The standing finance committee (2021-2022) presented its forty-fifth report on the bill “Chartered Accountants, Cost & Work Accountants & the Company Secretaries Amendment bill, 2021” which was tabled in the parliament recently.
The report pointed out the repeated number of professional misconducts in the profession which is also because of the autonomy the ICAI enjoys. The committee proposed having a string of Indian Institute of Accounting that will raise the standards of accounting education & offer competition to the Institute of Chartered Accountants of India.
Before getting started on what is IIA, you all need to understand that the introduction of IIA has just been made as a suggestion in a report of the Standing committee. The president of ICAI recently, while addressing the members of the fraternity ensured that the council will leave no stone unturned to maintain the quality of the Institute & that the self-respect of the profession is not dented.
The Report of the Standing committee:
The Standing committee in its report took the example of the US where there are 56 state boards of Accountancy & its members are appointed by the government. There would be state Chartered Accountant bodies but they don’t regulate themselves. The ICAI on the other hand is conducting examinations & giving licenses which makes it a statutory monopoly. In the US & other developed countries awarding the license to work as an accounting professional is with the government & the government can cancel the same. The power remains in the hands of the government or the senate. Whereas in India, you have to take a license & become a member of the institute to practice. This means the ICAI controls everything. Also, unlike other countries where multiple bodies are competing with each other & developing the profession, India has only one Institute for the same.
Current Government’s attitude towards the ICAI:
The government for the past few years has consciously tried to reduce the power in the hands of the ICAI. The introduction of the National Finance Reporting Authority, allowing other accounting professionals to work as Insolvency professionals under the Insolvency & Bankruptcy Code, 2016 are some of the steps taken in the same direction.
As per the report of the committee, the Indian Institute of Accounting (IIA) will raise the standards of accounting education & offer competition to the ICAI.
An outline of what IIA’s would be like:
– The IIAs will be statutory bodies established by a Central law similar to IITs and IIMs.
– They will be set up in different parts of India.
– Each IIA will have a board of governors consisting of experts, laypersons, and government officers drawn, among others, from the Ministry of Finance, the Ministry of Education, and the Ministry of Corporate Affairs. The board size will be ten.
– The board will have fully functional, financial, and administrative autonomy for its efficient functioning.
– The chairman and the members will be eminent persons from business, public administration, accountancy, finance, academia, and on. The board will appoint the chairman and the members and they must be free from conflict of interest of any kind i.e. professional, financial, or personal.
– The chairman and the members will serve part-time and will have a term of three years. They shall not be eligible for reappointment or extension to avoid entrenchment and to bring in new talent regularly. The board will appoint a Director (CEO) for a term of five years. The Director shall not be eligible for reappointment or extension to avoid entrenchment. This is particularly important because the board is part-time and the Director could develop deep roots.
– Each IIA will have an Academic Council that will develop the curriculum. The undergraduate curriculum will have financial and cost accounting, auditing, tax, law, business strategy, organizational behaviour, management, governance, and public administration, technology, data science, psychology, and other fields relevant to the wide role that accountants play.
– IIAs will start with a five-year undergraduate programme in accounting. Over time, they will develop post-graduate programmes in specialized areas such as forensic accounting, business analytics, cyber security, valuation, international tax, and other relevant fields. Once these programmes stabilize, they will develop Ph.D. programmes.
– Admission will be through a national entrance test after secondary schooling under the National Educational Policy 2020.
– IIAs will be research-driven. They will support research and publications efforts by their faculty generously.
– IIAs will work closely with national and regional educational institutions such as the Indian Institutes of Management, the Indian Institutes of Technology, the National Law Universities, and other universities and institutions.
– From the beginning, IIAs will have an international outlook. They should have students from all over the world including from developing countries.
– They should aim to get the best faculty from around the world. They should price their education reasonably and provide liberal financial aid to needy students. Access, equity, inclusion, diversity, and fairness are important. They should work to raise endowments from the industry.
– Those who qualify in the undergraduate programme will be given two degrees, a Bachelor of Accounting and a Bachelor of Business. This will give them a choice of the stream they want to go into.
– They will be given a license to practice similar to CAs. The license-holders will be called Certified Professional Accountants (CPAs). They will be required to register themselves with a Central Licensing Authority (such as NFRA) which will handle their disciplinary matters.
– The proposal visualizes the IIAs as academic institutions that educate licensed professionals similar to AIIMS, PGI, JIPMER, National Law Schools, and so on. In contrast, the Institute of Chartered Accountants of India will be a professional certification agency, much the same way it is now.
Is IIA a threat to the CA profession?
We all need to understand that it is only proposed as a suggestion in one report. It could take years before the whole idea can come into action & eventually in existence. In my opinion, competition is never harmful. This step would surely force the ICAI to revise its curriculum & keep a check on its members to keep them in a discipline which would further improve the ethical standards & robustness of the profession.
there are people who are in power will be able to influence licensing as it will work under political pressure
previously there are ias ips who all need to work under govt pressure and do unethical things but now ca or cpa will also need to work under govt pressure . In my view licensing should always rest with an independent body not funded by any govt.