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President's Message - May 2020 - (22-05-2020)

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My dear Professional Colleagues,

In the words of ICAI Past President, CA. P.A. Nair - “no efforts should be spared in justifying the confidence reposed in us by the society. This calls for independent, objective, honest and impartial attitude on the part of each one of us.” ICAI has sailed through its journey of more than seven decades with conviction, optimism, hope and confidence to maintain the virtues of independence, integrity and excellence. The Institute has always believed that the aptitude and the attitude are two important possessions Chartered Accountants should have for their selfactualisation. Swami Vivekananda once remarked - “we are what our thoughts have made us; so take care about what you think. Words are secondary. Thoughts live; they travel far.” By materialising the indestructible power within us to train our minds, we can face any difficult challenge and jump over any arduous hurdle with paramount positivity and strength to realise our potential and emerge triumphant. After all, a positive mind can always discover the silver lining in a grey cloud. An optimistic attitude evokes energy and enthusiasm and pushes us to take increasingly tough initiatives and excel at the tasks that are set on our mind. Besides positivity, by equipping one to take charge of one’s own actions as well as surroundings, is the foundation for building successful professionals who can set precedents and benchmarks for others to follow. The Institute of Chartered Accountants of India firmly believes that a professional bestowed with leadership qualities can catalyse change with persistent influence as opposed to coercive authority. By demonstrating discipline and dedication, a successful professional not just actualises own goals but also compels others to strive for their dreams. I wish to remind the professional fraternity that invincible faith in oneself in addition of unbending hope for the best, adds a charismatic charm to one’s inherent character and aids us to stand out and distinguish ourselves from the unexcited crowd. Remember, we can never be appointed or elected as a leader but only evolve into one.

President, ICAI
CA. Atul Kumar Gupta
President, ICAI

Under the invincible umbrella of positivity and perseverance, ICAI has always deftly dealt with hardships and adeptly responded to times of crisis. After all, every challenging circumstance which presents disorder and fear is in fact, the best occasion to learn more and fear less. Amidst the chaos caused by the life-threatening claws of the global pandemic - Covid-19, the Institute of Chartered Accountants of India has come up with several enabling measures and initiatives in order to promote knowledge as the ultimate weapon. The Institute has always remained at the technological forefront. Some of the recent technology driven initiatives, DCMM, UDIN and Digital Learning Hub (DLH) are well recognised, used and acknowledged by the fraternity, stakeholders and pleasantly by various professional organisations in India and abroad. We will continue to leverage technology to give our profession a winning edge and raise a generation of professionals who are second to none in the world professional arena. Despite the challenge of no physical interactions, ICAI through Digital Learning Hub, already allowed members to earn up to 10 structured CPE hours without any charge. Moving further, now Members can participate in certificate courses virtually at a very small cost and ease of access. Further, 50 hours educational course by ICAI Registered Valuers Organisation, and Indian Institute of Insolvency Professional of ICAI, and academic classes for students are also initiated on virtual mode.

The International Federation of Accountants (IFAC), global organization for the accountancy profession, also recognised ICAI online modules (DLH) in these times of crises; and on a call, ICAI offered its voluntary support for the professional brethren globally.

Rebooting of Indian Economy

COVID-19 pandemic has created a unique situation before all of us which we never witnessed before. Global economies are facing serious crisis related to um-employment, sustainability in terms of small and medium enterprises and liquidity. Recent slowdown also got exaggerated because of prolonged fight against pandemic. At this time each one of us has to rise and shoulder the national duty. We are fully aware that our branches and members are putting their best to support the humanity, still the call is to take up important tasks of building nation. Post COVID-19, there will be new ways of doing business, shifting of operations, adoption of technology and call for self-sufficiency will be the need of hour. At this time, ICAI, an important stakeholder and its members, who understand the nerve of the business need to explore innovative ways of policy level suggestions. Recently, we formed a Special Purpose Group on “Rebooting Indian Economy – way forward for 5 Trillion USD Economy” and deliberated on Nine Mantras as follows:

  • Invest on Make in India
  • Attract Investment by Sustainable Policies
  • Increased domestic productivity by innovation and Adoption of technology
  • Work on Potential Sector to increase Exports
  • Self-sufficient – Reduce dependency on Imports
  • Explore new financially viable Sector to boost employment and Exports
  • Ensure Sustainability {SDG 2030}
  • Focus MSME/SME
  • Tax policies-Stabilized, Growth oriented, ensure easy of doing

We at ICAI engage with experts and stakeholders at national and global levels, discuss and deliberate at appropriate levels to share our thought process and identify way forward on each of the above mantra.

