What are the current priorities before ICAI on standards for accounting?
We are giving a lot of focus on framing accounting standards and audit guidelines for the cooperative sector. This sector is very important and there is need for better governance and transparency here. Except Maharashtra and Gujarat, no other (state) government is taking strong steps in bringing corporate governance and transparency in the financial statements of cooperative firms. So, we want to lay down certain principles and procedures for our members who audit as well as prepare financial statements for cooperatives. We are meeting all state ministers and requesting them to improve cooperative (sector) audits in their states.
What does this mean? Will these standards also cover non-government organisations (NGOs)?
We will be telling how cooperative audits can be carried out in a transparent way, about the need for a uniform financial statement and also details about the disclosures required for better governance. No, NGOs will not be covered under this set of guidelines. We are working on framing accounting and audit guidelines for NGOs separately. Identification of the source, disclosure of the money and utilisation of the funds to see if it has been used for the purpose the trust was established are all key to NGO accounting guidelines.
Rahman Khan, deputy chairman of the Rajya Sabha, had recently suggested ICAI prepare some standards to assess presumptive losses/gains for a standard assessment. Is it practical?
We have received this suggestion from him. We need to see if there are any practices followed internationally. We have to discuss it with him to understand what his expectation is.
We have received this suggestion from him. We need to see if there are any practices followed internationally. We have to discuss it with him to understand what his expectation is.
Which industry-specific standards are you working on?
We are preparing a guidance document for audit in rate-regulated sectors such as power, fertiliser, oil and gas, etc. These are areas where the rates are regulated by authorities. The guidance note will tell our members how to recognise the revenues and prepare the reports for these sectors.
We are preparing a guidance document for audit in rate-regulated sectors such as power, fertiliser, oil and gas, etc. These are areas where the rates are regulated by authorities. The guidance note will tell our members how to recognise the revenues and prepare the reports for these sectors.
The government has allows chartered accountants to form Limited Liability Partnership (LLP) firms. How will it impact the profession?
LLP is an important tool for growth. But we had several apprehensions when the government clarified we can set up LLPs. We wanted to know if LLPs could be statutory auditors, because under current law, body corporates cannot be appointed statutory auditors. The government then clarified that our LLPs formed for this specific purpose will not be treated as body corporate, which means the LLP form of chartered accountant firms can carry out attesting functions or statutory audits. They can be appointed as tax auditors or statutory auditors. It also gives young chartered accountants lot of opportunity to join together and form big audit firms.
LLP is an important tool for growth. But we had several apprehensions when the government clarified we can set up LLPs. We wanted to know if LLPs could be statutory auditors, because under current law, body corporates cannot be appointed statutory auditors. The government then clarified that our LLPs formed for this specific purpose will not be treated as body corporate, which means the LLP form of chartered accountant firms can carry out attesting functions or statutory audits. They can be appointed as tax auditors or statutory auditors. It also gives young chartered accountants lot of opportunity to join together and form big audit firms.
Source: http://www.business-standard.com/india/news/qa-g-ramaswamy-president-icai/442406/
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