new concept, don’t just think
thrive and flourish. And, the one about the last man in India; also think about the
factor that can enable them last man on earth. While designing an innovative
solution to address a local challenge, spare a
to unlock their full potential is thought on whether it could be scaled up to
comprehensive digitisation. address similar challenges elsewhere in the world.
Now, the time has come for you to compete with
your peers around the world and become world
A. The Micro, Small and Medium Enterprises class.
(MSME) sector is a key pillar of the nation’s
economy. It has the highest potential to generate Q4. From providing medical oxygen to
jobs in our country. The sector also contributes setting up a free Covid-19 care facility,
significantly to the national GDP and exports. I Reliance is taking a number of steps to
therefore expect it to play a pivotal provide relief to needy during
role in India’s post-COVID recovery ongoing pandemic. How do
and realising our vision of becoming you see these benevolent
a $5 trillion economy. steps of the company?
If India aspires to become an A. Right now, the number one
economic superpower, it is important priority for everybody at Reliance
that its MSMEs thrive and flourish. is to strengthen the nation’s fight
And, the one factor that can enable against COVID-19 and to enable
them to unlock their full potential is it to put the pandemic behind us.
comprehensive digitisation. Digital And we have deployed our best
technologies can help them reboot Shri Mukesh Ambani, resources towards this end.
Chairman, Reliance
themselves to produce a new array of Industries Limited From supplying medical oxygen
products for fast-changing domestic to hospitals to creating high-
and global markets while moving up the ladder of quality COVID care infrastructure; from providing
price and quality competitiveness. meals support to marginalised communities
That is why we at Jio are continuously looking to equipping frontline workers with PPEs; from
at creating easy-to-use and highly affordable spreading awareness about COVID-appropriate
integrated digital services for MSMEs in India. behaviour to safeguarding rural lives and
The ultimate objective is to enable entrepreneurs livelihoods; from making available free fuel to
across India to run their businesses with COVID response vehicles to contributing to
unprecedented efficiency. various COVID relief funds; our efforts have been
consistent, robust and multi-pronged.
Q3. In the present scenario, what are
the opportunities available to Indian All that we are doing is guided by our philosophy
entrepreneurs? How can they open up and of WE CARE. What you call ‘benevolence’ is ‘duty’
compete in the global markets? for us a caring and empathetic corporate citizen.
A. If there is one thing, I am absolutely confident I am particularly overwhelmed by the committed

about the future, it is that there will be a profusion efforts of our frontline workers across the country
of opportunities for Indian entrepreneurs in who are risking their own lives to keep us safe and
secure. As a society, we owe a lot to them.
the post-Covid era. The Indian economy will
rebound very fast and transition from recovery to I am confident that India will ultimately win the
resurgence at a pace that will surprise the world. battle against COVID. Because the entire nation
India has the largest population of young people is united in this battle. All of us are fighting hard.
in the world. No other country has this unique And the human spirit to fight and survive is greater
demographic advantage. Moreover, today’s young than any disease or pandemic.

24
In Conversation
Q6. The present turmoil emanating
I am particularly overwhelmed out of Global pandemic has created
unprecedented economic challenges. How
by the committed efforts of our do you foresee Indian economy after five
frontline workers across the years? Do you think, we would be able to
achieve dream of being $ 5 trillion economy
country who are risking their own anytime soon? What role do you foresee for
lives to keep us safe and secure. As the finance professionals like chartered
a society, we owe a lot to them. accountants in achieving this phenomenal
target?
Q5. Reliance commenced annual triple- A. India’s economy will bounce back from the
bottom line performance reporting from COVID-19 pandemic and prove cynics, who doubt
the Financial Year 2004-05 onwards. the country’s growth story, wrong by becoming a
More recently, in the year 2015 United $5 trillion economy. The economy will not only
Nations General Assembly has finalised 17 rebound but will also grow with unprecedented
Sustainable Development Goals to promote acceleration.
prosperity while protecting the planet.
How important it is for corporates to work Jio, our high-speed 4G connectivity infrastructure,
towards sustainability? How sustainability has proved to be India’s Digital Lifeline during
issues are dealt with in Reliance? the pandemic. India is still working, studying,
receiving healthcare, shopping and socialising
A. I mentioned that WE CARE is the overarching online. Simply put, India is thriving online.
philosophy for everything we do at Reliance. WE
CARE for our employees and their families. WE This underscores the phenomenal evolution of
CARE for our customers, our shareholders, and Digital Technology in India. From being a means
our partners. WE CARE for the country and the of limited engagement and entertainment, it has
community. Also, at the broadest level, WE CARE evolved into a platform of unlimited enablement
for the planet and the people. and empowerment of all sections of society and
The climate crisis reminds us that Planet Earth is all sectors of the economy.
the most important stakeholder for all businesses Now, at the threshold of the 5G revolution, I firmly
and economic activities. Focus on short-term believe that India has the historic opportunity to
gains and neglect of the long-term health and become the world’s pre-eminent Digital Society
survival of the environment that nurtures life is a with Ease of Living for all, even at the middle
recipe for disaster. and the bottom of the economic pyramid.
Fortunately, a global consensus is emerging for And my conviction comes from the enormous
action against climate change. The world is now transformative power of the Digital Technologies,
closing ranks for a strong, effective and time- as well as the tremendous talent of the Indian
bound global action on climate change. This youth who are propelling this new India.
gives Reliance the right opportunity to accelerate Q7. Chartered Accountants on account of
our New Energy business wedded to the vision of their knowledge in finance, accounting,
clean and green development.
taxation are readily absorbed in companies.
We have now embarked on our most ambitious How do you find them in business matters?
new initiative in making India a world leader in What are their skills that best serve the
Clean, Green and Renewable Energy. Towards requirements of industry?
this end, we will establish the Dhirubhai Ambani
Green Energy Giga Complex over 5,000 acres in
Jamnagar. This will comprise four Giga Factories
— Solar Energy Factory; Energy Storage Battery The world is now closing ranks
Factory; Green Hydrogen Factory; and Fuel Cell for a strong, effective and time-
Factory. All our products will proudly proclaim:
Made in India, by India, for India and Made for the bound global action on climate
world! Reliance will establish and enable at least change.
100GW of solar energy by 2030.

25
In Conversation
schemes across sectors have provided the right
To build the foundation for a impetus to domestic manufacturing at the right
time.
sustained leadership in the
Rationalization of taxes has taken India’s corporate
digital age for India it will be tax rate to one of the lowest among emerging
necessary for the CAs to imbibe economies in the world.
new skills. I call them the four Cs: Digital India initiative has given a push for universal
Critical thinking, Communication, connectivity, which will play a key role in making
India a Digital Society.
Collaboration and Creativity. In addition, the Government has done
commendable work in ensuring basic income,
A. The contribution of Chartered Accountants insurance, healthcare access, access to energy,
in our nation’s growth is well acknowledged. banking, electricity and sanitation for millions
As a profession, you are entrusted with the living in rural India.
responsibility to ensure financial integrity and Q9. Managing an industrial behemoth
propriety of every commercial activity. must be very demanding and tiring. How
A talented mind is the greatest asset to a company. do you maintain work-life balance? How
And the ICAI has certainly nurtured a large number is it important for Reliance to provide life
of talented minds over the years, who are playing balancing opportunities to its managers?
important roles across the industry. A. When you love your work, and when that work
I have seen that when the Chartered Accountants has a lofty societal purpose, that love, and that
are able to build upon their knowledge of finance purpose become the sources of inexhaustible
and infuse it with entrepreneurial spirits, they can energy and inspiration. In that situation,
become great business leaders. maintaining work-life balance becomes easy.
However, the world of tomorrow will be quite Q10. Any concluding remarks that you would
different from that of today. To build the foundation like to share with Chartered Accountant
for a sustained leadership in the digital age for fraternity?
India it will be necessary for the CAs to imbibe A. I have great respect for the profession of
new skills. I call them the four Cs: Critical thinking, Chartered Accountants. They ensure the discipline
Communication, Collaboration and Creativity. of transparency and accountability, which are
Q8. Being Chairman of the largest corporate indispensable for the health and growth of any
conglomerate in India, how do you see business.
the current regulatory and governance I personally believe every individual; every
environment in India? How do you rate the institution needs to constantly keep expanding
situation of regulation for Corporates? What horizons to keep growing in life. Innovation is not
are your suggestions for improvements, if something which you do once and forget about. It
any? is a constant process that one needs to inculcate
A. The regulatory and governance environment in in the culture.
India today is certainly progressive and conducive All the Chartered Accountants and the ICAI as
for growth. The Indian government has provided
an institution must aim to become the world
a sustained policy impetus with structural reforms
leaders of your profession. To achieve that, it
and pivotal legislations in investments, taxation
is necessary not just to dream big, but also to
and infrastructure in last few years, with an aim to
execute successfully the small and not-so-small
reach $5 trillion in coming years.
tasks every day with passion and innovation. I
India has made rapid strides in the ‘Ease of have no doubt that the enormously talented and
Doing Business’ ranking in last few years thanks hard-working Chartered Accounts of India, under
to a number of such reforms. ‘Make in India’ the guidance of a great institution like the ICAI,
and ‘Atmanirbhar Bharat’ initiatives are aimed at are already on their way to achieving this and
boosting domestic manufacturing sector. The PLI winning global laurels.

ce
ellen
Exc
and
ence, In
tegrity
Manual verification to
end
Ind
ep
Audit tools
In the early stages of civilization with
unrefined methods of maintaining accounts
a person use to listen to the accounts read
over by an accountant to check them. In India,
“Arthashastra”, a treatise by Kautilya explains
the process of accounting and auditing in
medieval times.
The motives and methodology of auditing,

outpacing the time have forged ahead rapidly,
from vouching to Computer aided auditing
techniques. In the last decade or so there
has been rapid transition to digital, electronic
and virtual modes of auditing. Using drones
for physical verification in these times of
pandemic is also not uncommon. Incidentally,
the commercial world benefitted the most
from incredible inventions and boons of
science. The accounting professionals in their
insatiable thirst to develop and deliver a higher
quality audit and serve the business world
In olden times the key purpose of audits was in a more ethical manner are using a nexus
to gain information about the financial system of advanced techniques to amass financial
and records of the business. Auditing is as information and mine the large volume of data
old as accounting, and there are signs of its and provide assurance beyond accounting
existence in ancient cultures. The exploration books.
of counting process began thousands of
years back with counting manually on fingers, The ICAI is continually engaged in the process
pebbles, marks on sticks, knots on a rope and of review of the existing and emerging auditing
other such techniques. Interestingly, humans practices worldwide and identify areas in
in different parts of world developed different which standards and statements need to
numeral systems but the basis of counting be developed. ICAI formulates Engagement
was the same, i.e., when a certain number say Standards, Standards on Quality Control and
a base is reached, a different mark is made Statements on Auditing so that these may be
representing all of them. But manual counting issued under the authority of the Council of
suffered from both accidental and intentional the Institute.
errors.

27
Vision – Global Leaders
Continuing to Develop a Successful &

Vibrant Profession
Never have we
Jelena Misita
been so challenged
The author is Chair, PAO Development
globally to think Advisory Group, International
about our future Federation of Accountants. She can be
reached at [email protected]
while being cognizant and [email protected]
that the pandemic
is not over, and our
situations continue to go on, even if done virtually. 1. Advise IFAC and provide
to change. We want The pandemic has especially insights on trends and
and hope that we will highlighted the importance of opportunities relevant to
strong collaboration among our capacity building for PAOs,
get back to a sense profession. as well as implications
of normalcy. But we for development of the
IFAC PAO Development &
have been shown how Advisory Group’s Role accountancy profession.
much life can change 2. Advocate for strengthening
The Advisory Group has
in a short period significantly evolved since it PAOs to support of the
of time and even a was first established in 2005. profession, including
return to normalcy Today, we help IFAC support through outreach
strong, sustainable PAOs—the activities and speaking
will look significantly most effective, efficient, and engagements.
different for everyone. sustainable source for advancing
Read on… the accountancy profession— 3. Provide assistance and
around the world. mentoring to developing
I
We actively contribute to IFAC’s PAOs as they strive to
n addressing previous and
current adversity, the global strategic objectives, especially improve and meet IFAC’s
accountancy profession has in preparing a future-ready membership requirements
not only remained steadfast profession in four key areas: and global best practices.
and committed, it has also
quickly adapted for members’
and society’s benefit. And we
must continue to champion
adaptability to identify and seize
opportunities as we discover
them. Although this pandemic
presents unprecedented
challenges for professional
accountancy organizations
(PAOs), it has not stopped
our efforts to serve members
and stakeholders in the public
interest and the greater good.
For all of us at the Advisory
Group, our work also continues

28

4. Enable access to resources year we have built upon the PAO Digital Readiness
and expertise from IFAC lessons from 2020 and are Assessment Tool;
member organizations focusing on PAO resiliency
and partners, including and continuing our work to Contributing to articles and
international development strengthen membership videos for IFAC’s Knowledge
partners, to support PAO quality. We are working to help Gateway;
development. PAOs thrive by addressing topics Forming a dedicated PAO
such as digital transformation, Sustainability Working Group
Advisory Group members mental wellbeing, and to address strategies for PAO
are from both developed and stakeholder engagement, to development and recovery;
emerging economies and name a few.
represent a variety of different Representing IFAC at various
sectors—private and public In focusing on strengthening webinars and events;
sector, academia, firms, PAOs, membership quality, we will
and small businesses. This continue raising awareness of Publishing a new article:
diversity means we have a breath the international standards— New Quality Management
of experiences and knowledge to especially the International Standards: A Tremendous
call on to shape our advice and Education Standards, new Opportunity for PAOs;
assistance. audit quality management
standards, and the International Supporting PAOs with
Despite going virtual in 2020, the Code of Ethics for Professional technical assistance
Advisory Group accomplished a Accountants—as well as and sharing of best
great deal thanks to members’ investigation & discipline practices for international
commitment to keep carrying systems and support developing standards’ adoption and
out our responsibilities. PAOs with resources and best implementation; and
2021 Priorities practices. Our Advisory Group Mentoring and answering

works with IFAC staff to connect questions for organizations
We know a crucial issue for
directly with PAOs to provide interested in IFAC
IFAC’s member organizations,
guidance, advise and resources.
including the Institute of membership.
Chartered Accountants, Examples of the Advisory
is remaining relevant and Group’s activities either The Advisory Group’s ultimate
sustainable for the long term— completed or ongoing in 2021 purpose is to be of service
and ensuring all stakeholders include: to PAOs and ensure wide
understand our relevance and Supporting PAOs to navigate ranging support for the global
sustainability. That is why this and complete IFAC’s accountancy profession, which

29

in turn serves and supports
national, regional, and the
global economy. Each of
our volunteer members
are passionate about our
work, and we look forward
to advancing our plans for
2021.
Accountants’ Role in
Economic Development
IFAC has recently
published new data
linking the accountancy
profession and economic
development. The analysis
reviewed the accountancy
profession in the G20
countries (including each
individual country of
the European Union), and the and trends from across the advisor, Mr. Farrukh Rehman, for
results highlight how professional world. One such Network Partner their active contributions to the
accountants make a significant is the South Asian Federation Advisory Group’s work. I would
contribution to the different of Accountants (SAFA) and on also like to acknowledge my
economies at the local, national, behalf of IFAC and the Advisory predecessor Mr. Arjuna Herath,
and global levels. Group, we would like to thank from the Institute of Chartered
them and other Network Partners, Accountants of Sri Lanka, for
In each measure reviewed, a such as the Confederation of his enthusiasm, energy, and
greater number of accountants Asian and Pacific Accountants commitment to stewarding the
correlates to better economic (CAPA) and the ASEAN Group to where it is now.
performance. Moreover,
professional accountants who
are members of an IFAC PAO
correlate to even stronger
performance on the economic
indicators. It is because of
dedicated and committed IFAC
member organizations such as
ICAI that such an impact is felt.
Based on this data and our
experience working with PAOs, PAO Development & Advisory Group, February 2020
we not only want to recognize
the impact of ICAI and the other Federation of Accountants (AFA), In closing, it is quite positive
PAOs globally, but we also want for supporting our work and that the profession continues to
to acknowledge the volunteers regularly attending our meetings progress onward and upward. I
and practitioners that make this as observers. know that our Advisory Group
stands ready to support and
profession vibrant and successful. I would like to make special advance the profession. We look
If you are reading this and want to mention of current Advisory forward to engaging further with
get involved with the profession, I Group members, such as Mr. PAOs, our members, and our
encourage you to contact ICAI to Prafulla Chhajed, nominated by IFAC Network Partners.
seek out further opportunities! ICAI, along with his technical Readers interested to know more
Building Relationships & advisor Mr. Rajendra Kumar; about IFAC’s work and the Advisory
Partnership and Mr. Naeem Akhtar Sheikh, Group’s activities may visit the IFAC
nominated by the Institute website (www.ifac.org), including
IFAC Network Partners play an of Chartered Accountants of the Global Knowledge Gateway
important role in sharing views Pakistan, along with his technical (www.ifac.org/gateway). 

30
Accountants and Climate Change

A low-carbon Sanjay Rughani
transition is The author is Chair, PAIB Advisory
Group, International Federation
underway and of Accountants. He can be reached
will change at [email protected] and
[email protected]
how economies
operate creating
A
both uncertainty s Mark Carney, COP26 The transition to a below
and significant Finance Adviser and UN 2-degree Celsius net-zero world
opportunities. Special Envoy, put it at the really needs climate-literate
2020 IFAC and ACCA Climate accountants who can:
Politicians, Week event, the accountancy
regulators, and advise their clients and
profession is essential in
employers on the risks,
institutional achieving a low-carbon
liability and reputational
transition. The contribution of
investors, and an individual accountant will
damage arising from
asset managers are of course depend on their role
corporate activity that
negatively contributes to
all maneuvering but there are few roles that
climate change;
accountants undertake which
towards a world do not require thinking about support the strategic,
with net-zero climate impacts and their operational and financial
emissions. The financial consequences. assessment of climate
International
Federation of
Accountant’s Point
of View on climate
action outlines
the enormous
influence on IFAC’s
180 member
organizations
and on over 3.5
million professional
accountants yield
in driving climate
change transition
and adaptation.
Read on…

31

change and steering an significant work to be done to “to disclose a plan for how
organization toward meet such long-term ambitions their business model will be
the opportunities that not least companies putting compatible with a net-zero
decarbonization brings; and in place clear strategies and economy”.
robust short- and medium-term
provide investors the targets, and ensuring where The significant threat of
information they need to possible future investments are climate-related stranded assets
understand the current clearly aligned. Climate Action is also driving central banks
and prospective impact 100+ has put in place a net- and financial supervisors to
of climate-related matters zero company benchmark to assess their role in ensuring
on an organization and help track business alignment the resiliency of the financial
its financial position and with the Paris Agreement. system and solvency of
prospects. financial institutions.
Governments and businesses
Net-zero emissions will are setting net-zero emissions Capital markets have started
be achieved when all targets with about 120 to make decisions about the
anthropogenic GHG emissions governments and a fifth of the transition to renewable and
are counterbalanced by world’s 2,000 biggest listed sustainable energy with the
removing GHGs from the companies having made net- cost of capital for fossil fuel
atmosphere by carbon zero commitments. In India, options increasing. Financial
removal. The net-zero premise which is on a trajectory to capital is seeking solutions
is that emissions from human meet its current Paris climate to reduce GHG emissions.
activities based on fossil fuels commitments, Indian Railways The World Resources Institute
are reduced to as close to zero has committed to achieve highlights 10 key solutions to
as possible, and remaining net-zero emissions by 2030 reduce emissions.
emissions are balanced with an in addition to
equivalent amount of carbon various large
removal. In scenarios limiting companies
global warming to 1.5 degrees (e.g., Reliance
Celsius, GHG emissions need Industry net
to reach net-zero between carbon zero by
2063-2068 (and carbon dioxide 2035, Mahindra
much sooner by around Group carbon
mid-century). Although not neutral by
all countries need to reach 2040, and
net-zero at the same time, the Wipro net-zero
likelihood of attaining the Paris GHG emissions
Agreement and a 1.5 degrees by 2040).
Celsius warming scenario
depends on high emitting More than 40
countries acting sooner. asset managers
including
Net-zero emissions Vanguard and
commitments are a clear BlackRock,
signal of the intent to achieving signed up to the Net Zero Asset A major challenge for investors
the International Climate Managers Initiative pledging to and the capital markets is that
“Paris Agreement”. About make their portfolios net-zero climate risk disclosure globally
60% of global emissions by 2050 or earlier. The CEO of is inadequate. For climate risk
are now subject to such BlackRock, Larry Fink’s annual to be fully reflected in company
targets. Undoubtedly, there is letter calls on all companies valuations every company,

32

every bank, every insurer and accounting estimates and
investor needs to disclose judgements in assessing and Capital markets
their climate-related risks on a reporting on financial position have started to
standardized basis. Company and performance. Investors and
valuations in a 2-degree Celsius regulators, and subsequently
make decisions
or lower world will likely be very auditors, have started to ask about the transition
different given the potentially questions of companies, to renewable
significant implications on particularly those with large
future cash flows. carbon footprints, challenging and sustainable
their assumptions and risk energy with the
Climate change can only be disclosures in their financial
fully taken into account in
cost of capital
reporting. Reflecting climate
valuations when companies risk in financial reporting is for fossil fuel
have incorporated climate- ultimately the same as dealing options increasing.
related risks in their financial with other risks. Climate
position and performance. Financial capital is
risk may well lead to asset
As climate is increasingly impairment, and provisions and seeking solutions
integrated into corporate contingent liabilities. Property, to reduce GHG
decision making and reporting, plant and equipment can have
valuations will better reflect the useful economic lives spanning
emissions.
actual and potential climate long periods with significant
impacts. assumptions about future cash
Establishing a reliable
flows taken into perpetuity.
A significant challenge in carbon footprint (or GHG
Climate-related financial risk
climate-risk assessments and emissions inventory) for an
and opportunity both largely
disclosures is that climate organization, or for a product,
arise from the need to retire
impacts are not quantified can be a complex but critical
and replace carbon-intensive
and monetized. Quantification task to measure the energy
assets on an expedited basis.
helps to drive medium and consumption of activities and
long-term planning, and is With climate being a significant the emissions associated with
where accountants involved in financial concern and threat the business model.
financial planning and analysis, to business resilience and
can significantly contribute long-term value creation, This requires understanding
by providing financial-related accountants need to provide the absolute emissions across
information about profits and actionable information and value chains (i.e., beyond
valuations that reflect climate- insights on its opportunities, Scope 1 direct emissions
related risks and events. risks and potential financial and Scope 2 electricity
Without quantification of impacts. indirect emissions). Collecting
climate risks and opportunities, robust data of Scope 3 or
companies will find it hard There are four key areas of other indirect emissions is
to compare climate change focus for accountants in challenging but important
against their wider enterprise becoming climate-literate: to understand emissions
risks, and investors are unable in the supply chain, how
1. Know your emissions customers use products,
to make informed decisions
about the allocation of their Emissions arise from products, and the significant risks and
capital. services, and fixed assets. Both opportunities rela to operation
absolute emissions reduction licensing. Consequently, more
Effective climate risk reporting and carbon intensity provide companies are working with
also requires significantly a benchmark for targeted customers and suppliers to
better disclosure around key decarbonization actions. help address emissions in the

33

consumption and supply parts Many of these will be important benefits over longer periods
of the value chain. for financial planning and become important. Investments
financial statement preparation in R&D include resource and
Setting key performance to underpin balance sheet energy efficiency, migration
indicators (KPIs) that items. to circular business models,
improve performance and avoiding use or production of
link to incentives is critical. Scenario analysis and risk virgin materials (e.g., using
For example, an airline assessments help quantify bio-based raw materials
might reduce emissions per potential financial impacts like mycelium leather), and
passenger mile traveled, but on revenues, expenditures, diversification into other energy
higher passenger numbers assets, and liabilities under forms.
could still increase overall various climate scenarios. The
emissions. Accountants need adaptive capacity of business A credible transition plan is
to ensure GHG management models in different scenarios needed to access finance for
plans are in place to prioritize is highlighted by the extent low-carbon investments and
carbon reduction projects and to which weather events and products, such as electric
quantify cost savings, carbon increasing carbon costs impact fleets or renewable energy
savings, and implementation expected cash flows and asset generation. Mobilizing equity
costs. valuations. or debt finance to support new
technologies and processes
Accountants need to Climate risks must be is usually critical. Options for
address the emissions data embedded in strategic green finance have significantly
quality challenge through decisions such as capital increased over recent years
implementing an effective investment. Existing assets through green bonds such as
system of internal control including buildings, machinery, the bond and sukuk issuances
over such data and ensuring equipment, and vehicles are used at Standard Chartered,
it is subject to investor-grade stores of future emissions and sustainability-linked loans.
assurance. which will continue over
their remaining use. Asset 4. Tell the story
2. Integrate climate impairment and replacement
Communicating how your
information into strategy costs, and appraisal of new company is becoming net-zero
and risk management assets, is a fundamental part of compatible will be part of any
achieving net-zero. finance leader’s conversations
Comprehensive understanding with boards, investors and
of climate risk assessments and 3. Understand your other stakeholders--explaining
scenario modeling supports decarbonization options risks and opportunities,
robust analysis of opportunities targets and KPIs, prioritization
This includes options for of capital investment, and
and risks of different transition
permanent carbon reduction financial impacts, including
pathways and reveals the how climate change relates
and removal. Businesses with
resilience of strategies and to accounting estimates
a decarbonization strategy and
business models to physical and judgements used in
plan can respond and adapt
and transition climate risks. the preparation of financial
to different approaches to
Scenario analysis to prepare statements and reports. For
achieving net-zero emissions. climate reporting to move
The Financial Stability
Board’s Taskforce on Climate- beyond a marketing exercise
Investments in low-carbon
to one providing information
related Financial Disclosures solutions can often appear that boards and investors need
(TCFD) recommendations for economically unviable because to enable decarbonization,
disclosure will likely include of high up-front capital costs. accountants need to be part
significant assumptions and So measuring economic of the equation and rise to the
estimates about the future. returns, and other potential occasion. 

34
Small and Medium Practice

Transformation During a Crisis
There have been
many lessons from Monica Foerster
the pandemic, and The author is Chair, SMP Advisory

Group, International Federation of
small- and medium- Accountants. She can be reached at
sized practices [email protected] and [email protected]
(SMPs) have had to

evolve their practices
to fit the changing New Service Offerings and professionals and firms further
needs of their clients. Digitalization into advisory services, and this
T
need will continue - offering a
In some cases, this he pandemic has fostered great opportunity for the industry.
has meant assisting innovation for many firms. The trend towards offering more
Businesses and individuals advisory services is not new, but
them with debt that are struggling financially are the pandemic seems to have
covenant waivers, seeking ways they can operate accelerated the rate at which
obtaining new more efficiently. Because of this work is being undertaken by
this, accounting and advisory firms.
sources of financing, expertise is needed more than
SMPs need to embrace
navigating cash flow ever. From questions about
technology to better serve clients
government stimulus packages,
issues, advising them to adjusting business models, and attract and retain top talent.
on technology needs, to needing general insights on A survey of 3,300+ Gen Z’ers
across G20 countries examined
and so much more financial health and resilience,
this generation’s views on public
accountants are helping current
than they may have and new clients navigate these policy and the workplace. It
been asked to do in challenges. showed that Gen Z expects
digitalization and emerging
the past. It has also The global health and financial technology will be a double-
changed the way that challenges have propelled many edged sword, both bringing new
the firms themselves
do business, as
many firms, like their
clients, have had to
shift to a fully virtual
working environment.
In many cases, it
has even changed
the way firms try to
retain key staff and
plan for their future.
Read on…

35

ways of doing things (meaning a fully virtual work environment. sole owners estimated that their
new and more interesting jobs) Many firms were not prepared to employees would work remotely
but also driving the decline work in a virtual office setting. 40% or more of the time than
of traditional job roles and With stay-at-home orders and they did before COVID-19.
responsibilities. many office locations around the
globe being closed even well into Effective selection,
According to industry data, SMPs 2021, firms have had to figure implementation, and
that embark on diversification out how to continue to provide management of technologies, as
(before digitalization) tend to high quality services to their well as training employees to use
have lower productivity. One clients, while not being able to be software solutions, have become
pointer, noted in the Association on site. fundamental to the success of
of Chartered Certified any firm. When introducing or
Accountants and Singapore Google’s CEO Sundar Pichai reviewing a technology strategy,
Commission report and quick said recently that the future of a firm needs to first define its
guide, is to digitalize first—before work involves a “hybrid model.” goals, then find and embrace
diversification. A March article from IFAC on a system that will achieve
the virtual environment and most, if not all, of those goals.
The Virtual Office the hybrid office notes that as IFAC has developed a Practice
with other trends in technology Management Guide, which
One major challenge for many in the workplace, companies covers leveraging technology
SMPs in 2020 was converting to will thoroughly understand the to assist SMPs in developing an
benefits and challenges of a effective technology strategy.
hybrid office model only after it
has become a common practice. Staffing Trends
The global health
and financial Onboarding remote staff also
comes with challenges. A
More work and tighter tax and
other reporting deadlines have
challenges have January IFAC article notes the caused widespread staff burnout.
following measures should be
propelled many considered:
Firms will have to be strategic
and creative in attracting and
professionals and keeping talented people as
Getting the technology and we continue to navigate what
firms further into environment right. seems to be a never-ending busy
advisory services, Communication between the
season.
and this need will employer and employee and Firms also may need to think
setting work expectations.
continue - offering outside the box regarding
the skills they are seeking to
a great opportunity Staff interaction. perform new services and how
for the industry. those services are staffed. Firms
A 2020 Succession Planning
may also be able to leverage
Survey conducted by the AICPA
The trend towards noted that the majority of firms
technology tools in order to
reduce staff hours spent on
offering more surveyed expected that more
projects, allowing them to focus
of their staff would work from
advisory services home after the pandemic ends
more on the big picture and
advising their clients.
is not new, but the than they did before it. Almost
three-quarters of multi-owner In a 2019 report by AICPA,
pandemic seems to firms (71%) and nearly half of the recruitment of non-
have accelerated sole owners (47%) said that accountants as a percentage
more of their staff would work of all new graduate hires are
the rate at which remotely once the pandemic is up from %11 to %31, whereas
this work is being over. In some cases, respondents there has been an approximate
expected the shift to remote work %30 decline in the hiring
undertaken by to be considerable. Eighteen of accounting graduates since
firms. percent of respondents from
multi-owner firms and 17% of
2017. The marketplace
continues to demand different

36

competencies and, while 2020 Succession Planning
accounting graduates are still Survey. More than half of multi- Firms will have
being hired, firms are also owner firms (55%) said they
seeking other skill sets to expand are currently experiencing to be strategic
their services. There is further succession challenges, up from and creative
anecdotal evidence to suggest 26% in 2016, the last time the
that some of the technology- survey was conducted. in attracting
specific hiring is occurring at the
“experienced hire” level—not just However, the survey results
and keeping
the entry level. indicate the COVID-19 pandemic talented people
has not affected most firms’ as we continue
IFAC has developed a Practice plans for succession. More
Transformation Action Plan
than three-quarters (76%) to navigate what
that focuses on how SMPs can
embrace change, leverage of single owners and sole seems to be a
practitioners said the pandemic
technology, manage talent, and
have a renewed emphasis on has not changed their time never-ending busy
providing relevant and value- frame for retirement, while the season.
added services. vast majority of respondents
from multi-owner firms (88%) Conclusion
Succession Planning said it has not changed their
senior partners’ time frame for The pandemic has shown that
A December 2020 Journal the pace of change will be faster
retirement. Most single-owner
of Accountancy article notes tomorrow than it is today. Firms
that many CPA firms are now firms and sole practitioners
(72%) also said the pandemic will need to continue to adapt
grappling with succession and adjust their business models
planning issues, according had not changed their plans for
to keep up with their clients’
to the results of the AICPA’s merging or selling their firms. needs. 

