ICAI And Its Members

    The disciplinary committee gave a report that the member was guilty of ‘Other Misconduct’. The council has accepted this finding and recommended to the High Court that the name of the member be removed from the register of members for a period of one month.

    The Delhi High Court observed that the act of the member in issuing such a vague certificate with the intention of persuading the Bank to grant loan to his client was ‘Other Misconduct’. The High Court also observed that the lack of responsibility displayed by the member clearly shows that he had acted in a manner unbecoming of a Chartered Accountant and, therefore, the Council rightly recommended removal of his name form the register of members for a period of one month. As regards the punishment recommended by the Council, the High Court observed that there has to be some degree of integrity and probity which is expected of a Chartered Accountant who is regularly concerned with financial transactions and on the basis of whose recommendations and certificates financial institutions such as banks disburse loans or enter into other financial transactions. Under the circumstances, the Court was of the view that the punishment awarded to the member was not unduly harsh.

2. Some ethical issues :

    The Ethical Standards Board of ICAI has issued the following clarifications on some ethical issues in the form of questions and answers for the benefit of members.

        (i) Q. Can a chartered accountant in practice agree to select and recruit personnel, conduct training programmes and work studies for and on behalf of client ?

        A. Yes, the ‘Management Consultancy and other Services’ as specified by the Council includes both, personnel recruitment and conduct of training programmes and work studies. As such, the same are permitted for a chartered accountant in practice.

        (ii) Q. Whether a member in practice can act as insurance agent and arrange business for the Insurance Companies ?

        A. No, a member in practice is permitted to render Insurance Financial Advisory Services only. It is not permissible for member to do any kind of marketing and business procurement for any insurance company. Their services are limited to professional services in the form of advisory and consultancy services.

        (iii) Q. Whether Code of Ethics is applicable outside India ?

        A. The Code of Ethics of the Institute is applicable to all the members, even outside India.

        (iv) Q. Can a member in practice indicate in a book or an article, authored/contributed/published by him, his association with any firm of Chartered Accountants ?

        A. No, as per C.A. Act, 1949, a member is not permitted to indicate in a book or an article, authored/contributed/published by him, his association with any firm of Chartered Accountants.

        (v) Q. Can a Chartered Accountant in practice seek professional work from his professional colleagues ?

        A. Yes, as per C.A. Act, 1949 a member is permitted to apply or request for, or to invite, or to secure professional work from another Chartered Accountant practice.

    (Refer Page 572 C.A. Journal October, 2009)

3. Classification of Compulsorily Convertible Debentures in the Balance Sheet — EAC Opinion :

    A private limited company, engaged in the business of construction and development of real estate, issued ‘Compulsorily Convertible Debentures’ to a Bank. These debentures were compulsorily convertible into equity after 39 months. Till the date of conversion interest at 13.65% p.a. was payable. The debentures were unsecured.

    The company held the view that the amount raised by compulsorily convertible debentures has to be treated as ‘equity’ and should form part of Shareholders Funds. The auditors took the view that this amount should be considered as ‘Unsecured Loans’. When the matter was referred to the Expert Advisory Committee (EAC) of ICAI, it has given the following opinion.

    From the facts of the case it is evident that the debentures issued by the company carry an interest @ 13.65% on quarterly basis till the date of conversion. Accordingly, the Committee is of the view that till the date of conversion the debentures are in the nature of loans. The company is a private limited company and, therefore, the provisions of Schedule VI to the Companies Act, 1956 would apply with respect to the form of balance sheet of the company. Schedule VI to the Companies Act, 1956 requires debentures to be classified under the head ‘secured loans’ and the disclosure is required to be made with respect to the terms of redemption or conversion (if any) of debentures issued to be stated together with earliest date of redemption or conversion. The debentures issued by the company are unsecured. Accordingly, the committee is of the view that the same should be classified under the head ‘unsecured loans’ in the balance sheet of the company.

