ICWAI Professional Body & Professionalism - 4

22 March 2009 |

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 LinkedIn profileView 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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