37
Farsighted Approaches to Auditor

Independence: Responding to Global
Challenges
Auditor
Independence is a Stavros Thomadakis
major component The author is Chair, International Ethics

Standards Board for Accountants. He
of the International can be reached at thomadakis@econ.
uoa.gr and [email protected]
Code of Ethics
for Professional
Accountants elimination of fee dependency and investor communities,
(including of the auditor on a single client. have been lingering for quite
International All this is viewed by the new some time about the impact
standards through the lens of the provision of NAS
Independence of their positive impact upon to audit clients on auditor
Standards) “independence in fact” and independence.
(the Code). The “independence in appearance”,
to use the language of the The extant Code includes
International Ethics prohibitions on the provision
Code.
Standards Board for of NAS, in many cases subject
These new provisions are path-
Accountants (IESBA) breaking in several ways. Their
to a materiality threshold.
has recently issued It also requires the use of a
greatest advantage is that they “reasonable and informed
revisions to its are future-focused as explained third party” test implying
standards of auditor below. that outsiders’ perceptions
independence with Project initiation about independence have
to be considered in auditor
an effective date of Concerns among stakeholders,
judgments.
December 15, 2022. especially from the regulatory
Read on..
T
he revised standards
address pivotal issues
- limits, conditions and
prohibitions on the provision of
non-assurance services (NAS)
to audit clients; principles
for the transparency and the
distinct separation of fees
charged for audit and non-
audit services; and restrictions
directed to limitation or

38

The occurrence of corporate Services: Exploring Issues to An important supplementary
failures and the pressures of Determine a Way Forward”. We objective, common to all Code
persistent crises led many also commissioned a review of provisions, is that the standards
around the world to question academic literature on impact have to be applicable and
whether independence of fees on market perceptions operable globally, not being
could be maintained when about auditor independence. fashioned for a few select
NAS were becoming both a jurisdictions. By and large, this
significant source of revenue Further, we studied the “applicability” objective implies
to audit firms. The deeper steps that some advanced the advancement of principles-
issue has been one of possible jurisdictions took to reinforce based provisions with some
distortion of incentives, or, independence. “Black lists” flexibility to meet local needs.
in the language of the Code, of prohibited NAS or “white
emergence of serious threats lists” of allowed NAS to be More specifically, the work,
to independence: Can a firm provided to audit clients consultations and deliberations
conduct an independent audit have surfaced in national of IESBA looked for conditions,
when the provision of NAS to regulations. Fee disclosures limits, and targeted prohibitions
the audit client is becoming a and caps on types of fees have of the provision of NAS to
serious business relationship also been established in some audit clients; they also viewed
that can influence auditor jurisdictions as a constraint to mandating transparency of
judgments and objectivity? NAS provision to audit clients. related fees paid by the audit
Are there not situations when These initiatives furnished a client for both audit services
safeguards do not suffice and guidepost to the deliberations and NAS, and to possible
prohibitions must be put in of the Ethics Board as to threats to independence that
place? the direction of travel. Audit fee correlation between the two
firms themselves, sensitive to categories of services or fee
Confronted with such perceptions and regulatory dependency may create.
questions, the IESBA pressure, had also been taking
conducted outreach on the steps to reduce in fact and It was clear in the specification
basis of a paper issued in May appearance the mixing of of project objectives that the
2018 and titled “Non-assurance audit and non-audit services new independence provisions
by instituting various forms would be differentiated,
of separating walls among depending on whether
The occurrence of the client entity is a public
various business lines. Thus,
corporate failures both regulatory evidence and interest entity (PIE) or not.
and the pressures wide perceptions pointed to the This distinction rests on the
premise that, by definition,
of persistent crises need for the global standard-
independence requirements
setter to step in; and so we did
led many around with simultaneous projects on need to be more stringent
the world to NAS and on fees. for PIEs, as their financial
condition is more relevant to a
question whether broad set of stakeholders with
The objectives
independence higher impact on the public
could be The overarching objective interest. The critical distinction
of the projects has been to
maintained when strengthen the IIS, addressing
between PIEs and non-PIEs
already exists in the Code and
NAS were becoming public interest concerns about provides an important and
both a significant independence when firms socially meaningful canon
source of revenue provide NAS to their audit for scalability of provisions.
clients and in certain fee- It would be disproportionate
to audit firms. related situations. if SMEs and SMPs were, for

39

example, subjected to strictures previous work in the course of rise to a SRT but all NAS that
as burdensome as for large and an audit; and this is the most might give rise to a SRT, i.e. not
more complex entities. evident and most damaging just the fact but even the mere
circumstance to both the possibility of a SRT occurring.
IESBA Solution - NAS: Key substance and the appearance It is objective because the
features of independence. Reflecting prohibition does not depend
The “IESBA Solution” responds about it, review of own work on a materiality threshold. So
to all these queries and cancels the critical perspective it is not a matter of judgment
concerns. Here, the focus or scepticism – it undermines, whether the prohibition will bite
will be on key provisions, or even leads to disappearance or not. It will bite for PIEs.
discussing their broad of independence. Of all threats,
SRT is the most damaging to Besides being efficient,
significance. Those who
independence, both in fact and stringent and objective, the
would like to see the complete
in perception. SRT prohibition has another
provisions for NAS and
more powerful advantage: it
fees, can visit our webpage
So IESBA’s global solution has covers possible future services,
(ethicsboard.org) for full
not been yet another black list. embedding new technologies
details, including responses to
It has gone to the heart of the that may present new forms
consultation and justification
issue mandating for PIEs, a and opportunities for the
of IESBA’s choices of standard
prohibition of any service that SRT to surface. In a world of
content and architecture.
might give rise to a SRT. This technology-driven innovation,
The structural elements on is a novel approach both in this is a clear advantage as
which the Code is premised the Code itself and in relation compared to lists of presently
are the list of five fundamental to various national regulatory defined and known NAS that
principles and a conceptual regimes. may well change: The SRT
framework that specifies threats prohibition is farsighted and
to compliance and how to It is important to emphasise future-proof.
address them. The five threats here that the new standard
are worth repeating here: self prohibiting the risk of SRT The centerpiece prohibition of
interest, self-review, advocacy, is efficient, stringent and services that might give rise to
familiarity, and intimidation objective. It is efficient because a SRT is complemented by a
All these threats may affect with one principles-based series of other provisions that
independence. And all, or prohibition, it, in fact, prevents enhance independence. For
most, become entwined with the provision of a whole set one, the new standards elevate
the provision of NAS and the of NAS to audit clients. It is very significantly the role of
payment by the audit client of stringent because it eliminates those charged with Governance
fees to the audit firm for these not simply all NAS that give within the client entity. They
services.
Examining the black lists in
jurisdictions that have regulated
this matter, we find a common
– and powerful – denominator
in the prohibited NAS: the
distinct possibility that their
provision creates a self-review
threat (SRT). Self-review
means reviewing your own

40

have to concur to the provision NAS, not otherwise subject to Yet, the payment of fees on the
of any NAS not otherwise the SRT prohibition, to certain basis of that model may give
prohibited and they approve the members of the PIE’s corporate rise to threats to independence,
fees, as well. Communication family, especially the parent especially the self-interest threat
of the auditor with those entity, must also be disclosed and the intimidation threat.
charged with governance to TCWG of the PIE by the A clear project objective is to
(TCWG) is an important feature audit firm. These will be taken raise the awareness of audit
because it empowers these into account when assessing firms about these threats and
parties to play a very significant independence and concurring to make provisions addressing
role in the process, to express with (or rejecting) the provision those threats.
an opinion on the question of the NAS.
of independence and to act Approaching the question of
Core provisions prohibiting fees, the Board stayed away
on this opinion. This too is a the SRT apply to PIEs, as
significant novelty. from any attempt to determine
already explained. In the case
of non-PIEs, the provisions are what the proper level of fees
By virtue of the Code’s “related scaled down but still involve should be, as this is a business
entity” provision, the SRT a strengthening of evaluation decision and depends on
prohibition of NAS extends to and review of the SRT and a variety of real-life factors.
cover related entities of the the application of appropriate However, the new provisions
PIE client. For a listed client safeguards by the auditor. flag important elements of
in particular, this will include So, on the whole, the new principle. First, that the audit
related entities under direct standard represents a general fee should be sufficient for
or indirect control of the strengthening and clarification the provision of audit services
listed entity, its parent entity of independence requirements as required by the principle
as well as its sister entities. A with respect to the SRT. This of competence and due care.
noteworthy supplement to the does not mean that other
Second, the audit fee should be
threats are disregarded or
standard is that the provision of determined on a stand-alone
omitted. There is ample
consideration, requirements basis and not be correlated to
or application material for the fees paid for non-audit services.
A noteworthy management and reduction Third, very high or very low
supplement to the of other threats. Singling out fees might affect adversely
standard is that IESBA’s focus on the advocacy perceptions of independence or
threat can also seriously quality.
the provision of undermine independence. The
NAS, not otherwise new standard places limitations Audit committees of PIEs
subject to the SRT on provision of NAS such as must be fully informed on
legal services or tax-planning the determination of fees and
prohibition, to services, for example, precisely services involved on the basis
certain members of in order to prevent the erosion of requirements of the Code.
the PIE’s corporate of confidence in the auditor’s
The new provisions go further:
skepticism and independent
family, especially judgement.
for PIEs, they mandate public
the parent entity, disclosure of fees paid by the
The IESBA Solution - Fees: client to the audit firm and
must also be Key features network firms separately and
disclosed to TCWG distinctly for the audit and
The Board and the extant Code
of the PIE by the recognize the wide acceptance
the non-audit services. Thus,
market participants will be able
audit firm. of the audit client payer model. to make comparisons and draw

41

Complementary projects behaviour when they are
The new provisions involved in the development,
Two ongoing projects have a implementation or use of
banish fee bearing on how the NAS and technology. Additionally, in
dependency by Fees provisions are applied the case of NAS, we plan to
flagging that, in around the world: the revision offer additional guidance to
of the definition of PIE and the implementation of the
the case of PIEs, the work on technology and new NAS provisions, in the
the appearance ethics. context of dense technological
of revenue applications.
The current definition of PIE
concentration includes “listed entities” and Conclusions
of more than 15 accepts additional entities A principle-based Code with
that local laws and regulations
percent from a may specify. This extant
clear guidance for application
continues to be the best
single client must specification leads to significant option for globally consistent
be corrected variety across jurisdictions. practice of ethical precepts and
IESBA is now specifying requirements.
steering indications of what
features PIEs should have so Code pronouncements must
their own conclusions about be comprehensive and remain
that local definitions are more
the trustworthiness of audits. relevant not only in the context
globally consistent. We are
of new technologies but also in
A last important provision considering consultation results
another context: the pressing
relates to “fee dependency”. at this point. The project is needs for more informative
Already described in the Code, closely coordinated with the and more standardised non-
this relates to situations of an IAASB so that we can work financial reporting, which will
audit firm receiving substantial towards a common definition. require an extension of the
revenue from a single client. system of external examination
Our technology initiatives
This is a situation where “self- in the form of audits, reviews
are looking at the impact and assurance.
interest” and “intimidation” of innovations on ethical
threats come to play. The behaviour. A comprehensive Lastly, advancements in ethical
new provisions banish fee review of the Code’s codes – analogous to the
dependency by flagging fundamental principles, IESBA’s International Code –
that, in the case of PIEs, taking into account current across the entire eco-system
the appearance of revenue technological inroads, of corporate professions, both
concentration of more than has shown the Code’s within and around corporate
15 percent from a single client fundamental principles to organisations should be
must be corrected: measures promoted by the accounting
be solid, comprehensive
to reduce concentration, public profession, corporate
and clear in their coverage
disclosure of the dependency organisations and policy
of new configurations of makers. I remain a very strong
if it occurs for two consecutive technologically-supported proponent of a generalised
years and disengagement human judgment and elevation of ethical cultures and
from the client if dependency practice. Nevertheless, we behaviours across the actors
persists for five years. In are actively studying potential who move and energise our
the case of non-PIEs, the enhancements to the Code economies. The International
Code now prescribes a less that would enable professional Code of Ethics for professional
stringent but still robust use of accountants to appropriately accountants furnishes an
safeguards. respond to threats to ethical excellent prototype. 

42
CA Profession and Professional

Standards
The profession
of chartered CA. (Dr.) Shiwaji Bhikaji Zaware
accountancy is The author is Chair, Asian-Oceanian Stan-
dard-Setters Group and a member of the
based on code of Institute. He can be reached at sbzaware@
professionalism and icai.org and [email protected]
ethics. Often termed

as a partner in the
process of national
A
development, the ‘Profession’ is a about their own conduct as a
disciplined group of member of a profession.
Institute of Chartered
professionals who adhere
Accountants of India’ to professional standards The CA profession can be
has been playing and who hold themselves traced all the way back to
a crucial role in out as and are accepted by pre-independence times. The
Indian economy stakeholders to repose the Companies Act, passed by the
by successful confidence for possessing British administration in India
implementation of special knowledge and skills for. in 1913, required a list of books
that a company incorporated
various financial and
‘Professionals’ are governed under the Act had to maintain.
accounting standards. by codes of ethics and The Act also provided for the
Running on the basis professional commitment to appointment of an auditor, who
of professional ethics, competence, integrity, morality, had the power to audit these
ICAI is responsible for altruism and promotion of books. Later, the Government
drafting accounting, the public good within their introduced a Diploma in
auditing and expert domain and are quality Accountancy course in Bombay
other standards. conscious. ‘Professionalism’ (now Mumbai). This course
is defined as the personally followed a pattern similar to
Considering held beliefs of a professional a smaller version of today’s
the amount of
challenges in this
area, it is advisable
that Chartered
Accountants must
adhere to quality
consciousness
and professional
standards in order
to sustain the
confidence of all the
stakeholders. Read
on..

43

CA course with a three-year countries, the word ‘Chartered’ ICAI has achieved recognition
training period. Those who when used for Indian as a premier accounting
completed the course and Accountants, has no relation to body not only in the country
training could practice as an the royal charter of the British but also globally. At a macro
auditor in India. In 1930, the (as India is a republic)! level, the ICAI prescribes
then Government decided accounting/financial reporting
to maintain a ‘Register of The traditional role of a standards, thus ensuring
Accountants’ and preferred the Chartered Accountant as an uniformity in the accounting
title as ‘Registered Accountant’. accountant and auditor has and financial reporting and
However, even with all these undergone sea changes since helping the stakeholders to
practices, the accountancy 1949 as in today’s commercial assimilate how the financial
profession remained under- world, he/she is recognised as performance, financial position
regulated until the formation ‘Business Solution Provider’. and cash flow is displayed
of an expert committee in
1948, which suggested that
an autonomous body should
be formed for enhanced
regulation. By then, many
Indians had already become
members of the Institute of
Chartered Accountants in on historical facts. ICAI, as a
Hon’ble Prime Minister of regulator, works closely with
England and Wales (ICAEW) India, Shri Narendra Modi the Ministry of Corporate
and were known as Chartered while addressing during CA affairs and while executing
Accountants at that time. day on July 1 , 2017 stated its leadership responsibilities,
An ‘Expert Committee’ was that “Chartered Accountants has intensified its interactions
formed in independent India are like Ambassadors of any with the Ministry of Finance,
to advocate the formation of country’s economic system. Ministry of Human Resource
an autonomous institution Your signature is more Development, Reserve Bank of
of accountants to govern powerful than that of a Prime India, Ministry of Commerce,
the accountancy profession. Minister. Your signature is a Ministry of Railway, Securities
In 1949, soon before India testimony to the trust in the and Exchange Board of India
became Republic, the truth.” and Insurance Regulatory and
Parliament accepted the Expert Development Authority besides
Committee’s report and passed ICAI – Partner In Nation a host of other number of
“The Chartered Accountants Building government departments.
Act”. This Act came into The ICAI is often termed as a
effect from July 1, 1949 and These initiatives by ICAI are
“partner in nation building” as a part of the special drive to
the Institute of Chartered it has played and continues
Accountants of India (ICAI) was augment stakeholders’ trust
to play a vital role in the and established professional
established as the regulator Indian economy by successful
of the esteemed profession. leadership and influence in all
implementation of various the emerging fiscal arenas with
Since then, July 1 has been financial reporting standards
commemorated as the CA Day global orientation.
viz. formulation of accounting
in India. The term “Chartered standards, convergence Code Of Ethics
Accountant” became the with International Financial
preferred title instead of the Reporting Standards (IFRS), Ethics is knowing the
previously used “Registered implementation of auditing and difference between what you
Accountant”. However, unlike assurance standards, and so have a right to do and what
in other Commonwealth on. The list is endless. is right to do

44

In today’s ever-changing the Institute, whether in practise Ethics are vital to
commercial environment, or in service. The latest Code encourage Chartered
ethics is not a domain that has been derived from the Accountants to maintain
must be kept distinct from International Ethics Standards rightful professional
the practical world, but Board for Accountants (IESBA) demeanour. The approach
rather is an integral part of as Code of Ethics, 2018 issued and conduct of professional
it. It must be imparted in by the International Federation accountants in providing
the individual’s habits and of Accountants (IFAC) subject services have a bearing on
temperament in order to create to the required changes that the economic well-being
an overall culture of ethics. have been made to make it of their profession and
This force must be dominant compatible with Indian laws. country.
enough to keep pace with The Code of Ethics establishes The ethical aspects
the changing dynamics and fundamental ethical principles of carrying profession
quality consciousness of the for professional accountants, are becoming just as
profession. As a result, it was reflecting the profession’s imperative as the financial
felt necessary for ICAI to frame recognition of its public interest ones, and a well-considered
ethical framework for Chartered responsibility. These principles code of ethics is an
Accountants. The provisions define the expected conduct of indispensable prerequisite
of the Code of Ethics has to be a professional accountant. for qualitative output.
followed by all the members of
The ICAI played and

continues to play
a vital role in the
Indian economy
by successful Importance of Code of Apart from the Code of Ethics,
implementation of Ethics a professional accountant
various financial The Code of Ethics serves should also act diligently and
reporting standards as a guide for members of in accordance with applicable
the profession. professional standards while
viz., formulation providing services.
A unique mark of a
of Accounting profession is acceptance Professional Standards
Standards, of its accountability
Convergence with to the stakeholders. A Professional Standards are a
professional accountant’s set of laws, principles, practices
International responsibility is not limited
and behaviour that members of
Financial Reporting to meeting the needs of a
a respective professional group
single client or employer.
Standards (IFRS), Professional accountants have to follow.
implementation are trusted by investors,
As a premier professional body,
of Auditing banks, financial institutions,
insurers, the government, ICAI is responsible for drafting
and Assurance tax authorities, accounting, auditing and other
Standards, and so collaborators, the business standards. These professional
and financial community, standards are described as
on. and other stakeholders. follows:

45

I. Accounting Standards The Accounting Standards net worth of INR 500 crore or
(AS) and Indian Accounting Board of the ICAI established more are required to follow Ind
Standards (Ind AS) in the year 1977 issues the AS on mandatory basis for the
In the present era of accounting standards to accounting period beginning
liberalisation and globalisation, establish uniform standards on or after April 1, 2016.
the world has become a global for preparation of financial Under Phase II, remaining
village. Financial reporting statements in accordance listed companies (irrespective
plays a very important role with the Indian GAAP, for of net worth) and non-listed
in the economic growth of better understanding of the companies having net worth
any country. It is a business users. These accounting of INR 250 crore or more are
communication language in standards are expected to be required to follow Ind AS for the
which summarised business implemented by non-corporate accounting period beginning
transactions are reported to entities including small and on or after April 1, 2017.
the primary and secondary medium sized enterprises
Besides, all holding, subsidiary,
users in the form of ‘General (SMEs). The auditors must
joint venture or associate
Purpose Financial Statements’. ensure compliance of the
companies of companies which
With improving technology accounting standards while
are covered by the roadmap
and logistics, businesses have certifying general purpose
financial statements. Otherwise are also required to follow Ind
the opportunities to expand
audit report needs qualification. AS in all phases. In the similar
at an international level.
fashion, the roadmap has
However, different accounting
ICAI prepares and recommends also been made applicable
frameworks are observed
AS/Ind AS through National for the Non-Banking Finance
in different countries for
Financial Reporting Authority Companies (NBFCs) by now.
the same transaction. This
results in confusion in the (NAFRA), which subsequently
minds of the users of financial gets notified by MCA vide However, for banks and
statements which has resulted Companies (Accounting insurance companies, Ind AS
in the need to adopting unified Standards) Rules, 2006, framework will be applicable
international standards that can Companies (Indian Accounting from a future date as may be
help economy, industry and Standards) Rules, 2015 and decided by the regulator.
accounting professionals. related amendments thereto,
which are applicable to The IFRS are principle-
companies. based standards issued by
Apart from the India decided to converge the International Accounting
Code of Ethics, with IFRS for public interest Standards Board (IASB) of
IFRS Foundation that set
a professional entities and accordingly,
common rules so that the
IFRS-converged Indian
accountant Accounting Standards (Ind AS) financial statements can be
should also act were introduced. The Indian consistent, transparent, and
Government issued a roadmap comparable globally.
diligently and
for the implementation of
in accordance Ind AS in a phased manner. The ASB of the ICAI has
with applicable Under phase I, all companies been a critical wheel in the
are permitted to follow Ind accounting standard-setting
professional AS on voluntary basis for the chariot of this nation since its
standards accounting period beginning formation. Since then, the ASB
while providing on or after April 1, 2015. All has been working in public
domestic public companies interest to enable the nation
services. (Listed or Non-Listed) having a based on high quality globally

46

accepted financial reporting a substantial amount of converged standards have
standards. The ASB has judgement and efforts increased the confidence
successfully implemented the which determines the of investors and helped
IFRS converged Ind AS with significance of CAs. CAs better understanding
few essential carve-outs with can explore opportunities of financial statements
reference to national laws and related to Ind AS across the world with due
practices. accounting, advisory, comparability. Foreign
training services. investors prefer their
Opportunities in entities in India to follow
implementation of Ind AS in 2. Opportunities to the the IND AS, as it brings
India industry closer to IFRS.
With the implementation of Ind Indian conglomerates are
Ind AS Implementation
AS, immense opportunities are spread across the globe.
The adoption of single set Challenges
available to the members of CA
professional. The knowledge of high quality globally 1. First time adoption
accepted accounting
and experience in IFRS
standards, helped in First time adoption has
has opened doors for such
reducing the cost of its own challenges for any
professionals at the domestic
preparing the financial jurisdiction adopting or
and international forums. statements, which were converging with IFRS as it
1. Opportunities to the earlier prepared using must change many of the
accounting profession different sets of accounting old policies and adopt new
principles/ standards. It ones.
Though the initial phase streamlines the process
of implementation was of preparing the individual 2. Issues in reclassification
challenging, however, and group consolidated and/ or regrouping
it provided many financial statements with
opportunities to the better quality. Further, Adopting or converging
practising professionals it also enhances the with IFRS also leads
and non-practising confidence in the minds of to reclassification and
members of the industry. In stakeholders. regrouping of the current
this huge transition, CA has items. Under Ind AS, the
3. Opportunities to the reclassification needs to
a significant role to play to economy
guide and hand hold the be separately disclosed.
entities for smooth and Convergence with IFRS has These may be challenging
trouble-free transition to helped industrial growth for entities as they
IFRS converged Ind AS. It and has benefitted the require knowledgeable
required complete overhaul corporate entities manifold. professionals to execute
of the policies, processes, Moreover, international this task.
operating structures, and comparability has also
benefitted the industrial 3. Management’s training
IT systems. CAs have an
and capital markets in and transition plans
opportunity to demonstrate
their talent and expertise the country which led to For any jurisdiction,
not only in India but better economy across the
adoption or conversion
across the globe as these country.
to IFRS may become
standards were adopted in 4. Opportunities to the challenging if there is lack
more than 140 countries as investors of training and adequate
on today. The application knowledge. Hence,
of these standards requires The adoption of IFRS immense importance

47

should be given to the 5. Audit risk AS in conformity with Ind
management training for AS principles, subject to
Auditors, during their
the smooth transition to simplification, minimal use
audit assessments, may
Ind AS. It may also be of fair value, minimal use
have to be vigilant of
noted that at all stages, of time value of money
any misrepresentations
active involvement of and with least disclosure
or manipulations by the
auditors and trained management. There are requirement especially for
professionals are required high chances that entities use by SMEs.
for planning, development may try to conceal previous
and implementation of 8. Change in IT Systems -
undetected errors thereby
the new standards. ICAI tampering the opening Financial reporting systems
through Certificate Course balances. It is important must be able to produce
on IFRS/Ind AS has taken that auditors timely plan robust and consistent
considerable efforts to the assignment and identify data for reporting. The
train the members and the files and workings that system must be capable of
other preparers of financial consist of greater risk on capturing new information
statements account of the involved required for disclosure
complexities. such as fair values of
4. Effective transition audit
6. Fair value measurement financial instruments,
Implementation of Ind AS base related party transactions,
results in fundamental shift segmental information,
in the financial reporting As per Ind AS, principally etc. The effective
of the entities in any assets and liabilities are implementation of Ind
jurisdiction. Changes in the recognised at fair value. AS requires professional
application of new policies, This accounting may
the configuration of bring a lot of volatility and
systems and maintenance subjectivity in the financial Auditors, during
of internal controls will statements. Also, in India, their audit
the initial transition to Ind
all influence audit risk,
AS was tough, as entities assessments,
significantly increasing
the risk of misstatements
prepared the financials may have to be
and fraud. In turn, this
predominantly on Historical vigilant of any
Cost basis.
will have a considerable misrepresentations
impact on how audits are 7. Concerns of applicability or manipulations by
conducted. That is why it of two sets of accounting
is important to properly standards–
the management.
plan the engagement, a There are high
Application of two sets
step that everyone agrees
of accounting standards
chances that
is the key to a successful
i.e., rule-based AS and entities may try to
transition. Planning should
focus on two major areas:
principle-based Ind AS at conceal previous
national level is a challenge
assessing and updating the to follow for prepares/
undetected errors
knowledge of professionals; makers as well as auditors. thereby tampering
and participating in the Hence, keeping this in the opening
company’s conversion mind, the ASB of ICAI
process.
balances.
has initiated to develop

48

judgement, however, there Opportunities of these 3. Standardised audit
are challenges in aligning standards in India practices
the IT system with Ind AS.
1. Guidance to auditors in These standards guide the
II. Engagement And Quality performing audits auditors to execute the
Control Standards audit assignments and lays
Auditing standards provide out the standard practices
The information provided guidance to the auditor to be followed by the
by the management in that helps determine the auditors.
financial statements is extent of audit steps and
of utmost importance to 4. Improved credibility
procedures to be applied
investors, bankers and other Following the auditing
to fulfil the audit objectives.
stakeholders. Hence, it is
These standards act as the standards in a requisite
important that the entity’s
yardstick against which the manner ensures that the
annual report provide
quality of the audit results financial statements have
qualitative information. Auditor
plays a very important role is evaluated. uniformity and present
in ensuring that the financial true and fair presentation
statements are acceptable 2. Enhance quality and of the entity’s financial
worldwide. Taking these points relevance of auditing performance and position.
into consideration, the ICAI has This provides invaluable
formulated Engagement and The primary responsibility credibility and confidence
Quality Control Standards. of preparing the financial to investors, bankers, and
statements is on the other stakeholders of the
The Companies Act of 2013 management and auditors entity.
(erstwhile 1956) state that while certifying financial
auditing standards issued by 5. Detect and prevent fraud
statements are supposed to
the ICAI are mandatory for the obtain relevant information Even though, it is said that
audit of financial statements of to ensure reasonable auditor is a watchdog, not
companies in India. Standards a bloodhound, an audit
assurance that the financial
of the following nature issued or investigation can be an
by the Auditing and Assurance statements are free from
material misstatements effective tool for identifying
Standards Board (AASB) shall and preventing the fraud.
be collectively known as ‘the and reflect the true and fair
view. Auditors are experts at
Engagement Standards’: identifying weaknesses in
an organisation’s systems.
Challenges:
1. Documentation –
These standards ensure
that the audit procedures
and compliance are
duly documented.
Documentation of audit
queries is also a crucial
requirement, as it helps
the auditors to track the
status of the queries raised
during audit. However,
excess documentation is

49

time-consuming and delays the valuation report. Further, ® Merger, amalgamation
the audit procedures at acknowledging the necessity or restructuring require
times. This results in losing to have consistent, uniform valuation of assets or
track on auditing in few and transparent valuation shares, or a swap ratio
instances. policies and synchronise to be calculated for a
varied practices followed by share swap on merger
2. Time management and the members undertaking the of two companies
deadlines valuation assignments, ICAI
® Acquisition of
There are strict timelines issued Valuation Standards.
minority shareholding
laid for the listed entities
for publishing their audited
financial statements. It
is challenging for the
auditors to timely complete
the audit taking into
consideration requirements
of these standards which The ICAI has also formed by existing
includes documentation Registered Valuers shareholders who
and query resolution. Organisation, which is Section hold over 90% of the
8 Company, to enrol and company’s shares
3. Covid-19 challenges regulate registered valuers as
® Allotment of shares for
The outbreak of the its members in accordance
consideration other
pandemic has brought with the Companies (Registered than cash and issue of
various challenges to the Valuers and Valuation) Rules, sweat equity
auditing profession due to 2017.
increasing restrictions on ® Buy-back of shares
travel, meetings, access to The rules notified by the MCA from some or all
have created a new avenue for shareholders
client locations and thus
auditors face practical professionals called RVs. ® Liquidation of a
limitations to obtain company under
Opportunities/Scope of the Insolvency and
the required inputs with
the help of information Valuation Standards in Bankruptcy Code,
technology. India 2016
III. Valuation Standards Valuation is required in Certain other laws such as

many contexts including Foreign Exchange Laws,
With the commencement
investment analysis, Tax Laws also require the
of the concept of registered
capital budgeting, merger/ management to acquire
valuers under the Companies
acquisition transactions independent fair valuation
Act, 2013 and with the
and financial reporting. reports.
notification of Companies
(Registered Valuers and Under provisions of the Valuation reports may
Valuation) Rules, 2017 Companies Act, a RV’s be utilised by investors,
and amendments thereto, report on valuation of employees, lenders,
the requirements place a equity shares is mandatory suppliers and trade
tremendous responsibility on in the following situations: creditors, customers,
the members of profession and governments. The
in carrying out the valuation. ® Issue of new shares to requirements may vary
The Government has reposed shareholders except in depending on their
confidence in CAs to furnish case of rights issue intended use.

