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Professional Body

The definition of Professional Body from Reference.com


"A professional body or professional organization, also known as a professional association or professional society, is an organization, usually non-profit, that exists to further a particular profession, to protect both the public interest and the interests of professionals. The balance between these two may be a matter of opinion. On the one hand, professional bodies may act to protect the public by maintaining and enforcing standards of training and ethics in their profession. On the other hand, they may also act like a cartel or a labor union (trade union) for the members of the profession, though this description is commonly rejected by the body concerned."

The first half of the definition is very sweet and text book type definition what the public knows about and second is what the professional body does.

I am writing this blog in particular reference to Indian Accounting bodies.

There was a reference by RV in CMA Yahoogroups "How many prerogatives and previlages can one body enjoy ? in a democracy-craving" with reference to ICAI, India. To which I found one of the reports in DCA website sharing same concerns.
3.02 In most countries, the regulatory role is carried out, to greater or lesser degree, by professional bodies representing certified public accountants. Whilst in some countries the regulator is a re are merely voluntary “non-statutory” self self-regulating organisation, in some others they are creatures of a specific statutes. In IndiaHere, the Institute of Chartered Accountants of India (ICAI) has been set up under the Chartered Accountants Act, 1949, to examine and regulate the profession. Similarly, the Institute of Company Secretaries of India (ICSI) has been set up under the Company Secretaries Act, 1980, to regulate its members. Analogously, and the cost accountants are regulated by the Institute of Cost and Works Accountants of India (ICWAI)Institute of Cost and Works Accountants of India (ICWAI) regulate the cost accountants. Indeed, these three professional organisations are statutory bodies created by acts of Parliament, and not mere self-regulating organisations.

3.09 The opinions expressed by those who met with the Committee were split along the middle: one set of people fervently advocated the setting up of an independent Public Accounting Oversight Board, while another — most notably, many chartered accountants, argued otherwise.

In India, we have only one Accounting body that conducts financial audits, frames accounting standards and behave like a bully .... trade union tendencies (I am coming to second part of definition).

Read the statements of President of ICAI. Read CAinIndia

The RBI move has huge ramifications for accounting and audit firms in India and adversely affects their business. “Almost 35-40% of CA firms, especially the smaller ones, will be hit by the RBI directive,” said the ICAI president Sunil H Talati.

Read Financial Express

"We believe internal auditing is the sole prerogative and core competency of a chartered accountant. No other professional body should be allowed to provide such services," Talati said.

Read Hindu Business Line ICAI opposed name change of ICWAI with objections that word "Management" would create confusion.
ICAI Act does not explain anything about the word "Chartered" but it changed from Registered Accountant to Chartered Accountant in 1950. They forgot India is a republic and ICAI is the only govt. recognised body in the country that uses the word "Chartered". Read my earlier blog.

You may notice the ICSI Act

Pursuant to section 383A of the Companies Act, 1956, companies with a paid-up share capital of Rs.Two crores or more are compulsorily required to appoint a whole time Company Secretary who must he member of the Institute of Company Secretaries India.

Every company having a paid-up share capital of Rs.Ten Lakhs or more but less than Rs.Two Crores, is required to engage the services of a Secretary in Whole-time Practice for issue of compliance Certificate.

My question is why a paid employee of a company who functions a company secretary be a law professional or member of other accounting bodies in India. When you practise as a company secretary, then you should be a company secretary from ICSI... but is the case when in employment.

The Companies Act does not have any minimum qualification for "Director" !!!

ICWAI is slow mover in every area concerned and tries to catch with everybody.

The above discussion has been focussed on professional body acting like a cartel.

The second question is

"professional bodies may act to protect the public by maintaining and enforcing standards of training and ethics in their profession"

Do you feel
  • that standards of training good accounting bodies in India ?
  • Monitoring of Practising Firms about quality standards
  • Effective displicinary actions against the erring professionals
  • Read Disciplinary Misconduct in this report
As a consumer you do not have choice to hire services of accounting professions other than ICAI since there is no other accounting institute in India.

Now India should move towards having a Regulatory Authority/Board for Accounting & Audit Standards and more than one accounting bodies. The quality of bodies should be monitored by the Regulatory Authority so that the professional institutes do not not behave like cartel. And the public would be benefitted.

Your views please.

