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Category: Ethics And U

Audit? Sorry Boss!

Shrikrishna : Arjun, you seem to be relaxed today.

Arjun : Yes. Bhagwan. I have taken the biggest decision in my profession today.

Shrikrishna : Before I forget, I had some work with you. There is a request.

Arjun : Lord, you have to command and not request me. I am your disciple, devotee, younger cousin, friend and even your obedient servant. Actually, you are my Lord! I can’t do anything in my life without your blessings. Please tell me.

Shrikrishna : Actually, I avoided telling it earlier since you were stressed in your deadlines. Now Diwali is over, extended deadlines are over.  Now, only normal work may be there.

Arjun : Bhagwan, howsoever busy I may be, but your work is always a priority. Please tell me. I will only be too pleased.

Shrikrishna : You know, my family has a big dairy business.

Arjun : Yes. You were brought up with milk-maids.

Shrikrishna : Last week, our auditor communicated his inability to continue. I want you to audit my brother’s company’s accounts.

Arjun : Oh! Oh!! Oh!!! Bhagwan! (collapses in nervousness)

Shrikrishna : Arey Arjun, what happened? You were in a good mood just now, since you have taken a big decision.

Arjun : Bhagwan, you made this request before I could tell my historic decision to you.

Shrikrishna : What is that, Paarth?

Arjun : I have taken a pledge like Bheeshma. I won’t sign any audits henceforth!

Shrikrishna : Strange! But I will be paying your fees.

Arjun : Bhagwan, will I ever charge fees to you or your brother? But I am sorry. Please don’t ask me to do the audit. In fact, my big  decision is that I conveyed to all my audit clients that I am unable to continue as an auditor. I tendered my resignations to many of them.

Shrikrishna : Surprising! Before I asked you, I checked up with many other local CAs. But everybody refused. Our accounts are clean.

Arjun : You are one hundred per cent right. But now we are all afraid of ever-increasing regulations. We are not equipped to do large company’s audits.

Shrikrishna : Why? All these years, you were signing their audits.

Arjun : Times have changed. You can tell me again to fight with enemies even more dreadful than the Kauravas; you can tell me to go to exile again; or give any other task. But audit? No way.

Shrikrishna : Why suddenly this wave of quitting audits?

Arjun : Bhagwan, now even Brahamadev will not dare to sign big company’s audits.

Shrikrishna : But why?

Arjun : Lord, you know that mine is a mid-size firm. We don’t get good staff or articles. We are so stressed that we cannot spare time to  upgrade ourselves. There is virtually a flood of regulations. There is always a fear of disciplinary action against us.

Shrikrishna : But who has the time to check your work?

Arjun : Lord, you are mistaken. Now, there is QRB, FRRB, – where knowledgeable professionals examine our work. They raise dozens of points. Many of them are too technical. We don’t have the necessary expertise to implement things like IndAS IFRS, SQC, or even the SAs.

Shrikrishna : Hmmm!

Arjun : Moreover, often nowadays there are irregularities in accounts. Management themselves are involved in fraud. The government expects us to detect fraud, although an audit is not an investigation. They want us to be bloodhounds and not merely watchdogs. And that new authority, NFRA! We are very much afraid.

Shrikrishna : Then how the big firms can do the audits?

Arjun : No, Lord. Even they are avoiding. They have all the resources and workforce. Still, they find it risky. So, they admit junior  members as partners to sign the audits. This is the reality of life!

Shrikrishna : I understand. If you are not geared up to take these challenges better not accept the large audits. Rather, it would be unethical to venture into such tasks without a trained workforce, without full knowledge of regulations.

Arjun : Bhagwan, today, in all frauds and scandals, auditors are also accused. Many CAs today are on bail. I cannot afford to face such things.

Shrikrishna : The problem seems to be really grave. It would help if you made  proper representation to the government.

Arjun : That is the biggest problem. We are not at all united. We do not have strong and competent leaders, we don’t vote properly, and wisely. Instead of looking at merits, we vote by community  criterion only! The government also has a closed mind.

Shrikrishna : Very sad. I guess that is the reason why our existing auditor refused to be reappointed! But then, the government will allow non-CAs to do the audits!

Arjun : Ha! Ha!! Ha!!! Having put all our life into it, we can’t do it. How can others cope with it? I suggest that you  as a business community should take up the matter with the government. Unfortunately, in audit, the management does not cooperate. They are least bothered about the auditor’s difficulties. More burdens but no reward!

Now, enough is enough.

Bhagwan, now you only have to do something to save our profession.

Shrikrishna : Tathaastu.

                    Om Shanti.

This dialogue is based on the current scenario of CAs avoiding signing large audits. Actually, it would be unethical to accept such audits if you cannot do justice to them.

Contingent Liabilities and MRL – Management Representation Letter

Shrikrishna : Arjun, in past years, during these months of August and September, you used to look worried. But now, you are not only worried but also afraid! What is the matter?

Arjun : Till now, our soldiers used to get killed in terrorists’ attacks. That is why I was worried. But nowadays our CAs are getting killed by Regulators.

Shrikrishna : What do you mean.

Arjun : Nowadays, there is always some news about suspension of membership of so many CAs; and fines of crores of rupees being imposed by the Regulator. That is making me afraid.

Shrikrishna : I understand.

Arjun : Bhagwan, you always say everything is the result of your karma, you have propounded the theory of karma.

Shrikrishna : True. Doing karma is in your hands but giving fruits is my prerogative.

Arjun : Then Lord, tell me, are the karmas of CAs really so bad? Are they sinners?

Shrikrishna : Arjun, these punishments are partly for doing wrong karma; but mainly for not doing the karma expected from you!

Arjun : Meaning….?

Shrikrishna : See, your Institute always keeps on issuing detailed guidance on so many things as to how to perform an audit. But most of you take it lightly. You just don’t care to follow them.

Arjun : Lord, these standards are so boring and complicated that it is a big burden on us. And the Managements are least interested in following them. They don’t see any value addition in them. And they firmly believe that we do it for our safety and hence, it warrants
no remuneration.

Shrikrishna : But many simple standards also you don’t follow; like giving engagement letter, third-party evidence obtaining proper Management Representation Letter (MRL) and examining secretarial records, etc.

Arjun : But Lord, there is no co-operation from clients. I am talking of small- and medium-sized enterprises /companies. Big corporates may be having qualified staff.

Shrikrishna : Arjun, this is an endless discussion. Let me ask you, do you ever enquire about contingent liabilities?

Arjun : How will we know? We go only by the books of account. If these liabilities are not appearing in books, Management should tell us.