50

Challenges the valuation of business Further, the Council of the
in such difficult times, ICAI, recognizing the need for
The valuation of companies forensic accounting and fraud
where businesses of all
and assets is derived detection, in the emerging
sizes are facing substantial
basis the available facts economic scenario, has also
challenges in several ways.
and circumstances. The launched “Certificate Course on
inferences arrived at in IV. Forensic Accounting And Forensic Accounting and Fraud
several cases can be Investigation Standards Detection”.
subjective and may depend (FAIS)
on the exercise of individual Opportunities of Forensic
judgment. Even though Business ecosystem has become Accounting in India
every method has been increasingly complex due to rise
in white collar crimes, frauds Opportunities for forensic
employed systematically in accountants are increasing
and scams observed recently in
arriving at the value, there rapidly in recent years due
public as well as private sectors.
is no undisputed single to rise in cases of money
Recognising the pressing
value. necessity for proactive action in laundering, tax evasion,
Valuation requires reliance this area, ICAI has developed a window dressing, financial
full set of Forensic Accounting manipulations, and frauds.
on representations of
owners/clients, their and Investigations Standards Forensic accountants are
management and other for its forensic professionals. often hired by companies
third parties. Thus, The FAIS establish uniform when litigation is
report may suffer from performance and evaluation anticipated or suspected.
criteria, methods, processes, and In this area, CAs are
losses, damages, costs
practices. These standards are responsible to analyse
or expenses arising
pronouncements, which form the financial documents
from fraudulent acts,
the foundation for conducting to identify inaccuracies,
misrepresentations, or
all forensic accounting and scrutinise financial data
wilful default on part of the investigation engagements.
companies’ management and trace discrepancies,
These standards ensure raising identify, and prevent
viz. directors, employee or the quality benchmark of such
agents. financial frauds, report on
engagements and are intended damages from contract
Buyers and sellers are to support the professionals to breaches, examine complex
considering qualitative discharge their responsibilities. business cases to minimise
factors in business
transactions. The valuers
are facing challenges in
quantifying the qualitative
aspects in valuation
because these qualitative
factors are not tangible in
nature.
Due to the COVID-19
crisis, the stock markets
are dealing with enormous
volatility on daily basis.
Most investors, financial
institutions, corporates,
etc., are dealing with
apprehensions around

51

risk, provide litigation efficiently to judicial foreign direct investment
support and findings to proceedings as an expert (FDI) in India has grown
be used as trial evidence, with the help of FAIS. tremendously in recent
execute regular financial times, as a result it is
record audits to warrant Law enforcement challenging to take legal
compliance with the law. agencies, banks, actions on financial
corporates, regulatory fraudsters from other
Forensic accountant bodies, and other countries.
or auditor may act as stakeholders achieve
an advisor to the audit more confidence in COVID-19 has affected
committee. their investigations by nearly every class of
involving CAs having professionals, including
Forensic professionals profound experience those involved in court
are in increasing demand and supremacy in the systems. Many forensic
considering rising areas of audit, financial accountants work with
incidents of cybercrimes analysis and moreover with attorneys to investigate
and fraud detection. It is understanding of FAIS. or defend individuals
the practice of utilising accused of tax fraud,
accounting, auditing, In recent times, the misappropriation, or
data mining tools, and banking sector provides other forms of white-
investigative skills to detect a vast opportunity for collar crimes. While
fraud/mistakes. forensic auditors. The court systems have
forensic auditing is limited operations,
Forensic accounting required for all the public the accountants have
helps in research activities sector banks to identify the discovered that these
required during the loss or wilful default and types of engagements
due diligence in case of system loopholes. have number of
mergers and acquisitions.
challenges as at present.
Forensic accounting is
Professionals may also consistently used by the V. Accounting Standards
be able to contribute
insurance industry to For Local Bodies
quantify the economic
damages arising from a The Local Bodies play a
Internal Audit claim. very important role in the
planning and development
Standards have Challenges of local areas that include
a key role in villages, towns and/ or cities.
strengthening In India, forensic Local Bodies play a role of an
accounting is an agent to implement various
Internal Checks emerging field in fraud government schemes to the
and Controls of an detection. Therefore, local people contributing to
organisation, apart there is a shortage of the economic development
from statutory expert accountants of any country. The AS and
with adequate technical Ind AS are not applicable and
compliance in knowledge. do not govern the financial
case of large statements for Local Bodies.
Due to globalisation and
corporates. The ICAI formed a Committee
rapidly growing economy, on Accounting Standards

52

accrual basis are yet to be At an international level,
There are implemented for its effective to help the jurisdictions
challenges in use. adopting or converging with
IFRS, many international
every profession VI. Other Standards groups and forums have been
and we CAs must formed. These organisations
Internal Audit Standards have
ensure adherence a key role in strengthening
and forums exchange ideas
to quality and have a joint voice in
internal checks and controls
matters relating to the
consciousness of an organisation, apart from
IFRS. For the IASB, it is
statutory compliance in case
and professional of large corporates. important that they get to
standards in order know clear message from
to sustain the Income Computation and various regions like Europe,
Disclosure Standards Asia, Oceania, and such
confidence of all mandated by Ministry of others given its significant
the stakeholders, Finance are also required to importance in the world
who rely on be adhered as a part of due economy. Such established
compliance. groups and forums also help
certified financial
smaller jurisdictions that lack
statements. Recently, ICAI is in the direct IFRS experience at
process of developing operational levels.
Sustainability Reporting
for Local Bodies (CASLB)
Standards that will result Asian-Oceanian Standard-
with the primary objective
into reporting vital issues of Setters Group (AOSSG) is
of formulating accounting
environment and other issues one such forum consisting
standards that would be
to ensure sustainability and of 27 member jurisdictions
made applicable for the Local
stability to the corporates. across the Asian-Oceanian
Bodies.
(AO) Region. The most
While formulating the Conclusion
important objective of this
Accounting Standards for group is to bring national
There are challenges in
Local Bodies (ASLBs), CASLB standard-setting bodies
every profession and we
gives due consideration together from around the
to the International Public CAs must ensure adherence
to quality consciousness AO region to establish a
Sector Accounting Standards platform to discuss problems
(IPSASs) issued by the and professional standards
in order to sustain the and share experiences in
International Public Sector
confidence of all the the adoption/convergence
Accounting Standards Board
stakeholders, who rely on process and make
(IPSASB) of IFAC and has
certified financial statements. contributions to a single
integrated them, to the extent
set of high quality global
possible, in the light of the
Hon’ble Prime Minister of accounting standards. Other
conditions and practices
prevailing in India. India, Shri Narendra Modi such forums and groups
had said “We know that we include World Standard-
Currently, most of the will be more successful Setters (WSS), International
local bodies follow cash when we pursue our goals Forum of Accounting
basis of accounting and in partnership with the Standard-Setters (IFASS).
hence standards based on world”. 

ce
ellen
Exc
and
ence, In
tegrity
Financial Reporting to
end
Ind
ep
Integrated Reporting
way to describe and understand the financial
performance and financial position of the
entity.
To standardize the accounting information

presented in the financial statements,
there is a requirement to establish certain
accounting policies based on Generally
Accepted Accounting Principles (GAAP).
GAAP is a common set of accounting
principles, standards and procedures that
are used to record financial information and
compile financial statements. ICAI since its
inception has always endeavoured to have
sound financial reporting framework within
the country. With increasing importance
of transparency through better financial
disclosures, disclosure of financial as well
as non-financial information under financial
reporting is gaining importance. This has
led to development of inclusion of non-
Traditionally reporting is consisted of financial financial information. Integrated reporting
reporting that provides information about the demonstrates how organisations create
status, performance and changes in financial value connecting strategic objectives, risk
position of an entity. Financial reporting and performance. It brings together material
involves the disclosure of financial information information about the business strategy,
to the various stakeholders about the financial governance, performance and prospects in
performance and financial position of the a manner that reflects the commercial, social
organization over a specified period of time. and environmental context. The process of
The main components of financial reporting integrated reporting underpins integrated
are the financial statements, notes and it thinking and benefits the management and
also include various reports required by the governing bodies. It is useful to all those who
different regulators in compliance with the are interested in business ability to create
laws, such as, Report of Board of Directors, value, viz, providers of financial capital,
Auditors report, etc. Financial Statements employees, customers, suppliers, business
are useful for the organisation, its investors, partners, local communities, legislators,
regulators and others with a standardised regulators and policy makers.

54
PERSPECTIVE
Brand Building by a Chartered

Accountant
The general perception
is that the terms CA. T. N. Manoharan
‘Brand’ and ‘Goodwill’ The author is a Padma Shri Awardee
are associated with and Past President of ICAI. He can be
reached at [email protected]
business enterprises and [email protected]
and their products and
services. In reality,
W
these terms are
equally relevant even hat applies to the profession is regulated by the
shaping up of the ICAI with participation of the
for an individual’s life. ‘Brand’ of an individual nominees of the Government in
By one’s conduct and equally applies to a Chartered the Council and its committees
behaviour, a person’s Accountant (CA). In fact, at the helm of affairs. CAs
image is built over a for a CA it assumes greater are considered as partners
period of time in the relevance because the in nation building due to the
eyes of society. Every profession’s reputation depends relevance of their functioning
word uttered and on the collective reputation with the credibility of the
every act performed of all its members. If a CA is Economy. Therefore, personal
pronounced as guilty of any
on a day-to-day brand of every CA is important
misconduct or is arrested in a
basis contributes financial scam or caught in a
in the larger interest of the
to the image and profession and the Nation.
fraudulent transaction, it affects
perceptions about the image of entire profession.
an individual, either Chartered Accountants (CAs) In this article some of the
positive or negative. are considered as elite class critical ingredients of such
If it is positive then it of citizens in the country. The brand building are discussed.
adds to the reputation
of the individual
and if it is negative,
then it adversely
impacts the image
of the person. These
positive perceptions
cumulatively build
as the ‘Brand’ of the
individual which is
nothing but goodwill
and reputation in
personal, professional
and social network.
Read on…

55
PERSPECTIVE
Respectability - Quality in he must bear in mind nation’s
thought and action interest in every facet of the When someone
Every CA should be proud of
service rendered. Competence approaches to
backed by macro level vision
the profession to which he and micro level proficiency
engage us for any
belongs, having qualified after should govern the approach work that appears
education on a vast curriculum, of a CA. to compromise on
undergoing a rigorous training
and a robust examination Credibility - Adoption of values, our ability to
process. Every CA must begin Ethical values say ‘no’ should stem
his career by remembering that
Ours is a profession created
from a solid ethical
“Work is worship and talent
is capital.” A CA should be by an Act of Parliament and foundation embedded
conscious of the sanctity of his we are regulated by a well laid within us.
signature affixed on a financial down Code of Ethics under that
statement or a certificate issued enactment. We can be tried
by him. A CA must realise under the ethical framework tells us that Gautama Buddha
that the world believes that by invoking disciplinary action deserted his crown, palace
the qualification he possesses not only for specific omissions and prosperity in search
brings along superior and and commissions but also for of peace. On the contrary,
more reliable competence any other misconduct. Thus, many in today’s world are
and capability than a non- as CAs we are expected to abandoning peace by plunging
CA service provider. To meet maintain dignity and integrity in pursuit of material prospects.
with such expectation, a CA in anything we do. We should Prosperity is welcome but not
needs to constantly sharpen not be lured to do anything by compromising on values
the knowledge and skills that unethical or unprofessional, leading to deprivation of peace
enable delivery of quality whatever be the rewards of mind. Aspiration is essential
services. He must harness promised. When someone but greed should be avoided.
analytical and critical thinking approaches to engage us Whatever we aspire must
so that the resultant action for any work that appears to be achieved through proper
adds to his qualitative compromise on values, our means. Earning money should
functioning. ability to say ‘no’ should stem not be the primary goal while
from a solid ethical foundation carrying on the profession.
He must expand his horizon embedded within us. We must Delivering quality service to
by continuous learning about hold ourselves responsible for our fullest satisfaction and
the worldwide happenings, a higher standard than anyone matching with the expectations
especially in the field of expects. If functioning within of the client, within the ethical
accounting, audit, tax, law the ethical framework becomes parameters, must be the
and finance. He should stay the culture among CAs, focus. Money should be a by-
abreast of the evolving business then that would become the product of such services and
models and innovative trends hallmark of the profession if this philosophy is followed,
in execution of transactions. rewards would flow in abundant
He must look for role models Adherence to values, no measure in the
in his field and embrace their doubt, is a challenging task long run.
best practices. He must not in a corrupt environment.
forget the close nexus the Desire to become rich in the Contentment is a virtue that
financial sector has to the shortest possible time can be would help us to prevent greed
Indian Economy. As a member the root cause for deviation from influencing our decision.
of the profession perceived as from established principles Besides, by sheer hard work,
a partner in nation building, and ethical values. History vision and competence, we

56
PERSPECTIVE
may reach the top but we can an essential ingredient that
stay there only if we possess demonstrates the attitude and Adhering to self-
integrity. It is true that in the the responsible behaviour of imposed time
modern era we need to be a person. Adhering to self-
adaptive to many changes imposed time schedules in
schedules in the
happening around us in the day-to-day life is a virtue day-to-day life is a
terms of knowledge, skills, that reflects on the discipline virtue that reflects on
infrastructure, communication, of an individual. When that the discipline of an
technology, etc. But what discipline is imbibed by a CA
remain static and does there will be no procrastination. individual. When that
not undergo any change Consequently, there will be no discipline is imbibed
are the ethical principles stress due to postponement by a CA there will be no
underlying human life and the of work execution. A CA must
CA profession. This would always believe that he will be
procrastination.
determine the credibility of the busier on the following day
CA profession. than today and therefore, each for extension of any statutory
day’s obligations must be timeline which, when made,
Responsibility - Adhering to fulfilled on the same day. A CA reflects upon our inability to
time schedules must be habituated to do right execute responsibilities entrusted
things at the right time. Time is to us in a timely manner. Under
Professionalism is also in exceptional circumstances like
valuing time which is a precious a created thing. To say ‘I don’t
the pandemic situation or natural
resource for everyone. Every have time to do something’ calamities, the Government
CA should value others’ time is equivalent to saying ‘I don’t itself would extend the due
and maintain punctuality want to do it’. dates for filing audit reports,
returns etc. In some specific
in meetings. Punctuality is If this attitude of adhering to situations, industry forums and
time schedule gets engrained chambers of commerce may
within us, then several magical requisition the Government. But
It is true that in things would happen around us. we as professionals must be well
the modern era we First, all the CPE programs and organised to deliver services
meetings of ICAI would start on promptly and in a planned
need to be adaptive time and end on time. Second, manner within the prescribed
to many changes even dignitaries who are invited timelines. This would prompt
happening around us to grace the events would be Central and State Governments
punctual knowing that we would and the Regulators to repose
in terms of knowledge, not delay commencement faith and confidence on us and
skills, infrastructure, waiting for anyone. Third, even entrust additional
communication, if any of them turn up late, they responsibilities.
would be accommodated to join
technology, etc. But as they come. Still, when they Reliability - Honouring of
what remain static go back, they would not only commitments
carry the memories of the quality
and does not undergo program they attended but they Every commitment made by
any change are the would remember never to be late a CA, irrespective of whether
it is small or big, must be duly
ethical principles for ICAI events
honoured. It could be a promise
in future.
underlying human life to respond to a query, attend a
and the CA profession. Similarly, CAs must plan their meeting or event, complete an
affairs and educate their clients assignment entrusted, return
This would determine such that all the statutory a book borrowed or a debt to
the credibility of the timelines are adhered to without be repaid. Everything stands
CA profession. any need for extension of time. on the same footing. The
No request should go from ICAI concept of materiality doesn’t

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PERSPECTIVE
apply. Breach of any promise Sustainability - Right valuation
makes a dent on the image of of services CAs must elevate
a CA. In the unfortunate and
unavoidable situation of inability Branding also depends on themselves from mere
pricing of the services. The
to fulfil any such promise, it
must be foreseen and proactively knowledge, experience, efforts number crunching
modified on mutual consent and time invested in rendering a to strategic thinking.
so that the commitment is service must be duly evaluated
restructured and honoured at and factored in pricing the Entrepreneurs and
a later date without default. A services rendered to clients. corporates expect
CA must be sensitive to feel Unless the CA himself values his
ashamed even to imagine any services correctly, the client will CAs to be part of the
such failure to not understand and appreciate decision-making
perform. the value. Underselling of
services should be avoided process instead of
When anyone associates with
a CA, he must find him to be
because that would gradually
erode the ability of a CA to hire
merely providing
absolutely reliable and dignified. talented team and invest in inputs for decision
Every CA must also be proud infrastructure including modern
to acknowledge with gratitude tools, software and gadgets
making.
and a sense of pride, that it is which in turn would impact
the profession of Chartered adversely on the quality of the services for a low cost or free of
Accountancy that made him services rendered. A CA should charge in a conscious manner
a person of such a stature in also aim to build his brand as may be warranted, especially
the society. Therefore, even a best trainer and employer by
under the most compelling moulding and grooming the from client affordability angle.
circumstances, the community CA students and employee CAs But that approach should be an
would believe that a CA would associated with him. For this exception.
refrain from breaching his necessary infrastructure and
commitments. work ambience must be created. Sometimes, a CA may charge
In the case of a CA rendering less on the apprehension that
specialised services, there has he may lose the client. Proper
to be a premium loaded in the discussion with the client
Every CA who renders billing because of the high-end to explain about the various
services backed by nature of services. Besides, for
components of billing should
a specialist, unlike a generalist,
knowledge, values the number of clients to be allay this apprehension. Besides,
every CA who renders services
and competence serviced would be limited and
backed by knowledge, values
more importantly, the delivery of
should rightly price his services would be directly by the and competence should rightly
services with absolute specialist and not by a team. price his services with absolute
confidence, unmindful of even
confidence, unmindful Components of service rendered,
losing the client. Such a CA
in many cases, is not properly
of even losing the identified and added on to the would not only sustain quality
client. Such a CA would billing. Invariably when a CA of services, but would also
follows the practice of annual command respect for self and
not only sustain billing or lumpsum fee package the profession in the long run.
quality of services, but for various services without Even the client will not mind
adequately defining the scope of paying for the true worth of
would also command services, it may lead to under- services if quality is guaranteed.
respect for self and selling of services. A CA must
Everyone must understand that
properly document and consider
the profession in the the man-hours spent on every the bitterness of poor-quality
lasts longer than the taste of
long run. assignment. Of course, in certain
cheaper pricing.
deserving cases, rendering of

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PERSPECTIVE
Capability - Adapt and stay themselves from mere number With the liberalisation of FDI
relevant crunching to strategic thinking. norms during the past few
Entrepreneurs and corporates years coupled with phenomenal
The routine services hitherto
expect CAs to be part of the improvement in the Ease of
rendered by a CA such as return
decision-making process instead Doing Business (from 142nd
filing have been mechanised.
of merely providing inputs for Rank to 63rd Rank during the last
Under specific legislation such
decision making. Earlier CAs in 7 years), India is clearly emerging
as GST, even audit requirement
employment ultimately reach the as the most potential investment
has been done away. Digital era
level of CFO whereas in current hub for global investors.
and technology evolution have
times, it is a matter of pride Similarly, Indian companies are
changed the way the businesses
that some CAs have attained expanding their operations by
are done and correspondingly
the position of CEO. Emerging organic and inorganic growth
even CAs have to reorient the
opportunities on investment strategically positioning across
way they operate and render
advisory, wealth management, the globe. Looking at these
services. We need to embrace
funding options for businesses, trends, advisory role of CAs
technology in every facet of
family arrangements, succession on inbound and outbound
our functioning and that is
planning for HNIs are potential investments, international
bound to bring about accuracy,
areas for engagement. CAs can taxation, FEMA related matters,
quality, speed, scaling and cost
explore new avenues in the field DTAA, Transfer Pricing and
optimisation. There are many
of Insolvency and Bankruptcy GAAR is gaining significance.
sunrise services for which we
Code (IBC), particularly as
must gear up and adapt to stay Being capable of partaking,
Resolution Professionals.
relevant. participating and partnering
There is scope for more CAs to in all the happening sectors
CAs must become proficient specialise in Forensic Accounting of the economy and staying
in Digital transformation and Investigation, Risk based relevant to be reckoned for
services, Virtual CFO and Audit and Systems Audit on rendering services is yet another
Business Support Services. account of increase in Frauds way of building brand by a CA.
Sizable number of CAs can and cybercrimes. When large number of CAs
transform their operations from
While the statutorily prescribed demonstrate this capability,
compliance to value addition
audits are likely to continue, the profession’s branding gets
services. CAs must elevate
CAs who have established firms enhanced and sustained.
of reasonable size and relevant
Conclusion
Indian companies competence can gear up for
broader opportunity given the As of date, about 27.5 per cent
are expanding new guidelines issued by the of the members (91603 out of
their operations by Reserve Bank of India in the 333,882) are women. About 54%
sphere of audit of Banks, Urban of the members (180,610) do
organic and inorganic Co-operative Banks and NBFCs. not hold Certificate of Practice.
growth strategically Restrictions in the maximum Everything written here applies
number of entities one firm to both men and women. It also
positioning across the can audit, introduction of substantially applies to CAs in
globe. Looking at these appointment of Joint Auditors, employment. Past President
rotation of Auditors once in CA. Y.H. Malegam has made a
trends, advisory role three years recently introduced profound statement “Important
of CAs on inbound and by the RBI has opened up this thing for a profession is not the
arena for distribution of such brilliance of the few, but the
outbound investments, audits among larger number of competence of the many”. Every
international taxation, audit firms. Even a mid-size firm member is the ambassador of
meeting the eligibility criteria, as the profession. If each CA builds
FEMA related matters, per the RBI guidelines, should be brand diligently as discussed
DTAA, Transfer Pricing able to undertake and do audit above, then we need not
of 4 Banks (including one public worry about the future of our
and GAAR is gaining sector bank), 8 NBFCs and profession as it would certainly
significance. 8 Urban Co-operative Banks, emerge as the profession of the
simultaneously. future. 

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PERSPECTIVE
Improving Audit Quality: Significance

of Independence and Capacity Building
CA. Amarjit Chopra
In the last 20 years, a Past President, ICAI & Past
series of spectacular Chairman, National Advisory
Committee on Accounting
scams namely Standards.
Satyam, Global Trust CA. Sabyasachee Dash
Bank, ILFS, King Member of the Institute
Fisher, Yes Bank, Dewan They can be reached at
[email protected]
Housing Finance Ltd., CG and [email protected]
Power Systems etc. hit Though Chanakya primarily sword. With the advent of
the economy, disrupting espoused the idea of sophisticated detection tool
the financial ecosystem. economic governance in India and technique, the scandals are
Amongst the trending in Kautilya’s Arthashastra, also carried out with the same
stories was the Punjab it went through a series high-end technology posing
and Maharashtra of evolution over the last unprecedented challenges to
Cooperative (PMC) few decades. Each scam enforcement
Bank, which drew social contributed to strengthening agencies.
the corporate governance
media attention and ire.
framework of the respective The government and investors
Nevertheless, it appears nation. Although it’s practically demand more transparency in
that the voices of the ill- impossible to eliminate all the overall conduct of affairs.
fated depositors are still the threat factors, mitigation An element of skepticism has
unheard in the corridors strategies are provided both become a default factor during
of power. Even Twenty- in the statute(s) and the the business performance
One months later, the individual organizations. evaluation. The more robust
crisis remains Technology, on the other hand, the governance mechanism,
is acting as a double-edged the better is the reliance
unresolved. Read on…
J oy Thomas, Managing
Director of the beleaguered
bank, in his five-page letter
to the Reserve Bank of India
dated 21st September 2019,
confessed the role of top
management, including a few
board members, in hiding the
actual NPA numbers and the
real exposure to the bankrupt
HDIL. He also blamed the
auditors for “superficially
auditing” the lender’s books
due to time constraints.

