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Abundance of skills available in the sector of accounting and auditing and with impending Companies act direct tax code bill India should re-orient its recognition procedure lest it ideology of inclusive growth is in shambles.WRT Auditing and public accounting profession.

Most of the countries in the world whether UK/EU/ZA/Au have made it a point to demutualise education and auditing profession and regulate the profession by bringing in a certain degree of competition and enabling the profession to be institute(institution) neutral.In UK six bodies are recognised as RQB and one of them is not a member body of IFAC.In Australia Three bodies are recognised by ASIC.In ZA(south africa)the newly constituted IRBA has come up with an accredition model in May 2007. Read More

In the USA it is a common format of exams under AICPA but NASBA recognises the qualification for License to practice.In Canada though there is no super regulatory body the Government of canada recognises three institutes for Auditing(CGA/CICA/CMA).Most of the south east asian countries recognise more than one qualification for credence to auditing with malasia having two internal bodies-MIA/MICPA.

The relevance of having such a demutualisation is to recognise the skill-set delivered by various institutes and also promote healthy competition.This also ensures quality and destroys Monopoly which is a must for any civilised society.

Unfortunately the development in India is not encouraging on this front where we are trying to put all eggs in one basket and grant undue weightage that may harm the stakeholders interest in the longrun.

ICAI is a statutory accounting body and so is ICWAI and both are the members of IFAC and the latter is a founder member of the international organisation.In a huge country like India with variety of stakeholder it is in the interest of the society to have a superior regulator with the participation of the accredited institutes(ICAI/ICWAI).This may be under the administrative supervision of the MCA.With the digitisation of MCA operations it would be easier to track the performance of the auditors.

Members of ICWAI/ICAI should be entitled to register as auditors initially and be allowed to audit businesses on equal footing(financial/cost/special/internal/tax audits).Any new bodies by virtue of WTO on services fulfills the criteria should also be allowed to have accredition.
ICAI and ICWAI should be restricting their function to delivery of education and required skill set and the member disciplinary mechanism and quality assurance and review board.Their representatives will occupy the newly constituted supervisory body for regulating the auditing profession.The regulatory body will focus its arms on all types of audit with sectoral neutrality.
A member of the two institutes should satisfy additional requirements as designed by the regulator to get registered as Auditor.

I think India should enter into such model coterminus with the enactment of the New companies act and direct tax code bill.

The benefit will be that the society shall have choice of the professionals a change of mind set and more focussed audits.

More Info :

ASIC, Australia
OPSI, UK

Blog Posted by RV

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Chapter III Service Scope and Rules

Article 14 Only CPAs may undertake the following professional auditing activities:

The reports issued by CPAs in their lawful execution of auditing activities have the full force and effect of verification documents.

Article 15 A CPA may undertake accounting consultation and other accounting related service activities.

Article 16 Any assignments undertaken by a CPA must be accepted by the accounting firm to which such CPA belongs, and the contracts of assignments must be signed by that firm and the clients.

The accounting firm assumes all civil liabilities for any professional services undertaken by any CPA associated with the firm.

Article 17 A CPA in the execution of his professional activities may investigate according to the necessity of the situation, the client’s relevant accounting information and documents, examine the client’’s business site and facilities, and require his client to provide necessary assistance.

Article 18 A CPA who has a conflict of interest with or a financial interest in a client must avoid dealing with that client. The client also has the right to require such an avoidation.

Article 19 A CPA has the responsibility to keep the business information he acquires in the performance of his services confidential.

Article 20 A CPA shall refuse to issue any relevant report where:

1. A client suggests overtly or covertly that a false or misleading report or statement be issued;
2. A client intentionally fails to provide relevant accounting information and documents;
3. The report to be issued by a CPA cannot correctly present the material items of financial information due to a client’’s other unreasonable demands.

Article 21 When performing auditing services, A CPA must issue reports pursuant to the procedures as determined in the professional standards and regulations.

A CPA may not commit any of the following errors or commissions in the performance of an audit or the issuance of a report:

1. Omitting any fact of variance between a client’’s financial and accounting treatments in material items and the State regulations, provided the CPA is fully aware of such fact;
2. Issuing an untrue report or a report which fails to disclose the fact that a client’’s financial and accounting treatments will damage the interests of the users of the reports or other related parties, provided the CPA is fully aware that the report is untrue or that a material fact has not been disclosed;
3. Issuing a report in which a client’’s financial and accounting treatments will be misleading to the users of the report or the persons who have interest in the report, provided the CPA is fully aware that the report is misleading;
4. Issuing a report in which the material items of the financial statements are materially untrue, provided the CPA is fully aware that any such statements are materially untrue.

