Archive for the ‘ICAI’ Category
Educational institutions set to follow ICAI norms
Higher education institutes in the country will soon have to report their financial information in a standard and uniform format set by the Institute of Chartered Accountants of India (ICAI). As per the format, the institutes will now have to disclose their balance sheet and the income and expenditure account. The new system is a shift from the present cash basis of accounting to accrual-based system.
While the balance sheet will include sources and applications of funds along with liabilities and assets, the income and expenditure statement would reflect the academic receipts, grants and donations. With education being a not for profit activity, the Ministry of Human Resource Development (MHRD) wants to enforce these standards in order to check how much profit the educational institutes are making.
“We want the institutes to keep their accounts and want to know if they actually are not-for-profit which they should be. The new accounting standards will be mandatory for all and we hope to implement it this year. Going ahead, we might introduce the accounting format for schools also,” said an MHRD official.
The move assumes significance as in the recent years, government aid to educational institutions particularly in the form of concessions and incentives has risen besides increased fees charged from the students and increased donations by certain donor agencies. “We already disclose our finances, which are audited by the Comptroller and Auditor General of India. The new accounting standards are very recent and we are still studying the new paradigm as depreciation will have to be included,” said IIT-Kanpur Director.
The present system of accounting and financial reporting followed by educational institutions does not meet the accountability concerns of the donors, including government and other stakeholders such as members, governing board, management staff, volunteers and general public as educational institutions in India follow not only diverse accounting practices but also different basis of accounting.
As per the new system, funds received by educational institutions may be divided into restricted funds, unrestricted funds which includes corpus fund, designated funds and general fund. “The new accounting standards will make it easier to understand and follow the balance sheets and make the entire system more transparent. Also, we are following the old system of accounting which need to be improved,” said Shekhar Chaudhuri, Director, IIM-Calcutta.
However, institutes feel that the new accounting norms would only add to their administrative load. “It would be better to reduce the involvement of human element and use some modern technological solution for accounting to do financial accounting accurately,” said an IIT professor.
Source: The Financial Express, May 11, 2012
>Globalisation of Indian CAs need of the hour: ICAI
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Rapidly growing Indian economy and the strides taken by Indian firms to go global have thrown up the need for “globalisation of Indian accountants” to tap into growing opportunities, the President of the Indian Chartered Accountants of India (ICAI) said on Saturday.
“India is growing at a rapid pace, a lot of FDI (Foreign Direct Investment) is flowing into the country, Indian companies are setting offices abroad, acquiring firms and merging it to grow bigger and global. In the light of these developments, it is important that Indian accountants also globalise,” ICAI President G. Ramaswamy said on sidelines of the Branch Audit meet organized by the Bangalore chapter of the Southern India Regional Council (SIRC) of the ICAI.
Talking about the growing opportunities for CAs, he said, “The IFRS (International Financial Reporting Standards) is expected to throw ample opportunities for CAs in India.” The Institute has already trained around 2,607 members through a 100-hour intensive training programme that prepares CAs for adoption of the IFRS to meet the future requirement, he said.
Explaining the attractive remuneration on offer, he said the average entry level salary of Rs. 900,000 per annum is expected to scale up to Rs. 2 million in the next five years. “Last year during a campus recruitement programme organized by the Institute, three candidates barely in their early twenties were offered Rs. 2.1 million per annum for an international posting. For domestic posting, the best offer received was Rs. 1.5 million per annum,” he said.
The ICAI has also set up an IFRS Implementation committee, which envisages involvement of a number of CAs in the implementation of IFRS across the countries, he said. “CAs are in huge demand, not only in the financial sector but also in BPOs, KPOs and software firms,” Ramaswamy said.
Going forward with the implementation of the IFRS, a huge amount of outsourcing work is expected to come to India.
The ICAI has already entered into an agreement with the IFRS council of Japan for ousourcing of accounting work, he said, adding one of India’s software majors is estimated to have hired 800 CAs in its BPO and around 2,000 overall.
Talking about various initiatives of ICAI, he said it had written to the Central Government to empower it to act against erring firms after suitably amending the relevant Act, to avert big coporate frauds like the Satyam scam. If empowered, the ICAI proposes action against firms in those cases in which there are continuous and repetitive acts of negligience, jeopardizing public interest or there is proven collusion in perpetration of a fraud, he said.
The ICAI, which is a statutory body established under the Chartered Accountants Act for regulation of the profession of CAs in India, is also contemplating measures for initiating changes in the disciplinary mechanism, including taking up public intererest cases on priority, he said.
In the current year, with a view to conclude ICAI disciplinary proceedings in the Satyam matter at its earliest (subject to parties approaching courts) a disciplinary committee has been set up exclusively for the same which would endeavour to complete the hearings and put it on a fast track mode against erring individual auditors, he said.
Source: The Economic Times, March 20, 2011
>ICAI inks MoU to train accountants in UAE
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Institute of Chartered Accountants of India (ICAI) has signed an MoU with an Abu Dhabi-based research institute to train mid-rank accountants in the UAE. ICAI and Centre of Excellence, Research and Training (CERT), the commercial arm of the Higher Colleges of Technology (HCT), had signed the MoU to start a one-year ‘Accounting Technician’ diploma course mainly to cater to Emirati students.
ICAI will develop the course curriculum for the diploma, the first batch of which is expected to commence in July. The course will be tailor-made to suit the local laws and regulations. ICAI’s Dubai chapter, with 15,000 members, is its largest overseas chapter.
In Dubai, ICAI is also conducting International Financial Reporting Standards (IFRS) certification course for its members at its Knowledge Village training office. The institute has launched a nationwide campaign to spread awareness on the convergence of Indian accounting standards with IFRS. As a preliminary step, IFRS certificate and IFRS e-learning system had already been started and so far over 2000 students have cleared the course.
