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This is part 4 of the topic Professional Body and Professionalism by CMA B V Prabhakar. He discusses on how accounting bodies IMA-USA, ICWAI-INDIA & ICSI-INDIA apply the above principles.

View CMA B V Prabhakar’s profile

II. INSTITUTE OF COST & WORKS ACCOUNTANTS OF INDIA (ICWAI)

(www.icwai.org)

ICWAI is a premier statutory accounting body established by an Act of Indian Parliament, namely, Cost & Works Accountants Act, 1959 (CWA Act) to impart and develop cost & management accountancy profession in India. It operates under jurisdiction of Ministry of Corporate Affairs of Central (Federal) Government of India. It has chapters all over India and also in Middle East.

Vision Statement

“ICWAI would be the preferred source of resources and professionals for the financial leadership of enterprises globally “

Mission Statement

“ICWAI professionals would ethically drive enterprises globally by creating value to stakeholders in the socio-economic context through competencies drawn from the integration of strategy, management and accounting.”

COST ACCOUNTING RULES & STATUTORY COST AUDIT

One of the salient features of the Indian Companies Act is the provision for mandatory requirement of maintenance of Cost accounting records for certain industries and ordering of cost audit by Central Government for certain companies covered by such provision.

Section 209(1) (d) of the Companies Act, 1956 prescribes mandatory maintenance of cost accounting records for certain class of manufacturing industries .

Section 233B of the Act empowers Central Government to order Cost Audit for the Companies required to maintain cost accounting records by a notification. Such audits are conducted by Members of ICWAI in practice.

A. ETHICS & PROFESSIONAL CONDUCT:

According to ICWAI Guidelines, as professionals in the field of Cost and Management Accounting, the members of the Institute are bound by a code of professional ethics. This code stipulates and binds them to the highest level of care, duty and responsibility to their employers and clients, the public and their fellow professionals.

Cost accountants have to observe fundamental principles, which are:

(a) Integrity

A cost accountant should be straightforward and honest in performing his services.

(b) Objectivity

A cost accountant should be fair and should not allow prejudice or bias or the influence of others to override objectivity.

(c) Competence

A cost accountant must refrain from performing any service which he is not competent to carry out unless proper advice and assistance is obtained to ensure that the service is performed to the satisfaction.

(d) Confidentiality

A cost accountant must not disclose information acquired during the course of his engagement and should not use or disclose any such information without proper and specific authority or unless there is a legal or professional right or duty to disclose.

(e) Professional Behaviour

A cost accountant should act in a manner consistent with the good reputation of the profession.

THE CWA ACT, 1959

ICWAI, being a statutory body is regulated by the CWA Act and for the management of the affairs and for discharging the functions assigned to it by the Cost and Works Accountants Act, there is a Council of the Institute.

Every member of the Institute is entitled to designate himself as a Cost Accountant.

There are two classes of members,

a)those who are in practice and
b)those who are otherwise occupied.

The practising members conduct statutory cost audits, excise audits and certifications. Conducting of such statutory audits and certifications require high degree of competence and proper professional conduct.

The Council has been empowered to institute any enquiry into cases where it is prima facie of the opinion that a member is guilty of professional or other misconduct.

Professional misconduct defined

Section 22 of the Act read with the Schedules to the Act , contains an illustrative, though not exhaustive definition of “Professional misconduct”. These constitute the Code of professional conduct applicable to Cost Accountants.

Professional Misconduct falls under the following categories:

FIRST SCHEDULE:

Part I : Professional misconduct in relation to Cost Accountants in Practice
Part II : Professional misconduct in relation to Members of the Institute in service
Part III: Professional misconduct in relation to Members of the Institute in generally
Part IV: Other misconduct in relation to Members of the Institute generally

SECOND SCHEDULE:

Part I : Professional misconduct in relation to Cost Accountants in Practice
Part II : Professional misconduct in relation to Members of the Institute in service
Part III: Other misconduct in relation to Members of the Institute generally

“Other Misconduct”

A member is liable to disciplinary action under the CWA Act, if he is found guilty of any professional or “other misconduct”.