Shrikrishna : That’s your mistake. It is your duty to ask. You people have a habit of carrying forward everything ‘as per last year’. You are not able to visualise anything beyond the books.

Arjun : Tell me, how to go about it.

Shrikrishna : Your working papers should specifically contain a note on contingent liabilities. You should visualise and guess what disputes or litigations are going on. Tax litigations are very common. Then, there could be show cause notices under labour laws, other economic laws, penal consequences of defaults which are noticed.

Arjun : Yes, Lord. We hardly pay any attention to this aspect of the balance sheet. And we do not have any confirmation from the Management either.

Shrikrishna : That’s what I am saying. You take MRL very lightly. It should be prepared very carefully. I know, you only prepare it on behalf of the Management. That’s a good opportunity for you to put many points to ensure your safety. Don’t prepare it mechanically. MRL should contain the details of all pending disputes and estimated liabilities on those account along with various other aspects of the Client’s business that may have impact on his business.

Arjun : I agree, Lord.

Shrikrishna : Your Institute has provided specific guidance on MRL. Please read it and protect yourself.

Arjun : Bhagwan, from this year, I will pay special attention to these points. Thank you for opening my eyes.

This dialogue is based on the general precautions to be taken in audit in respect of contingent liabilities and MRL.

Black Days

Arjun : (Chanting) Krishna Krishna Hare Krishna Krishna! Sabhi dishame Krishna Krishna

Shrikrishna : (enters) Arey Arjun, why are you chanting my name?

Arjun : Oh Krishna! Lord, I was not chanting your name. Krishna means darkness. For my profession, I see darkness everywhere. No one is there to protect us.

Shrikrishna : Why? You are capable of protecting yourselves. You are so highly qualified. Nothing moves without your signature.

Arjun : Those signatures only have brought this darkness. We do not see any ray of hope.

Shrikrishna : How can the signatures bring darkness?

Arjun : That I will tell you later. By the way, tell me, ‘Krishna’ means black or dark. Why is your name Krishna?

Shrikrishna : Arjun. You are right. But in Sanskrit language, every word has multiple meanings. Krishna means who has a lot of attraction in his personality. ‘Aakarshan’ karnewala krishna. He who pulls the attention of all, who is attractive.

Arjun : Oh Lord, our profession also was very attractive once upon a time. All of us got attracted and fell in this deep well. We cannot come out. I see no light around. Everything looks gloomy.

Shrikrishna : Why are you nervous?

Arjun : We have become like ‘Abhimanyu’, my brave son who was killed by Kauravas in an unfair manner. He knew how to enter the ‘chakravyuha’ but did not know how to come out.

Shrikrishna : But why do you want to come out? People outside envy you.

Arjun : Because people do not know about our real plight. The grass is always greener on the other side…

Shrikrishna : I do not understand why you have become so helpless.

Arjun : Who is there with us? We don’t get good staff. They are keen to grab some opportunity outside right from the day they join! We don’t get article trainees. There is a mountain of regulations. Unsurmountable!

Shrikrishna : Arjun, if you come together, you can lift the mountain. Do you remember? All Gopas and Gopikas had lifted Goverdhan mountain in Mahabharata.

Arjun : Natural mountains can be easily lifted. But this man-made mountain of laws and regulations…

Shrikrishna : But what you do is so valuable…

Arjun : (laughs sarcastically). Value? No one sees any value in it. The clients for whom we slog and invite risks for ourselves ask us ‘what value addition you have made.

Shrikrishna : But basically, it is clients’ responsibility to do it properly.

Arjun : Ha! Ha!! Ha!!! Lord, it is only in theory. Everybody feels it is our responsibility. So, no payment for carrying this burden.

Shrikrishna : Then why don’t you refuse to sign?

Arjun : If I say, “No,” there are hundreds of other CAs who will jump to sign. We are never together. We have no unity amongst us. So, the question of lifting the mountain does not arise. And if I refuse to sign, we will die of starvation! We have no choice, Lord.

Shrikrishna : Regulations are bound to be there. They were there also in the past.
Arjun : Agreed. But in the past, the regulators were more sensible and decent. They understood the spirit behind the law and our practical difficulties. Now, they are bent on killing us.

Shrikrishna : Who are they all?

Arjun : All investigating and regulatory authorities keep on complaining against us. Any fraud occurs, we are the first to blame as if we only commit frauds or we mastermind them.

Shrikrishna : Why are they having such a negative opinion against you?

Arjun : In the past, I admit that a few CAs might have been involved in scams or at least connived at it. They did the audit very casually and signed it very carelessly. But all are not like that.

Shrikrishna : But your Institute does not protect you?

Arjun : These regulators complain against us to our Institute only. And we have to also face disciplinary action.

Shrikrishna : Really?

Arjun : Managements sponsor a fraud. They themselves have vested interests. Such frauds are difficult to detect and we have limited time. We have to meet deadlines. Limited manpower, limited authority. And the investigating authorities routinely make us co-accused! We are made to face SEBI, RBI, Stock Exchange authorities, EOW, SIFO, NFRA, CBI…

Shrikrishna : Oh! You mean there are criminal cases against you CAs?

Arjun : Then our first task is to obtain bail. Today many CAs are on bail. The criminal proceedings take years together; and until it is settled, there is no peace of mind. Even technical errors are made a hype of! They treat it as misconduct.

Shrikrishna : How do you plead your case before the courts and investigators?

Arjun : That is another burden of expenditure on us. Compiling the old data, hunting for it, then conveyance, travelling, lawyer’s fees…just unaffordable. And in the process, regular work suffers. So again a loss. And they rake up matters where we would have done the audit even 15 years ago! They expect us to produce evidence of those years!

Shrikrishna : But you can always deny or refuse.

Arjun : Many times, the investigating officials have no concept at all as to what an audit is and how is it distinct from investigation. They have wide powers, team of experts working for them and their own sweet time of even a couple of years to detect the fraud. And for us, only a couple of weeks’ time — with limited authority, pressures from clients, limited manpower, and to look after so many rules and regulations!

Shrikrishna : What is the remedy!

Arjun : Lord, you are Bhagwan, and you are asking me for remedy? Even you will have no solution to this problem. Already, many are quitting the profession, surrendering their COP, giving up audit work, avoiding signing the audits…and their next generations profession. Grossly underpaid; and overburdened with regulation!

Shrikrishna : Who else complains against you?

Arjun : Our clients, our partners, our staff, our articles, our spouse, close relatives and almost everyone. Even a stranger can complain. I am told there are even professional black mailers! Lord, nothing appears to be positive. Ghor Kaliyuga.