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PERSPECTIVE
quotient reposed in the being adopted without country- Apart from the Chartered
management. It›s in this specific customization. These Accountants Act and
context, the role of independent threats are unfortunately not Regulations, the Companies
auditors and directors easy to safeguard. Theoretically Act provides prescriptive
assumes significance. While an auditor is appointed by measures to ensure
the Auditor plays a watchdog shareholders. However, independence by laying
role, the Independent Director practically auditors are down disqualifications on the
(ID) acts as a trustee for the appointed by a dominant appointment of an auditor
shareholders. Both challenge group. Intimidation threat (Sec 141). Companies Act
the management responsible impairs the independence of also attempts to enhance
for the day-to-day affairs on the auditor to an extent. independence of auditors
governance-related matters. by prescribing certain non-
While this looks simple on Notably an auditor has the audit services which an auditor
paper, its execution is not responsibility to remain may not be able to undertake in
that easy due to internal and independent. ICAI has respect of an audit client (Sec
external factors. recommended the following 144). This would eliminate/
guiding principles. mitigate risk of conflict of
We now get down to interest. Companies Act
dwell upon the threats 1. For the public to have
also lays down for removal
and safeguards to the confidence in audit quality,
of existing auditors with the
independence of the Auditor. auditors must appear to be
prior approval of Regional
Threats to independence independent of the auditing
entities. Director. Sometimes the law
and safeguard measures of puts third parties on guard
auditors are enshrined in the against the possibility of an
ICAI guidelines. According to 2. The Auditor should possess
integrity, objectivity and abridgement of freedom by
the International Federation of requiring certain additional
Accountants (IFAC), there are professional skepticism, all
of which are prerequisites disclosures to be made.
five threats: self-interest threats,
to independence. Naturally Code of Ethics and
self-review threats, advocacy
the Provisions under these Acts
threats, familiarity threats, and
3. Before taking on any work, are complementing in their
intimidation threats. These
he must conscientiously nature.
factors are common to all
consider whether it would
geographies and capable of Against this backdrop, there
involve threats to his
independence. If he finds are adequate legal provisions,
any, he should either desist guidelines and code of conduct
The government and from the task or, at the
for safeguarding independence.
Independence being a state
investors demand very least, put in place
of mind, is not affected by
more transparency in safeguards that eliminate
a relationship. However,
those threats. All such
the overall conduct precaution measures need
appearing independent is as
crucial as being independent.
of affairs. An element to be recorded in a form According to ICAI, in any case,
of skepticism has that can serve as evidence where there is a feeling in the
of compliance with due public mind that the close
become a default process. If the Auditor relationship of the Auditor
factor during the cannot fully implement with the management would
reasonable and adequate
business performance safeguards, he must not
affect the independence
of Auditor, the auditor should
evaluation. accept the work. use his good sense and refrain

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PERSPECTIVE
MCA/RBI/IRDA depending upon audit of public sector banks
To improve the the entities being regulated (PSBs) and other public
by each one of them. It is a sector undertakings (PSUs).
quality of reporting bit disappointing that none of
there is a need to the regulators is willing to take It is also felt that monopolies
in general are bad in any
free the Auditor from up this responsibility. In our
sector and our profession is no
opinion irrespective of practices
the intimidation of worldwide, India may take the exception to this. The need for
removal and to ensure lead in this to enhance quality reduction in concentration of
audits and other professional
all such measures of audit and consequently
the credibility of auditing work in few hands is
to eliminate risk of profession.
well recognized. We are of the
opinion that there must be level
conflict of interest. playing field for all players in
In the recent times it is being
profession. We do recognize that
generally perceived that there is
from accepting the appointment. profession cannot be run on
a need to restrict non audit
If an auditor wishes to command socialistic pattern of society.
services being rendered to an But at the same time, it
respect and confidence from audit client by Auditors. Rather, needs to be recognized that
the public, he must ensure there has been a sense of feeling tenders floated by government
his independence and assure that there is a need to ensure departments and various
the people of the faith and this control to operate at network entities should not be tailor
trust that could be reposed on level rather at firm level alone.UK made and skewed heavily
him. The CA should ensure its has already taken a lead in this in favour of certain firms
independence in all assurance matter by requiring bigger firms alone. This has certainly
services, including concurrent to segregate audit and non-audit hampered the development
audit, tax audit, and internal services effective 2024. of Indian firms. Time is ripe to
audit. Needless to say that speak up for small and medium
independence ensures free and Also, in India a view has sized firms willing to move
frank expression of opinion/ been emerging that probably to next stage. Reduction in
reporting. it would be better to have concentration of audit work will
more than one pair of eyes certainly encourage Indian firms
We are of the opinion that to scrutinize the financial to invest in technology and to
to improve the quality of statements as Auditors. Though prove that these are second to
reporting there is a need to free there is no empirical evidence to none in performance.
the Auditor from the intimidation prove that Joint Audit concept is
of removal and to ensure all more efficient, yet it is believed The RBI’s new norms for
such measures to eliminate risk that having more than one appointment of auditors have
of conflict of interest. Laying auditing firm could provide created a buzz in the financial
down a process to ensure an opportunity for auditing circles. We appreciate the
appointment of Auditors by an matters to be discussed and regulator for its commendable
independent agency other than measures. RBI has brought
concluded by representatives of
the management, at least in case far reaching changes in the
more than one firm. There has
of Public Interest Entities (PIEs), rules with regard to capping of
been opposition to the concept number of audit appointments in
is key to provide independence of Joint Audit from certain entities regulated by it. Period for
to Auditors. We in no way are quarters for lack of empirical which an Auditor can continue
trying to belittle the performance evidence to prove its superiority. has been reduced to three
of Auditors so far. But what According to them, it may years. It has also introduced
we are trying to advocate is even lead to situations wherein cooling period of six years after
a process which is likely to different auditors may not be a term of three year’s audit of
improve the quality of audit able to come to unanimity an entity. It has also restricted
and consequently the reporting on certain issues. However, it auditors from accepting any non-
by Auditors. Appointments may not be out of place to audit services in any regulated
of Auditors in PIEs be made by mention that concept of Joint entity of the same group. Most
any of the regulators viz. SEBI/ Audit has worked very well in importantly all these new

62
PERSPECTIVE
norms have been introduced could be for the banks, which
at network level rather than have not been given such But at the same
the firm level. New norms also
stipulate Joint Audit in regulated
relaxation. time, it needs to
entities beyond a threshold RBI has done its job bringing in be recognized that
limit. New norms also prescribe the concept of Joint Audit. In our
view, this needs to be extended
tenders floated
certain factors like exposure
of regulated entities to certain to all PIEs. While a Joint Audit by government
clients of proposed auditors to be by itself may not do a miracle departments and
considered by Audit Committees in addressing all the issues
while determining independence concerning the audit process various entities
of Auditors for recommending and its usefulness, there is should not be tailor
their appointment. inbuilt merit when there is a
second pair of eyes deployed made and skewed
In our view, the implementation
of the new norms could throw a
to enhance the objectivity heavily in favour of
and quality of the opinion-
few challenges. First, the audit
making process. Besides, in certain firms alone.
committee will have to select
the event of disagreement
the auditors, ensuring auditor’s
between joint Auditors, it A vital takeaway is that this is a
independence appropriately. To
would be incumbent upon step towards providing a level
our mind, they may have to lay
both the Auditors to come to a playing field between Indian
down criteria for ascertaining
common point which both origin and other firms having
the same. Another challenge
subscribe. global networks. For several
could be related to the time the
entities have to comply with the reasons, Indian firms have
It hardly needs be emphasised been marginalized in having
regulator’s mandate with regard that there is a need build
to change of Auditors due to their share of the pie in the
capacities of Indian firms. profession by losing grounds to
cessation of their term after ICAI has been making efforts
three years compared to earlier the Indian arms of large MNC
to enhance technical skills of firms. The widely advocated
period of five years in certain members through continuing
regulated entities. Also capping argument is Indian firms lack
education programmes. techno-investment. This charge
on the number of appointments Also various specialised post
that a firm and firms in the may be partially true, but the
qualification courses have solution lies in giving them
same network can accept will been introduced to promote
cause vacancies for Auditors. It opportunities they deserve on
specialisation in areas like merits rather than sidelining
is good news for medium sized Forensic Audit, Concurrent
Indian firms but may cause through systematic approaches.
Audit of Banks, Ind As, Often the government agencies
some hardship to certain firms International Taxation, Valuation
whose tenure gets reduced play a crucial role in such act
Services and so on. Recently, of skepticism antagonism.
or must vacate office due to networking guidelines have been
capping mandate. Recently, SEBI This practice must stop in the
revised. ICAI needs to create more considerable interest
has made it mandatory for an opportunities for the members to
auditor who resign as auditor to concerning all stakeholders.
ensure utilisation of specialised Many accomplished and astute
give reason for his resignation. skills of members appropriately.
MCA is also looking at making members are practicing through
For this it may be important to Indian firms who have
it mandatory for the resigning have a dialogue with government
auditor to give the correct demonstrated skills par
agencies and various regulators excellence. We appeal to all
reason for his resignation. This to allow tendering by networks of
is one more step to ensure Indian firms to consolidate,
small and medium sized firms. infuse technology, and improve
independence of auditors. This would allow these firms to overall audit infrastructure
The new rules are applicable come together and pool their to achieve the profession’s
from the current financial year, resources and invest in resources aspiration.
i.e. 2021-22. While the non- including technology which
bank lenders can adopt the ultimately will improve the quality Whatever RBI has done
norms from the second half of of audit and other professional is commendable. But as they say
the financial year, the challenge work undertaken by such firms. “Yeh Dil Maange More” 

63
PERSPECTIVE
New-Age Technologies to Overcome

the Pandemic Challenges
The COVID-19 crisis
has impacted the global CA. K. Raghu
economy and many The author is past President, ICAI and
economies are yet to former Board Member, International
Federation of Accountants. He can be
recover from the multiple reached at [email protected] and
[email protected]
waves of Covid and
lockdowns. Many of
the countries are on the
brink of recession and goods which contributed 28% billion for FY 20-21. The IT
are struggling with rising of the global manufacturing industry, as compared to other
unemployment. Like output. With the Covid industries, has witnessed an
other countries, India disruption, India will emerge enormous market boom due
also witnessed a sharp as a favoured destination for to this disruption. The industry
deterioration in overall manufacturers to set up their has been most successful
business confidence operations. Manufacturers are in thriving this crisis by
and there is a need for aware that when the pandemic continuing to work remotely.
another fiscal package ends, the focus would be on The pandemic has proved
to restart the economy. greater automation, setting to be a catalyst to speed up
Today, organisations are up smaller manufacturing technological changes.
quickly adapting to the units and sourcing raw
Healthcare Sector
changing environment to materials from local sources.
overcome the challenges Vietnam, Indonesia, Cambodia The Healthcare sector
faced by them due to the and Singapore will also be comprises of hospitals, medical
pandemic. Read on… favoured destinations for equipment manufacturers,
manufacturing. diagnostics, pharmaceuticals,
C
hartered Accountants have etc. The COVID-19 pandemic
IT Sector
an important role to play in has created a severe strain on
helping business navigate IT industry’s revenue is healthcare resources across the
through the long lasting estimated at around US$ 191 globe. It has highlighted the
impact of the pandemic. The
accountancy profession must
remain resilient in times of
crisis and the profession should
take the lead in helping the
economy recover soon.
Impact of Covid on various
Sectors of the Economy
Manufacturing Sector
Countries across the globe
were heavily dependent on
China for manufacture of

64
PERSPECTIVE
weaknesses in the healthcare a boom. Approximately now being bridged. However,
infrastructure in well-developed 825 million learners are Insurance Schemes from
countries like USA, Italy, Spain, currently affected due to Private Insurance Companies
etc. During the second wave, school closures in response cover only 18% of the urban
India witnessed an acute to the pandemic. According population and a little over
shortage in supply of oxygen, to UNICEF monitoring, 14% of the rural population.
ventilators, hospital beds, etc. 23 countries are currently
implementing nationwide Agricultural Sector
The disruption has created new closures and 40 countries are
opportunities in the wellness As compared to the
implementing local closures, Manufacturing and Service
industry by providing nutrition impacting about 47% of the
and wellness products, fitness sectors, the Agricultural
world’s student population. sector is under dual pressure
equipments, online medicine
delivery services, etc. Online Aviation Sector of COVID-19 and climate
consultations have increased change. Agrarian economies
As compared to 2019, more such as India, Bangladesh,
manifold in the back drop of
than half the passenger traffic Vietnam for which agricultural
the pandemic. There has been
was lost in 2020. Thus, about sector accounts for 12-16% of
a dramatic rise in the online
4.8 million jobs were affected, their GDP, have been affected
sales of immunity-related
i.e., a 43% reduction from the most. The agricultural
products, masks and sanitisers.
pre-covid levels. Significant sector has been suffering
The Indian Pharmaceutical
reductions in passenger despite the government
industry which is popularly
numbers have resulted in flights launching relief schemes and
known as “Pharma of the
being cancelled or planes packages for the benefit of
World” was highly benefitted in
flying empty between airports, small farmers.
this disruption due to its huge
which in turn massively
production capacity. Adoption of Technology by
reduced revenues for airlines
Telecommunication Sector and forced many airlines to Businesses – Role of our
lay off employees or declare profession
With increasing restrictions, bankruptcy. As passenger
people are spending more time The Corporates in India are
flights were cancelled, the
at home for both work and using new age technologies
cost of sending cargo by air
leisure in countries across the to capture, record and
changed rapidly.
globe. This has led to increased mine information in their
voice calls, video calls, etc. and Insurance Sector organisations and have
network usage has witnessed invested huge resources
While the insurance industry,
a huge spike in the last 2 to build Cloud based
like every other industry,
years which augurs well for the infrastructure. Due to multiple
has taken a major hit during
telecommunication sector. lockdowns put in place by
this pandemic, the future
various governments, the
Education Sector prospects of the industry look
pandemic has speeded up
bright. Since the onset of the
the process of technology
Virtual classes have now pandemic, people are rushing
adoption manifold and these
become the new norm as to insure their lives and there
changes are here
teacher-student interaction seems to be a boost in demand
to stay.
is happening through online for insurance. India has been
platforms such as Zoom, an under-insured country and To remain competitive in this
Google Meet, Microsoft with Government initiatives, new business and economic
Teams, etc. and due to this such as Ayushman Bharat environment, businesses –
the telecommunication which aims to insure the poor both big and small - have no
industry has witnessed and vulnerable, the gap is choice but to recognise the

65
PERSPECTIVE
importance of technology. Today’s RPA technology Cyber Risk Consulting
Technology adoption and uses software robots to offer
implementation has become improved business efficiency, Cyber Risk services which
the need of the hour. data security and effectiveness include Cyber Strategy
by mimicking human actions and Management, Cyber
In this scenario, Chartered and automating repetitive Intelligence and Cyber
Accountants must have the tasks across multiple business Analytics are gaining ground
skill sets to assist companies applications without altering due to the advent of mobile
in implementing new age existing infrastructure and technology, cloud computing
technologies and also provide systems. and social media. Chartered
support services in developing
Accountants, as Technology
a robust Information System Cloud Accounting Consultants, can help
(IS) Controls and a strong
Storing data on remote businessmen in re-aligning
Cyber Security framework.
servers opens up opportunities their business to the dynamic
Emerging Technologies by making geography economic conditions.
that can help business to unimportant. Once data is
be innovative during the entered in the cloud, you Block Chain Technology
pandemic times can work on it anywhere - in
Block chain is a distributed
your office, at the airport, in
Artificial Intelligence (AI) ledger system that allows each
your home 500 miles away.
Cloud Computing is now participant (or node) to see
Artificial Intelligence aims to clearly where information has
replicate human intelligence in evolving like never before,
with companies of all shapes come from and gone to - in
machines and AI applications
and sizes adapting to this essence, block chain is an
are revolutionising all
new technology. While Cloud innovation in record keeping,
sectors of the economy, be
Computing is undoubtedly a cryptographic
it manufacturing or service
beneficial for mid-size to large chain of proofs.
organisations, both in the
private and the public sector. companies, it is not without
its downsides, especially for To alter the Block chain
AI tools are being used in the
smaller businesses. without being obvious, anyone
banking, insurance, retail,
wanting to create a false
healthcare and manufacturing
Big Data and Analytics record would supposedly have
sectors extensively.
to modify every subsequent
Robotics Process It has the potential to block, which generally requires
Automation (RPA) transform almost every aspect
everyone using the block chain
of business – from research
to agree to the fraudulent
RPA has the potential and development to sales
transaction. Therefore, in a
ability to disrupt the entire and marketing and to provide
Block chain environment it is
business functions across new opportunities for growth.
Big Data and Analytics help extremely difficult to alter data
all companies and sectors.
businesses in descriptive or insert false information.
Where humans were once
the sole resource to perform analytics, predictive analytics
Block chain alters the
functions such as customer and prescriptive analytics.
conventional techniques
service, transactional activities
and generating insights, RPA The availability of online real- for invoicing, reconciliation,
technology has advanced to a time information will assist in documentation, contract
level where robots can perform quick decision making and preparation and mechanises
these same tasks, with greater will improve the quality and the physically performed
efficiency and accuracy. accuracy of financial reporting. assignments. Block chain

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PERSPECTIVE
Security strategy of a company and whether it is subject
Cyber Risk and Cyber and help them create a strong to specific types of Cyber
cyber security infrastructure security risks.
Security present that is robust and sophisticated.
Cyber Security allows Establishing and engaging
new opportunities companies to detect frauds and multi-disciplinary teams,
and challenges to other vulnerabilities in the ERP for example, including
systems in their organisation information security
the Accountants. and prevent cyber attacks professionals and auditors.
Every corporate on real time basis across the
enterprise. Digital Commerce
using sophisticated Digital Commerce uses the
Cyber Risk and Cyber Security
IT systems are present new opportunities
Internet, mobile networks
and commerce infrastructure
vulnerable to Cyber- and challenges to the
to execute transactions with
Accountants. Every corporate
customers or businesses. Today,
attacks. It is assessed using sophisticated IT systems
we find that new business
are vulnerable to Cyber-
that a large cyber attacks. It is assessed that a
models are driving growth and
creating value by disrupting
security breach large cyber security breach
currently represents one of
many existing businesses. For
currently represents example, Amazon, Flipkart,
the world’s most serious risks,
Snapdeal, Big Basket are
and that it will also trigger
one of the world’s an explosion in corporate
most serious risks, expenses. That is unfortunate in
Cyber Risk and Cyber
a social perspective, but from a
and that it will also commercial perspective, it offers Security present
opportunities for new advisory
trigger an explosion services, risk assessments new opportunities
in corporate and assurance engagements.
and challenges to
Cyber-attack is an entirely new
expenses. threat arising in the wake of the Accountants.
digitisation.
can streamline financial An enhanced role in Cyber
Every corporate
reporting and audit processes. Security requires relevant using sophisticated
knowledge, skills and
Chartered Accountants can
experience. For businesses to IT systems are
also assist organisations in
help implementing Block chain
effectively undertake Cyber
Security Risk management, key
vulnerable to Cyber-
solutions effectively. areas of knowledge and skills attacks. It is assessed
include:
Cyber Security that a large cyber
Relevant IT systems and
Cyber Attacks are becoming technology, as well as the security breach
a growing reality in the digital ability to be updated about
changes in the technology
currently represents
world, and today, top banks,
financial institutions and and systems environment. one of the world’s
corporates are giving a lot of Understanding IT processes most serious risks,
importance for Cyber Security and controls and their
in their organisations and evaluation. and that it will also
investing heavily on cyber Awareness and relevant trigger an explosion
security infrastructure. experience with Cyber
security frameworks. in corporate
Chartered Accountants can Understanding an entity’s expenses.
offer their services to the Cyber industry and business

67
PERSPECTIVE
successful enterprises in the 2. Engage with IT Companies
digital commerce space. and Professionals An important step is
Aggregators in the travel, food,
hospitality, transport, housing,
Once the organisation’s tech to train and up skill
appetite has been decided, we
fashion has created many need to engage IT companies the staff with the
success stories. Example, Uber,
Ola, Zomato have created huge
or professionals who can emerging
provide their expertise after
valuations. The Government carefully evaluating the technologies and this
of India is also driving digital
commerce and many traditional
needs of our profession. can be achieved by
Professionals need to work
business houses have ventured
closely with Business Process
conducting
into e-commerce in a continuous training
Consultants to create a
big way.
detailed blue-print and build a programmes.
In this scenario, it is essential for suitable digital
CA’s to study the developments infrastructure.
in the digital commerce space. 3. Up skilling and training of their attention to existing
CA’s can offer pre-funding staff business processes and
consulting services, due- industries have witnessed
diligence, valuation, negotiation Once the digital
infrastructure is a dramatic change in their
and post funding reviews operations. Professionals
to such digital commerce implemented, the next most
important step is to train need to look at this shift as
companies where huge
and up skill the staff with an opportunity and seek
investments are flowing into
the emerging technologies to broaden their client
these companies. We can offer
our services as a trusted advisor and this can be achieved base beyond geographical
by providing strategic inputs by conducting continuous boundaries. Ex: The Start-
over and above contributions training programmes. up ecosystem provides an
in core areas of accounting, 4. Implementation of a excellent opportunity for our
finance, tax and audit. Hybrid workspace profession to broaden our
client base and work with the
The most visible impact of
Adoption of Technology Next Generation businesses.
the pandemic was the shift
by our profession from “Work from Office” to Conclusion
“Work from Home”. Remote
1. Invest in Technology Currently, economies and
working and virtual meetings
Every crisis demands difficult are here to stay, although societies around the world are
decisions to be made. less intensely. Offices have trying to find a way to move
Chartered Accountants started working with less forward from this crisis-laden
need to analyse the size and than 100% workforce while period. As strategic partners, our
nature of their organisations continuing to practice profession has a pivotal role to
working remotely. Chartered play in helping governments and
to decide the level of
Accountants need to adopt a
investment in technology. businesses navigate efficiently
hybrid system of working so
For instance, smaller firms as to significantly reduce the in these troubled times.
having smaller teams require cost of workspaces. Chartered Accountants can
basic VPN and firewall support businesses in expanding
facilities to enable remote 5. Building broader client and enhancing their digital
working. Applications like base infrastructure, and in doing so,
Google Meet, Microsoft During the pandemic, there must innovate and embrace
Teams, WebEx, etc. can has been a dramatic shift technology.
be used for holding virtual by consumers towards
meetings. However, larger online channels, and Our profession is future- ready
organisations require a larger businesses have succeeded and can meet the pandemic
amount of investment in in responding digitally. challenges in these testing times.
technology. Businesses have refocused 

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ICAI Code of Ethics- Marching

Ahead of Times
The basic human instinct
is to place personal CA Manoj Fadnis
gains above service. The author is Past President, ICAI
and Past President, Confederation
Therefore, persons who of Asian and Pacific Accountants.
as individuals and as He can be reached at manojfadnis@
icai.org and [email protected].
a class, are willing to
place public good above
their personal gain
have enjoyed respect it has changed to the shared the concept of non-assurance
regulations, as happened all services got codified in section
and honour. But such over the globe. However, the 144 of the Companies Act, 2013.
a relationship can be importance of laying down
the Code of Ethics is still a The law regarding the
maintained or enhanced disciplining the profession has
duty which the profession
only if the professional should retain with itself. This also evolved over time. The
body to which they can be done only if the Code scams which hit the global
belong would interpret marches ahead of the times. profession at the turn of the
The Council of the Institute century and our country in the
the concept of public first decade have forced the
of Chartered Accountants of
interest as broadly as India (the Council) has always change from the self-regulations
possible. The respect and placed importance in keeping to the shared regulations. Prior
confidence enjoyed by the Code ahead of the legal to 2006, there was no concept
requirements. For instance, of monetary penalties being
a profession, to a great imposed on an erring member
Peer Review was introduced
extent, is dependent in the profession much before when found guilty of professional
on the strictness and the Chartered Accountants misconduct. Even reprimand
(Amendment) Act 2006 brought had been considered as an
scrupulousness with effective deterrent to prevent a
in Quality Review. Similarly,
which such a code is various pronouncements of the professional from doing what
adhered to by self- ICAI became applicable before is prohibited. Removal of name
discipline. Read on…
A Chartered Accountant,
whether in public practice
or in service, should both
be, and appear to be, free of
any interest which might be
regarded, whatever its actual
effect, as being incompatible
with integrity and objectivity.
Self-discipline requires complying
with the Ethics not only in letter
but also in spirit. The fabric of
disciplining the profession was
originally weaved on the basis
of the self-regulations. Today

69
PERSPECTIVE
from the Register of Members (d) Restriction on fees from a is well known that the Companies
had been the severe punishment single client exceeding fifteen Act, 2013 made the conduct of
with permanent removal as the percent, and the business too stiff. Hence,
extreme form of punishment. (e) Restriction on Taxation various Removal of Difficulties
With changing times, monetary Orders were issued and later the
penalties have become part Services to Audit clients. law was significantly amended,
of the law. The concept of the The first two have been in 2015, 2017, 2018 and 2020.
monetary penalties has become implemented with effect from 1st The motto of the Government of
more pronounced after the July 2020. The remaining three India since 2014 has been ‘ease
Companies Act, 2013 has been have been deferred for the time of doing businesses’. In line with
implemented. being. this thinking, section 144 of the
Companies Act, to the extent
In such fast-changing times, the In respect of the first two set of of management services needs
Council has done well to keep changes, it will be seen that the re-consideration to calibrate the
pace with the global ethical corresponding provisions were Indian profession to meet the
standards. The International by and large already in place global challenges.
Ethics Standards Board for in Code of Ethics 2009. It is
Accountants (IESBA) lays down also, not to deny that some of Similarly, some of the provisions
the ethical standards to be these new provisions are more of the IESBA Code now
complied with by professional detailed and therefore will require incorporated in our Code will
accountants. In 2009 ICAI better compliance. There are create practical difficulties for
Council adopted for the first some issues which will naturally the Indian profession. The
time the IESBA Code, popularly emerge which require more IESBA Code requires Rotation of
referred to as the IFAC Code of deliberations in the profession. Partners. This was implemented
Ethics. They were introduced in the ICAI Code of Ethics in
in the Code of Ethics as Part A. The revised IESBA Code 2009. However, with Rotation
The provisions of the Chartered of Ethics as adopted by us, of Firms becoming applicable
Accountants Act, the Regulations uses the term Management under the Companies Act 2013,
and the Council decisions were Responsibilities. It rightly points the rotation of partners has lost
retained as Part B. Since 2006, out that an audit firm should its significance. The global ethics
the powers of the Council to not take up any management still do not require rotation of
issue notifications have been responsibilities with respect firms and hence the concept of
changed to issuing guidelines. to an audit client. Obviously, rotation of partners is justified
such responsibilities will lead in that Code. Since India has
The global ethical standards to conflict of interest with the stricter legal provisions i.e.
underwent significant revision role as an auditor. It creates rotation of firms, one wonders
in the last 10 years. In 2018, self-review and self-interest what is the use of rotation of
IESBA issued the revised Code threats. But the Code clarifies partners. The rotation of partners
of Ethics. The ICAI has been that providing advice and requires a cooling period not
quick to adopt these standards. recommendations to assist the only for the engagement partner
The same were introduced in management of an audit client
our Code of Ethics in 2019 and in discharging its responsibilities
made applicable in a staggered
manner from 1st July 2020.
is not assuming management The revised IESBA Code of
responsibilities. Thus, certain Ethics as adopted by us,
The significant changes which non-assurance services can be
have come in the revised Code of rendered to an audit client if the uses the term
Ethics can be summed up as: auditor does not take up the Management
(a) Prohibition of Management
management responsibilities. Responsibilities. It rightly
However, section 144 of the
Responsibilities to audit
Companies Act does not permit
points out that an audit
clients,
taking up the Management firm should not take up
(b) Duty of Accountant in case Services and no distinction any management
of breach of independence is made in the law whether responsibilities with
standards,(c) Responding such services are rendered
to Non-compliance of Laws with or without taking up the respect to an audit
and Regulations (NOCLAR), Management Responsibilities. It client.

