News Flashes

CAs may soon be able to keep books in US, Australia & Singapore

24th August 2006: Chartered accountants are seeking to widen their horizon. With gloabalisation gaining ground, they are keen to tap business in other countries and are willing to support opening of the Indian market on a reciprocal basis.

Efforts have been initiated to ink mutual recognition agreements (MRAs) with the US & Australia, and talks are at an advanced stage with Singapore so that Indian CAs can take up work in these countries. The government may give the move a thrust when a US delegation led by Franklin Lavin, under secretary for international trade, US dept of commerce, visits the country later this year.

US has informed New Delhi that its accounting regulator, the International Qualification Assessment Board (IQAB) is in touch with its Indian counterpart — the Institute of Chartered Accountants of India — and that the issue continues to be monitored during its trade policy review.

Meanwhile, ICAI, which is at an advanced stage of talks with Singapore in line with the comprehensive economic co-operation agreement (CECA) between the countries, has also started talks with its counterpart in Australia — the Institute of Certified Public Accountants of Australia.

It also has a joint working group with UK to work out an MRA. The talks are expected to gain pace due to a convergence of views between the government, the industry & some major legislative initiatives.

The limited liability partnership (LLP) bill, which allow partnerships without a cap on the number of partners, is expected to please both the professionals here and in the partnering country.

Now there is a ceiling of 20 partners in a partnership firm and 10 in a banking firm. Professionals say the new law will ensure a level playing field, while liberalising services trade. “We are ready to open up the accounting sector on a reciprocal basis.

Our professionals should be allowed to do in the partnering country what we allow them to do here. We see it as an opportunity, not as a threat,” said ICAI president TN Manoharan. He said that talks revolve around five areas for the convergence of the qualification.

These are the minimum eligibility for a student to enroll for accounting qualification, the curriculum, practical training, examination and the licensing needed for practice (not for working with a corporate).

MRAs have the advantage that the liberalisation could be broader than what is envisaged under the WTO — accounting, auditing and book keeping. Taxation-related services, restructuring, valuation and consultancy are not part of WTO talks.

Dress code for Chartered Accountants soon

24th August 2006: A dress code for practicing Chartered Accountants will be out by the end of this month with Institute of Chartered Accountants of India giving finishing touches to the recommendatory proposal to give its professionals a corporate look and don a new brand identity.

"We are in the process of finalising a dress code that will be announced by the end of this month," said ICAI president T N Manoharan.

He, however, said the proposal would not be mandatory in nature. "It will be more of a recommendation, though we expect it to be followed by the professionals," Manoharan said.

Elaborating on the proposal, he said the dress code would not be for day-to-day affairs but for events like business meetings and other official representations and engagements.

Set up under an Act of the Parliament, ICAI is the apex governing body working for regulation and development of the accountancy profession in India.

Manoharan clarified the code would be applicable only to professionals working in individual or partnership capacity. "Those who are employed with companies are not bound to follow as they will be acting as per the requirements and stipulations of the organisation they work for," he added.

A formal dress code, he said, could be a full-sleeve shirt, tie and shoes.

ICAI is also working on the design of a logo that Chartered Accountants could use on their visiting cards, letter-heads and other stationery. This follows a similar initiative of the institute where it had allowed its members to prefix the letters 'CA' before their names, similar to what doctors do. PTI DP PD AN ANS 08061125 DEL (Reopen DEL 24)

The steps are being taken at a time when ICAI is going in for major changes with regard to the development and working of accounting professionals in India.

The institute has recently taken a bold initiative as part of which the time-period for becoming a CA has been cut down, almost by one-and-a-half year. It has simplified the rigorous examination structure students have to go through and the new system is likely to be operational from next month.

In another move it has also permitted its members to set up management consultancy firms while retaining their status of being practicing CAs, who were so far not allowed to be equity holders in companies.

