In a country that thrives on economic growth and financial stability, Chartered Accountants play a pivotal role in ensuring the smooth functioning of businesses. Chartered accountants are financial experts who possess extensive knowledge and skills in accounting, auditing, taxation, financial management, and other related areas. They serve as the backbone of the financial sector, providing a wide range of services to individuals, businesses, and the government. CAs conduct independent audits to ensure the accuracy and transparency of financial statements, thereby safeguarding the interests of stakeholders. Their audits help maintain trust in the financial system and provide vital information for decision-making.
The Institute of Chartered Accountants of India (ICAI) was established in 1949 under the ICAI Act due to a deficit of trust in financial statements. The institute’s purpose is to ensure that financial statements are audited by Chartered Accountants to maintain the integrity, excellence, and credibility of financial data. It is the only institute that focuses on financial literacy. The institute is one of the largest educational bodies in terms of student enrollment.
There are two sets involved: the subject, which consists of individuals, firms, and companies, and the government. The institute acts as a bridge between the government and the subject, and its members ensure compliance with taxation laws and other regulations such as SEBI and Company Law. As an individual, I may not be familiar with various provisions, but Chartered Accountants ensure that I file my income tax properly. The dedication of Chartered Accountants is evident in the high number of tax returns filed, which exceeded 7 crores this time.
The second part pertains to business planning. For this purpose, a project report is prepared to minimize finance costs and maximize benefits. In a competitive world, it is crucial to minimize transaction costs to survive, generate profits, and serve the nation. Chartered Accountants are uniquely capable of fulfilling this role with excellence due to the ethical standards set by the Institute.
The Institute follows a system where Chartered Accountants are issued a certificate for one year. This ensures that they adhere to prescribed norms in providing services and if any deficiencies are found, their certificate is not renewed, and disciplinary action is taken. This profession plays a pivotal role not only between the government and individuals but also between the government and industries.
I believe that tax planning is crucial in today’s world. Common people may not fully understand its importance. Let me give you an example. In a budget a few years ago, there was a reduction in income tax rates for new companies. This meant that if you incorporate a new business entity in India, you can make India an attractive investment destination for domestic and international players. A chartered accountant is the best person to guide foreign investors, new industrialists, and entrepreneurs about the benefits provided by the government, such as the lowered income tax rate. Instead of incorporating a new business in the same entity or in a different form, it is advisable to do it as a private limited or public limited company to avail of this benefit. All of these scenarios involve tax planning, which is extremely essential and should never be frowned upon.
Chartered Accountants are bound by a strict code of ethics. They are conscious of the fact that they play a crucial role in partnering in nation-building. Many leaders of the country have placed their trust in the role of chartered accountants. Just like you would visit a doctor who recommends an MRI or CT scan to identify any issues and find ways to fix them, chartered accountants, when assessing a company’s finances, can identify areas of high costs, suggest ways to increase revenue and earnings per share (EPS), and inform you about your tax liabilities.
They ensure that you pay the applicable direct or indirect taxes to contribute to the country’s progress. The role of chartered accountants can be beautifully summarized in this manner.
There are two or three aspects to consider. The first aspect pertains to the role of Chartered Accountants in financial reporting, bookkeeping, and maintenance of books of accounts. Currently, accounting standards in India are benchmarked with the International Financial Reporting Standards (IFRS) used globally. Similarly, auditing standards in India align with international standards. This means that the financial reporting and auditing practices in India are on par with international best practices.
When discussing the country’s economic growth, we find ourselves in a time where India has established itself as a leader in various industries. For instance, India has emerged as the vaccine capital of the world, providing vaccines to the global population during the COVID-19 pandemic. Additionally, India has gained significant goodwill in the software industry, with many tech companies in Silicon Valley and India’s own technology sector dominating the global landscape.
In terms of the finance profession, Indian accountants are playing a significant role globally. Approximately 10% of the 4 lakh members of the profession are located in different jurisdictions worldwide, contributing not only to their respective economies but also attracting investments to India. This trend positions India to become a Finance and Accounting Hub. With 8.5 lakh students pursuing the Chartered Accountancy course, India has a large pool of world-class accounting professionals who follow internationally benchmarked standards. This enables them to not only handle India’s financial work but also support global capacity centers that have been established in India, conducting accounting work for the globe.
In conclusion, India has the potential to lead the finance, accounting, and taxation era worldwide, thanks to its adherence to international standards and the presence of highly skilled accounting professionals.
(The author is an Advocate by profession)