70
PERSPECTIVE
but also for the entire audit team. of the total fees. The rationale
When the firm itself will retire in has been that an excessive Responding to Non-
a period of ten years at the most, dependence on one single client compliance of Laws and
the requirement of rotation of will create a threat. The revised
partners is not required. This Code of Ethics now require that Regulations (NOCLAR) is
aspect needs to be reconsidered where the fees exceed more than an important global
by the Council. fifteen percent from one client
for two consecutive years, the development. The IESBA
Responding to Non-compliance of audit firm needs to demonstrate Code envisages that if a
Laws and Regulations (NOCLAR) is its independence. Thus, against
an important global development.
professional accountant
a blanket ban, the new proposal
The IESBA Code envisages that seeks to provide a gateway to comes across an instance
if a professional accountant demonstrate the independence of non-compliance of
comes across an instance of non- even if the fees exceed the thresh
compliance of laws, compliance hold levels. But this concept needs
laws, compliance of which
of which is of critical importance, to be limited to those entities is of critical importance,
then a professional accountant
cannot keep his eyes closed. He
where TCWG are different from then a professional
the management. A strong and
needs to escalate the issue within independent Audit Committee is a accountant cannot keep
the organisation up to the level of pre-requisite. Therefore, whenever his eyes closed. He needs
Those Charged With Governance introduced, it will be advisable to
(TCWG). If at that level also, there make it applicable to the listed
to escalate the issue
is no satisfactory response, then the companies or those companies within the organisation
professional accountant needs to which have established Audit up to the level of Those
report to the concerned regulatory Committees.
authority. The laws which are of Charged With Governance
critical importance will include The tax services rendered to an (TCWG).
the Fraud Corruption and Bribery audit client are also to be restricted
Laws, Money Laundering, Terrorists from a date to be notified by the
Financing and Proceeds of Crime, Council. Tax services comprise a have the concept of tax audit,
Data Protection, Tax and Pension broad range of services, including as prescribed under section
Liabilities, Environmental Protection activities such as: 44AB of the Income Tax Act. The
and Public Health and Safety etc. Council has issued Guidance
Tax return preparation.
Note on Tax Audit which is a
Reporting of frauds directly to the Tax calculations for the
rich literature bringing out the
regulator has been prescribed
in India for a long time. The purpose of preparing the requirements of the audit. Once
Reserve Bank of India requires accounting entries. the financial statements are
this in the audits of banks and Tax planning and other tax audited, then preparation of the
non-banking finance companies. advisory services. tax return does not result in a
Sub-section (12) of section 143 of conflict. Also the Tax laws have
the Companies Act, 2013 requires Tax services involving evolved over a period of time. In
a fraud to be reported directly to valuations. the case of Rajkot Engineering
the Secretary Ministry of Corporate Association1, the Government
Affairs, Government of India. Now Assistance in the resolution
of India filed an affidavit to the
such requirement has become of tax disputes.
effect that the views of the tax
part of the Ethics. The proper
implementation of this provision Amongst all the above types of auditor will not be binding on
rightly needs more engagement services, tax planning and tax the assessee. Thus, on an issue
with all the stakeholders so that services involving valuations where the tax auditor qualifies
the ultimate objective of bringing may create threats in terms his report, it is still open to an
in this onerous responsibility is of an audit client. Therefore, assessee to take a different
achieved. Hence, the provision has the proposed restrictions will position in the tax litigation and
not been implemented as of now. only enhance the credibility of under such circumstances if
The Code of Ethics, 2009 the audit services. However, he is being defended by his tax
contained a self-regulatory tax return preparation and auditor, there cannot be said to
provision that the fees from one representation services do be a conflict. Hence, the Indian
client, with some exceptions, not create a threat. India is position is different from the
should not exceed forty percent probably the only country to global position. These matters
1
162 ITR 28 (Guj)

71
PERSPECTIVE
need to be kept in mind as and in tenders is permitted with
when the Council decides to some restrictions. However, the Keeping the tradition
implement the above restrictions. unfortunate reality is that the of bringing in Ethical
tenders have seen the fees going
The revised IESBA Code has down to abnormally low levels. requirements before
also introduced the concept of
Key Audit Partner. The ethical
This is for us as individuals to they become part of
introspect. The Institute as a
requirements are now more regulator cannot decide the
the law, the Council
clearly extended to the entire minimum levels of professional has decided that upon
audit team and the said Key
Audit Partner. Also the extent of
fees. At best it can recommend laying down the office
the same for us to consider.
documentation has increased. What fees is to be charged is as director of an entity,
These are inevitable in the ultimately for each one of us to one cannot accept the
modern society. decide. But as a professional office of auditor of the
As mentioned before, significant we should strive to see that the
amendments were brought in client gets more in value than same entity for a
by the Chartered Accountants what money he pays. With this period of two years.
(Amendment) Act, 2006 which principle in mind, members
became effective from 17th should increase their fees. of the Council, a member brings
November 2006. One such Contingent fees are not a disrepute to the profession or the
amendment was to empower desirable way of charging fees for Institute as a result of his action
the Council to lay down a professional, more so in case of whether or not related to his
guidelines for advertisements assurance services. However, the professional work, such an action
by a Chartered Accountants in position is completely different will be regarded as a professional
in the case of management misconduct. Interpretating these
practice. The Council issued the provisions, the Hon’ble Supreme
guidelines in this regard in 2008 consultancy services. It is
necessary to ensure level playing Court in a recent case held that
which have been substantially where a complaint was made
field between the professional
amended by way of Council against a Chartered Accountant
firms and those rendering services
Guidelines 2020. The issues in the form of corporate entities. relating to sale of certain shares
relating to social media have also Regulation 192 of the Chartered the High Court was not justified
been aptly covered in the revised Accountants Regulations, 1988 in reversing the decision of the
guidelines. I personally hold permits certain specific services Disciplinary Committee which had
the view that for a professional where contingent fees can be held him guilty. The Hon’ble High
the best advertisement is a charged. Also, the Council is Court had concluded that the said
authorised to decide other services Chartered Accountant was not
satisfied client who speaks well acting as a Chartered Accountant
of his auditor/ advisor. But in where fees can be charged
on success basis. Acting as and was not discharging any
the complex world that we live functions in relation to his
Insolvency Professional has been
in, limited advertisement is practice. This decision has been
recently included in this list. The
the need of the day. This has ‘Non-Assurance Services to Non- reversed and the decision of the
been properly recognised and Audit Client’ can be a basis for Disciplinary Committee has been
permitted by the Council. Council to decide in future. restored by the Hon’ble Supreme
Court. This case demonstrates
Coupled with the empowerment Keeping the tradition of bringing the robustness of the Institute’s
to advertise, the law since 2006 in Ethical requirements before disciplinary mechanism. At the
also made competition healthier they become part of the law, the same time it is essential to remind
by doing away with some of the Council has decided that upon ourselves that all our actions
restrictions such as under-cutting laying down the office as director should be in accordance with the
to be a professional misconduct. of an entity, one cannot accept highest professional standards.
This is based on the premises the office of auditor of the same
entity for a period of two years. To conclude, we need to be proud
that once all the members are of the robust professional Code
This cooling period is necessary
to adhere to the same technical to install confidence of the society of Ethics given to us. It is our
and ethical standards, the service in the role of the auditor. This is a bounden duty to ensure proper
recipients should be allowed laudable decision of the Council. compliance. I am always confident
the benefit of cost optimisation and optimist that the profession will
and profession should become Schedule I Part IV sub -clause (2) continue to grow and prosper in
more competitive. Participation provides that where in the opinion the times to come. 

ce
ellen
Exc
and
ence, In
tegrity
Single entry to Double
end
Ind
ep
entry accounting system
disseminating desired financial information to
users and other relevant stakeholders and are
more helpful for decision making purpose. In
the double entry accounting system, financial
statements can be prepared with accuracy
that depicts complete information about
financial position and financial performance
of the organisation. It records two aspects of
transaction (debit and credit).
Double Entry Accounting System has

substantial advantages as it emphasizes the
dual nature of every business transaction
– for every debit entry there must be a
corresponding credit entry. It provides the
basis for the comprehensive and orderly
recording of the financial aspects of the
transactions of a business, provides a means
of proof of accurate accounting through the
equality of total debit and credit entries, and
by the integration in the ledger of personal,
Transparent financial reporting is essential real and nominal accounts, provides material
for good governance and establishing for the development of statements of profit
accountability in any organisation. It is and loss, and of equity, assets, and liabilities.
necessary that the financial reporting
be accurate in capturing the underlying ICAI believes in a comprehensive ecosystem
transactions, enhance transparency and be where accounts of all organisations are
user friendly to facilitate understanding of maintained under double entry accrual basis.
the financial statements by the users. The As a partner in nation building, ICAI is extending
single entry accounting system lacks on support to a number of governmental bodies
the dimensions of transparency and user- at local to national level to move to double
friendliness as there is no completeness entry system. Double entry accounting system
of records that leads to non-availability not only induces transparency in reflecting
of complete information about assets and financial transactions but also the financial
liabilities. Here, double entry accounting performance and financial position including
system comes into picture that helps in income, assets and liabilities.

In Quotes
73
What the Leaders Said About ICAI and Indian

Accountancy Profession since July 2020
The Institute of Chartered Accountants of India completes its 72 magnificent years of service on
July 1, 2021. Leading from the front, ever since 1949, ICAI has been instrumental in the growth
of the Indian accountancy profession, and has witnessed its members & students base grow by
leaps and bounds. ICAI has not only marked a commanding presence in the accounting arena,
but has also proven its mettle in service to the nation. Through professional excellence, ICAI
has marked a distinguished presence and is trusted by the society, government, the Indian
polity and policy makers alike. The Institute marches on further in its continuous journey of
embracing best global practices. The founding fathers of the nation and succeeding leaders of
Indian polity, have time and again abundantly acknowledged and highly commended, ICAI
and Indian accountancy profession’s potential, in social and economic well-being of the nation.
A glimpse of the views of the noted personalities, on various occasions of ICAI, as reported
in the journal and as tweeted by them during the Journal Volume Year starting July 2020, is
presented to you.
Shri Narendra Modi, Hon’ble Prime Minister of India
Hon’ble Prime Minister’s message – Global Level Indian Audit

Firms : “Friends, along with Doctors Day, Chartered Accountants Day is also
celebrated on the 1st of July. A few years ago, I had asked for global level
Indian audit firms as a gift from Chartered Accountants of the country. Today
I want to remind them of that. Chartered Accountants can play a very worthy
and positive role in bringing transparency to the economy. I extend my best
wishes to all Chartered Accountants and their family members.”
(78th edition of Mann Ki Baat delivered on June 27, 2021)
“It would not be an exaggeration to say that the organization is one of India’s most illustrious and
industrious bodies. Some of the brightest young minds have been honed under its leadership.
I have had the opportunity to address the community of Chartered Accountants many times and
each time, I feel elated, with their enthusiasm for India’s consistent push towards greater corporate
transparency as well as Ease of Doing Business.
…As Chartered Accountants, you work in an important position where governance and citizens
meet. You facilitate the interaction between the two with your expertise. Every citizen of the country
values your honesty, integrity and commitment to you profession. As book- keepers, you also play
the role of conscience keepers.”
(In a message published in The Chartered Accountant journal July 2020 issue)
Compiled by Editorial Board Secretariat of the ICAI. Comments can be sent to [email protected]

In Quotes
74
Shri Om Birla, Hon’ble Speaker of Lok Sabha
“Today, first of all, I want to congratulate ICAI on its 72nd Foundation Day. Best wishes and
many congratulations to ICAI President CA. Atul Gupta. I am delighted to be a part of this
momentous occasion and very unique occasion. I am also like a member of your family. I
have also seen how much hard work one has to put in order to earn the meritorious degree
of Chartered Accountancy. I have always maintained whenever I visited at ICAI events that
all these years your organisation has been conducting the CA examinations and there
has never been a time where questions have been raised on the examination systems and this is the
speciality and creditability of your organisation. And even today, the same standards of speciality and
creditability have been maintained by your organisation.
…. today is the day celebrated as CA day and today also happens to be Doctors’ Day. We see where
doctors are the ones who serve the humanity; Chartered Accountants are also, like doctors, since they
play a vital role in ensuring the economic health of the country…”
(In a special address on the occasion of 72nd Foundation Day of The Institute of Chartered
Accountants day of India, report published in The Chartered Accountant journal August 2020 issue)
Shri Amit Shah, Home Minister of India

“Hon’ble Home Minister of India, in his message to ICAI on the occasion of 1st July 2020,
mentioned about the significant role of Chartered Accountants in promoting the culture of
honesty and good governance in the corporate arena.
He further added that mission Aatmanirbhar Bharat will bring an era of newer opportunities
for all and that chartered accountants will be playing an important and decisive role in this
historic journey of self -reliant India.”
Smt. Nirmala Sitharaman, Minister of Finance and Corporate Affairs

Finance Ministry interaction with tax professionals : “During the meeting, Smt.
Nirmala Sitharaman emphasised that enhanced taxpayer service is an important priority
for the present Government and every effort should be made to amplify the same. While
appreciating the role of ICAI and its president Shri Jambusaria and the ICAI’s positive
contribution in giving shape to today’s meeting, the Finance Minister complimented them
for providing specific nuanced inputs lying between the intersection of technology and
taxation. Smt. Sitharaman also expressed her gratitude to the people who sent inputs through email and
assured them that their suggestions would be taken up in all earnestness and would be addressed on
priority.”
(Excerpts from press release issued by Ministry of Finance on 22 June 2021)
Greetings to all CA professionals today on #CharteredAccountantsDay. Your role in building an

#AtmaNirbharBharat is crucial. You have been contributing with inputs for #EaseofDoingBusiness in
India. Wishes for your positive and growing role in the service of the nation. @theicai.
(On Twitter on July 01, 2020)

In Quotes
75
CA. Piyush Goyal, Union Minister of Railways, and Commerce and Industry
“The minister in his address on the occasion of ICAI’s virtual international conference 2020
on the theme Accountancy Profession: Augmenting Economic Sustainability said that he
appreciates the fact that while serving for 70 years, ICAI has done well to imbibe qualities
of honesty, integrity, competence and regard for society as the students who joined ICAI
made ICAI proud not only in India but in foreign land as well. He asserted that India has
been given a unique opportunity to re-design, reinvent, re-inspire and re-innovate to face
the future and sustainable development is our guide for the same. Under ‘Aatmanirbhar Bharat’ ICAI
is progressively expanding its role in the global economy, which would not have been possible without
strengthening the MSME sector. He appreciated the efforts of ICAI for focusing on MSMEs and asserted
that CAs are well positioned for effective resolution and to augment the efforts of the Government to build a
self-reliant India.”
(In a report published in The Chartered Accountant journal January 2021 issue)
Shri Nitin Gadkari, Hon’ble Minister for Road Transport and Highways and MSME
“The Chartered Accountancy profession has a proud history of rendering selfless service to
the nation. ICAI is an institution that has been constantly evolving, innovating and inspiring
its members to adapt the global business needs and to achieve the highest standards of
professional excellence. I am convinced that it would continue to do so.”
Shri Ravi Shankar Prasad, Hon’ble Minister of Law and Justice,

Communications, Electronics and Information Technology
“Since its inception in 1949, ICAI has been an integral partner in nation-building. The
Institute has played a significant role in establishing financial discipline, transparency,
accountability and propriety in every sphere of financial activities.
During the current times when COVID-19 crisis has hit, every sector of the economy, CA
fraternity has to shoulder the responsibility of bringing India back to its growth trajectory.
The nation looks forward towards your selfless contribution to Indian economy. I am confident that our
country would emerge victorious and CA fraternity that is well versed to handle critical situations would
have significantly contributed.”
Shri Dharmendra Pradhan Minister of Petroleum & Natural Gas and Minister of Steel
“Greetings and best wishes to India’s CA fraternity on Chartered Accountants Day. A vital
element in nation building, the CA community is assiduously working to ensure better
corporate governance and is propelling India towards economic growth.”
(On twitter on July 01, 2020)

In Quotes
76
Shri Thaawarchand Gehlot, Hon’ble Minister of Social Justice and Empowerment

“I have been informed that ICAI. Set up by an Act of Parliament to regulate the profession
of Chartered Accountancy has a glorious track record of more than seven decades in
rendering and administering an internationally renowned Indian profession.”
Shri Anurag Singh Thakur, Minister of State-Finance and Corporate Affairs
“The journey of ICAI right from its inception till now has been exemplary and Chartered
Accountants have played a stellar role in the growth story of our nation. I firmly believe
that the CA profession will continue to play a dynamic role in ensuring stability and
sustainability to the national growth, as was being done in the past.
The Institute of Chartered Accountants of India and the entire fraternity have earned
applause worldwide for their efficiency, integrity and financial acumen and ICAI has done some
remarkable work in exporting sort power in this form and manner to other nations.
Chartered Accountants are a crucial cog in the economic system of this country and they ensure a
smooth segue and transition of any policy measure announced by the Government. It is also imperative
to spread the knowledge and ethics amongst the lakhs of young students who are undergoing the
journey to become a Chartered Accountant.”
The minister in his address on the occasion of ICAI’s virtual international conference 2020, felt that the
theme is interesting and comes at a time when sustainability tops the agenda of the Government. He
added further that the Government is looking at strong economy based on strong fundamentals and
acknowledges the role of CA. which is crucial to the growth of an economy and it is a medium between
the Government and the business community. He appreciated ICAI has a global presence in 63 cities
of the world and the members abroad are playing an important role in moving ahead the vision of
Aatmanirbhar by the Government.
Shri Pratap Chandra Sarangi, Hon’ble MoS for MSME, Fishries, Animal Husbandry and Dairying
“The role of the ICAI in the country’s socio-economic growth has been indeed praiseworthy.
In the exponential growth and stability of Indian economy, the Chartered Accountants have
a fair share of credit. At a time when the whole economy is devastated by COVID-19, the
ICAI and the learned fraternity of Chartered Accountants have an onerous role to play in
providing the professional accouming services to the industries and businesses to help
!hem sustain and grow.”

In Quotes
77
CA. Suresh Prabhu, Hon’ble Member of Parliament,

Rajya Sabha and Prime Minister’s Sherpa to G7 and G20
“It is a proud moment for me to wish my fraternity from the chartered accountancy profession,
especially on the Foundation Day of ICAI, who are celebrating the glorious service of ICAI which
has been synonymous with the growth and development of our nation all these days. Through
their dedicated service, members of ICAI have left an indelible mark in the minds of people to
take up this profession as one of the most respected career options to serve the country. It will
not be out of place to say that members of ICAI are doing exceedingly well in their profession as
well as in other walks of life, bringing laurels to the Institution.”
CA. Prabhu, in his address on the occasion of 71st Annual Function on February 9, 2021, striked a comparison
between a doctor and an accountant. He further said that we cannot think about revival of the economy
without thinking about the crisis of 2008, as the world today is highly interconnected and the economies need
to work on revival of global economy to reboot their own economy. He added that here is where our chartered
accountants can play a vital role and help the economy grow.
CA. Arun Singh, Hon’ble Member of Parliament (Rajya Sabha)

“CA profession has played a true role of Partner in Nation building and has always been at the
forefront promoting various initiatives of the Government. In the time of COVID-19 pandemic,
the CA profession remain at forefront and supported Government & society and contributed in
COVID fund, distributed kits for the needy etc. throughout the country.
…for reaching the dream of becoming dollar five trillion economy, we need to have good health
of individuals and of society.” Hon’ble Member of Parliament further added “Innovation & ICAI
are synonymous to each other, as ICAI always keep innovating in every field, i.e., curriculum,
implementing new global practices, technological reforms, issuing new guidelines etc. to be at the forefront
of economic development.”
… This noble profession has taught me time management and sharpened by Managerial skills. I am proud to
be a part of this profession.”
CA. K. Rahman Khan, former Union Minister of Minority Affairs and

also Ex-Deputy Chairman of Rajya Sabha
CA. Khan addressed the international conference participants on augmenting inbound
investment in ‘Make in India’. He discussed the important factors which any country needs to
focus in order to attract FDI which are market access. He also explained about the role of ‘Make
in India’ in augmenting the FDI and how during this pandemic also, India is able to provide
a safe and rewarding investment opportunity. He also added that growth of FDI is a strong
reflection of growth of India and through the ‘Make in India’ the nation is building to embrace
growth and become a super power.
Shri Tejasvi Surya, Hon’ble Member of Parliament

The hon’ble Member of Parliament laid emphasis on how India has the world’s youngest
population is aspirational, ambitious, and wants to reach out for a better tomorrow. For building
a better tomorrow, he stressed on the importance of having dominance in the area of technology
and innovation. He also talked about encouraging the agricultural sector and summed up that
India needs to make right kind of policies and reforms to enable young people to emerge as
top notch leaders, innovators and thought leaders in every sector of the economy and greatest
challenge is to provide equal opportunities to all.

ce
ellen
Exc
and
ence, In
tegrity
Accounting Profession
end
Ind
ep
moving from local to Global
for effective decision making for the top
management with smart software systems in
the emerging technological milieu.
Continued globalization is creating more

opportunities and challenges for members of
the accounting profession. Globalization is
encouraging the free flow of resources within
the nations, enhanced overseas outsourcing
activities and the transfer of technical and
professional skills with exchange of language
and cultural systems. Accounting firms in
various foreign nations like Australia, UK,
Canada, Europe are outsourcing services to
India, thereby creating a shift in employment
within the accounting industry.
Indian accounting professionals are known for

their high intellectual, financial, technical and
analytical skills across the globe and around
12000 members of ICAI had been instrumental
in bringing brand value to this profession
Over the years, Accounting as a profession has globally. Indian business abroad look for
been reshaped by a combination of various Indians for handling their business and with
forces like market volatility, globalization and increased FDIs and lucrative investment
technological innovation. The accounting schemes in India by Government of India,
professionals are no longer concerned with we are sure that foreign clients will soon
the traditional bookkeeping, internal checks, see the competencies of Indian accounting
reconciliations, reporting and authentications professionals and India will be become one of
but are under increasing pressure to move the top destination for finance professionals ,
beyond the tasks of reporting their company’s just like IT professionals. ICAI is also signing
results and protecting its assets to assuming various MOUs and MRAs with other foreign
the roles of trusted business advisor and institutes in order to facilitate the cross-
an enabler of their organization strategies. border movement of people and services
Professional accountants need the skills which provides avenues to professionals to
to provide all-inclusive corporate reporting grow their global footprints.

79
CSR
ICAI – Contributing to Societal Goals
The Institute of Chartered Accountants of India its best efforts to create, maintain, and improve
firmly believes in the incomparable importance of awareness and compliances of CSR Regulations;
fulfilling duties and meeting social responsibilities undertake meaningful and quality initiatives;
so as to transform stakeholders into benefactors. such activities that capture the true essence of
The impactful role that communities can play social responsibility in such a way that leads to
in facilitating and broadening the horizons of value creation for the society, promote sustained
impoverished areas in modern competitive world growth in harmony with the environment through
needs excessive consideration. Afterall, prosperity transparency and effective governance. ICAI
is best achieved in an inclusive society where gains educates, conducts events and take focussed
are shared equitably. In such times, it is imperative initiatives directed towards overall wellbeing of the
to move away from the narrow personal gains to society.
take assertive and strong steps towards redefining
the record and aspire for greater balance and
1. Task Force for Covid-19
deeper meaning to human existence; this is only As a vigilant leader, we all are aware how the 2nd
possible through the collective fulfilment of our wave of Covid-19 pandemic impacted the society.
corporate social responsibilities. The 2nd wave of pandemic had a devastating
effect of the Indian society and also the Indian
The ambit of CSR (Corporate Social Responsibility) economy. The severity of the situation caught
activities has grown manifold. Even a few years India unprepared for the onslaught. To minimise
ago, before the Companies Act 2013 came the spread of the virus, lockdown had to be
into effect, businesses used to contribute to the imposed in several states. Jobs, and as a result,
development of the society as a benevolent and the household incomes have also been impacted.
generous act. There was no compulsion to spend The health system also came under pressure due
for the social cause. However, with the coming to the rapid spread of the virus.
into effect of the Companies Act, 2013, India
has seen CSR spending becoming compulsory To mitigate the issues ICAI branches, formed Special
by law and non-fulfilment of the provisions is Covid Task Force and helped the members, students
punishable offence. CSR is playing an important and their family and society at large to arrange for
part in achieving the sustainable development hospital beds, oxygen, medicines, plasma, food etc.
goals. Government of India seeks to achieve the The Branches worked at the ground level and were
SDG Goals through CSR and through private- in direct contact with the needy. Members of the
public partnership in nation building. During Task Forces were readily available on call to provide
the Covid-19 pandemic also, CSR has played a support and comfort to the sick.
very important role in supporting the social and
economic development of the country where the
Corporate Sector joined hands with Government
in boosting up health infrastructure to fight the
pandemic.
Being a partner in Nation Building, ICAI sou

moto take several steps as part its responsibility
to the society. ICAI has also submitted views on
Frequently Asked Questions on Companies (CSR
Policy) Amendment Rules, 2021 being framed by
the MCA. ICAI through the CSR Committee puts
Contributed by CSR Committee of ICAI.

80
CSR
2. Blood Donation and students above 18 years of age. A grant for
reimbursement of expenses upto Rs. 7,500/- was
To support the members and students, the declared by the CSR Committee. During the
Branches of ICAI were requested to organize last quarter due to the efforts of the branches of
Blood Donation / Plasma Donation Camps since ICAI, facilities have been provided at more than
blood was in short supply during the peak of 83 vaccination camps at various places all over
the second wave of the Covid-19 pandemic. A the country for the vaccination of more than
grant for reimbursement of expenses upto Rs. 15,454 members and students and their family
7,500/- was declared by the CSR Committee, for members. Other branches have also submitted
organizing the Blood Donation Camp. During the their willingness to facilitate the vaccination of
last quarter, reports have been received from 25 members and students once the vaccines are
branches where more than 1000 units of blood made available.
was collected. Members and students had actively
taken part in the initiative. 4. Supply of Oxygen
3. Vaccination of Members, Students and Task Forces for Covid-19 were formed at the
their family Branches where the members of the Task Forces
provided support to members and students of
Vaccination Camps were organized by the the branch, during the Covid-19 pandemic, by
Branches since April, 2021, in various phases, arranging for hospital beds, oxygen cylinders and
for the benefit of members, students and their oxygen concentrators, medicines, ambulance
families. In the initial phase, senior citizens and and also took care of the ailing family by providing
individuals with co-morbidities were vaccinated. free / subsidized food. Some branches of ICAI
Since May, 2021 vaccination camps have been have donated Oxygen Cylinders, kits and other
organized by various branches for members medical equipment to Hospitals and with the
Indore Branch of CIRC of ICAI CSR Committee urges CA Vaccination Camp organised by Pune Branch of WIRC of ICAI
family to be vaccinated
on the occasion of World
Immunization Week, 2021
Vaccination Camp organised by Guwahati Vaccination camp organised by Bhilwara Vaccination Camp organised by Alwar Branch of CIRC of ICAI
Branch of EIRC of ICAI Branch of CIRC of ICAI

81
CSR
understanding that the priority treatment will be
given to Chartered Accountants.
Tree Plantation by Sonepat Branch
Oxygen Concentrators arranged by Kishangarh Branch of CIRC of ICAI
5. Tree Plantation
The CSR Committee of ICAI is organizing Mega
Tree Plantation Drive which will be flagged off on
CA Day, 2021 by the august hands of Shri Prakash
Javadekar, Minister of Environment, Forest and
Climate Change (confirmation awaited). There is a
target of planting 10 lakh trees during the current
year. The committee invites all members and Tree Plantation by Ernakulam Branch
students to be a part of the Mega Tree Plantation
drive. Each member and student has to plant at This small contribution from you towards the
least 1 tree during the current season. He also environment will go a long way to preserve the
should pledge to nurture the tree for a minimum green cover of the earth and make the earth a
period of 3 years. better and healthier place to live.
Inauguration of Mega Tree Plantation Drive on the occasion of CA Day, 2021

82
CSR
6. International Yoga Day Celebrations
For the general health and well being of the society,
International Yoga Day celebrations were organized
on 21.06.2021. Two webinars were organized
during the day. Guru Maa Chaitanya Meera took
the session on Be with Yoga, Empower Yourself,
where she discussed various asanas and yogic
exercises for good health. The afternoon session Members of Tirupur branch have donated 20 benches of chairs consisting
was taken by Padmashree Gurudev Swami Bharat of three chairs in a row worth Rs.1.50 lakhs, for accommodating 60
patients at a time to Government Medical College and Hospital, Tirupur
Bhusan on the topic : Yoga in Today’s Context
where basic exercises were discussed which could peace and prosperity and to align the individual
be followed in our everyday life. The session was social activities so as to fulfill the sustainable
ended with a discourse by Brahma Kumari Yeshu. goals.
The sessions received good response from the
members. 8. Individual Social Responsibility
7. Being in Touch for the Society A ISR Community Hub has been created in
DLH platform where individual members and
ICAI encourages members and students to work students can showcase the social activities done
for the social cause. Flyers have been circulated by them so that others will also be motivated for
on important days like International Day of Forests, the social cause. All such efforts are appreciated
World Environment Day, World Wildlife Day, by the Committee. At individual level one such
Chartered Accountant CA Gaurang Parikh has
been serving the society with great humility. At the
age of 63, when most people think of spending
their retired life relaxing at home, he has been out
on the streets helping the needy and the destitute.
Education being a big casualty among children
of workers he motivates their parents to get the
admission in the local municipal schools or in
their village and assist them logistically. He also
encourages them to shun bad habits and adopt
healthy lifestyle. There are many other members
Awareness Campaign: World Day against Child Labour - 12th June, 2021 who are doing their bit in helping the community.
It is the need of hour that we should come forward
to help others.
Awareness Campaign: World Day to combat Desertification and Drought -

17th June, 2021
World Health Day, to name a few. The purpose

of the same is to make the CA fraternity aware of
important Sustainable Development Goals which
were adopted by the United Nations in 2015 as a
universal call to action to end poverty, protect the Awareness Campaign: International Day of Biological Diversity-
planet, and ensure that by 2030 all people enjoy 22nd May, 2021

83
CSR
Feeding of Stray Animals by Recycling of waste Chartered Accountants in Morbi contributed an ICU on wheels
CA Students
Sewing Machine donated by individual Chartered Accountant Donation of food by individual Chartered
Accountant
Indian CA honoured with

Uganda’s Highest Civilian Award
As a matter of great
national pride, CA
Rajesh Chaplot,
an Udaipur-born
Ugandan business
leader was
honoured with the
Uganda’s Highest
Civilian Award at
a ceremony in
Kampala. The honours were done by Yoweri Museveni, His
Excellency Hon’ble President of Uganda in the year 2020.
The accolade was conferred upon Rajesh Chaplot for his
determined efforts and excellence in the field of Business
& Commerce, Social Service and for furthering the ties
Teaching Children living near railway stations by CA Student between India and Uganda.

ce
ellen
Exc
and
ence, In
tegrity
Pathshala to Internationally
end
Ind
ep
benchmarked education
to e-learning. Indian education might have

evolved to a great extent but one thing which
is common from Vedic days to modern times
is the ability of our country to churn out world
class professionals.
ICAI has adopted most modern technological

tools to impart education. Today ICAI is
providing education through a state of art
platform - digital learning hub to both members
and students. Classes are being delivered
electronically free of charges to the students
to assist them in their learning efforts.
ICAI believes that the role of a Chartered
Accountant has been evolving continually to
assume newer responsibilities in a dynamic
environment. There has been a notable
shift towards strategic decision making and
entrepreneurial roles that add value beyond
traditional accounting and auditing. The
ICAI education pedagogy is benchmarked
to the best of global systems and follows
In ancient India, education was imparted in International Education Standards of IFAC.
temples, pathshalas and gurukuls. Indigenous
education was imparted in small institutions Recently, ICAI released International CA
called pathshalas consisting of few students curriculum wherein three levels of examination
following a flexible curriculum with no fixed have been retained. In the system, education
fee, no benches or chairs and no printed books would continue to be imparted through
either. From conducting classes under a tree distance learning by providing study materials
or a guru’s residence Indian education has and other educational inputs. In addition,
come a long way from vernacular education greater emphasis would be laid on e-learning
to international curriculum, from no roll calls modes, like e-books, e-lectures, e-journal and
to regular timetable and from slate and chalk virtual coaching classes to bridge the distance
to bounded books and note books and now learning gap.