A CPA shall be liable for the behavior listed in the above items only if he or she should know the situation under the professional standards and rules.

Article 22 A CPA may not:

1. Purchase or sell the stock bonds or other properties of an audited organization or individual during an audit;
2. Solicit or accept compensation of any sort beyond the agreed upon price, or try to obtain any other interest by taking advantage of the position of auditor;
3. Accept the assignment of collecting a client’’s receivables;
4. Allow others to execute professional activities in his or her name;
5. Execute professional activities with two or more accounting firms;
6. Solicit business by advertising or publicizing his or her professional qualifications;
7. Conduct other activities contrary to the laws and regulations.

Article 23 An accounting firm can be established by two or more CPAs in partnership.

The partners are responsible, with their property as security, for the liabilities of the accounting firm held in partnership in proportion to the amount of capital each partner contributed to the firm, or as provided in the partnership agreement. The partners have joint liability for the firm’’s liabilities.

Article 24 An accounting firm which conform to the following conditions can be a legal entity with limited liability:

1. With a registered capital of not less than 300 000 Yuan;
2. With a number of full-time professional staff and at least five of them are CPAs;
3. Conforming to the scope of professional activities and other conditions as stipulated by the Finance Department of the State Council.

An accounting firm with limited liability is responsible for its liabilities with all its assets.

Article 25 The establishment of an accounting firm should be approved by the Finance Department of the State Council or the finance department of a province, an autonomous region or a municipality directly under the central government.

To apply for the establishment of an accounting firm, the applicant must submit the following documents to the organization that examines and approves the application:

1. Application report;
2. Name, organization structure and business location of the accounting firm;
3. The constitution of the firm. If the firm has a partnership agreement, the partnership agreement should be attached;
4. List of the names of CPAs, their resumes and other relevant supporting documents;
5. List of the names of the principals, partners of the accounting firm, their resumes and other relevant supporting documents;
6. Capital verification report of the accounting firm with limited liabilities;
7. Other documents as required by the organization that examines and approves the application.

Article 26 The organization that examines and approves the application should decide whether the application should be approved within 30 days from the date of the receipt of the application documents.

The finance department of a province, an autonomous region or a municipality directly under the central government shall record the approval of an accounting firm with the Finance Department of the State Council. In case the Finance Department of the State Council discovers that the approval is improper, it must notify the organization where the original approval was made and require a reexamination within 30 days from the date of the receipt of the record.

Article 27 The establishment of a branch office of an accounting firm must be approved by the finance department of a province, an autonomous region or a municipality directly under the central government where the branch office is located.

Article 28 An accounting firm shall pay tax pursuant to the law.

An accounting firm shall establish a fund for professional liability or purchase a professional liability insurance policy, pursuant to the regulations promulgated by the Finance Department of the State Council.

Article 29 An accounting firm may accept an assignment independently of the administrative or industrial jurisdiction except to the extent of any limitations in any other laws or regulations.

Article 30 No organization or individual shall interfere in an organization’’s choosing an accounting firm for professional services.

Article 31 The stipulations in Articles 18 through 21 of this law shall also be applied to accounting firms.

Article 32 An accounting firm shall not violate any provisions of items 1-4, 6 or 7 or article 22 of this law.

Source: CICPA Website

Blog posted by RV

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The world seems to be moving towards IT and everyone in the company has to be IT savvy. Sometimes the questions asked by the financial controllers is whether the standard ERP applications are driving the accounting strategy of the company.

When a company is a multinational company then the IT strategy is driven by the parent company and local company has little say about the implementation as financial accounts have to be consolidated. Localisation needs are catered, but to limited extent. Or else the local company has to go for third party application or MS Office application like Excel or Access to fulfil the local reporting needs.

When I was explaining how the automatic account determination is performed in SAP for the inventory movements, the question posed by the accountant was -

The answer is every goods movements will have an accounting entry. So the accountant has to determin which inventory accounts (Balance Sheet) is debited/credited for inventory movement with offsetting GL account (P&L). So you have to understand the system and see how it works. Once you understand, configure it and forget it. Then right accounting entries will be posted.

The role of the accountant has changed from doing routine posting to analysing the information. He has the capability to analyse information. A shift from being an accounting clerk to management accountant. I believe, with the implementation of ERP systems, the role of accountant has changed from being a financial accountant to management accountant. The answer is the accountant has to be IT savvy .

Click here - to know about Inventory Accounting in SAP

Almost all the areas in SAP has been automated to post to Financials. The role of the accountant is determine that right GL accounts are configured in the system. As the accountant graps the way system work, his role to perform as a true management accountant enhances.