Shrikrishna : Make more use of technology to add efficiency in your functioning.

Arjun : Technology? That is another monster. Soon we will be rendered outdated due to the automation. That is why I was chanting Krishna Krishna. Everywhere, there is darkness.

Shrikrishna : I feel, only a strong base of ethics and unity amongst you all can save you in this scenario.

Arjun : Agreed. But under ethics, they charge us for negligence. How can a fraud and negligence, exist together? In fraud, something is done consciously. In negligence, there is absence of application of mind.

Shrikrishna : You have a point.

Arjun : Moreover, these authorities are not accountable to anyone. In the process, our ordinary professionals are being harassed.

Bhagawan, it is high time that you use your ‘Sudarshan Chakra’ to save us. Otherwise, we see only ‘black days’ around.

Shrikrishna : Do not worry Arjun. Bright days will come soon. Keep on fighting ethically. And ultimate success will be yours.

|| Om Shanti ||.

Note: This dialogue is based on the general scenario in the profession today, where regulators have become a little too active against CA professionals.

Legacy

Shrikrishna : Why are you looking worried, Arjun?

Arjun : Our life has become so depressing, that all CAs are really worried. They are not sure whether to continue the practice at all! And if yes, how to continue…………?

Shrikrishna : What do you mean?

Arjun : I told you many times, audit work is a nightmare. No one wants to do audits.

Shrikrishna : Why?

Arjun : Too much of regulation. Client feels all those regulatory requirements are meant for auditors only. They find no value addition from our services.

Shrikrishna : Then you should charge more fees! You are doing what actually they are expected to do.

Arjun : You are applying salt to our wounds! Even our normal fees they are not willing to pay! Payments of additional fee is out of question.

Shrikrishna : I am aware, Arjun. But you should show courage to get rid of such clients.

Arjun :Bhagwan, very easy to say so, but…

Shrikrishna : But what?

Arjun : Cannot afford. It is not a question merely of fees.

Shrikrishna : Then?

Arjun : Lord, frankly our own work is full of lapses. Client’s record is bad, they don’t have good assistants. We cannot do justice to all regulations. We are ourselves not upgraded!

Shrikrishna : Yes, even during your CPE hours you don’t pay much attention.

Arjun : Yes, it is difficult to concentrate. And we really cannot keep track of all requirements of audits.

Shrikrishna : But once you give up the work, how will it matter?

Arjun : That precisely is the problem. So far we have accommodated the client with all his limitations; and suddenly if we discontinue, he is annoyed. He rakes up disputes.

Shrikrishna : Oh! And then what does he do?

Arjun : He consults some other CA. We have no unity in our profession. We accommodate the clients but not our own professional brother. We try to take advantage of the discontent of other CA’s clients.

Shrikrishna : That’s very dangerous.

Arjun : Yes; and sometimes the client or other CA tries to blackmail us. They threaten us to expose our lapses of past years. We simply cannot do anything about it. We can’t change or rectify old errors!

Shrikrishna : So, you are the prisoner of your own legacy!

Arjun : Very true. We feel, some other CA will get an opportunity to examine old work.

Shrikrishna : But why don’t you rectify all old errors in one year and give a qualified report if lapses continue.

Arjun : It is easier said than done and requires courage to do so. Client says, all these years you have been quiet on our lapses, then why suddenly you have stopped ‘co-operating’.

Shrikrishna : Then have some kind of understanding with your successor and tactfully come out of the risk.

Arjun : The sword remains hanging on our head for at least 7 years. Recently, there was an interesting case.

Shrikrishna : What was that?

Arjun : There was a complaint of misconduct against a CA for lapses in audit. That complaint was filed by a regulator. The CA sought to take defence on the basis of ‘legacy’.

Shrikrishna : Meaning?

Arjun : He argued that this is being done for past so many years in the same manner. For instance, our stand and remark on fixed assets register!

Shrikrishna : True. One cannot take shelter under ‘legacy’. If there was something wrong in the past, the new auditor is expected to set right the things. He cannot perpetuate the errors of the past. Otherwise, both will be in a soup!

Arjun : But our approach is that of copy-paste. No one has time to consciously deviate from the past.

Shrikrishna : Best way is not to create a legacy of wrong things, regardless of no fees or less fees. Your work should be as perfect as possible, irrespective of what had happened in the past.

Arjun : That we are realising at this stage in our life. Initially, we took many things lightly, saying ‘chalta hai’! But now we may have to pay for it.

Shrikrishna : Better late than never. Remember, Arjun, it is never too late.

Arjun : Many CAs are running away from attest function. Somehow, they want to avoid signing of audits.

Shrikrishna : It is all the more worse that many senior CAs take junior partners to sign the audits!

Arjun : True. We need to wake up and mend our ways. Otherwise, the legacy will kill us!

Thank you Bhagwan.

II Om Shanti II.

Note: This dialogue is based on the proper approach towards our work right from the beginning. One cannot perpetuate the mistakes.

Internal Peer Review (Health Check-Up)

Shrikrishna : Arjun, as usual, you are looking weary. What is the matter? Actually, this is your peaceful time. No serious deadlines now.

Arjun : Bhagwan, I agree; the pressure is a little less. My worry is about my health.

Shrikrishna : Why, are you not well?

Arjun : No, that way, everything is all right. But I did my annual health check-up last week.

Shrikrishna : All reports normal?

Arjun : Nothing very serious. But there is some ‘sugar’ found. And BP is also not very normal. The doctor said there’s nothing to worry. But he advised to start medication before it gets serious.

Shrikrishna : So, how many tablets did he prescribed?

Arjun : Four tablets, twice a day! Actually, our profession is so stressful that many of us are sailing in the same boat. Everyone is facing some kind of health issues or the other. Knee pain; insomnia, arthritis, spine problem, and what not!

Shrikrishna : Occupational hazards! Really serious.

Arjun : I don’t see an end to this problem. Helpless! More and more regulatory burdens, low fees, high risks, and no staff. There is a constant struggle for survival.

Shrikrishna : Arjun, I understand your plight. But there is certainly some remedy that can mitigate this problem, if not eliminate it.

Arjun : What is that? Give up practice?

Shrikrishna : No Parth. That cannot be a solution. What I am saying is that just as you do your annual health check-up; why can’t you do the health check-up of your working systems?

Arjun : What do you mean?

Shrikrishna : See, Arjun, your institute already has the peer review system in place. I believe it is mandatory to get your firm peer-reviewed before getting certain large audit assignments.