Know Your Ethics
85
FAQs on Communication and changes

in professional appointments
Q. Whether a Chartered Accountant

in practice can accept a position as
auditor previously held by another
Chartered Accountant without
first communicating with him in
writing?
A. No, a Chartered Accountant in

practice cannot accept a position as
auditor previously held by another
Chartered Accountant without first
communicating with him in writing. It will establish effective communication with the
be in violation of Clause (8) of Part I of First retiring auditor unless there is some evidence
Schedule to the Chartered Accountants Act, to show that the letter has in fact reached
1949. the person communicated with. Members
Q. What is the intention behind communicating should therefore communicate with a retiring
with the retiring auditor? auditor in such a manner as to retain in their
hands positive evidence of the delivery of
A. As per Council directions under Paragraph the communication to the addressee. In the
2.14.1.8(i) under Clause (8) of Part-I of the opinion of the Council, the following would in
First Schedule to the Chartered Accountants the normal course provide such evidence:-
Act, 1949 appearing in Volume-II of the
Code of Ethics, 2020, professional courtesy a) Communication by a letter sent through
alone is not the major reason for requiring a “Registered Acknowledgement due”, or
member to communicate with the existing
b) By hand against a written
accountant. The underlying objective is that
acknowledgement, or
the member may have an opportunity to
know the reasons for the change in order c) Acknowledgement of the communication
to be able to safeguard his own interest, from retiring auditor’s vide email address
the legitimate interest of the public and the registered with the Institute or his last
independence of the existing accountant. known official email address , or
When making the enquiry from the retiring
auditor, the one proposed to be appointed d) Unique Identification Number (UDIN)
or already appointed should primarily find generated on UDIN portal (subject to
out whether there are any professional or separate guidelines to be issued by the
other reasons why he should not accept the Council in this regard)
appointment.
Q. Whether a Chartered Accountant can
Q. Whether posting of a letter under accept appointment as an auditor after
“Certificate of Posting” is sufficient to sending communication to the previous
establish communication with retiring auditor through registered post without
auditor? acknowledgment due?
A. No, a mere posting of a letter “Under A. No, a Chartered Accountant cannot

Certificate of Posting” is not sufficient to accept an appointment as an auditor after
Follow us on: www.esb.icai.org | [email protected] |@icaiesb

Know Your Ethics
86
sending communication to the previous 1949 appearing in Volume-II of the Code of

auditor through registered post without Ethics, 2020.
acknowledgment due, as this may tantamount
to professional misconduct under clause (8) However, in case of assignments done by
of Part I of First Schedule to the Chartered other professionals not being Chartered
Accountants Act, 1949. Accountants, it would also be a healthy
practice to communicate.
Q. Whether a member of the Institute will
be deemed to be guilty of professional Q. Whether a Chartered Accountant who is
misconduct if he accepts his appointment appointed as tax auditor for conducting
as an auditor immediately after intimating special audit under the Income-tax
his appointment over the phone to the Act by the IT Authorities is required to
previous auditor? communicate with statutory auditor?
A. Yes, the member would be held guilty of A. Yes, Council direction mentioned under
professional misconduct for the following Clause (8) of Part I of First Schedule to the
reasons: Chartered Accountants Act 1949, appearing
in Volume-II of the Code of Ethics, 2020,
a) That he had failed to communicate with prescribes that it would be a healthy practice
the retiring auditor in writing; and if a tax auditor appointed for conducting
special audit under the Income-tax Act, 1961
b) That he did not wait for a reasonable communicates with the members who has
length of time for a reply to be received conducted the statutory/tax audit.
from him.
Q. Whether a Chartered Accountant in practice
Q. Who is “previous auditor” (or retiring can accept audit in case the audit fee of the
auditor) for the purposes of communication previous auditor remains unpaid?
to be made in terms of clause (8) of Part I
of First Schedule to the Act? A. No, in case the undisputed audit fees for
carrying out the statutory audit under the
A. The term “previous auditor” (or retiring Companies Act, 2013 or various other statutes
auditor) refers to the immediately preceding have not been paid, the incoming auditor
auditor who held the same or similar should not accept the appointment unless
assignment comprising same/ similar scope such fees are paid. In respect of other dues,
of work. the incoming auditor should in appropriate
circumstances use his influence in favour of
Q. Whether communication by the Incoming his predecessor to have the dispute as regards
auditor is mandatory with the previous auditor the fees settled.
in respect of various audit assignments, like
the concurrent audit, revenue audit, tax audit The Council has taken the view that the
and special audits etc.? provisions of audit fee made in accounts
signed by both- the auditor and the auditee
A. Yes, the requirement for communicating with along with other expenses, if any, incurred
the previous auditor would apply to all types by the auditor in connection with the
of audits viz., statutory audit, tax audit, GST audit, shall be considered as ‘undisputed’
audit, internal audit, concurrent audit or any audit fees.
other kind of audit. The Council has laid down
detailed guidelines in this regard and the same Members may like to access the Video on
are appearing in Paragraph 2.14.1.8(xiv) to “FAQs on Communication and changes in
2.14.1.8(xvii) under Clause (8) of Part I of First professional appointments” at http://esb.icai.
Schedule to the Chartered Accountants Act, org/esb-videos/

87
Opinion
Accounting Treatment of Expenditure Incurred
for Configuration Design Study of Integrated
Refinery Cum Petrochemical Project
A. Facts of the Case

1. A company (hereinafter referred to as ‘the
Company’), which is a joint venture of
public sector oil marketing companies, is
scouting for suitable land for setting up an
integrated refinery cum petrochemicals
complex. Meanwhile, as a part of project
implementation, the Company has engaged
various consultants for carrying out different
studies including the pre-feasibility and
configuration design study of the project. Further, the site of the refinery and
petrochemicals complex is not a parameter
2. The objective of configuration study carried out
for ascertaining the optimal configuration and
is to arrive at a most optimum configuration
the same configuration can be implemented
(essentially deciding the different products,
on any land allotted for the project.
quantities, process units and their capacities)
of refinery and petrochemical process units 3. The querist has referred to the guidance under
while achieving best economics and meeting Indian Accounting Standard (Ind AS) and
the domestic consumption of different Educational Material, issued by the Institute
products in future. The configuration thus of Chartered Accountants of the India (ICAI)
finalised forms the basis on which further as follows:
stages of Project implementation follow. Paragraph 7 of Ind AS 16, ‘Property Plant and
This base configuration, after carrying out Equipment’ states the following:
a fine tuning, detailing and re-optimisation, “The cost of an item of property, plant
the extent and scope of which depending on and equipment shall be recognised as
the time lapse and based on the significant an asset if, and only if:
changes, if any, on the product demands
and cracks, will define the specifications (a) it is probable that future economic
for the selection of different licensors. The benefits associated with the item
licensors thus selected will generate the will flow to the entity; and
design packages, which form the basis for (b) the cost of the item can be
Front End Engineering Design (FEED), measured reliably”
Detailed Feasibility Report (DFR) and Detailed
Paragraph 16 of Ind AS 16 on ‘Elements of
Engineering. The Plants will be constructed
cost’ states the following:
based on the detailed engineering, which
will be commissioned with the assistance of “The cost of an item of property, plant
licensors and operated thereafter. and equipment comprises:
Therefore, a configuration study is a starting a) its purchase price, including import
point of the journey culminating with duties and non-refundable purchase
construction of refinery and petrochemical taxes, after deducting trade discounts
complex. and rebates.

88
Opinion
b) any costs directly attributable to cannot be sold or transferred or leased to
bringing the asset to the location others.
and condition necessary for it to be
Further paragraph 16 of Ind AS 16, inter alia,
capable of operating in the manner
intended by management. states that any costs directly attributable to
bringing the asset to the location and condition
c) the initial estimate of the costs of necessary for it to be capable of operating in
dismantling and removing the item the manner intended by management should
and restoring the site on which it is be included in the costs of an item of property,
located, the obligation for which an plant and equipment.
entity incurs either when the item
is acquired or as a consequence The cost of a self-constructed asset is also
of having used the item during a determined using the same principles as for
particular period for purposes other an acquired asset.
than to produce inventories during Since know-how has been acquired for
that period.” installation of the plant and considering it
Question No. 16 along with the Response as given will be used for installation of this plant only,
in Educational Material on Ind AS 16, issued by the cost of know-how should be capitalised
the erstwhile Ind AS Implementation Committee as part of cost of relevant plant as directly
of the ICAI is reproduced below: attributable cost.”
“A public sector company is engaged in 4. Accounting treatment by the Company:
refining and marketing of petroleum products.
The company has entered into engineering The configuration design study is fundamental
agreements with a foreign licensor for transfer for construction of integrated refinery cum
of know-how for installation of petrochemical petrochemical project and being used as a basis
plant at one of its refineries. The know-how can for preparation of feasibility report. The study
be used only for the company’s own use and analyses existing technologies and materials
cannot be sold or transferred or leased to others. to determine the best fit for the project, i.e.,
As per the agreement, the licensor will provide the configuration study helps in deciding the
engineering and technical services in connection specifications of the project. As explained in
with the design of the plant. Whether the cost of paragraph 2 above that configuration finalised
technical know-how fee related to plant design forms the basis on which further stages of Project
incurred under the engineering agreement is to implementation follow. The cost incurred is
be capitalised as intangible asset or as a part of specific to the complex the Company is planning
the relevant plant? to construct and not generic. Therefore, the cost
Response is integral part of the project, which is required for
setting up the refinery cum petrochemical project.
In the given situation, to determine whether Further, paragraph 16 of Ind AS 16, states that any
know-how should be capitalised as an costs directly attributable to bringing the asset to
intangible asset or as a part of relevant plant, the location and condition necessary for it to be
judgement needs to be exercised as to which capable of operating in the manner intended by
element is more significant, the property, management should be included in the cost of an
plant or equipment element or intangible item of property, plant and equipment. Since, the
element. The entity should evaluate whether study done will be used for setting up the project
any intangible part is actually integral to the only, the consultancy expenditure incurred for
larger asset or whether it is really a separate
configuration design study has been capitalized
asset in its own right. In the present case,
under ‘Capital Work in Progress’ as part of directly
the technical know-how is integral to the
attributable cost.
plant which is required for installation of the
petrochemical plant. The know-how can be 5. Comptroller and Auditor General (CAG)
used only for the company’s own use and Observation:

89
Opinion
As per paragraph 5 of Indian Accounting Standard “Research is original and planned
(Ind AS) 38, ‘Intangible Assets’, the Standard investigation undertaken with the prospect
applies to, among other things, expenditure on of gaining new scientific or technical
start-up, research and development activities. knowledge and understanding.”
Research and development activities are directed
“Development is the application of
to the development of knowledge. Therefore,
research findings or other knowledge to a
although these activities may result in an asset with
plan or design for the production of new or
physical substance (eg a prototype), the physical
substantially improved materials, devices,
element of the asset is secondary to its intangible
products, processes, systems or services
component, ie, the knowledge embodied in it.
before the start of commercial production
As per paragraph 56 of Ind AS 38, examples or use.”
of research activities are: (a) activities aimed
at obtaining new knowledge; (b) the search for, (Emphasis supplied by the querist.)
evaluation and final selection of, applications of The configuration design study does not satisfy
research findings or other knowledge; (c) the the definition of research and development in Ind
search for alternatives for materials, devices, AS 38 based on the following:
products, processes, systems or services; and
(d) the formulation, design, evaluation and final i. The study has not been done with an
selection of possible alternatives for new or intention of gaining new scientific or
improved materials, devices, products, processes, technical knowledge and understanding.
systems or services. Existing methods available have been used
to perform the configuration study. Also, the
Since the scope of the work of the consultant technologies considered by the consultant
relates to search for alternative configuration/ are tried and tested and commercially feasible
system, the work comes under the scope of technologies.
‘Research Activities’ as described under sub-
paragraphs (c) and (d) of paragraph 56 of Ind AS ii. The configuration will define the specifications
38. for the selection of different licensors, who
will generate the design packages, which
Further, as per paragraph 54 and paragraph 55 of form the basis for FEED, DFR and detailed
Ind AS 38 respectively: engineering. The Plants will be constructed
“No intangible asset arising from research based on the detailed engineering thus
(or from the research phase of an internal effected, which will be commissioned with
project) shall be recognised. Expenditure the assistance of licensors and operated
on research (or on the research phase of thereafter. Therefore, configuration study will
an internal project) shall be recognised as not create an identifiable intangible asset as
an expense when it is incurred.” the same cannot be separated from the entity
and sold, transferred, licensed, rented or
“In the research phase of an internal exchanged by itself.
project, an entity cannot demonstrate that
an intangible asset exists that will generate iii. It is the refinery and petrochemical complex
probable future economic benefits. Therefore, which will be generating future economic
this expenditure is recognised as an expense benefits and not the configuration study
when it is incurred.” by itself. Thus, study is not a precursor for
creation of any intangible asset, as the results
Thus, as per paragraph 54 of Ind AS 38, the
of the study are not intended for use elsewhere
payments made to the consultant relating to study
to generate economic benefits.
of alternative configurations should be recognised
as expenses. Accordingly, it may be inferred that the Company
6. Views of the Company to CAG Observation: is not undertaking any research and development
activity. The configuration finalised is fundamental
Definition of ‘Research’ and ‘Development’ under to the construction of refinery and petrochemical
Ind AS 38 is as under: complex; and forms the basis for further stages

90
Opinion
of project implementation. Therefore, the capable of operating in the manner
expenditure incurred for the configuration design intended by management.
study, being part of the overall construction of
c) the initial estimate of the costs of
the project, should be treated as capital work
dismantling and removing the item
in progress in accordance with Ind AS 16; and
and restoring the site on which it is
further since the expenditure is neither research located, the obligation for which an
nor development, it doesn’t fall within the scope entity incurs either when the item
of Ind AS 38. is acquired or as a consequence
However, CAG desired that the Company of having used the item during a
should obtain views of the Expert Advisory particular period for purposes other
Committee of the ICAI on accounting treatment than to produce inventories during
of consultancy cost incurred on configuration that period.
design study. 17 Examples of directly attributable costs
B. Query are:
7. In view of the above, the querist has sought a) costs of employee benefits (as defined
the opinion of the Expert Advisory Committee in Ind AS 19, Employee Benefits)
as to whether the accounting treatment done arising directly from the construction
by the Company for expenditure incurred for or acquisition of the item of property,
the configuration design study by classifying it plant and equipment;
as Capital Work in Progress as per Ind AS 16 (b) costs of site preparation;
is correct.
(c) initial delivery and handling costs;
C. Points considered by the Committee
(d) installation and assembly costs;
8. The Committee notes that the basic issue
raised by the querist relates to the accounting (e) costs of testing whether the asset is
treatment of expenditure incurred by the functioning properly, after deducting
Company for configuration design study the net proceeds from selling any
under Ind AS. The Committee has, therefore, items produced while bringing the
considered only this issue and has not asset to that location and condition
(such as samples produced when
examined any other issues that may arise from
testing equipment); and
the Facts of the Case, such as, subsequent
accounting under Ind AS 16 or Ind AS 38, (f) professional fees.”
including impairment of assets, the exact
Ind AS 38, paragraph 8 states as follows:
scope and nature of configuration design
study carried out and any other incidental “Research is original and planned
issues. investigation undertaken with the prospect
of gaining new scientific or technical
9. The Committee notes that Ind AS 16 states knowledge and understanding.”
the following:
“Development is the application of
“16 The cost of an item of property, plant research findings or other knowledge to a
and equipment comprises: plan or design for the production of new or
a) its purchase price, including import substantially improved materials, devices,
duties and non-refundable purchase products, processes, systems or services
taxes, after deducting trade discounts before the start of commercial production
and rebates. or use.”
b) any costs directly attributable to The Committee notes that the querist has stated
bringing the asset to the location that configuration design study for the refinery/
and condition necessary for it to be plant has not been carried out with an intention of

91
Opinion
gaining new scientific or technical knowledge and which as per the querist, is required for setting
understanding and that existing methods available up the refinery cum petrochemical project, can
have been used to perform the configuration be capitalised as a part of cost of property, plant
study. Further, the querist has also stated that the and equipment (refinery cum petrochemical
technologies considered by the consultant are tried plant) only if such study is directly attributable to
and tested and commercially feasible technologies; bringing the plant to the location and condition
and that the configuration study is intended to lay necessary for it to be capable of operating in the
out the specifications for the selection of different manner intended by the management.
licensors.
D. Opinion
Considering this, the Committee is of the view
10. On the basis of above, the Committee is of
that the configuration study does not appear
the opinion on the issues raised in paragraph
to have been undertaken with the prospect of
7 above that the cost of the configuration
gaining new scientific or technical knowledge and
design study should neither be considered as
understanding. Further, the Committee notes that
research nor as development costs under Ind
development under Ind AS 38 is an application of
AS 38, as discussed in paragraph 9 above.
research findings or other knowledge to a plan or
Further, such cost can be capitalised as a part
design for the production of new or substantially
of property, plant and equipment (refinery
improved materials, devices, products,
cum petrochemical plant) only if such study
processes, systems or services. However, the
is directly attributable to bringing the plant
configuration study in the extant case does not
to the location and condition necessary for
entail an application of research findings or other
it to be capable of operating in the manner
knowledge, as per the facts provided by the
intended by the management, as discussed
querist. Therefore, the cost of such configuration
in paragraph 9 above.
study should neither be treated as research nor as
development cost under Ind AS 38. 1. The Opinion is only that of the Expert
As far as capitalisation of such costs with the Advisory Committee and does not necessarily
refinery cum petrochemical plant is concerned, represent the Opinion of the Council of the
the Committee further notes that paragraph 16 of Institute.
Ind AS 16 states that any costs directly attributable 2. The Opinion is based on the facts supplied
to bringing the asset to the location and condition and in the specific circumstances of the
necessary for it to be capable of operating in the querist. The Committee finalised the Opinion
manner intended by management should be on January 18-20, 2021. The Opinion
included in the costs of an item of property, plant must, therefore be read, in the light of any
and equipment. Any costs that are not directly amendments and/or other developments
attributable to bringing the asset to the location subsequent to the issuance of Opinion by
and condition necessary for it to be capable of the Committee.
operating in the manner intended by management 3. The Compendium of Opinions containing the
is expensed in Statement of Profit and Loss as Opinions of Expert Advisory Committee has
incurred. been published in thirty nine volumes. This
The Committee is of the view that in case of self- is available for sale at the Institute’s office at
New Delhi and its regional council offices at
constructed assets, directly attributable costs
Mumbai, Chennai, Kolkata and Kanpur.
are generally such costs which are necessary to
enable the construction activity, i.e. these costs 4. Recent opinions of the Committee are
are directly related to the construction activity available on the website of the Institute
and without the incurrence of which the asset under the head ‘Resources’.
cannot be brought to the location and condition 5. Opinions can be obtained from EAC as per
necessary for it to be capable of operating in the its Advisory Service Rules, which are available
manner intended by management. Accordingly, on the website of the ICAI, under the head
the Committee is of the view that in the extant ‘Resources’. For further information, write
case, the costs of the configuration design study, to [email protected].

92
Ind AS Alert
I. Indian Accounting Standards: Update 37, Provisions, Contingent Liabilities and
Contingent Assets; Ind AS 38, Intangible
Notification of Amendments to Ind AS by Assets, relate to change of reference to
Ministry of Corporate Affairs (MCA) Conceptual Framework under Ind AS.
The MCA vide Notification dated June 18, iv) Editorial Corrections in Ind AS - Editorial
2021, has notified the following amendments Corrections include minor inaccuracies
to Ind AS as recommended by the ICAI and such as, punctuations, misspellings, font
examined and recommended by National (Bold Italics), grammatical errors etc.
Financial Reporting Authority: Keeping in view editorial corrections in
IFRS Standards issued by the IASB and
i) COVID-19 Rent Related Concession
editorial errors identified in Ind AS from
beyond June 30, 2021 - Amendment
time to time, editorial changes in Ind AS
to Ind AS 116, Leases, to extend the
were made. These changes are minor
availability of the practical expedient in
corrections in the text of notified Ind AS,
paragraph 46A so that it applies to rent
having no impact on its principles.
concessions for which any reduction in
lease payments affects only payments II. IFRS Foundation & IASB: Stakeholder
originally due on or before 30 June 2022, Consultations
provided the other conditions for applying
(A) Discussion Paper: Business Combinations
the practical expedient are met.
under Common Control - IFRS 3 Business
ii) Interest rate Benchmark Reform- Phase Combinations set outs reporting requirements
II - Amendment to Ind AS (Ind AS 104, for mergers and acquisitions—referred to as
Ind AS 107, Ind AS 109 and Ind AS 116) business combinations in IFRS Standards.
- The amendments focus on the effects However, that Standard does not specify how
on financial statements when a company to report transactions that involve transfers
replaces the old interest rate benchmark of businesses between companies within the
with an alternative benchmark rate as a same group. Such transactions are common
result of the reform. The amendments in many countries around the world. As
relate to specific requirements of these a result of this gap in IFRS Standards,
Ind AS to assist companies to provide companies report these combinations in
investors with useful information about different ways. In some cases, they use the
the effects of the reform on the financial acquisition method. That method measures
statements. the assets and liabilities received in the
combination at fair value and recognises
iii) Amendments to Ind AS consequential goodwill. In other cases, companies use a
to Conceptual Framework under Ind book-value method. That method measures
AS – Amendments to Ind AS 102, those assets and liabilities at their existing
Share-based Payment; Ind AS 103, book values. There is a variety of book-value
Business Combinations; Ind AS methods used in practice. Furthermore,
106, Exploration for and Evaluation companies often provide little information
of Mineral Resources; Ind AS 114, about these combinations. This diversity
Regulatory Deferral Accounts; Ind AS 1, in practice makes it difficult for investors to
Presentation of Financial Statements; Ind understand the effects of such transactions
AS 8, Accounting Policies, Changes in on companies that undertake them and to
Accounting Estimates and Errors; Ind AS compare companies that undertake similar
34, Interim Financial Reporting; Ind AS transactions.
Contributed by Accounting Standards Board of ICAI. Comments can be sent to [email protected]. Refer https://www.icai.org/post.
html?post_id=15770 for Ind AS Implementation Guidance and https://www.icai.org/post.html?post_id=14058 for Ind AS –IFRS
Standards Convergence Status

93
Ind AS Alert
The Discussion Paper Business Combinations IASB is also seeking views on which financial
under Common Control sets out the IASB’s reporting issues it should prioritise and on the
preliminary views on how to fill this gap in criteria for adding projects to its work plan.
IFRS Standards. The IASB’s aim is to explore The feedback received will help the IASB
possible reporting requirements that would to determine its activities and work plan for
reduce diversity in practice and provide 2022 to 2026. The responses on the Request
users of the receiving company’s financial for Information can be submitted in one
statements with better information about of two ways: (i) a comment letter; or (ii) the
these combinations. Specifically, the IASB is survey.
suggesting that the acquisition method should
be used when a business combination under (C) IFRS Interpretation Committee (IFRS IC)
common control affects non-controlling Agenda Decision: The IFRS IC from time-
shareholders. That method is required by to-time issues Tentative Agenda Decisions
IFRS 3 for mergers and acquisitions between for public comments across the globe on
unrelated companies. In all other cases, the various issues considered by it. In this regard,
IASB is suggesting that a book-value method the following Tentative Agenda Decisions are
should be used. A single form of a book-value open for comments by August 16, 2021:
method would be specified in IFRS Standards. Tentative Agenda Decision and comment
The Discussion Paper seeks feedback on the letters: Economic Benefits from Use of a
IASB’s preliminary views on when and how Windfarm (IFRS 16)
each method should be applied.
Tentative Agenda Decision and comment
(B) Request For Information: Third Agenda letters: TLTRO III Transactions (IFRS 9
Consultation - The IASB has published a and IAS 20)
consultation document to seek views on
what the IASB’s priorities should be over The ASB of ICAI, in May 2021, had submitted
the next five years. The IASB is asking for the comments to IFRS IC on Tentative
views on the strategic direction and balance Agenda Decisions on Non-refundable Value
of its activities—for example, how much Added Tax on Lease Payments (IFRS 16) and
time it should spend on developing new Accounting for Warrants that are Classified as
IFRS Standards compared with that spent Financial Liabilities on Initial Recognition (IAS
on its other activities, such as supporting 32) and the same can be assessed at https://
consistent application of the Standards. The www.icai.org/post.html?post_id=10209
FORTHCOMING EVENTS
S.No. Title of the Seminar/ Conference Date Place CPE Hours
CSR Committee
Programme Chairman: Chairman, CSR Committee
1. Certificate Course on CSR 06.07.2021 Online Upto 30 CPE Hours
through
DLH
Topic Certificate Course on CSR
Fees Rs. 5,500/- + GST
Contact Person For Registration & Further Details: Secretary, CSR Committee, 0120- 3045993
For more details about the forthcoming events please refer the detailed announcements
hosted on the ICAI website www.icai.org

94
National Update
SEBI asks Companies to Disclose Loans and replacement rates are based on the actual overnight
money market transactions. Central banks around
Guarantees given by them
the world have established their own replacement
rates. In case of the dollar, it is the secured overnight
Markets regulator Sebi has asked listed companies
financing (SOFR), while it is the sterling overnight
to make disclosure about loans and guarantees
index average (SONIA) for the pound; the Tokyo
provided by them to promoter or any other entity
overnight average rate (TONAR) for the yen; the
controlled by them on a half-yearly basis in the
Swiss average rate overnight (SARON) for the Swiss
compliance report on corporate governance.
franc and the Euro short term rate (ESTR) for the
According to the SEBI, the decision has been taken
euro. It is assumed that some of these Guidance/
to bring transparency and strengthening disclosures
disclosures will enable users of financial statements
about such loans and guarantees.
to understand the effect of these changes.
The regulator has come out with a new disclosure
format in this regard which will be effective from Source: https://www.thehindubusinessline.com/
financial year 2021-22. Under the new format,
any loan or any other form of debt advanced by MCA removes Restrictions on Board Meetings
the listed entity directly or indirectly to promoter, via Video Conferencing
promoter group directors including relatives,
key management personnels or any other entity
The Ministry of Corporate Affairs has issued a
controlled by them need to be disclosed, along with
aggregate amount advanced during six months and notification to allow board meetings through video
balance outstanding at the end of six months. conferencing for activities that were earlier restricted
for the digital medium. This move will will ease the
According to Sebi, in case of any guarantee or burden on companies to hold physical meetings
comfort letter provided by the listed entity in even beyond the pandemic. Some of the activities
connection with any loan(s) or any other form of
that were not allowed to be dealt with through video
debt, the listed entity needs to make disclosure about
aggregate amount of issuance during six months conferencing included the approval of the annual
and balance outstanding at the end of six months, financial statements, Board’s report, approval of the
taking into account any invocation. With regard to prospectus. Likewise, companies were not allowed to
any security provided by the listed entity, they need hold the audit committee meetings for consideration
to disclose about type of security, whether its cash or of accounts through video conferencing earlier. Apart
shares; aggregate value of security provided during from this, approval of matters related to merger,
six months and balance outstanding at the end of demerger, acquisition and takeover also required
six months. physical meeting. Due to the Covid-19 pandemic
Source: https://economictimes.indiatimes.com/ government had allowed video conferencing even
for restricted business in March last year but that
Life after LIBOR: MCA shows the way on was for a limited time. With the latest notification,
Corporate Financial Reporting the provision restricting video conferencing or other
audio visual means has been removed permanently.
The Ministry of Corporate Affairs (MCA) has effected Industries believe that this step will help overall ease
amendments to several accounting standards of doing business.
to cover the International Accounting Standards
Board’s amendments, Interest Rate Benchmark Source: https://www.business-standard.com/
Reform finalised in August last year. Covering the
existing Indian accounting standards, these changes SEBI notifies Minimum Public Holding Norms
are expected to smoothen financial reporting under for Insolvent Firms
the replacements for LIBOR (London Interbank
Offered Rate). LIBOR was a favourite benchmark and Sebi has notifies its minimum public shareholding
an estimate of the rate at which big banks in London
norms for listed companies. In December last year,
lent to each other. Several candidates recommended
by the central banks of the US, Japan, Switzerland, SEBI laid down a minimum 5% public shareholding
UK and the EU are going to replace LIBOR as the requirement for listed companies post the insolvency
benchmark rates now in the financial sector. A process. This move may encourage successful
major issue in the transition is that LIBOR is based bidders to delist the company after cancelling all
on an average of bank lending rate. However, the of the existing equity shares which is permissible in

