CAs protest inclusion of other professionals under ‘accountant’

The draft of the DTC, placed for public comments early this month, proposes to widen the scope of the definition of accountant to include other professionals as well.

Written by Shruti Srivastava | New Delhi | Published: April 21, 2014 12:02 am

The finance ministry’s proposal to expand definition of accountant to include company secretaries and cost accountants in the new Direct Taxes Code has the chartered accountants’ community up in arms.

The draft of the DTC, placed for public comments early this month, proposes to widen the scope of the definition of accountant to include other professionals as well. In the Code, the accountants would be responsible for undertaking audit and certification of accounts of assesses, something which has been the domain of chartered accountants so far.

This has the CA community worried. Concerned over the proposal, Institute of Chartered Accountants of India (ICAI) president K Raghu, along with a few council members of the institute, met top officials in the finance ministry last week to impress upon the difference in expertise of CA and other professionals.

“CAs are ideal to do tax audit, we are apt for financial audit. We have told the revenue secretary and the CBDT chairman that this work should be only for CAs as we have the expertise required for the job. They have assured us that they will look into it,” Raghu told The Indian Express.

In the meeting with revenue secretary Rajiv Takru and Central Board of Direct Taxes (CBDT) chairman RK Tewari on April 16, the ICAI officials also said that the move would lead to loss to the exchequer due to issuance of audit certificates by professionals having limited knowledge of audit of accounts.

According to the proposed definition of accountant, apart from CAs, company secretaries and cost accountants would also be included in it. The standing committee on finance had earlier urged the finance ministry to include company secretaries and cost accountants in the definition of accountant arguing that it will provide small and medium enterprises a wider and cost effective scope for selection of professionals.

ICAI’s opposition notwithstanding, the proposal has brought cheers for the cost accountants and company secretaries who argue that the move is timely and need of the hour.

“This is timely and appropriate in view global situation. Why should there be a monopoly of one profession? Cost-based and operational audits are required today. This is the age of professional accountants and not chartered accountants. Stakeholders need specific information,” SC Mohanty, president, Institute of Cost Accountants of India, said. He added that the institute will make a representation before the finance ministry after the elections. Widening of definition will benefit other professionals also because several legislations including excise use the definition of accountant from the Income Tax Act.

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  1. H
    Apr 21, 2014 at 2:59 pm
    It is a just a myth that only CAs are expert in taxation and no other profession has the same level expertise, if not more, in dealing in accounts/taxation. Favoring the inclusion of CAs for special audits under Excise Laws, then president of ICAI has argued that CAs are also expert in indirect taxation as the syllabus covers the same. The syllabus of CMA course also widely cover direct tax including tax planning in advance level. Moreover, several CMAs are expertly practicing tax, only they can't do tax audit & certain certification as laws has barred the same for all other than CAs. In India only two professionals viz. CAs & CMAs are recognised as 'accountant' under several laws including the CA Act,1949 & CWA Act,1959.Whereas, CSs are not 'accountant', even the CS Act,1980 governing the profession does not permit them to be an 'accountant'. Therefore, to avoid contradiction among several Acts and to become rational, only CAs & CMAs should only be treated as 'accountant' in DTC.It is also to be noted that non accounting professionals including company secretaries, not having expert exposure in the vast area of different accounting and auditing would prove fatal for the ultimate objective of certification/audit in DTC and may lead to enormous revenue leakages for exchequer. It is also to be noted here that depending only on a single accounting profession while ignoring the other accounting profession, would also block the fair compeion and would act as hindrance for best professional merits in the direct tax regime, which in turn would also prove fatal for the ultimate objective of certification/audit in DTC and may lead to huge revenue leakages for exchequer. A current fair example of the same may be ongoing fiasco of the NOKIA INDIA PRIVATE LIMITED where even after the tax audit and certification in Form-15CB for each foreign exchange remittance confirming compliances in respect of withholding tax have been duly fulfilled, all certified exclusively by the chartered accountants, the direct tax authority is claiming a whopping tax evasion of around rupees ten thousand crores (estimated figure collected from news reports). The professionals who will be recognised as ‘accountant’ here would be eligible for tax audit. Now tax audit requires detail knowledge of taxation and accounting. The syllabus of the Insute of Chartered Accountants of India (ICAI) and the Insute of Cost Accountants of India (ICAI) only covers these two subjects both in intermediate and final level with required detail. The contents of the syllabus of the Insute of Company Secretaries of India (ICSI) lacks in covering both the subject, especially accounting subject with expected detail required to perform tax audit. So, if CS and other non accounting professionals are allowed to perform tax audit, such decision would go contrary to the interest of the essee. It is not only the essee's responsibility to have equipped professional for properly checking/certifying his tax liability from books of account maintained, the Law is equally responsible not to allow a professional who is not fit for the job.