Arjun : Yes, doing audits of large institutions without your own peer review is a misconduct. Many CAs have taken it lightly and are facing disciplinary action.

Shrikrishna : That’s what I am saying.

Arjun : But getting oneself peer-reviewed is a task in itself.

Shrikrishna : So, why don’t you voluntarily go in for internal peer review? Some knowledgeable friend of yours can come and check your working systems on a regular basis.

Arjun : How exactly?

Shrikrishna : Whether you have firm policies as per SQC 1 i.e., Standard on Quality Control! Whether you have proper documentation to justify the work done by you! Whether you can give scores to your own firm as per the AQMM (Audit Quality Maturity Model). By interpreting the scores, you can decide at which level your firm is (Level 1 to 4). Also, see other regulatory aspects — record keeping, working papers, staff records, statutory compliances, staff training, and other systems.

Arjun : I agree. This will give early signals and reduce vulnerability. It will avoid last-minute running around.

Shrikrishna : It will also bring discipline in working. What you lack is the will-power to do things right.

Arjun : Yes, we do take all this very lightly. We are not pro-active and start digging a well when the house is on fire!

Shrikrishna : That’s it. If your professional stress is reduced, your health may improve.

Arjun : But where do you find such a knowledgeable peer?

Shrikrishna : If you look around, you will definitely find them. Interact with others during your seminars or in study circles and discuss from this angle. It is worth considering and implementing.

Arjun : Great idea! I will surely share this with others.

Thank you, Bhagwan.

! Om Shanti !

Note: This dialogue is based on the need for regular introspection and ‘health check-up’ of the profession.

CPE and COE

Arjun : Hey Bhagwan, I am really tired.

Shrikrishna : That you always are! What is the reason today?

Arjun : Want to complete my CPE hours.

Shrikrishna : What is CPE?

Arjun : As per the Continuing Professional Education (CPE), every member must devote at least 30 hours, every years to studies to keep himself updated.

Shrikrishna : Very good. 10,000 years ago, we also had this system. My Guru Sandipani and all other Gurus used to give us send-off on completion of our education of 12 years. They used to give a few instructions for life, from Taittireeya Upanishad.

Arjun : What were those instructions?

Shrikrishna : ‘Satyam Vada’ – Speak the Truth. Dharmam Chara – Perform your duty religiously and Swadhyayat Ma Pramadah – Never commit default in continuous Studies. Never give up on studies!

Arjun : Oh! I heard somebody saying these are the foundations of our Code of Ethics. Your last point is nothing but our CPE!!

Shrikrishna : Now tell me, what is your difficulty?

Arjun : Somehow, I managed 20 hours out of the target of 30 hours.

Shrikrishna : You people are known as the ones who ‘manage’ everything. Even CPE hours you manage?

Arjun : Yes, Lord, we can’t help it. Who has time to go and attend those boring lectures? From my college days, I lost my habit of attending any lectures and sitting there.

Shrikrishna : In college, was attendance not compulsory?

Arjun : It was; but the muster was kept outside the classroom. We used to sign and be elsewhere! Sometimes, we friends used to sign for one another. Proxy is acceptable in law as well!

Shrikrishna : Oh! So, right from your college days, you had no connection with ethics!

Arjun : Ethics? Ah! Who cares?

Shrikrishna : Still, I didn’t understand your problem.

Arjun : Bhagwan, nowadays our branches and study circles hold many Seminars and lectures to enable the members to complete their CPE Hours. 31st December is the last date.

Shrikrishna : That means, as usual, you wake up not at the 11th hour but at the 11th month! I wonder when you will learn ‘pro-activeness’. First things first!

Arjun : Further trouble is that it is mandatory to complete at least 2 hours on Ethics and at least 2 hours for Standard on Audits. Conveners are saying, “Now all good speakers are booked, and no venue is available!”

Shrikrishna : But why do you wait till the last moment? Your Branches and Study Circles should arrange mandatory lectures at the beginning of the year, between January to June.

Arjun : Nobody attends so early. Lord, we CAs cannot work unless it becomes compulsory. And we are quite used to getting an ‘extension of time’. But nowadays, no extension is granted. So, this ‘running around’.

Shrikrishna : So now, you need to be always on your toes. You can’t afford to relax and take things lightly. Actually, you should learn ethics before you start working on audits and taxation. There is no point in knowing about them when all audits and tax filings are over!

Arjun : Lord, I agree. I will tell the conveners to arrange COE and SA lectures before June every year so that we are equipped with knowledge before doing audits.

Shrikrishna : That’s it. You need to be eternally vigilant and proactive. That is your motto – Ya Esha Supteshu Jagarti.

Arjun : I agree, My Lord!

“Om Shanti”

Note:

This dialogue is based on the need for a proper attitude towards CPE and COE. It is in our interest to understand the spirit behind it.

Ethics and U

Shrikrishna : Hello, Arjun; how was your Navratri? Enjoyed Garba?

Arjun : Hummmm (no reply).

Shrikrishna : Arjun, what happened? Not feeling well?

Arjun : Bhagwan, I am not in the mood to say anything. Please leave me alone.

Shrikrishna : Paarth! Why are you so nervous? You have never said such a thing before.

Arjun : I am afraid and depressed.

Shrikrishna : Really? You are the bravest person on Earth. You fought with Kauravas, who were much larger in number, and still defeated them.

Arjun : It was simpler to fight with enemies physically with weapons. Even psychological warfare is alright. But I can’t fight with Regulators!

Shrikrishna : Why? Are they so powerful?

Arjun : They are not powerful, but they have full power to do anything, and they can kill you even without fighting!

Shrikrishna : Strange! But I had advised you to be cool and composed despite all odds and difficulties. You should be a ‘sthitapradnya’- of balanced mind — neither excited in happiness nor depressed in sad situations.

Arjun : That was alright in Geeta. It is easy to preach such philosophy but difficult to implement.

Shrikrishna : Why?

Arjun : The very survival of our profession is at stake. All my colleagues are quitting practice, or at least giving up audits!

Shrikrishna : I have heard about it over the last 10 to 15 years.

Arjun : I have decided to surrender my certificate of practice. Recently, NFRA has passed negative orders against many CAs. They are ordered to pay a fine of ₹1,00,000 and have been debarred from signing any audit for at least one year!

Shrikrishna : They must have committed some lapses in the audits.

Arjun : Most of them are senior members and I am aware that they are knowledgeable and have a good track record of audits.

Shrikrishna : Still, the mistakes do occur.

Arjun : Bhagwan, there is a difference between an error and misconduct so as to attract such a severe punishment.

Shrikrishna : Have you read the orders?