    (Refer Page 590 of C.A. Journal — October, 2009)

4. Campus Placement Programme :

    ICAI organised Campus Placement Programme for newly qualified Chartered Accountants at 16 centres during the month of September, 2009. 3235 candidates appeared before 133 Interview Teams representing 71 organisations. 902 jobs were offered. Highest salary offered was Rs.10.61 lacs p.a. Minimum salary offered was Rs.3 lacs p.a. Average salary offered to the candidates works out to Rs.5.15 lacs p.a. (Refer page 574 of C.A. Journal for October, 2009).

5. Present status of ICAI Branch buildings:

•  Land has been acquired for the building of the branches of Pimpri – Chinchwad (15,000 sq.ft.), Kota (1,277.75 sq.ft.), Hubli (38,745sq.ft.), Sangli (4,888.16 sq.ft.), Ahmednagar (4,990 sq.ft.), [algaon (5,200 sq.ft.), Bhilwara (27,000 sq.ft.), Mathura (6,988.59 sq.ft.), Faridabad (28,890 sq.ft.) Hisar (20,498 sq.ft.), Kakinada, Vijayawada, Sangrur, Bilaspur, Bikaner and Ajmer, while the acquisition is still in process for Rohtak.

•  The construction of ICAI Bhavan branch building has been completed at Cuttak and Mangalore (renovated). A building measuring 8,200 sq.ft. has been acquired for the Pune branch.

• Construction for Auditorium in Ludhiana and Indore has been completed and same have been inaugurated and become functional. Besides, a seminar hall in Guntar has also become operational.

•  Building construction has been commenced for the branches and the proposal for construction of building is under consideration for the branches of Mathura, Faridabad, and Bellary.

•  The proposal of acquisition of land is already approved for the branches of Kottyam, Solapur, Kolhapur, Jammu & Kashmir and Nellore. The branches of Varanasi, Bareilly and Allahabad have already started the process of acquisition of land.

•  The Building Committees for the branches, which do not have their own land or building, have been advised to acquire land and building respectively.

•  The guidelines have also been revised. It has been decided to standardwise the front elevation of the branch buildings.

•  A new branch at Vapi (WIRC) has been set up taking the total number of ICAI branches to 119.

(Refer Pages 558 of c.A. Journal for October, 2009)

6. Peesent studies of IFRS – Convergence:

•  To ease the convergence with IFRS, the Ministry of Corporate Affairs has constituted a core group under the Chairmanship of Secretary, Ministry of Corporate Affairs, while three members from the ICAI have been nominated for the core group.

•     The ICAI, as part of its efforts to facilitate smooth implementation of IFRS from 2011, has launched a website on IFRS and prepared study materials for each individual IFRS.

•     A CD on e-learning on IFRS has also been issued.

•     In-house Executive Development Programmes were organised for the corporates for imparting training on IFRS. Nearly 25 such programmes have so far been conducted since February, 2009.

•     A study group has been formed to study the tax implications of the implementation of IFRS in India.

•     Report on issues relating to SEBI Rules and Regulations (other than Mutual Funds) arising out of convergence has been finalised.

•     Report on issues relating to Companies Act aris-ing out of convergence with IFRS has been finalised.

(Refer Page 562 of CA. Journal for October, 2009)

7. Accounting Standards for Local Bodies (ASLB) Exposure Drafts:

Following Exposure Drafts are published for comments by members:

    i) Property,  Plant  and  Equipment  (ASLB) 5

    ii) Events  after Reporting  Dates  (ASLB) 6

(Refer Pages 683 and 693 of CA. Journal for October, 2009)

8. ICAI News:

(Note Page Nos. given below are from CA. Journal for October, 2009)

i) Election Code of Conduct:

As reported on Page 98 of B.CA. Journal for October, 2009, elections to Central and Regional councils are to be heldon 4th and 5-12-2009. ICAI has published the Election Code and Conduct on Pages 673-677. Members are requested to take a note of this Code of Conduct and ensure that they vote on the date/s fixed for these elections. Names of members contesting these elections will be intimated to each member by ICAI in the month of November, 2009.