“Other misconduct” as listed in Part III to the Second Schedule has not been defined in the Act but this provision empowers the Council to enquire into any misconduct of a member even if it does not arise out of its professional work. This is considered necessary because a Cost Accountant is expected to maintain the highest standards of integrity even in his personal affairs and any deviation from these standards, even in his non-professional work, would expose him to disciplinary action.

For example, a member who is found to have forged the will of a relative, would be liable to disciplinary action even though the forgery may not have been done in the course of his professional duty.

“Other misconduct” would also relate to conviction by a competent court for an offence involving moral turpitude punishable with transportation or imprisonment or to an offence not of a technical nature committed by the member in his professional capacity.

DISCIPLINARY ACTION AGAINST PROFESSIONAL MISCONDUCT

ICWAI has a three-tier mechanism to deal with Professional misconduct of its members – Disciplinary Directorate, Board of Discipline & Disciplinary Committee.

Disciplinary Directorate makes investigations in respect of any information or complaint received by it.

1)If the member is guilty of any professional or other misconduct mentioned in the First Schedule, Disciplinary Directorate places the matter before the Board of Discipline.

2)If the members is guilty of any professional or other misconduct mentioned in the Second Schedule or in both the Schedules, Disciplinary Directorate places the matter before the Disciplinary Committee.

The Board of Discipline and Disciplinary Committee on referral by Disciplinary Directorate, after affording the member an opportunity of being heard make an order and take any one or more of the following actions:

a)reprimand the member
b)remove the name of the member from the Register
c)impose fine

For the purpose of an inquiry under the provisions of CWA Act, the Disciplinary Directorate, Board of Discipline & Disciplinary Committee have the same powers as are vested in a civil court.

To be continued….

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This is part 3 of the topic Professional Body and Professionalism by CMA B V Prabhakar. He discusses on how accounting bodies IMA-USA, ICWAI-INDIA & ICSI-INDIA apply the above principles.

View CMA B V Prabhakar’s profile

• Strategic Costing
• Business Performance Management
• Finance Governance, Risk, and Compliance
• Technology Enablement
• Leadership Strategies and Ethics

1. How can management accounting and finance best contribute to improving competitiveness and achieving continuous improvement in the enterprise?
2. How does management accounting affect management behavior?
3. What are important emerging cost management and performance measurement techniques and issues?
4. How is globalization affecting management accounting and finance?
5. How is emerging technology being used to improve the effectiveness of management accounting?

• Leadership Strategies and Ethics
• Technology Enablement
• Strategic Cost Management
• Business Performance Management
• Finance Governance, Risk, and Compliance

• Leadership Strategies and Ethics
• Technology Enablement
• Strategic Cost Management
• Business Performance Management
• Finance Governance, Risk, and Compliance (FGRC)
• Practice of Management Accounting

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1. Profession v/s Professionalism - 2
2. Profession v/s Professionalism - 1
3. Lowballing
4. Membership of an Accounting Body - Value Proposition
5. Best Practice Managerial Accounting - SAP

This is part 2 of the topic Professional Body and Professionalism by CMA B V Prabhakar. He discusses on how accounting bodies IMA-USA, ICWAI-INDIA & ICSI-INDIA apply the above principles.

View CMA B V Prabhakar’s profile

Efforts of different professional bodies to promote professionalism.

Let us now see the case of three Professional Bodies, IMA-USA, ICWAI-INDIA & ICSI-INDIA, and compile how these Professional Accounting Bodies ensure, build and promote Professionalism among its members.

I. INSTITUTE OF MANAGEMENT ACCOUNTANTS , USA (www.imanet.org)

The Institute of Management Accountants (IMA®) is the world’s leading organization dedicated to empowering management accounting and finance professionals to drive business performance.