Arjun : Yes, Lord, they are in the public domain. That is another bad part! And those members say that all orders are stereotyped with hardly any variation.

Shrikrishna : It was in which matter, Arjun?

Arjun : Many of them were the branch auditors of DHFL. Writ petitions and litigations are pending in a few High Courts against the proceedings. Even the jurisdiction of NFRA has been challenged, particularly for that financial year.

Shrikrishna : But what were their Counsels doing? Didn’t they argue properly?

Arjun : Bhagwan, members were denied the right to be represented by legal Counsel. My friends say about the proceedings — the less said is better!

Shrikrishna : You are telling one side of the story. We must know what is the stand of the Authority.

Arjun : I am not competent to comment on their work. But the fact remains that it is dicey to sign any audit. They are making our lives miserable. I don’t see any bright future for our profession.

Shrikrishna : Chill, my dear, chill.

Arjun : They are only thrusting more and more burdens on auditors. There is no commensurate reward. No good staff, no articles, no clarity in laws! I don’t know how to cope. I have lost hope.

Shrikrishna : But what are your leaders doing?

Arjun : God alone knows! But Bhagwan, I bet that even if you sign any audit, you will be held guilty of misconduct!

Shrikrishna : Paarth, you may be right. Better, I continue to drive your chariot.

Arjun : Bhagwan, I am not joking. The fact is that all senior members are avoiding signing the audits and delegating them to the junior partners!

Shrikrishna : Good that all my four hands are occupied. I cannot hold a pen to sign the balance sheets.

Arjun : Bhagwan, holding a pen is not necessary. Your assistants will put your digital signatures, and you will not even know!

Shrikrishna : Anyway, I will request Goddess Saraswati to give some wisdom to the Regulators.

Arjun : Please do that; otherwise, we are doomed!
(Both laugh and disperse!)

“Om Shanti”

Note:
This dialogue is based on the present scenario of the audit profession and average members’ perception of it in the context of recent orders passed by NFRA.

Disciplinary Proceedings – When They Start?

Arjun: O’Lord! There are problems, problems and problems! No solutions anywhere.

Shri Krishna: That’s life, Parth! Even as a God, I also have problems – very complex ones.

Arjun: Ah! How can you have problems, Krishna?

Shri Krishna: Don’t you remember? I was born in a jail when my parents were in prison of the tyrant Kaunsa. Immediately after my birth, during heavy rains, I was taken to Gokul, on the opposite bank of river Jamuna. And in my early childhood, many demons came to kill me. Even after I grew up and became a king, there were disputes among my community of Yadavas. In my family, there was friction between my wives!

Arjun: Yes, and we, as your cousins, also fought amongst ourselves. You had to mediate between us.

Shri Krishna: True. But tell me, what is your problem now?

Arjun: We CAs need to fill up forms for empanelment so that we can get audit assignments from Government authorities, banks and so on.

Shri Krishna: It has to be so!

Arjun: Even for private sector companies, we need to give a declaration every year for appointment or renewal.

Shri Krishna: Then what is wrong with that? What is your problem?

Arjun: In those forms and declarations, we need to write whether any of the partners have been held guilty of professional or other misconduct. We also need to write whether there are any disciplinary proceedings pending against any partner.

Shri Krishna: It is a factual thing. You have to write Yes or No.

Arjun: Agreed. But against a few of my friends, some people have filed complaints to the Institute for misconduct. At this stage, they don’t know what to write – whether proceedings are pending or not.

Shri Krishna: (smiles). This is a common problem, Arjun. The answer is simple. You know that after the complaint is received, you have to file your explanation.

Arjun: Written Statement (WS).

Shri Krishna: Correct. Your WS goes back to the complainant. On that, he sends his rejoinder.

Arjun: Yes.

Shri Krishna: Now, after scrutinising these papers, Director Discipline arrives at a Prima Facie Opinion, whether you are prima facie guilty on any of the allegations.

Arjun: I know. A few of my friends have received such Prima Facie Opinion (PFO).

Shri Krishna: Director has to place the PFO before the Board of Discipline, if the offence pertains to the First Schedule item. If it is from Second Schedule, he places it before Disciplinary Committee, right?

Arjun: Yes. Bhagwan.

Shri Krishna: Now, when BOD or DC concurs with DD’s PFO that a member is prima facie guilty, that is the point of time when they say disciplinary proceedings are pending. Understood?

Arjun: Okay. You mean, when merely a complaint is filed, or WS is submitted, that is not considered as pending disciplinary proceedings. Am I right/

Shri Krishna: Absolutely.

Arjun: But what it implies?

Shri Krishna: The appointing authority or the client company can then take a call on whether, despite such pendency of disciplinary proceedings, they want to appoint your firm as Statutory Auditors.

Arjun: Obviously, they will not!

Shri Krishna: Yes. But there is no rule of law to that effect. It is their discretion. But as a policy or practice, they may not appoint such a firm.

Arjun: Then what will the firm do? They may lose revenue.

Shri Krishna: Naturally. If he is a proprietor, he will suffer more. If it is a firm, that particular partner who is held prima facie guilty, may withdraw from the firm so that the firm does not suffer.

Arjun: And what will he do?

Shri Krishna: He continues to be a member. He can continue in practice. It is only when he is finally punished and his membership is suspended, he has to stop practising.

Arjun: Can a membership be restored?

Shri Krishna: Yes. But at that time, your seniority is Zero! You can’t take articles.

Arjun: So, he can sign audits even when he is prima facie guilty; but not yet punished. Right?

Shri Krishna: Yes. Once you are held prima facie guilty, it is referred to ‘enquiry’ before BOD or DC.

Arjun: It is logical. Otherwise, anybody can just file a complaint against a member and make him disqualified for the appointment. That would be disastrous. Now there is a comfort that until you receive PFO, you won’t have to bother. Big relief, Lord, to my friends.

Shri Krishna: But wisdom lies in doing the practice diligently, following all standards and norms.

Arjun: Agreed. But Lord, we are human beings. And now the Regulators are numerous, and Regulations so complicated, that even for Gods, it will difficult to escape disciplinary proceedings. Auditors are expected to be ‘Super Gods”

! Om Shanti !        

(This dialogue seeks to clarify the expression ‘pendency of disciplinary proceedings)

Quality Control

Arjun: (chanting) – Hare Krishna! Hare Krishna! Krishna Krishna Hare Hare!

Shrikrishna: Arey Arjun, I am very much in front of you. What makes you chant my name at this moment?

Arjun: Lord, all my CA friends are fed up with this practice. They say it is frustrating and humiliating.