ii) New Publications  of lCAl  :

a) Compendium of Statements on Auditing (As on 1-7-2009)
 
b) Compendium of Guidance Notes on Auditing Pronouncements (as on 1-7-2009) (refer Page 664)

iii) Outsourcing  by Registrar of Companies (ROC) :

ROC has decided to outsource the work of technial scrutiny of Financial Statements for 2009-10 filed by companies with ROC to our members (Page 546).

iv) Special Audit  of Excise Records:

S. 14A and S. 14AA of the Central Excise Act, 1944 have been amended in the last Budget. Our members as well as Cost Accountants are now eligible to conduct Special Audit u/s.l4A dealing with computation of ‘Value of Goods’ and u/s.14AA dealing with ‘verification of proper utilisation of credit’ under the Central Excise Act and Rules. (Page 546)

v) Accounting  Technicians:

Students who have passed Intermediate/PE-II/PCE and completed the prescribed period of articleship can opt to apply for issue of Accounting Technician Certificate without any further conditions. No fee is payable for this purpose. They will continue to be eligible to appear in the Final Examination. (Page 549)

vi) Names of candidates for lCAl  Elections:

The following candidates are contesting the elections to be held on 4th and 5th December, 2009, for Central/Regional Councils from Western Region. Members are requested to note the names and treat it as their duty to cast their votes. Each member has to select a deserving candidate so that we have a strong council at the Centre and at the Regional Level which can enhance the prestige of our profession. We have to elect 11 candidates for central council and 22 candidates for WIRC The voting is by Single Transferable vote system.

a) Candidates for Central Council from Western Region

CA (1) Rajkumar Adukia,    (2) Brijmohan  Agarwal, Atul Bheda, (4) Praful Chhajed, (5) Ms. Bhavna Doshi, (6) Tarun Ghia, (7) Jayant Gokhale, (8) Pankaj [ain, (9) Nihar Jambusaria, (10) S. K. Maheshwari and I l I) Nilesh Vikamsey from Mumbai, (12) Arun Aanandagiri, (13) K. L. Bansal, (14) C V. Deshpande and (15) S. B. Zaware from Pune, (16) Durgesh Buch, Dhinal A. Shah, (18) Dilip Shah, and (19) Raju C Shah, from Ahmedabad, (20) M. K. Madkholkar (Thane), (21) Mahesh Sarda (Rajkot), (22) B. K. Rathi and (23) Hardik P. Shah from Surat, (24) Ashok R. Thakkar (Vadodara) and (25) [aydeep N. Shah (Nagpur).

b) Candidates for WIRC :

CA (1) S. H. Agarwal, (2) V. K. Agarwal, (3) A. S. Bhandari, (4) V. V. Dodhia, (5) N. C. Hegde, (6) A. C. Jain, (7) S. Y. Joshi, (8) D. K. Kabra, (9) J. V. Kala, S. K. Kedia, (11) D. K. Khandelwal, (12) M. P. Khare, (13) S. D. Lalan, (14) N. P. Majilhia, (15) N. L. Mishra, (16) S. K. Ratodia, (17) Ramesh Shetty, Shardul D. Shah, (19) Ms. Shruti J. Shah, (20) R. S. Sharma, (21) A. P. Shenoy and (22) K. K. Vaidya from Mumbai, (23) A. J. Patel, (24) A. K. Patel, (25) N. M. Pathak, (26) P. R. Raval, and (27) Y. A. Vyas from Ahmedabad, (28) R. N. Advani, (29) K. S. Mantary and (30) Dayaram Paliwal from Thane, (31) D. M. Apte, (32) D. B. Gandhi, (33) M. Y. Limaye and (34) C. D. Upasani from Pune, (35) S. G. Brahme (Dombivli), (36) J. A. Chaaira and (37) M. S. Modi from Surat, (38) P. D. Dhamankar (Vasai), (39) M. M. [oshi, and (40) J. M. Shah from Nagpur, (41) C. V. Pawar (Nashik), (42) R. N. Shah (Vadodara), (43) U. R. Sharma (Aurangabad) and Gautam  Verlekar  (Goa).