With a network of about 60,000 professionals, IMA provides a dynamic forum for management accounting and financial professionals to develop and advance their careers through its Certified Management Accountant (CMA®) program, cutting-edge professional research and practice development, education, networking, and the advocacy of the highest ethical and professional practices.

Vision Statement

The world’s leading association for management accounting and finance professionals.

Mission Statement

To provide a dynamic forum for management accounting and finance professionals to develop and advance their careers through certification, research and practice development, education, networking, and the advocacy of the highest ethical and professional practices.

A. Statement of Ethical Professional Practice as issued by IMA:

Members of IMA shall behave ethically. A commitment to ethical professional practice includes overarching principles that express our values, and standards that guide our conduct.

PRINCIPLES

IMA’s overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility.

Members shall act in accordance with these principles and shall encourage others within their organizations to adhere to them.

STANDARDS

A member’s failure to comply with the following standards may result in disciplinary action.

I. COMPETENCE

Each member has a responsibility to:

II. CONFIDENTIALITY

Each member has a responsibility to:

III. INTEGRITY

Each member has a responsibility to:

IV. CREDIBILITY

Each member has a responsibility to:

RESOLUTION OF ETHICAL CONFLICT

In applying the Standards of Ethical Professional Practice, members may encounter problems identifying unethical behaviour or resolving an ethical conflict.

When faced with ethical issues, members should follow their organization’s established policies on the resolution of such conflict.

If these policies do not resolve the ethical conflict, then members should consider the following courses of action:

Mission of the Ethics Program

Encourage organizations and individuals to adopt, promote and execute business practices consistent with high ethical standards, by providing valuable insight into the complexities that result from social and technological change.

The following definition of ethics is provided as a foundation for IMA members.

“Ethics in its broader sense, deals with human conduct in relation to what is morally good and bad, right and wrong. It is the application of values to decision making. These values include honesty, fairness, responsibility, respect and compassion.” - Rushworth Kidder, President, Institute for Global Ethics

As already explained above, IMA offers an ethics helpline service. Members of IMA as well as other financial professionals may contact this helpline for free, confidential guidance on ethical issues.

The purpose of the helpline is to provide guidance to those in the profession that find themselves in an ethical dilemma.

After a preliminary discussion of the problem to determine the kind of ethics matter being reported, an ethics counsellor will respond to the caller. Confidentiality is maintained at all times. The counsellor will not provide a specific resolution but will explain how the dilemma relates to the provisions of IMA’s Statement of Ethical Professional Practice.

B. CONTINUING EDUCATION REQUIREMENTS

CMAs are required to maintain their proficiency in the fields of management accounting and financial management. This includes knowledge of new concepts and techniques as well as their application in the management accounting and financial management professions. The objective is to maintain the professional competence of the individual and to enhance one’s ability to perform job-related requirements. The continuing education requirement is 30 hours per year.

A broad range of subjects may be included in the programs for which hours of credit will be given

- all aspects of accounting, financial management, business applications of mathematics and statistics, computer science, economics, management, production, marketing, business law, and organizational behaviour.

All CMAs are required to complete a minimum 2 hours of continuing education on the subject of ethics as part of their 30-hour annual CPE requirement.

IMA’s Statement of Ethical Professional Practice as depicted above, is an excellent framework for determining the types of ethical topics that are acceptable. The focus of the ethics education should be principally in the area of management accounting and financial management.

Topics should include ethical considerations in the area of decision support, planning and control for accounting and finance professionals working inside organizations. Members are encouraged to address specific scenarios such as fraud in financial reporting, manipulation of budgets for personal gain, disclosure of confidential financial information and coverage of ethics within general business environment.

To be continued….

Do you like to be updated in Accountancy ?

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Or

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Visit MA Stores ? You will find something you are looking for ….

You may also like to read

1. Profession v/s Professionalism - 1
2. Lowballing
3. Membership of an Accounting Body - Value Proposition