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Institute of Chartered Accountants of India

The Institute of Chartered Accountants of India (ICAI) is the national professional accounting body of India. It was established on 1 July 1949 as a statutory body under theChartered Accountants Act, 1949 enacted by the Parliament (acting as the provisionalParliament of India) to regulate the profession of Chartered Accountancy in India. ICAI is the second largest professional Accounting & Finance body in the world. However, the rapid growth and autonomy of the ACCA in the early 2000s, soon made ICAI the third largest in terms of membership, the first being the ACCA. ICAI is the only licensing cumregulating body of the financial audit andaccountancy profession in India. It recommends the accounting standards to be followed by companies in India to National Advisory Committee on Accounting Standards (NACAS). and sets the accounting standards to be followed by other types of organisations. ICAI is solely responsible for setting the Standards on Auditing (SAs) to be followed in the audit of financial statementsin India. It also issues other technical standards like Standards on Internal Audit(SIA), Corporate Affairs Standards (CAS) etc. to be followed by practicing Chartered Accountants. It works closely with theGovernment of India, Reserve Bank of Indiaand the Securities and Exchange Board of India in formulating and enforcing such standards.

Institute of Chartered Accountants of India

भारतीय सनदी लेखाकार संस्थान
Emblem of ICAI as given by Sri Aurobindo
Abbreviation	ICAI
Motto	Sanskrit: य एष सुप्तेषु जागर्ती
Formation	1 July 1949; 68 years ago
Legal status	established under theChartered Accountants Act, 1949 enacted by the Parliament of India
Objective	Regulate the auditingand financial accounting profession in India
Headquarters	ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi 110002, India
Coordinates	28.627815°N 77.242135°E
Region served	India
Membership	2,69,350 (1 April 2017)[1]
Member's designations	A.C.A. and F.C.A. (A.T.C. also available with IPCC level)
Official languages	English, Hindi
President	CA. Naveen N.D Gupta
Vice President	CA. Prafulla premsukh chaajed
Secretary	Shri V. Sagar[2]
Governing body	Council
IFAC member since	7 October 1977
Regional Offices	New Delhi (NIRC) Mumbai (WIRC) Kolkata (EIRC) Chennai (SIRC) Kanpur (CIRC)
Branches	163 Indian Branches and 30 Overseas Chapters
Website	www.icai.org

Members of the Institute are known asChartered Accountants. However, the word chartered does not refer to or flow from anyRoyal Charter. Chartered Accountants are subject to a published Code of Ethics and professional standards, violation of which is subject to disciplinary action. Only a member of ICAI can be appointed as statutory auditor of a company under the Companies Act, 2013. The management of the Institute is vested with its Council with the president acting as its Chief Executive Authority. A person can become a member of ICAI by taking prescribed examinations and undergoing three years of practical training. The membership course is well known for its rigorous standards. ICAI has entered intomutual recognition agreements with other professional accounting bodies worldwide for reciprocal membership recognition. However, it continues to be with limited franchise,due to the international acclaim and recognition for the ACCA, the world’s largest accounting body, despite tremendous efforts for regulation. ICAI is one of the founder members of the International Federation of Accountants (IFAC), South Asian Federation of Accountants (SAFA), and Confederation of Asian and Pacific Accountants (CAPA). ICAI was formerly the provisional jurisdiction forXBRL International in India.In 2010, it promoted eXtensible Business Reporting Language (XBRL) India as a section 25 company (now section 8 of Companies Act, 2013) to take over this responsibility from it. Now, eXtensible Business Reporting Language (XBRL) India is an established jurisdiction of XBRL International Inc.

The Institute of Chartered Accountants of India was established under the Chartered Accountants Act, 1949 passed by the Parliament of India with the objective of regulating accountancy profession in India.^[3]ICAI is the third largest professional accounting body in the world in terms of membership only to the ACCA and AICPA.^[4] It prescribes the qualifications for a Chartered Accountant, conducts the requisite examinations and grants license in the form of Certificate of Practice. Apart from this primary function, it also helps various government agencies like RBI,SEBI,^{[citation needed]} MCA, CAG, IRDA, etc. in policy formulation. ICAI actively engages itself in aiding and advising economic policy formulation. For example, It has submitted its suggestions on the Companies Bill, 2009.It also examines the various taxation laws, rules, regulations, circulars, notifications, etc. which may be enacted or issued by the Government from time to time and to send suitable memoranda containing suggestions for improvements in the respective legislation.The government also takes the suggestions of ICAI as expert advice and considers it favorably. ICAI presented an approach paper on issues in implementing Goods and Service Tax in India to the Ministry of Finance. In response to this, Ministry of Finance has suggested that ICAI take a lead and help the government in implementingGoods and Services Tax (GST).^[5] It is because of this active participation in formulation economic legislation, it has been designated by A. P. J. Abdul Kalam as a "Partner in Nation Building". Nonetheless, with the advent of globalisation and foreign investment, in India, ACCA has constantly gained ground and is currently, standing as tough competition to the ICAI, even though negotiations have been made in the past.