Shrikrishna: Really?

Arjun: Yes, Bhagwan. They say, we are taken for granted by everybody. We are slogging sleeplessly without commensurate reward. Too much of regulation!

Shrikrishna: What else they feel?

Arjun: They are repenting that they became a CA and entered into this practice.

Shrikrishna: And still they are putting their next generation into the CA course?

Arjun: Many of them have preferred their next generation to study other streams. And those children who have done CA are choosing corporate jobs instead of entering the practice.

Shrikrishna: I understand this situation. One reality is that your practice has become Compliance-oriented without much creativity. Secondly, clients don’t feel that you are indispensable.

Arjun: Lord, we cannot afford to be assertive. We have always to remain submissive and accommodative. In the process, many mistakes occur. Quality suffers.

Shrikrishna: Yes. That’s the reason why there are rampant cases of misconduct for technical defaults.

Arjun: Many regulators are there to harass us. And clients are least bothered about it. They don’t see any value addition to them; and feel that all the work we do is only to protect ourselves. They don’t feel the pinch of it! Hence, no value, no reward!

Shrikrishna: You people lack unity; and don’t use your collective strength. But Arjun, you need to endure what cannot be cured.

Arjun: You mean, there is no solution to this problem?

Shrikrishna: I never said so. But that requires will-power and determination.

Arjun: In what sense?

Shrikrishna: I know a CA who is extremely proactive and strict. He gives a deadline to the clients to submit all the data; and refuses to do their work if they don’t come in time. And if any client comes after the set deadline, he has to pay 10 per cent extra fee and that too, in advance!

Arjun: Oh! So wonderful to hear that! But very difficult to implement.

Shrikrishna: I understand, it is difficult to suddenly adopt this attitude and culture. But at least, there should be a determined and sincere attempt.

Arjun: What exactly should we do? How many years shall we keep on undergoing same stress in tax filing season? Our health suffers, family life suffers; and the clients for whom we do all this is least concerned about it.

Shrikrishna: I feel; you should form a group of 4 or 5 like-minded CAs. This typically is a problem of SME firms – who have limited resources, limited exposure, limited man-power and so on. You should seriously and dispassionately deliberate on what difficulties you face; how to overcome them; how to ensure quality of work, how to maintain working papers, how and when the communication should be made. So on and so forth.

Arjun: We should sit and prepare a checklist, and monitor it strictly and regularly.

Shrikrishna: I feel; this is the appropriate time you set to plan the work. There is no point in planning it too late in May or June! For this, you need to also brush up certain standards of accounting and auditing. Amidst the pressure of work, you are not quite serious about updating your knowledge.

Arjun: I agree. We complete the CPE hours just for compliance. We never understand the spirit and purpose behind it.

Shrikrishna: For quality control, you should devote at least 30 minutes every day to see what was planned today, to what extent it was achieved, why it remained incomplete; whether the quality was up to the mark and so on. This review is essential. There should be timely and clear communication both internally and externally and maintain time-sheets.

Arjun: All this we studied in theory but were never able to implement it.

Shrikrishna: Never take previous auditor’s communication lightly; and ensure that previous auditor’s undisputed audit fees have been really paid. Be particular about written communication everywhere and take proper and comprehensive Management Representation Letter (MRL). Please understand that certain things like this are for your own safety and your own safety is of supreme importance. It cannot be compromised.

Arjun: Yes, Lord. I have realised that the appointment letter and engagement letter are very important. We take it lightly. So also, generation of UDIN. We are also required to follow the KYC guidelines of ICAI.

Shrikrishna: And never ever sign anything in good faith before the client signs the financial statement or other documents.

Arjun: Bhagwan, a few of my friends were held guilty just because they did not put their membership number, FRN number and even the date of signing.

Shrikrishna: Most importantly, you SME people never go for stock verification. You never insist on a third-party evidence. Try to change yourself from this year. Plan the stock checking, write to banks, debtors, creditors, lenders; and all other concerned parties for confirmation of balances. All this forms your working papers. It is a must. Also, insist on company secretarial records and minutes. Further, verify what is available in the public domain.

Arjun: Our attitude is to say ‘who has time to do all this?’ But this is to our own detriment. I should recruit and retain good staff; not just who come through relatives and acquaintances! One good well-paid assistant is better than 3 or 4 mediocre assistants. All are unsatisfied, all of poor calibre; and all equally irresponsible!

Shrikrishna: Arjun, I am happy that you are introspecting. There is no use blaming or cursing others. Change yourself. Just as Charity begins at home, ‘Change’ also should begin at home! Have strict quality control. Be determined that     you will have a stress-free tax filing season!

! OM SHANTI!

This dialogue is based the need for proper planning for ensuring good quality of work.

Ethics and U

Arjun: Bhagwan, I am really tired of your ‘Ethics’.

Shrikrishna: Not my Ethics. Those are your Institute’s Ethics!

Arjun: Agreed. But I feel I committed a great blunder that I became a CA! And a still greater blunder is that I entered this terrible practice!! My friends in corporate jobs are earning much better and enjoying life.

Shrikrishna: Paarth, the grass is always greener on the…

Arjun: I am aware of that. I know, in corporate jobs also, there is a slogging, many compromises and stresses. But then, there is assured good earning!

Shrikrishna: But in practice, you are your own master. Aren’t you? And one more thing: Your friends in corporate jobs are also bound by the Code of Ethics. So, don’t envy them. You both are sailing in the same boat.

Arjun: It’s a myth. Everyone we encounter is our Boss, be it a client, our employee or article. And those revenue authorities! They are the Super Bosses.

Shrikrishna: Why are you so upset today? You have to accept the reality of life.

Arjun: Are you aware the number of new students registering for the CA course has gone down drastically? Of those who pass CA, hardly anyone ventures to enter the practice unless one has a Godfather. The next generation, even of well-established CA’s, is not keen on coming into practice.

Shrikrishna: Is it so?

Arjun: Oh, Omniscient Lord, why are you pretending to be ignorant about this situation?

Shrikrishna: Tell me, what is the main reason for your grievance today?

Arjun: See, I wrote an article in a magazine about M and A.

Shrikrishna: You mean Mergers and Amalgamations? Right? Very Good.

Arjun: But I could not write about my expertise, experience, names of clients, services rendered by my firm, and so on.

Shrikrishna: Why?

Arjun: Someone said item (7) of Part I of the First Schedule to CA Act does not permit it! See, everywhere there is a restriction on us. Our wings are chopped off, and they expect us to fly!

Shrikrishna: Yes, you cannot advertise your attainments and services.