Centre for Audit Quality

As each one of you will agree that the purpose of an independent audit is to provide confidence to the users of audited financial statements in the quality of financial reports, in particular their reliability. Improving audit quality and the consistency of audit execution is essential to maintain confidence in the independent assurance, provided by the auditors. It is trust that enables organisations to create long-term value and in developing confidence of external stakeholders on the users of financial information. There is no set definition of a quality audit, and many factors influence audit quality. As a result, judging audit quality can be challenging and subjective. The term ’audit quality’ has a number of different definitions across the world; however, none of them have achieved the status of a globally recognised definition. It is a complex subject and therefore, it might be challenging to assess audit quality. Further, the perception of audit quality depends on the various stakeholders of financial information which may be users, auditors, regulators, or society at large. The Institute of Chartered Accountants of India, the second largest accountancy body in the world, has a strong tradition of serving in public interest and for Indian economy. One of the epithets applied to the Institute of Chartered Accountants of India is “Partners in Nation Building”. ICAI through ‘The Chartered Accountants Act, 1949’ has been mandated to regulate the accountancy profession in India which inter alia comprises, laying down well-defined framework of education, practical training and examination, registering members and practicing firms, carry oversight on their extent of compliance in performing professional work, issuing standards/guidance on accounting, audit, ethics, pro-active reviews through PRB, FRRB in addition to those mandated by QRB and discipline errant members.

On quality side, we have framework for Audit Quality prescribed in Engagement and Quality Control Standards; SQC 1 which deals with audit quality at the level of firm for all audit engagements undertaken by them. SQC 1 requires the firm to establish a system of quality control designed to provide it with reasonable assurance that the firm and its personnel comply with professional standards, regulatory and legal requirements. Further, SA 220 deals with audit quality at the level of individual (engagement partner) audit engagement undertaken by the firm.

Internationally, the International Auditing and Assurance Standards Board (IAASB) of IFAC has issued a Framework for Audit Quality: “Key Elements that create an Environment for Audit Quality” in February 2014. The Framework prescribes the key elements of Audit Quality as input factors, process factors, output factors, key interactions and contextual factors.

As a part of ICAI’s drive to continue to benchmark the accountancy profession against the best available global practices, we have already converged to global standards on disclosure and assurance while keeping Indian interests in high stead. The future of the profession lies in its ability to change, evolve and adapt to the changing environment, which is central to reforms and ICAI’s mission is its standard-setting role. ICAI, recognising the fact that high level “quality framework” provide the foundation for development of a proficient, high quality accountancy profession, has moved to set up a “Centre for Audit Quality” at Centre of Excellence, Jaipur. The Centre for Audit Quality will aim at the continuous investment in the contemporary education and training for prospective accountants and auditors, developing guidance and training programmes to assist audit teams and offices to undertake effective root cause analysis, conducting group learning sessions to discuss identified causes of findings and the solutions to be implemented, establishing Audit Quality indicators, thus will work for Audit Quality Maturity Model. The Audit Quality Maturity model will initiate a process of laying out a voluntary self-evaluation matrix for accounting firms to gauge their relative maturity level as regards audit quality pertaining to Audit and Accounting related functions being rendered by them.

Virtual Firms and DCMM 2.0

“It is not the strongest or the most intelligent who will survive but those who can best manage change.” Creating and managing virtual firms by moving towards automation has become imperative. You will agree with me at this difficult time and continuous lockdown, various processes at our firm level got stuck because of non-availability of data and information in digital mode. Besides, lack of automation created a challenge, even to expand wings at global level and improve efficiency. In this scenario, it is imperative for all of us to move towards large scale automation at our offices. Recently, Digital Accounting and Assurance Board of ICAI had released Digital Competency Maturity Model (DCMM 2.0) for assessing digital competency of a firm with respect to level of automation in the area of audit, tax compliances, accounting and support functions. Besides guidance for adaptation of advanced and emerging technologies, the most useful enhancement is that DCMM version 2.0 includes detailed Implementation Guide and comprises a questionnaire that enables firms to rate their current level of maturity on digital competency and then develop a road map for achieving a higher level of maturity.