International AffiliationsEdit

ICAI is a founder member of the International Federation of Accountants(IFAC),^[6] South Asian Federation of Accountants (SAFA),^[7]and Confederation of Asian and Pacific Accountants (CAPA) ^[8] and International Innovation Network (IIN). ICAI is an Associate member of the Chartered Accountants Worldwide, Member of International Valuation Standards Council (IVSC).

Motto and missionEdit

New CA Logo for exclusive use by Chartered Accountants

The motto of the ICAI is Ya Aeshu Suptaeshu Jagruti [Sanskrit].^[9] The motto literally means "a person who is awake in those that sleep". It is a quotation from the Upanishads(Kathopanishad). It was given to the ICAI at the time of its formation in 1949 by Sri Aurobindo^[10] as a part of its emblem. CA. C. S. Shastri, a Chartered Accountant fromChennai went to Sri Aurobindo and requested him through a letter to give an emblem to the newly formed Institute of which he was an elected member from the Southern India. In reply to this request, Sri Aurobindo gave him the emblem with a Garuda, the mythical eagle in the centre and a quotation from the Upanishad:Ya Aeshu Suptaeshu Jagruti. The emblem along with the motto was placed at the first meeting of the Council of the Institute and was accepted amongst many other emblems placed by other members of the Council.

Apart from its emblem, ICAI also has a separate logo for its members. As a part of a brand building exercise, ICAI introduced this separate new CA logo for the use of its members in 2007.^[11] The logo is free for use by all members of ICAI subject to certain conditions.^[12] The logo was launched by the then Minister of Corporate Affairs, Prem Chand Gupta at the occasion of the Chartered Accountant Day (1 July) in the presence of the then President of ICAI Sunil Talati. Members of ICAI cannot use the ICAI emblem, but they are encouraged to use the CA logo instead on their official stationery.

The Mission of the ICAI as stated by it is: “The Indian Chartered Accountancy profession will be the Valued Trustees of World Class Financial Competencies, Good Governance and Competitiveness.”^[13]

HistoryEdit

Government Diploma in Accountancy Certificate

The Companies Act, 1913 passed in pre-independent India prescribed various books which had to be maintained by a Company registered under that Act. It also required the appointment of a formal Auditor with prescribed qualifications to audit such records. In order to act as an auditor a person had to acquire a restricted certificate from the local government upon such conditions as may be prescribed. The holder of a restricted certificate was allowed to practice only within the province of issue and in the language specified in the restricted certificate. In 1918 a course called Government Diploma in Accountancy was launched in Bombay (now known as Mumbai). On passing this diploma and completion of three years of articled training under an approved accountant, a person was held eligible for grant of an unrestricted certificate. This certificate entitled the holder to practice as an auditor throughout India. Later on the issue of restricted certificates was discontinued in the year 1920.

In the year 1930 it was decided that theGovernment of India should maintain a register called the Register of Accountants. Any person whose name was entered in such register was called a Registered Accountant.^[14] Later on a board called the Indian Accountancy Board was established to advise the Governor General of India on accountancy and the qualifications for auditors. However it was felt that the accountancy profession was largely unregulated, and this caused lots of confusion as regards the qualifications of auditors. Hence in the year 1948, just afterindependence in 1947, an expert committee was created to look into the matter.^[15] This expert committee recommended that a separate autonomous association of accountants should be formed to regulate the profession. The Government of India accepted the recommendation and passed the Chartered Accountants Act in 1949 even before India became a republic. Under section 3 of the said Act, ICAI is established as a body corporate with perpetual succession and acommon seal.

Unlike most other commonwealth countries, the word chartered does not refer to a royal charter, since India is a republic. At the time of passing the Chartered Accountants Act, various titles used for similar professionals in other countries were considered, such asCertified Public Accountant.^[16] However, many accountants had already acquired membership of the Institute of Chartered Accountants in England and Wales and other Chartered Societies of Great Britain and were practising as Chartered Accountants. This had created some sort of brand value. This designation inherited a public impression that Chartered Accountants had better qualifications than Registered Accountants.^[17] Hence the accountants were very stern in their stand that, the Indian accountancy professionals should be designated only as Chartered Accountants. After much debate in the Indian Constituent Assembly, the controversial term, chartered was accepted. When the Chartered Accountants Act, 1949 came into force on 1 July 1949, the term Chartered Accountantsuperseded the title of Registered Accountant. This day is celebrated as Chartered Accountants day every year.^[18]

