1. Disciplinary case :
In the case of ICAI vs. Shri A. L. Ghael (C.A. Journal — June, 2009, P. 2054-55) CIT Gujarat had filed a complaint against the member. In this complaint it was alleged that during the search carried out u/s.132 of the Income-tax Act, at the premises of the member, the Department found as under :
(i) 15 bogus certificates purported to have been issued by a bank to the effect that the bank was maintaining a non-resident external savings bank account. These were bogus bank certificates of gifts from NRE account.
(ii) 13 bank acknowledgements of Income-tax returns affixed with the seal of ITO and receipts under the seal of the Department.
The disciplinary committee, after examining the evidence brought on record, held that the member acted contrary to the conduct befitting a Chartered Accountant and committed ‘other misconduct’ for which he was liable u/s.22 read with S. 21 of C.A. Act. The Council of ICAI accepted the report of the disciplinary committee and recommended to the High Court that the name of the member be removed from the Register of Members for a period of 6 months.
The Gujarat High Court has taken a serious view of the conduct of the member. It has observed that so far as bogus certificates of the bank with regard to NRE account were concerned, it was clear that even after knowing the fact that the certificates were bogus, the member did not give copies to the Bank Manager for further investigation. This indicated the guilty mind behind the conduct of the member. As regards the blank acknowledgements and receipts under the seal of Income-tax Department, it was observed that the intention of the member was bad and illegal. Such conduct would not only result into loss of revenue but would also be a fraud on the public. On overall consideration of the matter, the court has confirmed the finding of the council of ICAI and held that the name of the member be removed from the Register of Members for a period of six months.
2. Auditing Standards :
(Note : Page Nos. stated below are from C.A. Journal for June, 2009)
The following Exposure Drafts are issued by ICAI. Members can submit their comments by 31-7-2009.
(i) Standard on Review Engagements (SRE) — 2400 (Revised) — ‘Engagements to Review Financial Statements’. (Pages 2154-2161)
(ii) Standard on Auditing (SA) — 700 (Revised) — ‘Forming an Opinion and Reporting on Financial Statements’. (Pages 2162-2176)
(iii) Standard on Auditing (SA) — 705 — ‘Modification to the Opinion in the Independent Auditors’ Report’. (Pages 2177-2188)
(iv) Standard on Auditing (SA) — 706 — ‘Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditors’ Report’. (Pages 2189-2193)
3. EAC opinion :
The Expert Advisory Committee of ICAI (EAC) has given an opinion for accounting for maintenance spares supplied free of cost along with the main equipment in the case of a public sector undertaking. One of the usual terms of the sale of the equipment by the company is that the price of the equipment includes certain specified quantity of maintenance spares supplied free of cost. In other words, the company agrees to supply certain spares free of cost i.e., without charging anything in excess of the agreed price of the equipment. However, while recording such sales, the company credits the sales account with the gross value of the equipment plus value of spares to be supplied free of cost and debits the account of the customer. Thereafter, the company debits the sales account with the value of the spares supplied free of cost and gives credit to the account of the customer. The question for consideration was whether the above accounting entry was in compliance with Accounting Standard (AS-9) dealing with ‘Revenue Recognition’.
The Committee has given the opinion that the accounting for sale of equipment duly reducing the value of free supply of spares would be in line with AS-9 provided significant risks and rewards of the ownership in respect of free spares are transferred at the time of the delivery of spares to the buyer. However, according to EAC, separate entries should be passed for (a) booking recognition of revenue from sale of equipment net of the amount related to revenue from spares when the risk and rewards of ownership of the equipment are transferred and (b) booking recognition of revenue from spares when the risks and rewards of ownership of spares are transferred. (Refer pages 2059-2061 of C.A. Journal for June, 2009)
4. Enhancing Audit Quality :
Financial Reporting Review Board (FRRB) reviews the General Purpose Financial Statements of certain enterprises and auditors’ reports thereon. Observations on major non-compliances in the following matters noted by FRRB are stated on page 2130 of C.A. Journal for June, 2009 :
(i) Disclosure of Accounting Policies (AS-1)
(ii) Valuation of Inventories (AS-2)
(iii) Revenue Recognition (AS-9)
(iv) Accounting for Investments (AS-13)
(v) Leases (AS-19).
5. Women Steering Group :
The World celebrated International Women’s Day on 8th March 2009. ICAI has constituted a Women Steering Group (WSG). The Mission statement of WSG states as under :
“The Women Steering Group of the Institute of Chartered Accountant of India (WSG of the ICAI) is a wing of ICAI, which is dedicated to serving women Chartered Accountants and female stu-dents aspiring to be the members of the ICAL The WSG will provide a supportive environment and valuable resources for female members and students to achieve their personal and professional goals. through various opportunities including leadership, networking and education.”
To accomplish this mission, WSG offers in-depth support in four important areas:
1. Increase Professional and Public Awareness about the Indian Women Chartered Accoun-tants.
2. Facilitate a national network of individuals and organisations to encourage networking and mentoring of women members.
3. Provide opportunities for professional growth.
4. Advocate professional parity.
It is stated that out of about 1,50,000 CAs. in our country, about 15% (22,500) are women. Out of about 4,50,000 CA. students, about 40% (1,80,000) are girl students. (Details about activities of WSG are published on pages 2132-2133 of CA. Journal for June, 2009).
6. ICAI News:
(Note: Page Nos. stated below are from CA. Jour-nal for June, 2009)
i) Transfer of Articles:
Announcement of the Council of ICAI dated 27-3-2009 about transfer of articles of Articled Assistants has been published in BCA Journal of June, 2009. This has now been published in CA. Journal for June, 2009 at page 2134.
(ii) Requirement of CPE credit:
Now members can view / check their CPE credit hours (Calendar yearwise) on the site www.cpeicai.org.maintained internally by the EDP Section, at the member login (not POU Login) for which they need to insert six (6) digit membership number [add zero (0), if required] and password would be that (6)-digit membership number pre-fixed with the letters (cpe). (Refer details on page 2136)
iii) Working hours of Articled Assistants
On page 240 of BCA Journal for May, 2009, summary of the announcement relating to Working Hours of Articled Assistants is published. Details are now available on pages 2137-38 of CA. Journal for June, 2009.
iv) ERP Courses:
ICAI is offering ERP Courses for members and students (Final / Articles completed) of the Institute to enable them to offer value-added services in the field of ERP consulting as functional consultants in the finance domain. Details are on page 2146.
v) Your Inspiring Success Stories:
On page 2142 there is an inspiring announcement by the Editorial Board on CA. Journal which reads as under:
“As part of multi-pronged activities to mark the ICAI Diamond Jubilee year, the Editorial Board has decided to publish extra-ordinary success sto-ries of Chartered Accountants in various walks of professional life in the Institute’s Journal, ‘The Chartered Accountant’. Do you think there is something remarkable about your achievements in professional life that the others should know? If yes, write down that glorious story and send it to us. You may ask yourself: What did I do to create my professional success? What inspired me in this mission? How did I not deviate despite the presence of blockages and distractions in my way? How did I overcome my weaknesses and work on my strength? How my achievements helped the organisation/other professionals/society at large? and Finally, how my CA qualification laid the foundation of my success?
The object of the write-up should be to motivate all our students, members, other readers as well as those who wish to join chartered accountant fraternity.”
vi) Professional Development Portal:
Professional Development Committee has enhanced and upgraded P.O. Portal with a view to provide timely and necessary information on practice development and professional opportunities to members. (Refer page 2139 for details)