Mapping on Impact of COVID -19 on Reporting and Assurance

In this difficult time of pandemic, our professional colleagues are facing a lot of challenges in terms of assessing the impact of COVID-19 on reporting and assurance. As shared earlier, ICAI has issued detailed advisories and FAQs on the impact of COVID-19 on reporting and assurance function related to Financial Statements for the year 2019- 2020. In line with the advisories, we thought it fit to have a Global webinar on “Impact of COVID 19 pandemic on Reporting and Assurance” organised on 13th April, 2020 wherein we invited leaders from various global and regional bodies apart from Professional Accountancy Organisations. The webinar focused to address the challenges that COVID-19 outbreak has on Global Economies especially addressing the challenge being faced by professionals andcorporates across the globe on accounting, reporting and assurance perspective. The webinar was addressed by global leaders including CA. Suresh P. Prabhu, Hon’ble MP (Rajya Sabha) and Prime Minister’s Sherpa to G 7 & G 20, Dr. In Ki Joo, President IFAC, and Mr. Alan Johnson, Deputy. President, IFAC apart from heads of ASEAN Federation, IAASB, Accountancy Europe, EFAA, and Edinburg Group. The Global Webinar was live streamed on all social media channels of ICAI, viewed by more than 80000 professional accountants globally, was organised in coordination with ICAI overseas Chapters.

Let’s Fight Together with COVID-19

At ICAI we are aware that this is a challenging time for all of us. To support our Small and Medium Practitioners, we started number of initiatives including free access to structured CPE Hours through DLH, and virtual certificate courses. Besides that, to offer a helping hand, we have extended the due date for the filing of various forms/regulatory classes for students and members. Further, the date for the registration of the foundation course also stands extended. An announcement on the use of electronic signature for signing audit reports and certificates and advisories for key audit considerations relating to ‘Going Concern’ and ‘Physical Inventory Verification’ have also been released.

It is time for us to muster all our positive energy, faith and hope and instil the same in our peers, family and friends to strengthen our community. We should also express and demonstrate gratitude towards all the COVID-19 Warriors providing essential services viz. doctors, nurses, chemists, police personnel, sanitation workers, bankers and many others who are leading from the front while working in the background to ensure citizen wellbeing. As you are aware Hon’ble Prime Minister has formed The Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) on 28 March, 2020, following the COVID-19 pandemic in India with the primary objective of dealing with any kind of emergency or distress situation as posed by thepandemic, and to provide relief to the affected people. The ICAI Council recognising its public interest and welfare facet as a statutory limb of Government has decided to contribute 21 crores towards COVID-19 relief measures; to collaborate in this call of national duty.

We do hope our small contribution will aid in supporting governmental efforts. I am pleased to inform that while acknowledging the humble contribution made by ICAI, our Hon’ble Prime Minister Shri Narendra Modi tweeted, “Our hardworking CA fraternity helps keep the world of business healthy and they are also contributing to make the nation healthy, making the fight against COVID-19 stronger by the contribution to PMCARES.” (10th April 2020)

Hon’ble Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman, Hon’ble Minister for Railways, and Commerce & Industry CA. Piyush Goyal and Hon’ble Minister of State for Finance and Corporate Affairs Shri Anurag Thakur also acknowledged ICAI contribution through different tweets.

ICAI- By the Members for the Members

It is imperative to stay aware and stay connected to tackle these trying times of adversity. In an attempt to remain in touch with all members, ICAI urges academically inclined enthusiasts to take up different forms of research work or even become associated in the capacity of an examiner or a MCQ or case-study developer. One can even make productive use of the available free time on the hands by submitting articles for this Journal. In this tough battle against the dreadful disease, our strength lies in our united efforts.

Mahatma Gandhi had once remarked, “live as if you were to die tomorrow; learn as if you were to live forever.” By making efficient utilisation of time, we at ICAI urge everybody to never let the wheel of learning stop. Backed by awareness, optimism and diligence, one can combat any evil and overcome all hurdles. Our growth is rooted within the constant nourishment of our morale and endless building of our knowledge.

Best wishes. Stay Safe and Healthy.

CA. Atul Kumar Gupta
President, ICAI
New Delhi, May 1, 2020
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