95
National Update
insolvency proceedings. In addition to mandating principal in such cases must not exceed the value
a compulsory minimum public float immediately of respective existing assets being hedged by the
after insolvency, SEBI has also crunched timelines scheme.
to achieve a higher public shareholding. So far, post
insolvency resolution, a company had 18 months to According to SEBI, in case participation in IRS
achieve public shareholding of 10%. This has been is through over the counter transactions, the
reduced now to 12 months. And the statutory public counterparty has to be an entity recognized as a
shareholding of 25% will have to be achieved in 36 market maker by RBI and exposure to a single
months. counterparty in such transactions should not
exceed 10 per cent of the net assets of the scheme.
https://www.bloombergquint.com/
However, if mutual funds are transacting in IRS
SEBI bets on Ai Machine Learning, Plans Data through an electronic trading platform offered by
Analytics Project to Track Market Manipulations the Clearing Corporation of India Ltd (CCIL), the
single counterparty limit of 10 per cent will not be
applicable.
Markets regulator Sebi is looking to take services
of an agency to implement a “data analytics Source: https://economictimes.indiatimes.com/
project” to track possible market manipulations
like insider trading and front running. The step Household Financial Savings Moderated to 8.2
has been taken as a part of Sebi’s effort to address pc of GDP in Q3FY21: RBI
and handle challenges arising out of technological
advancements in the markets. Sebi is trying to COVID pandemic has shown a higher impact
address and handle challenges arising out of on financial savings in country’s household.
technological advancements in the markets. In its According to RBI data the first wave of COVID-19
notice, the regulator has invited expression of interest last year impacted households as their financial
(EoI) from reputed and reliable solution providers for
savings moderated to 8.2 per cent of GDP in
implementation of data analytics project and building
December quarter from 10.4 per cent in the
of data models at Sebi. The regulator is looking to
previous three-month period, The preliminary
leverage artificial intelligence, machine learning
and deep learning to address critical challenges for
estimate of household financial savings is placed
data analytics impacted by the processing of a vast at 8.2 per cent of GDP in October-December
amount of data, either structured or unstructured. 2020-21, exhibiting a sequential moderation for
The agency is expected to build analytical models, the second consecutive quarter after having spiked
including machine learning and artificial intelligence. in the pandemic-hit June quarter. The moderation
was driven by a significant weakening in the flow of
Moreover, the analytics/model development would household financial assets, which more than offset
be done as per the SEBI’s requirements. This will the moderation in the flow of household financial
includes implementing analytics project, developing liabilities. The ratio of household (bank) deposits
new models , enhancement of a model in terms of to GDP declined to 3 per cent in the third quarter
adding new data sources in existing models, among from 7.7 per cent in July-September. RBI has also
others. stated that household debt to GDP ratio, which is
Source: https://www.livemint.com/ based on select financial instruments, has been
increasing steadily since end-March 2019. As per
SEBI comes out with New Guidelines on the data, financial assets, including deposits, life
Mutual Fund Investment in Interest Rate Swap insurance funds, provident and pension funds,
currency, investments in mutual funds and equity,
Markets regulator Sebi has floated fresh guidelines and small savings, stood at ` 6,93,001.8 crore in
for participation of mutual fund schemes in interest the third quarter. It was at ` 7,46,821.4 crore in
rate swap, a derivative product. Mutual funds can July-September 2020
enter into plain vanilla Interest Rate Swaps (IRS)
for hedging purposes. The value of the notional Source: https://economictimes.indiatimes.com/

96
Legal Update
Legal Decisions
DIRECT Income Tax normal provisions as well as while computing
TAXES book profit under section 115JB for AY 2013-
LD/70/01, [ITAT Delhi: ITA No.4418/Del/2016], Dy. 14. Assessee had sold land and building along
Commissioner of Income Tax Vs. M/s Sucon India with the additional FSI as a single deal to a single
Limited, 27/05/2021, purchaser and it was pursuant to change brought
in by DCR in Coimbatore which had conferred
Penalty under section 271(1)(c) levied for treating
additional benefit on the assessee by way of
speculative loss as business loss and setting it off
additional FSI. As per ITAT, assessee could not
against business income, deleted by ITAT. CIT(A)
have pre-empted any change in the DCR at the
had deleted the penalty by noting that assessee
time of purchase or before the sale and also no
had disclosed and explained its transaction
cost was incurred by assessee for receiving such
and that the genuineness of the transactions
benefit. For this assessee engaged in the business
and the loss incurred had been accepted in the
of manufacturing, ITAT held that the said sum is
assessment proceedings. Merely because the
a capital receipt since its inception and that the
AO has treated the business loss claimed by
same does not form part of assessee’s operational
assessee as a speculation loss, the same cannot
working results.
tantamount to concealment of income warranting
levy of penalty under section 271(1)(c). Also the
notice issued under section 274 r.w.s 271 by the LD/70/04, [Delhi High Court: W.P. (C) 5418/2021], Blue
AO without striking off the inappropriate words in Square Infrastructure LLP Vs. National Faceless Assessment
the said notice was held to be bad in law. Centre, Delhi, 20/05/2021
Assessment order passed under faceless
LD/70/02, [ITAT Mumbai: ITA No. 2361/Mum/2018], Galaxy assessment scheme without dealing with the
Surfactants Limited Vs. Asst. Commissioner of Income Tax, adjournment request made by assessee, set
27/05/2021 aside by the Delhi High Court. Assessee sought
adjournment on April 23, 2021 at 12:59 hours
AO dropped/reduced certain disallowances
through the e-portal, however, Revenue passed
proposed in the draft assessment order while
the assessment order on April 23, 2021 without
passing the final assessment wherein the AO for
dealing with the request for adjournment and
AY 2011-12 passed the draft order by assessing
without waiting for the timeframe given in the
the income at ` 56.24 Cr. which was reduced to
show cause notice-cum-draft assessment order
`42.47 Cr. while passing the final assessment order to expire. High Court gave assessee the liberty
under section 144C(3). Revision of assessment to file its response/objections, to the Show cause
order under section 263 was upheld by the ITAT. notice within one week from the date of the
AO is required to pass a final assessment order receipt of a copy of the this order passed by High
‘on the basis’ of the draft order where an assessee Court. Further directs Revenue to grant a personal
does not raise the matter before DRP. hearing through video conferencing.
LD/70/03, [ITAT Mumbai: ITA No. 6228/Mum/2017], Batliboi LD/70/05, [ITAT Pune: I.T.A. No.699/PUN/2016], The Income
Limited Vs. The Dy. Commissioner of Income Tax, 21/05/2021 Tax Officer Vs. Amit Murlidhar Kamthe, 17/05/2021
Sale consideration towards additional Floor ITAT held that no transfer of land, with disputed
Space Index (FSI) received by assessee held title, took place under development agreements
as as non-exigible to capital gains tax under with the builder which were later cancelled. ITAT
Contributed by CA. Sahil Garud, GST & Indirect Taxes Committee (CA. Mandar Telang), Disciplinary Directorate and ICAI's Editorial Board Secretariat. For details please visit
Editorial Page webpage at https://www.icai.org/post/editorial-board. Readers are invited to send their comments on the selection of cases and their utility at [email protected]. For full
judgement write to [email protected].

Legal Update
97
observes that under development agreements, the that due to demonetisation, the public panicked as
builder was allowed to enter into the property as the cash available with them in old denomination
a licensee (not owner) and further a part of such notes became illegal from 09.11.2016 leading to
piece of land was declared as excess land under investment in jewellery.
the Urban Land Ceiling & Regulation Act, 1976
at the material time which was later repealed and LD/70/08, [Delhi High Court: W.P.(C) 5234/2021], KBB Nuts P.
led to reversion of land that was acquired by the Ltd. Vs. National Faceless Assessment Centre, 10/05/2021
State Government. ITAT analysed the definition of
“transfer” under section 2(47)(v) and Sec. 53A of Assessee’s writ petition filed against faceless
Transfer of Property Act and remarked that since assessment order passed against the assessee
title to a part of such property itself was disputed without considering its objections to the draft
and vested with the State Government at the time assessment order, set aside by the High Court. A
of entering into the development agreements there draft assessment order was passed on 19.04.2021
was no transfer of possession at the material time. which was received by the assessee on 20.04.2021,
requiring the assessee to respond by 21.04.2021.
Assessee filed response on 22.04.2021 and the
LD/70/06, [ITAT Mumbai: I.T.A. No.4472/Mum/2019], Aditya assessment order was passed on the same day
Balkrishna Shroff Vs. The Income Tax Officer, 17/05/2021 without considering assessee’s submission /
ITAT deleted the addition made on account of forex objections. High Court directed the Revenue
gains for AY 2013-14 arising from repayment of to pass fresh assessment order after taking into
personal forex loan and held it as a capital receipt not account assessee’s objections of 22.04.2021, and
chargeable to tax for the assessee. The assessee had also asked Revenue to grant a personal hearing to
advanced personal loan of USD 2 lakhs [equivalent the assessee.
to approx INR 90 lacs] and received back the said
in INR equivalent of `1.12 crores. Forex gain of 22
lacs was taxed as Income from Other Sources by LD/70/09, [ITAT Chennai: ITA No. 2074/Chny/2018], The Asst.
the AO. ITAT observed that the said loan was given Commissioner of Income Tax Vs. Ramcharan Tej Konidala,
on capital account and was not given in the course 28/04/2021
of business of the assessee. ITAT remarked that ITAT directed deletion of addition which was
Revenue decided the head of income without even merely based on chargesheet filed by CBI before
deciding whether it is in the nature of income or not, special court without any corroborative evidence
and by mixing up the concept of ‘income’ with the of payment of on-money by the assessee to
concept of ‘gains’. Emaar Hills Township P. Ltd. CIT(A) had noted that
the conclusion arrived by the AO that assessee
LD/70/07, [ITAT Visakhapatnam: I.T.A. No. 253/Viz/2020], has paid on-money for purchase of flat, was not
The Asst. Commissioner of Income Tax Vs. M/s Hirapanna based on any document or independent enquiry
Jewellers, 12/05/2021 carried out during the course of the assessment
ITAT deleted the addition made under section 68 proceedings. As per ITAT, Revenue failed to bring
r.w.s. 115BBE wherein tax was levied at 60%, made on record any evidence to prove that findings of
on account of sales recorded on 08.11.2016 after fact recorded by Ld. CIT(A) were incorrect.
announcement of demonetisation. ITAT noted
that purchase/ sales matched with inflow/ outflow INDIRECT GST
of stock. An amount of 5.72 Crores in cash was TAXES
deposited by assessee in cash in demonetised notes LD/70/10, [ 2021-TIOL-1326-HC-MUM-GST] ,
recording that the same was out of cash sales and Dharmendra M Jani Vs. UOI, 16/06/2021
advances on 08.11.2016. Revenue had conducted Held: Per Abhay Ahuja, J.
survey on the assessee and had noted that no
proper KYC of customers was provided by the The Ld. Judge recorded a dissenting view to the
assessee and that the one day sale was against past conclusions drawn by Ujjal Bhuyan, J holding
pattern. ITAT found force in assessee’s submission that Section 13(8)(b) of the IGST Act would be

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constitutionally valid and operative for all purposes. closure of Petitioner’s business. He stated that if the
He held that there is no doubt that the power submission of Petitioner was to be considered, then
to stipulate the place of supply as contained in any tax levied by the Central or State Government
Sections 13 (8)(b) of the IGST Act is pursuant to would be a restriction to carry on trade under Article
the provisions of Article 269A (5) read with Article 19(1)(g) of the Constitution of India. The Ld. Judge
246A and Article 286 of the Constitution. He further also did not entertain the contention of the Petitioner
held that just because the import into India has been that there will be double taxation on the ground that
deemed to be inter-state trade or commerce, that in the petitioner’s case two distinctly identifiable
under Article 269A, in no way would take away the supplies involved, i.e., (i) supply of services by the
power of the Parliament to stipulate any other type intermediary to the overseas supplier of goods and
of supply to be a supply in the course of inter-State (ii) supply of goods by overseas supplier to the Indian
trade or commerce. The legislature keeping in mind importer, both being subjected to tax differently.
the peculiar exigencies of fiscal affairs and underlying
concerns of public revenue enacts provisions.
Hence, If the Parliament pursuant to powers invested
LD/70/11, [2021-TIOL-1297-HC-MUM-GST] Dharmendra M Jani
in it by the Constitution has in its wisdom dealt with
Vs. UOI, 09/06/2021
Intermediary Services as that rendered by Petitioner, Per Ujjal Bhuyan, J.: Export of services (as understood
that is a matter within the Parliament’s domain. in the ordinary common parlance) are treated as
As regards to the linking of section 13(8)(b) with inter-state supplies. However, by artificially creating a
Sections 7 and 8 of the IGST Act, the Ld. Judge deeming provision in the form of section 13(8)(b) of
held that both the sections have different purposes, the IGST Act, where the location of the recipient of
the former dealing with the place of supply and the service provided by an intermediary is outside India,
latter dealing with the nature of supply ( i.e. Inter/ the place of supply has been treated as the location
Intra supplies) and that the impugned provision of the supplier i.e., in India, the said provision runs
does not in any manner deem an export of service contrary to the scheme of the CGST Act as well as
to be a local apply whereas Section 13. The Ld. the IGST Act by Hence Section 13(8)(b) is is ultra
Judge further observed that the petitioner’s supply vires the IGST Act besides being unconstitutional.
is admittedly the same is supplied in the course
Per Abhay Ahuja, J: The power to stipulate the place
of inter-state trade or commerce pursuant to the
of supply as contained in Sections 13 (8)(b) of the
provisions of Section 7 of IGST Act. Relying upon
IGST Act is pursuant to the provisions of Article
the decision in the case of GVK Industries ( supra),
269A (5) read with Article 246A and Article 286 of
the court held that it’s not a case of extraterritorial
the Constitution and hence is constitutionally valid
legislation as it imposes the levy only when the
and is a fiscal legislation within the domain of the
intermediary service provider is the location in India.
parliament. The petitioner’s supply is admittedly the
It further held that the inter-State levy is on supply
same is supply in the course of inter-state trade or
within the taxable territory i.e. within the boundaries
commerce pursuant to the provisions of Section 7 of
of India and not extraterritorial in accordance with
IGST Act. The provisions are not violative of Article
Article 245 of the constitution of India. As regards
14 and Article 19(1)(g) of the Constitution of India
the challenge to the Constitutional validity on the
ground of Article 14, the Ld. Judge held that “the and do not suffer from extra-territorial jurisdiction.
intermediary” has been specifically defined and does
not include a person who renders the service for LD/70/12, [2021-TIOL-179-SC-GST], M/s Radha Krishan
himself. Therefore, between Petitioner and others, Industries vs. State of Himachal Pradesh and Ors, 20/04/2021
there is no discrimination. Section 13(8)(b) would
not be hit by Article 14 and there is a reasonable The power to order a provisional attachment of
classification founded on intelligible differentia the property of the taxable person including a
which has a rational relation/nexus to the object bank account is draconian in nature and the
sought to be achieved. As regards the challenge on conditions which are prescribed by the statute
the ground of Article 19(1)(g), the Ld. The judge for a valid exercise of the power must be strictly
expressed unwillingness to accept the contention of fulfilled. The exercise of the power for ordering a
the Petitioner that the provision would lead to the provisional attachment must be preceded by the

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99
formation of an opinion by the Commissioner of provisional attachment and hence writ can
that “it is necessary so to do” for the purpose of be entertained. Under the provisions of Rule
protecting the interest of the government revenue. 159(5), the person whose property is attached
Before ordering a provisional attachment the is entitled to dual procedural safeguards – (i)
Commissioner must form an opinion on the basis An entitlement to submit objections and (ii) An
of tangible material that the assessee is likely to opportunity of being heard. The Commissioner
defeat the demand if any, and that therefore, it is is duty-bound to deal with the objections to
necessary so to do for the purpose of protecting the attachment by passing a reasoned order.
the interest of the government revenue. The Initiation of proceedings under section 62, 63,
expression “necessary so to do for protecting the 64, 6, 73, or 74 is a must for invoking powers
government revenue” implicates that the interests under section 83 and once the final order under
of the government revenue cannot be protected section 74(9) is passed the proceedings under
without ordering a provisional attachment. Where Section 74 are no longer pending as a result of
the taxable person sets up the plea that the which the provisional attachment must come
extent of the attachment is excessive or where to an end. Once the first order of provisional
the taxable person offers an alternative form of attachment was withdrawn by the department,
security, these are also matters which ought to be passing of the subsequent order of the same
determined by the Commissioner in the exercise nature on the same ground and without there
of powers under Rule 159(5). No appeal under being any change in the circumstances is not
section 107 of the Act can lie against the order permissible
Disciplinary Case
Committee further noted that the Respondent in
his defence submitted that digital signatures were
used without his knowledge and the person who
had used his signature had accepted this fact before
the Court and in the Police Station as to misuse
of the signature. The Committee further perused
letter (brought on record by Respondent) dated
02.01.2015 from one Mr. AK wherein he stated
that by mistake, he had used the digital signature
of the Respondent. The Committee noted that the
Misuse of digital signatures by Respondent Respondent could not produce any evidence of
on E-form 32 -- Held, Respondent is guilty of acceptance of his fault by Mr. AK before the Court
Professional misconduct under Clause (2) of and Police Authority. Looking into the seriousness
Part IV of First Schedule and Clause (7) of of the matter and failure of the Respondent in
Part I the Second Schedule to the Chartered submitting any corroborative evidence which may
Accountants Act 1949. establish that his digital signature were misused
by Mr. AK, the Committee was not convinced by
Held: the version of the Respondent. The Committee
In the instant case, the charge against the noted that the sequence of events indicates that
Respondent is that he had certified Form 32 the letters dated 18.12.2013 and 02.01.2015
wherein Mr. X and Mr. Y were shown as having been of Mr. AK could have been only an after-thought
appointed as Directors and two existing directors and seems to have been procured to hide the
(Complainant & another) were removed from the negligence on the part of the Respondent .In view
Directorship of the company. On perusal of said of above noted facts, the Committee held that
Form -32 the Committee observed that form was the Respondent failed to exercise due diligence
digitally signed by the Complainant and verified and he is guilty of professional misconduct falling
by the Respondent. The Complainant had lodged within the meaning of Clause (2) of Part IV of First
Complaint with TCSSA to have the name of the Schedule and Clause (7) of Part I of the Second
person who got the certificate in his name. The Schedule to the Chartered Accountants Act, 1949.

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Legal Update
Given below are summarised important Circulars and
Circulars/ Notifications issued by the CBDT, CBIC-GST and FEMA

since the publication of the last issue of the journal, for
information and use of members. Readers are requested
Notifications to use the citation/website or weblink to access the full

text of desired circular/notification. Suggestions on this
column can be submitted at [email protected]
DIRECT I. NOTIFICATIONS provisions relating to the taxation of capital gains

TAXES arising in respect of Slump Sale. The rules provide
1.Central Government specifies the for two methods to determine FMV of the capital
Indo-Infra Inc u/s 10(23E) - Notification
assets wherein higher value would be considered
No. 67/2021, dated 17-05-2021
for the purposes of computation of capital gains
Vide this notification, the Central Government under section 50B.
has specified the pension fund, namely, the R e f e r : h t t p s : / / w w w. i n c o m e t a x i n d i a . g o v. i n /
communications/notification/notification_68_2021.
Indo-Infra Inc as the specified person for the pdf
purposes of section 10(23FE) in respect of the
eligible investment made by it in India on or after 4. M/s Indian Institute of Technology, Bhilai
17.05.2021 but on or before 31.03.2024 subject approved for the purposes of clauses (ii) and
to the fulfilment of conditions specified therein. (iii) of section 35(1) – Notification No. 70/2021,
R e f e r : h t t p s : / / w w w. i n c o m e t a x i n d i a . g o v. i n / dated 08-06-2021
communications/notification/notification_67_2021.
pdf In exercise of the powers conferred by clauses
(ii) and (iii) of section 35(1), read with rules 5C
2. Procedure for exercise of option under section and 5E, the Central Government has approved
245M(1) and intimation thereof by furnishing and M/s Indian Institute of Technology, Bhilai (PAN:
upload of Form No. 34BB under rule 44DA(1) – AABAI0415K) under the category of ‘University,
Notification No. 05/2021, dated 24-05-2021 College or other institution’ for Scientific Research
Vide this notification, the CBDT has specified and Research in Social Science and Statistical
procedure for furnishing and upload of Form Research This Notification shall be applicable
No. 34BB thereby exercising option us/ 245M(1) from AY 2021-2022 to 2025-2026.
R e f e r : h t t p s : / / w w w. i n c o m e t a x i n d i a . g o v. i n /
i.e. withdrawing pending application before communications/notification/notification_70_2021.
Settlement Commission (u/s 245C) as provided pdf
vide the Finance Act 2021.
R e f e r : h t t p s : / / w w w. i n c o m e t a x i n d i a . g o v. i n / 5. Amendment in Rule 31A vide the Income-tax
communications/notification/notification_ (17th Amendment) Rules, 2021 – Notification No.
no_5_2021.pdf 71/2021, dated 08-06-2021
3. New Rule 11UAE notified providing for Vide this notification, Rule 31A pertaining to
computation mechanism of Fair Market Value of statement of deduction of tax, Form No. 26A
Capital Assets for the purposes of section 50B (Form for furnishing accountant certificate under
vide the Income-tax (16th Amendment) Rules, the first proviso to of section 201(1)) and Form No.
2021 – Notification No. 68/2021, dated 24-05-
26Q (Quarterly statement of deduction of tax in
2021
respect of payments other than salary), Form No.
Vide this notification, the CBDT has inserted a 27EQ and Form No. 27Q have been amended.
new Rule 11UAE pertaining to computation of Various new particulars have been prescribed to
FMV of Capital Assets for the purposes of slump be furnished in the aforesaid Forms like furnishing
sale us/50B. The Finance Act 2021 amended the particulars of amount paid or credited on which
(Matter on Direct and Indirect Taxes, is contributed by Direct Taxes Committee, GST & Indirect Taxes Committee and Corporate Laws and Corporate Governance Committee of
ICAI respectively. FEMA updates by CA. Manoj Shah, CA Hinesh Doshi and CA. Sudha G. Bhushan)

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101
tax was not deducted in view of section 194Q(5) Writ Petition (Civil) No. 3/2020 vide order dated
w.e.f. 01.07.2021. 27.04.2021.
R e f e r : h t t p s : / / w w w. i n c o m e t a x i n d i a . g o v. i n / R e f e r : h t t p s : / / w w w. i n c o m e t a x i n d i a . g o v. i n /
communications/notification/notification_71_2021. communications/circular/circular_10_2021.pdf
pdf
III. PRESS RELEASES/INSTRUCTIONS/
6. ‘Competition Commission of India’ notified OFFICE MEMORANDUM/ORDER
under section 10(46) – Notification No. 72/2021,
dated 09-06-2021 1. New, Taxpayer-friendly e-filing Portal of the
Income Tax Department launched on 07.06.2021
In exercise of the powers conferred by section – Press Release, dated 05-06-2021
10(46), the Central Government has notified
The Income Tax Department has launched its
‘Competition Commission of India’ (PAN
new e-filing portal www.incometax.gov.in on
AAAGC0012M), a Commission established under
07.06.2021. The new e-filing portal is aimed at
Section 7(1) of the Competition Act, 2002, in
providing taxpayer convenience and a modern,
respect of the specified income and subject to
seamless experience to taxpayers. Several New
conditions specified. This notification shall apply
Features Introduced are Free of cost ITR Preparation
from FY 2021-2022 to 2025-2026.
R e f e r : h t t p s : / / w w w. i n c o m e t a x i n d i a . g o v. i n / Interactive Software available, New Call Centre for
communications/notification/notification_72_2021. Taxpayer Assistance etc. It was also clarified that
pdf the new tax payment system was launched on
7. Cost Inflation Index for Financial Year 2021- 18.06.2021 after the advance tax instalment date
22 notified - Notification No. 73/2021, dated 15- to avoid any taxpayer inconvenience. Refer:https://
06-2021 www.incometaxindia.gov.in/Lists/Press%20
Releases/Attachments/937/PressRelease_New_
Clause (v) of Explanation to section 48 defines Taxpayer_friendly_efiling_Portal_of_ITD_To_Be_
“Cost Inflation Index “, in relation to a previous Launched_on_7th_June_2021_5_6_21.pdf
year, to mean such Index as the Central
Government may, by notification in the Official 2. Guidelines for compulsory selection of returns
Gazette, specify in this behalf, having regard to for Complete Scrutiny during the Financial Year
75% of average rise in the Consumer Price Index 2021-22 - Conduct of assessment proceedings
in such cases – F.No.225/61/2021/ITA-II, dated
(Urban) for the immediately preceding previous 10-06-2021
year to such previous year. The CBDT, has vide
this notification, notified Cost inflation index for The parameters for compulsory selection of returns
Financial Year 2021-22 as 317. for Complete Scrutiny during Financial Year 2021-
R e f e r : h t t p s : / / w w w. i n c o m e t a x i n d i a . g o v. i n / 22 and conduct of assessment proceedings in
communications/notification/notification_72_2021. such cases are prescribed vide this document by
pdf
the CBDT. The exercise of selection of cases for
II. CIRCULARS compulsory scrutiny on the basis of the parameters
1. Clarification regarding the limitation time for prescribed and service of notice u/s 143(2) of the
filing of appeals before the CIT (Appeals) under Act will have to be completed by 30.06.2021.
the Income-tax Act, 1961 - Circular No. 10/2021, Refer:https://www.incometaxindia.gov.in/Lists/
Latest%20News/Attachments/451/Guidelines_
dated 25-05-2021 for_compulsory_selection_MiscComm_10_6_
Vide this Circular, the CBDT had clarified that if 21.pdf
different relaxations are available to the taxpayers 3. Relaxation in electronic filing of Income Tax
for a particular compliance, the taxpayer is Forms 15CA/15CB – Press Release, dated 14-
entitled to the relaxation which is more beneficial 06-2021
to him. Thus, for the purpose of counting the
period(s) of limitation for filing of appeals before In view of the difficulties reported by taxpayers
the CIT(Appeals), the said limitation (31.05.2021) in electronic filing of Income Tax Forms
stands extended till further orders as ordered 15CA/15CB on the portal www.incometax.
by the Hon’ble Supreme Court in Suo Motu gov.in, it has been decided that taxpayers can

102
Legal Update
submit the aforesaid Forms in manual format effective from 01.01.2021. The amended
to the authorized dealers till 30.06.2021. provision provides for extension of time limit
Authorized dealers are advised to accept such for applying for revocation of cancellation
of registration on sufficient cause being
Forms till 30.06.2021 for the purpose of foreign shown and for reasons to be recorded in
remittances. Refer:https://www.incometaxindia. writing. Consequential amendment has
gov.in/Lists/Press%20Releases/Attachments/938/ been made in rule 23(1) to provide that
PressRelease_Relaxation_in_electronic_ the time period of 30 days available for
filing_of_Income_Tax_Forms_15C A_15CB.pdf
submission of an application for revocation
4. Finance Ministry held meeting on 22.06.2021 of cancellation of registration in Form GST
with Infosys on issues in the new Income Tax REG-21 can be extended by the Additional
Portal – Press Release, dated 15-06-2021 Commissioner or the Joint Commissioner
or the Commissioner, as the case may be,
Senior officials of the Ministry of Finance, held an in exercise of the powers provided under the
interactive meeting on the 22.06.2021 with Infosys proviso to sub-section (1) of section 30 of
(the vendor and its team) on issues/glitches in the the CGST Act, 2017.
recently launched e-filing portal of the Income Till the time an independent functionality
Tax Department. Other stakeholders including for extension of time limit for applying in
members from ICAI, auditors, consultants and Form GST REG-21 is developed on the
taxpayers were also be a part of the interaction. GSTN portal, Circular No. 148/04/2021
Refer:https://www.incometaxindia.gov.in/Lists/ GST dated 18th May, 2021 has been issued
Press%20Releases/Attachments/939/Press-Release- to prescribe the SOP for implementation of
Finance-Ministry-to-hold-meeting-on-22 nd-June- the provisions of above rule across the field
2021-dated-16-06-2021.pdf formations.
5. Net Direct Tax collections for the Financial b) Rule 90-Acknowledgement of refund
application:
Year 2021-22 have grown at over 100% – Press
Release, dated 16-06-2021 Insertion of proviso in sub-rule (3)
Advance Tax collections for F.Y. 2021-22 stand The time period of 2 years for filing a fresh
at ` 28,780 crore which shows a growth of refund application after rectification of
deficiencies as communicated by proper
approximately 146%. Net Direct Tax collections officer shall now be computed after
for the F.Y. 2021-22 have grown at a robust pace excluding the time period between the date
despite the disruption caused by the COVID-19 of filing of the refund claim in Form GST
pandemic on the economy. Refunds amounting RFD-01 and the date of communication of
to `30,731 crore have been issued in the F.Y. the deficiencies in Form GST RFD-03 by
2021-22. the proper officer.
Refer:https://www.incometaxindia.gov.in/Lists/ Insertion of new sub-rules (5) and (6)
Press%20Releases/Attachments/940/PressRelease_
Net_DTC_for_FY2021_22_have_grown_at_ The applicants are now allowed to withdraw
over_100percent_16_6_21.pdf refund application in Form GST RFD-01W
at any time before issuance of provisional
refund order or final refund order or
INDIRECT 1. Amendments in CGST Rules, 2017 payment order or refund withhold order or
TAXES CBIC has amended various CGST Rules, notice, in respect of any refund application
2017 vide Notification No. 15/2021 Central filed in Form GST RFD-01. The new Form
Tax, dated 18th May, 2021 and Notification RFD-01W has been inserted in Part B of the
No. 27/2021- Central Tax dated, 1st June 2021 as CGST Rules, 2017.
under: On such withdrawal, amount debited by the
a) Rule 23-Revocation of cancellation of applicant from electronic credit ledger or
registration: electronic cash ledger, as the case may be,
while filing application for refund in Form
The amendment in section 30 made vide GST RFD-01, shall be credited back to the
the Finance Act, 2021 has been made ledger from which such debit was made.