Regards,

Santosh Puthran
AICWA

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PS: As I was writing this blog, I was exploring the possibility of sharing the SAP Inventory Posting document till I found the useful feature in google for document sharing. It is about thinking about possibilities and you find that someone else has already thought about it.

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Accounting news and snippets during the fortnight

‘India can now count on global norms’

Indian companies can expect a series of major revisions in the guidelines for preparing their financial statements in the next four years, until India’s financial reporting standards get fully converged with international norms by April 1, 2011. Read More

Interview with Pervenche Berès on convergence

In this exclusive interview, the chairwoman of the Committee of Economic and Monetary Affairs of the European Parliament talks about the convergence of accounting standards. Read More

Deferred tax under MAT?

For a taxpayer, the determination of correct tax liability is as important an exercise as the legitimate tax planning. In today’s scenario, the determination of correct tax liability poses several challenges. The treatment of deferred tax charge in determining the tax liability under the special provisions of Section 115JB of the Income-Tax Act is one such case. Read More

How to survive summer holidays

The Institute of Chartered Accountants in England & Wales (ICAEW) outlines how small businesses can keep the cash flowing during summer months when many firms are short-staffed. Read More

WNS completes successful ‘Build-Operate-Transfer’ of Finance & Accounting Services Unit for Aviva Global Services

WNS (Holdings) Limited (NYSE:WNS), the parent company of WNS Global Services, a leading offshore business process outsourcing (BPO) provider, today announced it has demonstrated the successful completion of a unique outsourcing model with the handover of a Finance and Accounting Services unit in Sri Lanka to AVIVA, the world’s fifth-largest insurance group and U.K’s largest insurance service provider. Under a “Build, Operate, Transfer” (BOT) Model, more than 300 WNS specialists were seamlessly transferred to Aviva Global Services in Colombo as of July 2, 2007. Read More

Tata Motors bags Award for Excellence in Cost Management

Tata Motors has won the National Award for Excellence in Cost Management fo r the year 2006, conferred by the Institute of Cost and Works Accountants of India (ICWAI). Read More

New logo for CAs unveiled

A new logo for the profession of Chartered Accountants (CA) was unveiled by the Union Minister of Corporate Affairs, Prem Chand Gupta on the 59th Chartered Accountant�s Day. It was on July 1, 1949, that the Institute of Chartered Accountants of India (ICAI) was established with the enactment of the Chartered Accountants Act, 1949. Read More

Industry needs more cost accountants

With a growing demand for cost and management accountants across the country and the professionals playing a more strategic role in an organisation, the Institute of Cost & Works Accountants of India, (ICWAI) Pune chapter has chalked out an expansion plan to improve access of the professional course to more students. Read More

Govt plans bill for valuation professionals

The government is drafting a bill to regulate valuation professionals who analyse companies, shares, debt, assets, brands and intellectual property to arrive at a financial value. Read More

Accounting news and snippets during the fortnight

‘India can now count on global norms’

Indian companies can expect a series of major revisions in the guidelines for preparing their financial statements in the next four years, until India’s financial reporting standards get fully converged with international norms by April 1, 2011. Read More

Interview with Pervenche Berès on convergence

In this exclusive interview, the chairwoman of the Committee of Economic and Monetary Affairs of the European Parliament talks about the convergence of accounting standards. Read More

Deferred tax under MAT?

For a taxpayer, the determination of correct tax liability is as important an exercise as the legitimate tax planning. In today’s scenario, the determination of correct tax liability poses several challenges. The treatment of deferred tax charge in determining the tax liability under the special provisions of Section 115JB of the Income-Tax Act is one such case. Read More

How to survive summer holidays

The Institute of Chartered Accountants in England & Wales (ICAEW) outlines how small businesses can keep the cash flowing during summer months when many firms are short-staffed. Read More

WNS completes successful ‘Build-Operate-Transfer’ of Finance & Accounting Services Unit for Aviva Global Services

WNS (Holdings) Limited (NYSE:WNS), the parent company of WNS Global Services, a leading offshore business process outsourcing (BPO) provider, today announced it has demonstrated the successful completion of a unique outsourcing model with the handover of a Finance and Accounting Services unit in Sri Lanka to AVIVA, the world’s fifth-largest insurance group and U.K’s largest insurance service provider. Under a “Build, Operate, Transfer” (BOT) Model, more than 300 WNS specialists were seamlessly transferred to Aviva Global Services in Colombo as of July 2, 2007. Read More

Tata Motors bags Award for Excellence in Cost Management

Tata Motors has won the National Award for Excellence in Cost Management fo r the year 2006, conferred by the Institute of Cost and Works Accountants of India (ICWAI). Read More