MembershipEdit

Members of the Institute are known as Chartered Accountants. Becoming a member requires passing the prescribed examinations, three years of practical training (known asarticleship) and meeting other requirements under the Act and Regulations. A member of ICAI can use the title CA before his/her name.^[19] A member of ICAI may either be anAssociate Chartered Accountant (A.C.A.) or aFellow Chartered Accountant (F.C.A.) based on his experience. Further based on holding Certificate of Practice, they may also be classified as practising and non-practicing Chartered Accountants. As of 1 April 2014, the Institute has 2,50,000 members out of which 152,899 are Associates and 76,247 are Fellows.^[20] The B.N. Chaturvedi Family is credited to be the only family in India to be Chartered Accountants in 5 Generations. [2]

Associates and fellowsEdit

Any person who is granted membership of the Institute becomes an Associate Chartered Accountant and is entitled to use the letters A.C.A. after his name. Generally, associates are members of the Institute with less than 5 years of membership after which they become entitled to apply for being a fellow member. Some associate members, particularly those not in practice, often voluntarily chose not to apply to be a fellow due to a variety of reasons.

An associate member who has been in continuous practice in India or has worked for a commercial or government organisation for at least five years and meets other conditions as prescribed can apply to the Institute to get designated as a "Fellow". A fellow Chartered Accountant is entitled to use the letters FCA. after his name. Responsibilities and voting rights of both types of members remain the same but only fellows can be elected to the Council and Regional Councils of ICAI. Fellows are perceived as enjoying a higher status due to their longer professional experience.

Practicing Chartered AccountantsEdit

Any member wanting to engage in public practice has to first apply for and obtain aCertificate of Practice from the Council of ICAI.^[21] Only members holding a Certificate of Practice may act as auditors or certify documents required by various tax and financial regulatory authorities in India. Once a member obtains a Certificate of Practice, his responsibility to the society increases manifold. The ethical principles applicable to a practising CA provided in first and second schedule of the Chartered Accountants Act, 1949 are more rigorous than the ones applicable to non-practicing CAs or both.

In India an individual Chartered Accountant or a firm of Chartered Accountants can practice the profession of Chartered Accountancy. After the enactment of the Limited Liability Partnership Act, 2008 it is expected that in the near future a Limited Liability Partnership (LLP) will be legally allowed to practice. A Bill has already been introduced in the Indian Parliament to give effect to the same.^[22]Corporation, companies and other bodies corporate are prohibited from practising as Chartered Accountants in India

Role of Chartered AccountantsEdit

Chartered Accountants enjoy a statutory monopoly in audit of financial statements under the Companies Act, 2013, Income Tax Act, 1961 and various other statutes in India.^[23] Financial statements audited by achartered accountant are presumed to have been prepared according to GAAP in India (otherwise the audit report should be modified). However, not all Chartered Accountants work in audit. Firms of accountants provide varied business services, and many accountants are employed in commerce and industry. Their areas of expertise include Financial Reporting, Auditing and Assurance, Corporate Finance,Investment Banking, Financial Modelling,Equity Research. Fund Management, Credit Analysis, Capital Markets, Arbitration, Risk Management, Economics,Strategic/Management Consultancy,Management Accounting, Information Systems Audit, Corporate Law, Direct Tax,Indirect Tax and valuation of businesses..^{[citation needed][importance?]} Apart from the field of professional practice, many CAs work in the industry and commerce in financial and general management positions such as CFO and CEO.

Council of the InstituteEdit

Map of India showing thejurisdictions of the five Regional Councils of ICAI

The management of the affairs of the Institute is undertaken by a Council constituted under the Chartered Accountants Act, 1949.^[3] The Council consists of 32 elected fellow members and up to 8 members nominated by the Government of India. The elected members of the council are elected under thesingle transferable vote system by the members of the institute. The Council is re-elected every 3 years. The Council elects two of its members to be president and vice-president who hold office for one year. The president is the chief executive Authority of the Council.^[24]

PresidentsEdit

ICAI's first president was CA G.P. Kapadia (1949 to 1952). CA Naveen N. D. Gupta is the current president.^[25][26]

Code of EthicsEdit

The Institute has a detailed code of ethics and actions in contravention of such code results in disciplinary action against the erring members. The Institute publishes a Members Hand book containing the Chartered Accountants Act 1949, Chartered Accountants Regulation 1988, Professional Opportunities for Members – an Appraisal, Code of Ethics and Manual for members. These together form the basis of regulation of the profession. The Council also has a Peer Review Board that ensures that in carrying out their professional attestation services assignments, the members of the Institute (a) comply with the Technical Standards laid down by the Institute and (b) have in place proper systems (including documentation systems) for maintaining the quality of the attestation services work they perform.^[27]