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India needs Paradigm shift in view-Auditing Skills Vs Brand CAs.

Abundance of skills available in the sector of accounting and auditing and with impending Companies act direct tax code bill India should re-orient its recognition procedure lest it ideology of inclusive growth is in shambles.WRT Auditing and public accounting profession.

Most of the countries in the world whether UK/EU/ZA/Au have made it a point to demutualise education and auditing profession and regulate the profession by bringing in a certain degree of competition and enabling the profession to be institute(institution) neutral.In UK six bodies are recognised as RQB and one of them is not a member body of IFAC.In Australia Three bodies are recognised by ASIC.In ZA(south africa)the newly constituted IRBA has come up with an accredition model in May 2007. Read More

In the USA it is a common format of exams under AICPA but NASBA recognises the qualification for License to practice.In Canada though there is no super regulatory body the Government of canada recognises three institutes for Auditing(CGA/CICA/CMA).Most of the south east asian countries recognise more than one qualification for credence to auditing with malasia having two internal bodies-MIA/MICPA.

The relevance of having such a demutualisation is to recognise the skill-set delivered by various institutes and also promote healthy competition.This also ensures quality and destroys Monopoly which is a must for any civilised society.

Unfortunately the development in India is not encouraging on this front where we are trying to put all eggs in one basket and grant undue weightage that may harm the stakeholders interest in the longrun.

ICAI is a statutory accounting body and so is ICWAI and both are the members of IFAC and the latter is a founder member of the international organisation.In a huge country like India with variety of stakeholder it is in the interest of the society to have a superior regulator with the participation of the accredited institutes(ICAI/ICWAI).This may be under the administrative supervision of the MCA.With the digitisation of MCA operations it would be easier to track the performance of the auditors.

Members of ICWAI/ICAI should be entitled to register as auditors initially and be allowed to audit businesses on equal footing(financial/cost/special/internal/tax audits).Any new bodies by virtue of WTO on services fulfills the criteria should also be allowed to have accredition.
ICAI and ICWAI should be restricting their function to delivery of education and required skill set and the member disciplinary mechanism and quality assurance and review board.Their representatives will occupy the newly constituted supervisory body for regulating the auditing profession.The regulatory body will focus its arms on all types of audit with sectoral neutrality.
A member of the two institutes should satisfy additional requirements as designed by the regulator to get registered as Auditor.

I think India should enter into such model coterminus with the enactment of the New companies act and direct tax code bill.

The benefit will be that the society shall have choice of the professionals a change of mind set and more focussed audits.

More Info :

ASIC, Australia

Blog Posted by RV

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