The CA Institute is working on a research paper on “cryptocurrency” including their audit and taxation aspects, it’s new president Debashis Mitra has said.
“We have set up a research group on this. Crypto is a technical subject. We are seeing the implication on accounting, how it should be audited and also the implication of 30 per cent taxation announced in the Budget,” Mitra said in his first media interaction after assuming charge as ICAI President in February. This research paper will be ready in next one and half months and will be submitted to the government, he said.
He added that the ICAI plans to use blockchain in finance and audit function, decentralised finance and align blockchain with other technology areas like big data and Artificial Intelligence. When asked about Prime Minister Narendra Modi’s call (in July 2017) to create four large Indian audit firms of global stature by 2022, Mitra said the ICAI will take active steps on this front during his presidency. “We are calling a meeting in April of the top 20 Indian audit firms and discuss with them on the way forward,” he said.
Mitra highlighted that there are about 50,000 practising units in the country and several of them are small firms and proprietary ones that could take advantage of the ICAI’s norms around networking and multidisciplinary partnerships to grow big. To a query on ICAI’s run-ins last year with the country’s sole independent audit regulator National Financial Reporting Authority (NFRA), Mitra said both ICAI and NFRA can “totally co-exist” in the coming days and that the past differences can be sorted out.
Both ICAI and NFRA now have new persons at the helm.
Future of audit profession
Mitra also said that the CA Institute, at its council meeting on March 24, will decide on a date to hold a special meeting to discuss and debate the future strategy for audit profession. He refuted the contention in certain quarters that ICAI’s disciplinary mechanism is not swift and in tune with the current day’s requirements.
He added that the efficacy of ICAI’s disciplinary mechanism should be measured on the metrics of “swiftness, adherence to set timelines and fair judgement”.
Insurance companies
Mitra also said that ICAI has recommended to insurance regulator IRDAI that all insurance companies be brought under IND AS (Indian accounting standards aligned with globally recognised IFRS) from April 1, 2023. The board of IRDAI is likely to meet by the end of this month and a decision is likely to be taken on this front, Mitra added.
Asked about adoption of IND AS by banks, Mitra said he has requested the Reserve Bank of India (RBI) to implement this “at the earliest“ for banks.
Listed companies
Mitra said the ICAI is looking into the issue of asking SEBI to appoint auditors of listed companies. Such an approach could enhance the independence of auditors in listed companies. While technically under the company law, it is the shareholders of listed companies who appoint statutory auditors, the ground reality is that the name of the audit firm is decided by the promoter (in most family controlled entities) and the approval of the shareholders is just a formality completed under the law.
On the likely changes in law to ban the rendering of non-audit services by statutory auditors, Mitra said the ICAI is open to this or any specific changes to Section 144 of Companies Act provided it enhances the independence of audit process. “Independence is important for us. We will go with what the Committee decides but the final decision should enhance auditor independence,” he noted.
Mitra also said that ICAI is working on developing and issuing a single comprehensive framework for social audit standards for audit of impact reporting of social enterprises listed on upcoming social stock exchanges. The standards would cover all aspects of assurance of impact reporting like scope, engagement acceptance, audit procedures and assurance report.