Arjun: Even the size of our name board is subject to restrictions.

Shrikrishna: Tell me, Arjun, how many clients go to CA by looking at the name board?

Arjun: I agree. They come only with a personal reference on hearing our reputation.

Shrikrishna: And how do you build your reputation?

Arjun: By rendering good services. Our satisfied client is our advertisement.

Shrikrishna: Then why are you agitated that you could not make a detailed write-up on yourself alongside your article?

Arjun: Because the other article in the same magazine was written by a lawyer, and he wrote a long introduction of himself! There is no level playing field.

Shrikrishna: Why don’t you think this way that, ultimately, a client will come to you by comparing the merits of your article and not by reading your CV besides the article? Remember, you may mention about yourself but not about the firm and its services, especially in a manner that would amount to an advertisement.

Arjun: I strongly feel there should be some relaxation on this.

Shrikrishna: Tell me, if advertisement is permitted, can you compete with big firms in the publicity budget?

Arjun: That’s the point.

Shrikrishna: Still, your Institute may be considering some relaxation in keeping with the changing times.

Arjun: Abroad, it is allowed, but not in India. That’s pinching us.

Shrikrishna: Well, you cannot change the situation.

Arjun: Why?

Shrikrishna: Because you are not united. No one cares for your grievances. Your voice is not audible. Moreover, you have never shown effective performance.

Arjun: What do you mean?

Shrikrishna: See, there have been so many financial scandals; but hardly anyone was exposed by your audit. Government feels that your survival depends on the laws and regulations made by the Government. So, you are nothing but government servants.

Arjun: But then our clients pay us, not the government. Don’t you think we have a duty towards our clients as well?

Shrikrishna: Certainly, But your duty towards your nation and various stakeholders is paramount. In fact, even your client is duty-bound to protect the interests of the nation and all stakeholders, and you should help them in doing so.

Arjun: I agree that we may invite trouble for ourselves if we are not careful. What is the solution?

Shrikrishna: Show ‘Chamatkaar’(miracle) and command Namaskaar (respect). Be united, be bold, be assertive. Your ethics are your shield.

Arjun: Yes, Lord, we will change our approach. Please bless us.

Shri Krishna: Tathaastu!

(This dialogue is based on the general approach towards Professional Ethics in the context of Advertisement.)

Audit Documents

Shrikrishna: Arjun, all set to enjoy Diwali?

Arjun: We are not that lucky, Lord! Compliances are not leaving us. Filing of tax returns will continue till the end of October.

Shrikrishna: That’s OK. But overall, you must be free.

Arjun: True. Since the financials and audit reports have been uploaded, the volume of work is under control.

Shrikrishna: So, it was good that the date was not extended. Right?

Arjun: I agree. “Ek bar yeh khatam ho jata hai to achha’. Some day or the other, we only need to do it. And even if we get more time, last-minute pressures cannot be avoided.

Shrikrishna: Now Arjun, listen carefully. After the uploading is done, you people always relax. You totally forget that many things need to be done at this point.

Arjun: I did not understand. What is to be done now?

Shrikrishna: Arjun, this is the most crucial time when you have to organise all your audit files and records. Are you sure whether the books of all clients have been properly closed?

Arjun: Oh! That reminds me. In many balance sheets, we have given effects outside the books, in Excel. We have yet to pass entries in Tally!

Shrikrishna: And what about working papers?

Arjun: Ah! Working papers, we never keep! We do all corrections there and then.

Shrikrishna: Do you have the appointment letters of all clients?

Arjun: Companies, we have. Others never give!

Shrikrishna: And bank confirmations? Any queries communicated to clients? Their replies?

Arjun: I will ask my assistants just now to organise all such papers. What else is required?

Shrikrishna: You are supposed to do this every year and you are asking me? Have you written to debtors, creditors and loan depositors for confirmation?

Arjun: That we do at the time of tax assessments if they ask!

Shrikrishna: Don’t you think it is essential for the audit? You certify ‘true and fair’ without all this? And what about MRL?

Arjun: Yes. Management Representation Letters are to be done. Those are the standard ones. I will get them.

Shrikrishna: Arjun, don’t take it so casually. MRL is to be thoughtfully prepared. It has to be tailor-made; with reference to certain special transactions in each case. I am sure in none of the non-corporate balance sheets you have considered contingent liabilities.

Arjun: I agree. We never look into what is not appearing in the financial books.

Shrikrishna: And what about various agreements – like purchase of property, contracts with major parties, bank loan sanction letters?

Arjun: Arey! You are telling a big list off-hand.

Shrikrishna: Actually, all that is readily given in your ICAI guidelines and standards.

Arjun: Who has time to read all that?

Shrikrishna: Arjun, please try to take these things seriously. Complaints of misconduct and gross negligence is quite rampant nowadays. One compliance – you people never look at.

Arjun: What is that?

Shrikrishna: Company Secretarial records, minutes, attendance of directors, forms uploaded, charges registered and so on. And similar records are to be seen in respect of Societies and Trusts also.

Arjun: I agree. We do not even ask for minutes. They say we will write them after the balance sheet is signed. What to do?

Shrikrishna: How can you tolerate this? You should give the checklist of all requirements while starting the audit itself. You should be proactive.

Arjun: I am sorry, Lord. We are very much disorganised. Even the hard copies of financial statements signed by auditees we may not be having. We notice it only next year.

Shrikrishna: That is very dangerous! You should immediately get all financials and other documents signed by directors or management even before uploading the statements. Anything may happen till next year! There may be disputes, a signatory director may die. Don’t do anything in good faith. You will invite trouble for yourself.

Arjun: As usual, you have opened my eyes. I will get all these things done immediately, before Diwali.

Shrikrishna: Good luck.

!!Om Shanti!!

[This dialogue is based on the importance of timely maintenance of working papers and organising audit documents and records. The absence of working papers brings many CAs into deep trouble.]

CA Amendment Act, 2022

Shrikrishna: Oh, Arjun, your July pressure is over! So, relaxing now?

Arjun: Yes, a little bit. Good monsoon, chilled climate. And the next deadline is 31st October.

Shrikrishna: Here is something that will not only wake you up, but shake you up!

Arjun: Really? Lord, don’t frighten me and spoil my mood. What is that?

Shrikrishna: Your CA Act is amended, particularly in respect of disciplinary mechanisms.

Arjun: I had heard about it but didn’t know the details. It’s good to hear from you.

Shrikrishna: First, the amendment is giving some relief. You know that once a complaint is lodged or information is provided, it takes a long time to settle. The process is expensive and time-consuming. Many times the complaints are frivolous, meaningless and without any substance.