Regards,

Santosh Puthran



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Comments

raghu said…
Definitely I agree with u in letter and spirit.Power corrupts and absolute power corrupts absolutely.
ICAI has all along adhered to the path mentioned above.First the Monopoly over financial audit then right to certify cost accounting(though now restricted) then taking the mantles of Accounting standards.Then certtifying Tax return (conflicting interest a member of the profession prepares accounts and another member of the same institute certifying the Tax returns,Now Internal audit)The tendency of monopoly is corrupt the society.That is the reason in the queens land they had allowed fair competition in accountancy profession by establishing Recognised qualifying board(as a oversight Board regulating audit profession)In australia ASIC does that and in south africa IRBA.I think that it is high time that India goes for de-mutualisation of educational institutes from regulators and thus removing conflicting interst and allowing members with required skill set to conduct audit if he is member of any body that imparts education.
Manoj said…
Sir, I agree fully with the concerns you have raised in this post..Unfortunately, the CA lobby appears to be really strong and gets their way done...our institute (ICWA) needs to be proactive and swift moves in this regard will only help serve the larger interests of the society.
Santosh Puthran said…
Hello Raghu & Manoj,

It is quite obvious why ICAI is protecting its interest and grabbing all the statutory assignments so that as professionals they are benefitted the most. Their practicioners are quite well off. The GOI or DCA has entrusted ICAI to monitor the profession. Same as RTO is responsible for issuing driving licences as well as penalising those breaking the law. The end result you can see the driving on the roads.

Commenting on other professions viz medicine or law their are lot of universities imparting education. The registerating authority is different for the practioners. In accountancy, it is run like monopoly.

ICSI has been growing too fast since the MCA has introduced lot of certifications to be done by ICSI members. ICWAI seems to be talk about the profession but the institute does not seem to recognise that real people who make the ICWAI known in corporate world are the members in employment and not members in practise. ICWAI can influence the profession by consistently working the industry and building up the base from graduate trainee to the financial controller... encouraging companies to train its student/graduates and progress the membership to the hightest level. Networking with other management institutes so that the members have good level of exemptions would enable ICWAs to complete those courses and then influence the profession.

At the end of day, ICAI is doing right... what it is expected to do to grow the profession. The concern is GOI should have Regulatory Authority in place to formulate Accounting Standards and have multiple accounting bodies to do the financial audits.
Anonymous said…
setting up another audit regularities will only add to more confusion. What India needs is simplified law, rules and regulations.
Santosh Puthran said…
http://www.indianexpress.com/story/28437.html - Another attempt by ICAI to take up as many things what traffic can bear.
Anonymous said…
Very much agree with suggestions, however i think that ICWA institute has also to make their presence feel rather than catching things....today, how many icwas are practicing cost accountants?? I think it is combined responsibility of members and institute to feel their presence to Govt and other accounting bodies like ICAI , of course this is not a bull fight , however, a CWA should get a right place and respect as a member of a professional body.

However i think for that we need a structural change in CWA as a professional course. To mention, how many fresh grad cwas are having practical knowledge of factory accounting, i have gone thru such exp myself and hence sharing the same. If you see any profession say for MBA, CA or CS... they require some kind of on job practical training to get a professional degree, where it is present in our case...

This is a small example where by i want to suggest this is high time for icwa institute make such things compulsary for students pursing such courses so that they stand well with other professionals, in their areas of specialisation.

hope for the best!!
KAPIL said…
Dear Raghu,

I truly respect yur comments and opinions in the matter and would like to add that actually the finnace position in a company is actually meant for a CWA or CA and not for the person with PGDBM or MBA degree. They are real forebearer of professional pursuits in finnace and not the so called MBA holders. It is that MBA institutes are only try to market themself out to newly opened up indian corporate sector to world business community. They are trying to simply focus taht they are knowledgeable lot and there is alot of hip and hop if you get MBA degree etc ..... but factually telling I have good no. of CWA freinds who are really intellignet and only they need to focus them out to the Managements that we are actaully the Cost/Management Accountants having sound knowldge of finance. I must share with you, I have good no. of MBA Finance from IIMs as my clients who visit me for help in syndication of funds for their project.

It is just a hype and a passing fad . Factually telling if you go in history every now and then there is passing fad for a new thing and finally things settle dowm and that which is real remains. Only I feel that CWAs should assert themself as real Management Finance personnels and what is a MBA-F holder in front of them.

Presentation skill or so called analysis is no real domain for a MBA course. Tomorrow you would find an MBA even to eat or to sleep or to polish the shoes.

I hope you understand. Any advices reqiured I can be reached out at knmconsultants@gamil.com.

KAPIL

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