This has been done keeping in mind the growing role of CAs in management consultancy as well as to help them compete with major consultancy firms who could employ huge capital and human resource, Manoharan said. PTI DP PD AN ANS 08061126 DEL

Indiabulls gets nod for demerger of its real estate biz

8th August 2006: Indiabulls Financial Services Ltd has received Bombay Stock Exchange and National Stock Exchange nod for demerger of its real estate business.

The company said the NSE and BSE have approved its scheme of rearrangement, whereby Indiabulls Real Estate Ltd would be a separately traded public entity.

Last year, Indiabulls had acquired Jupiter Mills and Elphinstone Mills, located at prime areas in Mumbai, from NTC for building commercial office space.

"Every shareholder holding one share of Indiabulls Financial Services Ltd would get one share of Indiabulls Real Estate Ltd, the demerged entity," the company said.

Farallon Capital Management LLC, recently invested Rs 644 crore in the company under a share subscription agreement.

As per the agreement, Oberon Limited, a Farallon SPV will be allotted convertible preference and non-convertible preference shares against the deal.

Indiabulls, which had committed to complete the de-merger by the third quarter, has also applied to the Delhi High Court for its approval, the release said.

Soon, your CA may charge you more

5th August 2006: Hiring Chartered Accountants (CA) for audit work is going to be costlier with the Institute of Chartered Accountants of India (ICAI) today revising the fee structure.

The institute today also decided to allow chartered accountants to provide management consultancy services as a corporate entity. Now a CA can provide management consultancy only as an individual or as a partnership firm.

ICAI president TN Manoharan said here that the new minimum fee structure is with reference to the size of a CA firm via-a-vis the population of the cities where they practice. It would come into force from next month, he said.

The fee-per-audit revision has been done after a gap of two years. For firms with five to ten partners in a city of 3m and above population, the revised audit fee would be Rs 6,000 (now Rs 5,000) and for firms with more than 10 partners, it would be Rs 12,000 (now Rs 9,000) per audit.

Similarly, for cities with population size less than 3m, audit fee has been increased to Rs 3,500 for firms with 5-10 partners, while for more than 10 partners it is now Rs 8,000, he said.

However, the condition shall not apply to income tax audit, VAT audit and audit under sales-tax law because these heads do not require statutory audit if it is below a certain limit, he said. The revision has been effected in the wake of spiralling prices, inflation and the increased service tax over the years.

ICAI said the decision to allow CAs to head management consultancy service firms without surrendering their certificate of practice has been taken to facilitate the profession’s growth in the wake of the outsourcing boom.

The condition is that the firm should be in the field of consultancy exclusively. This enables professionals to provide other functions like attestation of documents, while being in a consultancy firm, a practice disallowed so far.

The accounting regulator also revised the norms for accounting property, plant and equipment. As per the changes in accounting standards 10 and six, companies could capitalise the cost of major inspections or overhaul as a part of the cost of the asset.

The costs capitalised thus should be charged to the profit and loss account over a number of years, by way of depreciation. The change is made in line with international practice, said Mr Manoharan.

Now, CAs can open management consultancy cos

4th August 2006: Realising the threat posed by global management and consultancy firms like KPMG and Ernst & Young, the Governing body of Chartered Accountant professionals today allowed its members to set up management consultancy companies to help shore up capital and human resource.

Practicing CAs were so far not allowed to be equity holders in companies and could function in the capacity of individual or partnership firms.

Institute of Chartered Accountants of India (ICAI) president T N Manoharan said that its Council members had approved the proposal, keeping in mind the growing role of CAs in management consultancy as well as helps them compete with major consultancy firms who could employ huge capital and human resource.

Manoharan said professionals were increasingly being involved in management consultancy works and today's decision would help them expand to respectable levels.

"Gradually, decision-making jobs are being outsourced by managements to CAs. These include management decisions like deciding on debt or equity, methods to improve operational effiencies, interest swapping and cost effiency measures," he said.

He said that with the permission, CAs would get empowered to operate in a corporate form in specialised management subjects without the constraint of human resource or capital.

ICAI also introduced a new course on consultancy management which will be open to practicing CAs and based on self-assessment.

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