Source: The Economic Times, January 28, 2011
Private institutes to make accounts public
Private higher educational institutions will have to disclose their income and expenditure in a standard format and make them public in line with corporate-style accounting and auditing norms being readied by the Ministry of Human Resource Development (MHRD) and the Institute of Chartered Accountants of India (ICAI).
The guidelines are aimed at promoting openness and accountability in educational institutions, officials say. “The effort is to have transparency in the income and expenditure of higher educational institutes. Things like from which heads they are earning and under which head they are spending”, said a senior ministry official who did not want to be named. “Parents, students and society should know clearly about all these things”, the official added.
Though all educational institutions need to have their accounts audited, there is scope for manipulation of numbers because of the absence of a standard format, officials say. The numbers are also not required to be made public. The ministry official said the new guidelines would make it mandatory for private sector institutions to make their accounts public. “Like private sector publicly listed companies, they have to put their statements in the public domain”, the official said.
Ministry officials say there are concerns that many private institutions engage in malpractices to fleece students. “They may declare the course fee openly, yet several other expenditures like hostel, library (fees) become hidden ways to charge more”, said a second ministry official. “As higher education in private sector flourishes, hidden charges becomes a headache for millions of students”.
Prashant Bhalla, Vice-President of the private sector Manav Rachna International University in Faridabad, Haryana, said a broad accounting parameter could be ideal. “We can put the accounts in public through newspapers, but we (the private sector) should not be painted as a group only indulging in wrong practices”.
All state-funded higher educational institutes send their accounts to the government and are audited by the Comptroller and Auditor General of India (CAG) before being tabled in Parliament. Non-government educational institutes will have the liberty to name their own auditor. “Since they don’t get grants, their accounts will not go to Parliament”, added the second official.
According to official statistics, India has 504 universities, 22000 colleges and several thousand technical education institutions. Of the total number of higher educational institutes, at least 60% are controlled by the private sector. At least 13 million students are pursuing higher education across India.
The move to enforce a uniform accounting system for private sector institutions is positive, said Shobha Mishra, Head of the education wing at industry lobby Federation of Indian Chambers of Commerce and Industry (FICCI). “With increasing private participation in the higher education sector, attempts to bring transparency is not a bad idea”, Mishra said. “I believe there should not be any distinction between public and private sector in education on this subject”.
To boost education, the government is increasing its budgetary allocation. In the 2010-11 Budget, India earmarked Rs. 42036 crore (Rs. 420.36 billion) for education, an increase of around 15% from the previous fiscal. Higher education was allocated Rs. 11000 crore (Rs. 110 billion), around 7% more than in 2009-10.
The HRD officials also said the 14 proposed innovation universities, which will have private sector participation and enjoy greater autonomy, will also need to adopt the new accounting standards and make public their income and expenditure through newspaper advertisements and website postings.
The chartered accountants’ forum has agreed to prepare the common accounting format on a no-profit, no-loss basis. Amarjit Chopra, President of ICAI, confirmed that the institute was working on auditing standards for higher educational institutions. “By the end of October, the institute will come up with such standards. A committee is being formed for it within the institute”, Chopra said.
Source: Mint, September 8, 2010
Private institutes to make accounts public
Private higher educational institutions will have to disclose their income and expenditure in a standard format and make them public in line with corporate-style accounting and auditing norms being readied by the Ministry of Human Resource Development (MHRD) and the Institute of Chartered Accountants of India (ICAI).
Though all educational institutions need to have their accounts audited, there is scope for manipulation of numbers because of the absence of a standard format, officials say. The numbers are also not required to be made public. The ministry official said the new guidelines would make it mandatory for private sector institutions to make their accounts public. “Like private sector publicly listed companies, they have to put their statements in the public domain”, the official said.
Ministry officials say there are concerns that many private institutions engage in malpractices to fleece students. “They may declare the course fee openly, yet several other expenditures like hostel, library (fees) become hidden ways to charge more”, said a second ministry official. “As higher education in private sector flourishes, hidden charges becomes a headache for millions of students”.
Prashant Bhalla, Vice-President of the private sector Manav Rachna International University in Faridabad, Haryana, said a broad accounting parameter could be ideal. “We can put the accounts in public through newspapers, but we (the private sector) should not be painted as a group only indulging in wrong practices”.
According to official statistics, India has 504 universities, 22000 colleges and several thousand technical education institutions. Of the total number of higher educational institutes, at least 60% are controlled by the private sector. At least 13 million students are pursuing higher education across India.
The move to enforce a uniform accounting system for private sector institutions is positive, said Shobha Mishra, Head of the education wing at industry lobby Federation of Indian Chambers of Commerce and Industry (FICCI). “With increasing private participation in the higher education sector, attempts to bring transparency is not a bad idea”, Mishra said. “I believe there should not be any distinction between public and private sector in education on this subject”.
To boost education, the government is increasing its budgetary allocation. In the 2010-11 Budget, India earmarked Rs. 42036 crore (Rs. 420.36 billion) for education, an increase of around 15% from the previous fiscal. Higher education was allocated Rs. 11000 crore (Rs. 110 billion), around 7% more than in 2009-10.
The HRD officials also said the 14 proposed innovation universities, which will have private sector participation and enjoy greater autonomy, will also need to adopt the new accounting standards and make public their income and expenditure through newspaper advertisements and website postings.
The chartered accountants’ forum has agreed to prepare the common accounting format on a no-profit, no-loss basis. Amarjit Chopra, President of ICAI, confirmed that the institute was working on auditing standards for higher educational institutions. “By the end of October, the institute will come up with such standards. A committee is being formed for it within the institute”, Chopra said.
Source: Mint, September 8, 2010
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