Arjun: Yes. I agree. So, what have they done?

Shrikrishna: Now, once the complaint or information is received, the Director Discipline will decide whether the complaint or case is actionable or liable to be closed as non-actionable.

Arjun: Oh! Very good. That will save a lot of trouble for our CAs and save money and professional time for all concerned, including our Institute.

Shrikrishna: True. For this, he may call for additional information by giving 15 days’ notice to the complainant or informant. If he finds it non-actionable, he has to refer it to the Board of Discipline for its concurrence. If the Board disagrees, he must proceed with the normal investigation.

Arjun: How long will this take?

Shrikrishna: The Director Discipline has to refer it to the Board within 60 days of receiving the complaint or information.

Arjun: Good. So there is a time limit.

Shrikrishna: If he has to carry out the investigation, the Director Discipline gives 21 days to the Respondent to submit his Written Statement.

Arjun: There must be some extension allowable. We CAs cannot do anything without additional time.

Shrikrishna: Yes. Earlier, the maximum allowable extension was 30 days; but now it is only 21 days.
 
 Another important thing. Previously, a complaint could be withdrawn with the permission of the Board of Discipline (BOD) or Disciplinary Committee (DC). Now, this facility is withdrawn!

Arjun: This is not good. I feel that if the complaint is not of a serious nature, they should permit the withdrawal.

Shrikrishna: Further, the BOD will continue to consist of 3 members; but the composition is changed. Earlier, the President of the BOD normally used to be the President or Vice President of ICAI. Henceforth, he should be a non-member of the Institute. The other two members will be – one Central Government nominee but not a member of ICAI, and the third member will be a Central Council Member.

Arjun: Oh! So, the majority will be non-CAs. How will they understand the realities of our profession?

Shrikrishna: Punishments have also been made harsher! Previously, for the first schedule, the maximum period of suspension was up to 3 months. Now it can be maximum of 6 months! The maximum fine for the first schedule is now raised from rupees one lakh to two lakhs.

Arjun: Oh My God!

Shrikrishna: And now you will lose your sleep.

Arjun: What is that?

Shrikrishna: If a member is repeatedly found guilty for the last five years, then action can be taken even against his firm! And it is very severe.

Arjun: Tell me. Gathering strength to listen to you.

Shrikrishna: Then, even the firm may be prohibited from undertaking any professional activity for up to one year or a fine up to Rs. 25 lakhs can be imposed!

Arjun: Should it be the same offence?

Shrikrishna: No. It states only the item from the first schedule. So, it could be any offence.

Arjun: Baap Re! Many CAs will close their shops! And what about the Second Schedule?

Shrikrishna: You know that the Second Schedule contains more serious offences. There also, the composition of the DC is changed. Now, the Presiding Officer will be a non-member of ICAI. Two Central Government nominees, again, non-members! And two CCMs.

Arjun: So, the majority, including President, will be non-CAs!

Shrikrishna: Yes. It can be. And the maximum fine is raised from Rs. 5 lakhs to Rs. 10 lakhs. Suspension for any length of time, even permanently. This was already there.

Arjun: What about repetitive offences?

Shrikrishna: There, for repeated offences in the last five years, the firm may be prohibited from carrying out any professional activity for up to two years. Even the registration of the firm may be suspended or cancelled permanently! Or there could be a fine of up to Rs. 50 lakhs.

Arjun: Mar gaye! Don’t tell me anything further just now. Not in a position to bear it any longer!

Shrikrishna: Fine! In the meanwhile, I wish you a happy festival season.

“Om Shanti”

[This dialogue is based on the recent amendments (18th April, 2022) brought into the provisions of the CA Act and conduct of enquiry rules relating to disciplinary cases. The Amendments are effective from 10th May, 2022.]

PERMISSIBLE AND NON-PERMISSIBLE SERVICES

Shrikrishna: Arjun, we have been meeting regularly over the past many years. We discussed many aspects of Code of Ethics like the meaning of misconduct, disciplinary procedure, principles of disciplinary proceedings, a few live cases and so on.

Arjun: Yes, Lord. It was all interesting but quite often frightening. I lost my sleep many times.

Shrikrishna: True! But your motto says you are not supposed to sleep at all! Ya Esha Supteshu Jagarti…

Arjun: Ha! Ha!! Ha!!!

Shrikrishna: After all, eternal vigilance is the cost of independence.    

Arjun: Agreed. But Bhagwan, today tell me something new. Something latest.

Shrikrishna: Professional Ethics are age-old principles. There can be hardly anything new in that sense. Still, over time, the outlook changes, circumstances change, emphasis changes. In short, its implementation undergoes changes over time.

Arjun: Yes. Kaalaya Tasmai Namah!

Shrikrishna: In the good old days, the impact of good preachings (sanskaaras) was quite strong. Ethical behaviour came out in its natural course. And life was simpler.

Arjun: Technology has totally transformed human behaviour. Business is also becoming more and more complex.

Shrikrishna: And financial expertise is becoming a synonym for financial manipulation! CAs are supposed to be financial police. Hence, there’s more and more expectation from CAs.

Arjun: That means more and more regulations! Bhagwan, we don’t mind regulations, complex rules and other things. But the client does not see any value in it. Therefore, there’s no commensurate remuneration.

Shrikrishna: I agree, Paarth. It is a reality. What you cannot cure should be endured.

Arjun: But why can’t you, as Omnipotent Bhagwan, change the situation? Nothing is impossible for you.

Shrikrishna: Yes, I want to change it. But I will help only those who help themselves. You need to take the first step towards improvement. I will take care of the rest!

Arjun: Anyway. Tell me something about the new restrictions on the services that can be         
rendered by us.

Shrikrishna: Yes. Actually, as you know, the new Code of Ethics has become applicable. And your new Company Law is also putting restrictions on your services.

Arjun: Oh! You mean Section 144?

Shrikrishna: Yes. It states what services you cannot render to an audit client.

Arjun: But many of our audit clients request us to look after taxation, company law compliances, and so many things.

Shrikrishna: Now, you need to be cautious. The section clearly says that you can render only those services which are approved by the Board of Directors or by the Audit Committee!

Arjun: Really? We never see the minutes and secretarial records.

Shrikrishna: This section clearly specifies what services you cannot render. Like internal auditing, outsourced financial services like management of account receivable/payable, investment banking services such as mergers and acquisition, asset management factorial services, etc.

Arjun: I need to know much more about this. Otherwise, I will land myself in trouble. Just now I am busy. July ITR work has started.

Shrikrishna: As you wish!

“Om Shanti”