Chartered Accountants and what to expect from them – A CA speaks up

It is true that becoming a Chartered Accountant is tough but becoming a successful chartered Accountant is even tougher. A graduate who goes through rigorous article training and passes around 20 examinations, then becomes a chartered accountant. 1 in 100s pass this toughest course of the country. It is not tough just because of number of exams or duration involved, but because of level of understanding and practical approach expected from a CA candidate. Even after successfully clearing the exam he undergoes various practical challenges, first and foremost establishing his own firm that too with the demanding expectations with humble fee structures.

Criticizing Chartered Accountants on one after the other financial scams is absolutely uncalled for. Auditors are the watch dogs and not the blood hounds. If he is expected to sit down with the stakeholders and get the errors rectified, then we are asking more than auditing. Who will shell out the cost involved in such a long drawn process when people are not ready to pay even minimum professional fees decided by ICAI? Once the auditors raise objections, how are they being investigated by government agencies should also be looked after. It is the responsibility of the concerned government departments to ensure strict action is taken against the audit objections. Once a scam is exposed, it is unfair to mud all of that on a Chartered Accountant. Remember an auditor audits only the financial statements and not the standards of procedures adopted by a concern. It is the lethargic attitude of the investigating agencies that these scams remain under cover for long-long period of time.  

            The term audit has been derived from the Latin word “audire” which means to hear. According to Auditing standards and guidelines, U K, “An audit is the independent examination of an expression of opinion on, the financial statements of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligations”. Even as per SA 200, Basic Principles Governing an Audit, issued by the Institute of Chartered Accountants of India (ICAI), an audit is the independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion thereon. If we are expected to go beyond auditing, the very purpose of examination by an independent body would be dissolved. As far as a Chartered Accountant is concerned, he is appointed to give his opinion on the financial statements. He is not there to check each and every procedural lapse. That duty lies with the concerned bank inspectors, management and the internal audit team of a financial institution. The management and the auditors work hand in hand. Job of an auditor is only to analyse the books of account and where he feels that there are some red flags, he brings those in notice of the shareholders by qualifying audit report. If he is to himself resolve his own objections, then his independence is surely being compromised. Also expecting that all auditors would form same opinion on a given matter, is like expecting rains in a desert. When government can differ with its own opinion every now and then, how can it be expected out of an auditor? Be it 55 year old Income Tax Act, 5 year old Companies or newly born GST, when government is changing its mind every minute, how can it expect all the auditors to have a specific mind set throughout their tenure as auditors.

            It is a Chartered Accountant who has the courage to write against the same client who is supposed to pay his professional fees.  It is a Chartered Accountant who ensures that every now and then changing laws are fully complied by his clients. It is a Chartered Accountant who coordinates with Income Tax Officials in ensuring high tax collections. It is a Chartered Accountant, who ensures that all the returns be it Income Tax Returns, GST Returns, Labour Law Returns, TDS returns and all others are filed in time. It is the same Chartered Accountant who conducts a special audit, when the revenue department is in confusion at the time of assessment proceedings. It is a Chartered Accountant who assists the department when they carry out search/survey/seizure at their clients. It was the same Chartered Accountant who our Union Finance minister applauded for making Income Disclosure Scheme a huge success. Even after such huge Commitments, criticizing such a prestigious profession, is making the same Chartered Accountant think all over again. Just because of few, we cannot criticize the whole community. Tell me any Community which does not have a black sheep, after all it’s human nature.  

            If Government really wishes to reduce such scams, it should conduct regularly interact with the professional bodies about the working style of the government organisations. A bottom-up approach should be adopted by conducting such meetings at the ground level. Decisions taken at ministerial levels, usually fails to be properly communicated to the concerned professional. The time has come when things have to become transparent, gone are days when the government officials could remain silent when questioned by the auditors. The financial doctors should be kept abreast of the changes and standards of procedures involved in such government sector undertaking. There is a need to bridge the gap between what is expected and what is delivered. An autonomous body should be established to give insights about the government undertakings before any audit is commenced by auditors. It is also necessary that the Lowest Bid system of allotting the tenders should be discontinued. Work should be allotted purely based upon the experience and online assessment specific to the undertaking for which tender is released. Lastly it is important that whatever issue an auditor raises, it should be properly investigated in a time bound manner and where no action is taken by the government agencies, it should be heavily penalized.

            No auditor compromises when he is vested to give his opinion on utilization of public money. It is the failure to investigate to investigate audit objections, which lead to such huge scams. There are number of audit reports which are still waiting for an action, not only in case of companies but also of the government offices. The officials have no justification as to why no action has been taken on these audit reports. There is a need that an early action is taken on such audit reports. Rather than criticizing each other, there is a need that government discuss the matter with the professional bodies and revamp the complete auditing system including their own departments.  

Keshav R Garg

(B.Com, FCA, CS, ISA (ICAI))

Address: 3328, First Floor, Sector 27 D, Chandigarh, India - 160 019

Phones: +91-172-461-3328, +91-98880-90008

Mail: keshavgarg@kdai.in