New logo for CAs unveiled

A new logo for the profession of Chartered Accountants (CA) was unveiled by the Union Minister of Corporate Affairs, Prem Chand Gupta on the 59th Chartered Accountant�s Day. It was on July 1, 1949, that the Institute of Chartered Accountants of India (ICAI) was established with the enactment of the Chartered Accountants Act, 1949. Read More

Industry needs more cost accountants

With a growing demand for cost and management accountants across the country and the professionals playing a more strategic role in an organisation, the Institute of Cost & Works Accountants of India, (ICWAI) Pune chapter has chalked out an expansion plan to improve access of the professional course to more students. Read More

Govt plans bill for valuation professionals

The government is drafting a bill to regulate valuation professionals who analyse companies, shares, debt, assets, brands and intellectual property to arrive at a financial value. Read More

Telephonic interviews is the current trend. This is very popular since it saves time of the employers in screening the candidates as well as interviewing candidates who are based in different geographical area. Telephonic interview is a common feature in IT industry both for permanent employment and for contractors.

Few tips to get through the interview.

• Job specs: Read the job description thoroughly that you are being interviewed for. If you do not know or your recruiting agent has not provided details, then ask for it. This will help you discuss in the interview and will give a comfort level to the employer that you are serious about the job. If you are not interested in pursuing the job, please let the employers know. No one likes to waste time.
• Environment: Choose a quite place for your interview so that there are no interruptions during the call. You may never know that the it may be a conference call and interviewers are joining from different locations.
• Structure: The interviewer will generally introduce himself and team members to give an idea of the background who are interviewing. The lead interviewer will explain you about structure of interview, about the company, the job specs. Typically in IT industry, the interview will tell you before hand whether it is a techincal round and what they would expect from the discussion.
• CV: The interviewers will have a thorough look at your CV and the questions will be asked to you will based on what you have written. Be honest about your work experience and “no jargons”. Do not mention anything that is difficult to explain. Interviewers will ask you what you know and not what you don’t know. So keep your CV simple and maximum 4 pages so that it is browsed in 2 minutes. E.g of good CV is to include Career Objective and Career Summary to begin with bullet points on accomplishments in two last assignments. Bad CV is of 16 pages with details till the end.
• Answering: Be calm and attentive. Interviewers are not expecting that you know everything. But they are generally looking whether you can communicate, work with them and handle situations. In telephonic interview, your voice will show the level of confidence in you. Be calm, take pause wherever necessary. We were interviewing a candidate and we could feel his pulse during the discussion. Everyone is stressed on interview but not the full length of interview.
• Senario based questions: A scenario based questions is to test the skills on how a candidate handles situations. In one of the SAP interview, we asked question “You are one week from Go-Live. You have a problem in the level 3 of dunning procedure. It was working fine but due to change in some configuration, it is not working properly. What would you do in this situation ? The answers from candidate who do not know are likely to be
  • Will work late hours to find a solution.
  • Investigate technically to find the solution so that the Go-Live date is not impacted.
  • Involve other members to find solutions

  The answers expected are:

  • Will this problem affect the Go-Live. If no, then there are other issues to look into and see that Go-Live is not impacted.
  • Look for a workaround, if available. Suggest alternatives.
  • Handle this issue post go live.

Simple isn’t it !!! Don’t bluff. The employer is not looking for a “Superman”.

• Technical Questions: You will asked question about finance or taxation or companies act. You should focus on application of knowledge. If you are asked to quote about sections in taxation or transaction fields in ERP application, then you can tell them, if you know. If you do not know, then you can tell them that it is no big deal, if you had a book or system infront of you. Then you can continue to say is what matters is application of knowledge and those abilities you have it.
• Do you have questions: Before the conclusion of interview, the interview will generally ask you “Do you have any question?”. This is a point you should ask questions relevant questions about the job. Last but not least, you should conclude with “So far in the interview, do you have any concerns ?”. This will give an opportunity to explain yourselves further, if something was missed earlier.
• Conclude your interview by thanking them and inquiring with the lead interviewer when/how they would let you know regarding the outcome. The answer will enable you to to know whether you have moved ahead in the stage of job interview.

Generally, the decision whether your application will progress to next stage will be decided by the panel moments after the conclusion of the telephonic interview.

Simple Rules:

• CV should be simple and shows your accomplishments
• You are confident in the interview. Your voice should say so.
• You are able to demonstrate
• You are a team player
• Can handle situations
• Best fit for the job description

• Be honest in answering questions.

These few tips will take you to the next round.

Cheers,

Santosh Puthran
AICWA

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