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103
c) Rule 92-Order sanctioning refund from furnishing information in Part A

of Form GST EWB-01 “in respect of a
Omission of proviso in sub-rule (1) registered person, whether as a supplier
or a recipient” in certain specified cases.
The proviso requiring the issue of order
giving details of the adjustment in Part A The rule has been amended to specify
of Form GST RFD-07 when the amount that the information in Part A of Form GST
of refund is completely adjusted against EWB-01 cannot be furnished by a person
any outstanding demand, has been “in respect of any outward movement
omitted. of goods of a registered person” in the
specified cases.
Substitution of words “Part B” in sub-
rule (2) with “Part A” The amendments from (a) to (e) have
been made vide Notification No.
The proper officer or the commissioner will
15/2021 Central Tax, dated 18th May,
now pass the order in Part A of Form GST
RFD 07 instead of Part B for withholding 2021
the refund in case he is of the opinion that f) Amendment in Rule 26
the amount of refund is liable to be withheld
under the provisions of section 54(10) or as Companies have been permitted to
the case may be, section 54(11). furnish the return under section 39 in
Insertion of proviso in sub-rule (2) Form GSTR-3B and the details of outward
supplies under section 37 in Form GSTR-
The proper officer or the commissioner, on 1 or using invoice furnishing facility (IFF),
being satisfied that the refund is no longer verified through electronic verification
liable to be withheld, may pass an order for code (EVC) instead of DSC during the
release of withheld refund in Part B of Form
period 27th April, 2021 to 31st August,
GST RFD- 07.
2021.
d) Rule 96- Refund of IGST paid on goods
g) Amendment in Rule 36(4)
(or services) exported out of India
The restriction of availing 105% of eligible
Substitution of words “Part B”
ITC (i.e., ITC reflecting in GSTR-2A) shall
with “Part A” in sub-rule (6) apply cumulatively for the period April,
The proper officer shall now pass the May and June, 2021 while taking credit in
order in Part A of Form GST RFD- Form GSTR-3B for the tax period of June,
07 instead of earlier Part B upon 2021.
transmission of the intimation for
withholding refund. h) Amendment in Rule 59(2)
Amendment in sub-rule (7) A registered person under QRMP scheme
may furnish details of outward supplies for
The jurisdictional officer shall now
the month of May, 2021 using IFF from
proceed to release the withheld
1st June, 2021 till 28th June, 2021. The
refund amount in Form GST RFD
amendments from (f) to (h) have been
06 after passing an order for release made vide Notification No. 27/2021-
of withheld refund in Part B of Form Central Tax dated, 1st June 2021
GST RFD-07. Form GST RFD-07 has
been amended accordingly. IV. Retrospective amendment in section 50 of
the CGST Act, 2017 providing for interest
e) Rule 138E - Restriction on furnishing of
on net tax dues notified from 1st June,
information in Part A of Form GST EWB-01
2021
Rule 138E restricts a person (including
a consignor, consignee, transporter, an A proviso was inserted in Section 50(1) of the
e-commerce operator or a courier agency) CGST Act, 2017 vide the Finance Act, 2021 to

104
Legal Update
lay down that interest shall be payable on net tax Class of registered persons Rate of interest
dues (i.e., after adjusting the available ITC) where
such tax dues are declared in the returns filed after Taxpayers whose aggregate 9% for the first
turnover in the preceding FY 15 days from the
the due date (except where the returns are filed
> ` 5 crores due date and 18%
after the commencement of proceedings under thereafter
sections 73 or 74 of the CGST Act, 2017). Such
Taxpayers whose aggregate Nil for the first 15
proviso has been added with retrospective effect
turnover in the preceding FY days from the due
from 1st July, 2017. Now Notification No. 16/2021 date, 9% for the
≤ ` 5 crores
– Central Tax, dated 1st June, 2021 has been next 15 days, and
issued to appoint 1st June, 2021 as the date from [Both taxpayers filing monthly
18% thereafter
returns and taxpayers filing
which such amendment shall come into force.
quarterly returns under QRMP
V. Extension of due date for filing of GSTR-1 scheme]
Notification No. 83/2020-Central Tax, dated 10th The above amendment shall be deemed to be
November, 2020 has been amended vide Notification effective from 18th May, 2021.
No. 17/2021- Central Tax, dated 1st June, 2021 to
Interest rate for delayed payment of IGST has also
extend the time limit for furnishing the details of been lowered parallelly vide Notification No. 2/2021
outward supplies in Form GSTR-1 for the month of – Integrated Tax dated 1st June, 2021.
May, 2021 from June 11, 2021 to June 26, 2021.
VII. Waiver of late fees on delayed filing of GSTR-
VI. Lowering of interest rates for delayed 3B
payment of tax
Notification No. 76/2018-Central Tax dated 31st
The Central Government vide Notification No. December, 2018 has been further amended vide
18/2021-Central Tax dated 1st June, 2021 has Notification No. 19/2021- Central Tax dated 1st
reduced the rate of interest for delayed payment of June, 2021 to waive off late fees payable on belated
CGST (u/s 50 of the CGST Act, 2017) for the month furnishing of GSTR-3B for the months of March
of May, 2021 as under: 2021, April 2021, May, 2021 and for the quarter
January-March 2021 as under:
Class of registered persons Applicable Period for which late fee waived
tax period
Taxpayers whose aggregate turnover in the May, 2021 15 days from the due date of furnishing return
preceding FY > ` 5 crores
Taxpayers whose aggregate turnover in the March, 2021 60 days from the due date of furnishing return
preceding FY ≤ ` 5 crores and who have
April, 2021 45 days from the due date of furnishing return
opted to file monthly returns
May, 2021 30 days from the due date of furnishing return
Taxpayers whose aggregate turnover in the January – 60 days from the due date of furnishing return
preceding FY ≤ ` 5 crores and who have March, 2021
opted to file quarterly returns
The above amendment shall be deemed to be Taxpayer Maximum late fees

effective from 20th May, 2021.
Nil liability Rs 250/- (plus ` 250/- for
VIII. Amnesty Scheme regarding late fee for SGST)
pending Forms GSTR-3B Other than Nil liability Rs 500/- (plus ` 500/- for
An amnesty scheme has been introduced vide SGST)
Notification No. 19/2021– Central Tax dated 1st
The reduced rate of the late fee would apply if
June, 2021 by way of capping the late fees for non-
GSTR-3B returns for these tax periods are furnished
furnishing of Form GSTR-3B for the tax periods from
between 01.06.2021 to 31.08.2021.
July 2017 to April 2021 as under:

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105
IX. Reduction in late fee in case of delayed filing Notification No. 21/2021- Central Tax dated 1st
of Form GSTR-3B June, 2021 to reduce the late fees for delay in
furnishing of Form GSTR-4 for financial year 2021-
The CBIC has issued Notification No. 19/2021 – 22 onwards as under:
Central Tax dated 1st June, 2021 to reduce the late
fee payable on delay in furnishing of Form GSTR- Composition Maximum late fees
3B for June, 2021 onwards or quarterly returns from taxpayer
the quarter ending June, 2021 onwards as below:
Having Nil liability ` 250/- (plus ` 250/- for
i) For taxpayers having nil tax liability in GSTR- SGST)
3B, the late fee shall be capped at Rs 250 (plus Other than Nil liability ` 1,000/- (plus ` 1,000/-
` 250 for SGST) for SGST)
ii) For other taxpayers: XII. Reduction in late fees in case of delayed
filing of Form GSTR-7
Annual aggregate Maximum late fee
The CBIC vide Notification No. 22/2021-
turnover in previous year
Central Tax dated 1st June, 2021 has reduced
Upto ` 1.5 Crore ` 1,000 (plus the amount of late fees payable on delay in
` 1,000 for SGST) furnishing the return in Form GSTR-7 (TDS
return) for the month of June, 2021 onwards, to
` 1.5 Crore to ` 5 Crore ` 2,500 (plus
` 2,500 for SGST) ` 25 (plus ` 25/- for SGST) subject to maximum
of Rs 1000 (plus ` 1000/- for SGST).
X. Reduction in late fee in case of delayed filing XII. No e-invoicing for Government department
of Form GSTR-1 & local authority
The CBIC vide Notification No. 20/2021-Central Tax, Notification No. 13/2020-Central Tax, dated 1st
dated 1st June,2021 has amended Notification No. June, 2020 has been amended vide Notification
4/2018– Central Tax, dated the 23rd January, 2018 to No. 23/2021- Central Tax, dated 1st June,
reduce the late fee payable on delay in furnishing of 2021 to exempt Government department and
Form GSTR-1 for the tax period June, 2021 onwards local authority from the requirement of issuing
or quarter ending June, 2021 onwards as under: e-invoice.
S. Class of registered Maximum late XIV. Due date of filing Form GSTR 4 extended
No. persons fee upto 31st July, 2021
1. Registered persons who ` 250 (plus The due date of filing of Form GSTR 4 for the
have Nil outward supplies ` 250/- for financial year 2020-21 has been extended up
in the tax period SGST) to 31st July, 2021 vide Notification No. 25/2021
– Central Tax, dated 1st June, 2021. This
2. Registered persons having ` 1,000 (plus
amendment shall be deemed to have come into
an aggregate turnover of ` 1000/- for
force with effect from 31st May, 2021.
up to ` 1.5 crores in the SGST)
preceding financial year, XV. Extension of due date for furnishing
other than those covered declaration in Form GST ITC-04
under S. No. 1. Notification No. 11/2021- Central Tax, dated 1st
3. Registered persons having ` 2,500 (plus May, 2021 has been amended vide Notification
an aggregate turnover of ` 2,500/- for No. 26/2021- Central Tax, dated 1st June, 2021
more than ` 1.5 crores SGST) to extend the time period for furnishing the
declaration in Form GST ITC-04 (Job work
and up to ` 5 crores in the
movements) for the period January 2021
preceding financial year,
to March, 2021, up to 30th June, 2021. This
other than those covered
amendment shall be deemed to have come
under S. No. 1.
into force with effect from 31st May, 2021.
XI. Reduction in late fee in case of delayed filing XVI. Extension granted for specified compliances
of Form GSTR-4 (Annual Return filed by falling due between 15.04.2021 to
Composition taxpayers) 29.06.2021 till 30.06.2021
Notification No. 73/2017-Central Tax dated 29th Notification No. 14/2021- Central Tax, dated 1st
December, 2017 has further been amended vide May, 2021 has been amended vide Notification

106
Legal Update
No. 24/2021- Central Tax, dated 1st June, 2021 its first occupation, whichever is earlier,
to extend the time limit for completion or falls” shall be substituted.
compliance of any action, by any authority
or by any person which falls due during the Parallel amendment has been made for IGST
period from the 15th April, 2021 to 29th June, vide Notification No. 03/2021- Integrated Tax
2021, up to 30th June, 2021 subject to some (Rate), dated 2nd June, 2021
exceptions specified in the notification. As per GST Council recommendation, the above
Detailed notification can be accessed at:https:// amendment will allow the developer promotor
www.cbic.gov.in/resources//htdocs-cbec/gst/ to pay GST relating to such apartments any time
notfctn-24-central-tax-english-2021.pdf before or at the time of issuance of completion
certificate.
XVII.Place of supply of B2B supply of
maintenance, repair & overhaul services in Circular/Guidelines
respect of ships/vessels notified 1. Guidelines regarding cancellation of
The CBIC vide Notification No. 03/2021-Integrated registration
Tax dated June 02, 2021 has amended Notification
The CBIC has issued guidelines for its officers with
No. 04/2019- Integrated tax dated September 30,
regard to cancellation of registration under rule 22(3)
2019 to notify place of supply for the following
service under section 13(13) of the IGST Act, 2017: of the CGST Rules, 2017. It has been instructed
that since the legal provision stipulates passing of
Description of services or Place of Supply order in respect of the application of cancellation
of registration within 30 days of the date of the
circumstances application and cancellation of registration has no
Supply of maintenance, The place of supply effect on the liability of the taxpayer for any acts of
repair or overhaul service of services shall be commission/omission committed before or after the
in respect of ships and the location of the date of cancellation, the proper officer should act as
other vessels, their engines recipient of service. per prescribed legal process within the stipulated time
and other components or in order to avoid any delay. Hence, all the Principal
other components or parts Chief Commissioners / Chief Commissioners of
supplied to a person for use Central Tax have been requested to suitably instruct
in the course or furtherance all the officers under their jurisdiction to scrupulously
of business follow the due process as envisaged in the law in
XVIII. Time of payment of tax for a builder time bound manner and issue the requisite order in
promoter in case of a joint development respect of all such applications within a period of 30
agreement (JDA) days from the date of the application.
[CBEC-20/16/34/2019-GST/802 dated May 24,
The CBIC vide Notification No. 03/2021-
2021]
Central Tax (Rate), dated 2nd June, 2021 has
amended Notification No.06/2019- Central Tax CUSTOMS
(Rate), dated the 29th March, 2019 to make the
following amendments in the said notification: Notifications
1. Exemption from custom duty and IGST on
i) for the words “in whose case the liability
imports of specified COVID-19 related relief
to”, the words “, who shall” shall be
materials and other related changes
substituted;
The exemption from basic customs duty and health
ii) for the words “shall arise on the date of cess granted vide Notification No. 28/2021-Customs
issuance of completion certificate for the dated 24.04.21 on import of oxygen, oxygen
project, where required, by the competent related equipment and COVID-19 vaccines, has
authority or on its first occupation, been extended up to 31st August, 2021. Further,
whichever is earlier”, the words “in a tax exemption has also been granted on import of
period not later than the tax period in which Amphotericin B up to 31st August, 2021.
the date of issuance of the completion
certificate for the project, where required, [Notification No. 31/2021-Customs dated 31st
by the competent authority, or the date of May, 2021]

Legal Update
107
Further, the exemption from IGST granted vide Ad from a sponsor Indian Party (IP) to an Alternative
hoc Exemption Order No. 4/2021-Customs dated Investment Fund (AIF) set up in an overseas
3rd May, 2021 on specified COVID-19 relief material jurisdiction, including International Financial
imported free of cost by a State Government or any Services Centre (IFSC) in India, as per the laws
entity/relief agency/statutory body authorised in this of host jurisdiction, will be treated as Overseas
regard by any State Government for free distribution, Direct Investment (ODI).
has been extended up to 31st August, 2021.
Accordingly, IP as defined in Regulation 2(k) of
[Ad hoc Exemption Order No. 5/2021-Customs Notification FEMA 120 can set up AIF in overseas
dated 31st May, 2021] jurisdictions including IFSCs under the automatic
IGST has been exempted on import of specified route provided it complies with Regulation 7 of
COVID-19 relief material donated to the Notification FEMA 120.
Central Government or State Government or, A.P. (DIR Series) Circular No. 05 dated May 31,
on recommendation of State authority, to any 2021
relief agency, entity or statutory body for free
distribution, up to 31st August, 2021. Such Investment by Foreign Portfolio Investors
exemption shall also apply to goods which are (FPI) in Government Securities: Medium Term
already imported but lying uncleared on the date Framework (MTF):
of issuance of this exemption notification. Investment Limits for FY 2021-22:
[Notification No. 32/2021-Customs dated 31-05- a. The limits of FPI investment in Government
2021] Securities (G-Secs) and State Development
Notification No. 30/2021- Customs, dated 1st Loans (SLIs) shall remain unchanged at 6%
May, 2021 which provided for the reduction of and 2% respectively of outstanding stocks of
securities for FY 2021-22.
rate of IGST on import of oxygen concentrator
for personal use from 28% to 12%, has been b. All investments by eligible investors in
rescinded. “specified securities” shall be reckoned under
the Fully Accessible Route.
[Notification No. 33/2021-Customs date 14th
May, 2021] c. The allocation of incremental changes in the
G-sec limit (in absolute terms) over the two
sub-categories – ‘General’ and ‘Long-term’ –
FEMA A.P. (DIR Series) Circular No. 04 shall be retained at 50:50 for FY 2021-22.
dated May 12, 2021 d. The entire increase in limits for SDLs (in
Sponsor Contribution to an AIF set absolute terms) has been added to the
up in overseas jurisdiction including ‘General’ sub-category of SDLs.
IFSCs: The revised limits for all categories shall be as
It has been decided that any sponsor contribution under:
Table I – Investment Limits for FY 2021-22
All figures in ` Crore
G-Sec G-Sec Long SDL SDL Long Corporate Total Debt
General Term General Term Bonds
Current FPI Limits^ 2,34,531 1,03,531 67,630 7,100 5,41,488 9,54,280
Revised Limit for HY Apr 2,43,914 1,12,914 76,766 7,100 5,74,263 10,14,957
2021-Sept 2021
Revised Limit for HY Oct 2,53,928 1,22,298 85,902 7,100 6,07,039 10,75,637
2021-Mar 2022

ce
ellen
Exc
and
ence, In
tegrity
Lagaan to International
end
Ind
ep
Taxation
Taxation in India goes back to the ancient

times. We come across the word “kara” in
Srimad Bhagvatam and ‘bhgadugha’ (the
tax collector) in the Vedas. The first specific
mention of tax in the written history in India
is in the Arthasastra, which mentions both
direct and indirect taxes. It emphasises that
the king is only a trustee of the land. During
those days land revenue was the major
source of revenue for a king. The precursor
of “lagaan” was the system introduced
by Emperor Krishnadevaraya (1509–1529)
where the amount of tax levied depended
upon the income of the farmer and was
increased only if the income increased.
In modern India, for the first time Income Tax

Act was introduced in 1860. Paradigm shift in
the annals of taxation happened when based
on the experiences and reports of various
committees, revised Income Tax Act, 1922
was introduced. It was used to frame Income
Taxes have existed in all ages, only its Tax Act, 1961. Direct taxes moved and with
character and ways of implementation have more and more cross border transactions,
changed. Like scientific discoveries, nature international taxation has become very
of business, or income, has changed more important. Now income can be generated in
rapidly in the last couple of decades rather a location without physical presence. Today,
than during centuries earlier. Nearly 2000 we are observing a new wave of changes in
years ago there was a decree from Augustus tax laws with emphasis on fight against Base
Caesar that “all the world should be taxed”. Erosion and Profit Shifting. On the global
In ancient Greece, Germany and the Roman platform, India is taking lead in improving
Empires taxes were levied on the basis of the tax rules and their implementation – both
occupation. In Northern England taxes were for combating capital and profit flight and
levied on land and movable properties. improving dispute resolution mechanisms.

109
ICAI News

110
ICAI News

111
ICAI News

112
ICAI News
Invitation for Expression of Interest for Empanelment as Technical Reviewer/

Resource Person in the Sustainability Domain
The Institute of Chartered Accountants of India Resource Person for Sustainability Literacy
(ICAI), expanding its role as partner in nation Drive to be conducted via corporate films/video
building, has established Sustainability Reporting films for MSME and households, webinars,
Standards Board (SRSB) in 2020 with the objectives posters, consultations with stakeholders with
to develop reporting metrices for Sustainable the objective to widespread the awareness
Development Goals, benchmarking sustainability on importance and adoption of SDGs and
disclosures, strengthening assurance frameworks Sustainability Reporting.
for Non-Financial Information (NFI), and capacity
building of the profession in this emerging area. Resource Person to develop eLearning content,
such as e-books, e-lectures, covering 17
The Board is launching ICAI Sustainability Reporting
Sustainable Development Goals (SDGs)
Awards, both at International and National level,
focusing on developing understanding and
to benchmark global best practices vis a vis
awareness of members and other stakeholders
sustainability disclosure, developing Social Audit
Standards to strengthen assurance frameworks for towards SDGs and also suggesting ways in
non-financial information and taking initiatives to which they can contribute towards achievement
spread awareness and develop interest amongst of SDG targets.
stakeholders towards Sustainable Development
Persons interested are requested to fill in the form
Goals (SDGs). We are pleased to invite expression of
interest for empanelment as – and upload their resume at https://forms.gle/
xYbQrKMCWsusHSbz5 latest by July 15, 2021.
Technical Reviewer for ICAI International
Sustainability Reporting Awards and ICAI The Board will evaluate the responses and the
Sustainability Reporting Awards for the year shortlisted ones will be contacted for further
2020-21 for first stage review of reports received discussion. It may be noted that the decision of the
from participating entities. Board will be final in this regard.
Resource Person to develop draft of Social Audit For any further information email us at [email protected]
Standard for Impact Reporting and specific or [email protected]
Social Audit Standards with respect to sub –
themes of social impact, for example, poverty, We look forward to your active participation in this
nutrition etc covering aspects such as scope, initiative.
engagement acceptance, basic principles, audit
procedures, assurance report, documentation Chairman
etc. Sustainability Reporting Standards Board of ICAI
Classifieds
5854 We are 40 year old CA firm in Mumbai, 5856 A CA Firm with a 50 years experience
looking for firms having Tax practice looking for Professionals to join as
to merge with us. Please contact partners in Goa, Jammu, Leh and Ladakh,
9821665900 or [email protected] Daman & Diu, Ranchi, Chhattisgarh,
5855 R D N A and Co. LLP, a 33 year old CA firm, Bhopal, Patna, Mumbai, Ahmedabad,
offices at Mumbai, Raipur, Raigarh looking Chandigarh, Shimla and Bhubaneshwar.
for senior professionals to onboard as Kindly contact on - 9828095549 or drop
partners. Please e-mail at [email protected] email at [email protected]

ICAI in Media
113
ICAI in Media : Glimpses of May - June, 2021
New Delhi, June 7, 2021
New Delhi, June 4, 2021

ICAI in Media
114
New Delhi, May 27, 2021 New Delhi, June 8, 2021

ICAI hails Reserve
ICAI hails Reserve Bank’s new auditor norms
Bank’s new auditor
norms
New Delhi, May 27, 2021
New Delhi, May 27, 2021

Sustainability
Reporting Standards
Board of the
The Institute of Chartered
Accountants of India (ICAI)
(Set up by an Act of Parliament)
Presents
ICAI For
SUSTAINABILITY Excellence
REPORTING in Integrated
Reporting
and
2020-21 Reporting
on SDGs
Last Date of Receipt of Entries

October 31st, 2021 ICAI Sustainability Reporting Awards brochure
2020-21 is available on ICAI website at
https://resource.cdn.icai.org/65064srsb52340.pdf
Recognising and Encouraging Excellence in Sustainability Reporting

OBJECTIVES
To Recognize, Reward and To R e c o g n i z e i n i t i a t i v e s o f
A Encourage Excellence of
Businesses in Integrated B Businesses with a transformative
contribution to the 2030 Agenda for
Reporting Sustainable Development
PROCESS FOR DECIDING AWARDEES

Selection of awardees in specied categories will be
through a robust three tier process: AWARDS
1. Review by Technical Reviewers on defined parame- 1. One Gold Shield in each category and sub-category
ters. for the best entry.
2. Review of short-listed Sustainability Reports/ 2. One Silver Shield in each category and sub-category
Integrated Reports by Shield Panel. for the next best entry.
3. Selection by External Jury consisting of representa- 3. Plaques to be awarded to the entities who are
tives from regulatory bodies, professionals, academi- following better integrated reporting practices as is
cians, industrialists, philanthropists etc. decided by the Jury.
CATEGORIES OF THE COMPETITION
PROCEDURE FOR PARTICIPATION Category 1 : Integrated Reporting (6 Awards)
1. There is no Participation Fees. With sub-categories:
2. Sustainability Report/Integrated Report relating to the (A) Manufacturing Sector (3 Awards)
financial year ending on any day between April 1, (B) Service Sector (3 Awards)
2020 and March 31, 2021 (both days inclusive) is
eligible for participation. Category 2 : New Entrants in Integrated Reporting (2 Awards)
3. Decision of the Panel of Judges in all the matters Category 3 : Reporting on Sustainable Development Goals
relating to the Awards will be final. (2 Awards)
4. F i l l i n t h e E n t r y F o r m a v a i l a b l e a t
https://forms.gle/XmknH4p65XFXtyTGA and mail
the soft copies of the requisite enclosures as per the
entry form at [email protected] on or before
October 31st, 2021.
For further information please write to us at [email protected] or

visit our website www.icai.org or Call 011-30110474/456
Sustainability Reporting Standards Board,
The Institute of Chartered Accountants of India,
ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi-110002
Regd. with the RNI No. 738/57 Regd No. DL (C)-01/1190/2021-23, D. No. MH/MR/TECH-47/1/2021 License to post without prepayment,
ISSN 0009-188X WPP license No MR/TECH/WPP-133/DL(C)/2021. Posted at Mumbai Patrika Channel Sorting Office, Mumbai.
Published on 1st of Every Month. Posting Date: First 3 days of Current Month.
RESEARCH COMMITTEE
THE INSTITUTE OF CHARTERED
ACCOUNTANTS OF INDIA
(Setup by an Act of Parliament)
ICAI - DOCTORAL
SCHOLARSHIP
SCHEME
Last Date for submission of application:
2021
31st August 2021
ABOUT THE SCHOLARSHIP PROCEDURE FOR THE AWARD OF

Doctoral scholarship will be awarded to members of SCHOLARSHIP
the Institute who are registered as Ph.D. Scholars in Ÿ Applications are initially scrutinized by the
UGC recognized Indian Universities/ Deemed Research Committee Secretariat.
Universities/ Colleges, IIMs having University/ IIMs
approved Ph.D. Programme to pursue and complete Ÿ Thereafter, Shortlisting Committee will short-list
their Doctoral Research in Auditing, Taxation, region wise meritorious proposals from the
Commerce, Management and Accounting eligible applications.
Discipline.The candidates must have confirmed Ÿ Such candidates may also be invited for a
Ph.D. Registration at any of the institutions presentation before Shortlisting Committee.
mentioned above on the last date of application.
Ÿ The recommendations of the Shortlisting
Committee will then be placed before the
ELIGIBILITY CRITERIA Research Committee for its final approval.
Ÿ Member of the ICAI.
SCHOLARSHIP
Ÿ Minimum of 75% marks in 10th and 12th standard.
Ÿ Candidate should not be more than 40 years of The scholarship of Rs 50,000 per month for
age on the last date of application. maximum period of 36 months will be given to
maximum 5 scholars annually.
Ÿ NET/SLET and M.Phil. from a recognized
university will carry weightage in the assessment CONTINGENCY GRANT
of research proposal.
Yearly grant not exceeding Rs. 50000/- per year.
Ÿ Candidates who have already availed any other
doctoral fellowship awards are not eligible to
apply. SCHOLARSHIP TOPICS
The following topics are suggested:
HOW TO APPLY 1. Human Resource Accounting
Ÿ Applications are invited through ICAI website, 2. Simplification of Human Resource Laws
ICAI journal, Mass email to members and should 3. Government Sector Accounting
be received before 31st August 2021.
4. Integrated Reporting
Ÿ The application along with research proposal,
abstract (3000 and 300 words respectively) along 5. International Taxation Laws
with all the enclosures must be sent to Research 6. Water Audit
Committee at the given address before the last
The Research Committee will decide the suitability
date mentioned in the advertisement duly signed
of the topics from time to time.
and stamped by the Ph.D. Registered institution.
Scan for weblink

For further details please write to:
Secretary, Research Committee
The Institute of Chartered Accountants of India (ICAI)
(Set up by an Act of Parliament)
ICAI Bhawan, 8th Floor, Administrative Building, A-29, Sector-62, Noida-20 1309
Tel.: 0120-387 6877, Mob.: +91 7836040914, Email: [email protected], website: www.icai.org https://icai.org/post/icai-doctoral
-scholarship-scheme-2021
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volume 70 no.

1 pages -116 JULY 2021 `100

JOU R NAL OF TH E I NSTITUTE OF CHARTE R E D ACCOUNTANTS OF I N D IA

ICAI - set up by an act of parliament

Your Thought Leadership

#Control gets a wide berth in the new

#How Sustainable we are?

#Any other professional topic in mind?

The Accounting Profession – In It to Win It

www.icai.org THE CHARTERED ACCOUNTANT july 2021 3

JOU R NAL OF TH E I N STITUTE OF CHARTE R E D ACCOU NTANTS OF I N D IA

july 2021 22 Chartered Accountants

MEMBERS Vision - Global Leaders

18 Shri Santosh Kumar Gangwar, Hon’ble Minister of State

4 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

JOINT EDITOR CA. (Dr.) Debashis Mitra

59 Improving Audit Quality:

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

In Quotes For Overseas Members/Subscribers

icai NEWS ICAI RESERVES THE RIGHT TO REJECT ADVERTISEMENTS.

Printed and published by Mr. Rakesh Kumar Sehgal on behalf of

TOTAL CIRCULATION : 99,238

www.icai.org THE CHARTERED ACCOUNTANT july 2021 5

This CA Day brings with it an opportunity

play a monumental role in coordinating the actions

6 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

From the President

www.icai.org THE CHARTERED ACCOUNTANT july 2021 7

always propagated the idea that if one falls behind,

8 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

www.icai.org THE CHARTERED ACCOUNTANT july 2021 9

• Phase 1 - Pre-replacement issues-deals with the provisions of Investor Education and

10 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

ICAI President CA. Nihar N. Jambusaria, ICAI Vice-President CA.

ICAI President CA. Nihar N. Jambusaria and ICAI Vice-President

ICAI President CA. Nihar N. Jambusaria alongwith

www.icai.org THE CHARTERED ACCOUNTANT july 2021 11

Shri M. Venkaiah Naidu, Hon’ble Vice-President of India

12 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

Shri Om Birla, Hon’ble Speaker, Lok Sabha

www.icai.org THE CHARTERED ACCOUNTANT july 2021 13

Shri Amit Shah, Hon’ble Minister of Home Affairs

14 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

www.icai.org THE CHARTERED ACCOUNTANT july 2021 15

Shri Ramesh Pokhriyal ‘Nishank’, Hon’ble Minister of Education

16 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

Shri Girish Chandra Murmu, Comptroller & Auditor General of India

www.icai.org THE CHARTERED ACCOUNTANT july 2021 17

18 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

Sadhvi Niranjan Jyoti, Hon’ble Minister of State for Rural Development

www.icai.org THE CHARTERED ACCOUNTANT july 2021 19

20 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

Today there is a metamorphic change as

In the digital accounting there is electronic

The Institute of Chartered Accountants of India

22 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

A. If there is one thing, I am absolutely confident I am particularly overwhelmed by the committed

www.icai.org THE CHARTERED ACCOUNTANT july 2021 23

24 THE CHARTERED ACCOUNTANT july 2021 www.icai.org

2021 Priorities practices. Our Advisory Group Mentoring and answering

III. Valuation Standards Valuation is required in Certain other laws such as