Institute of Chartered Accountants of India - (History)

Ritesh Indian Son[CMA*CS*CA] (" Simple Living High Thinking ") (4117 Points)

20 March 2011

The Institute of Chartered Accountants of India (ICAI) is a national professional accounting body of India. It was established on 1 July 1949 as a body corporate under the Chartered Accountants Act, 1949 passed by the Parliament of India to regulate the profession of Chartered Accountancy in India. ICAI is the second largest professional accounting body in the world in terms of membership second only to American Institute of Certified Public Accountants. ICAI is the only licensing cum regulating body of the financial audit and accountancy profession in India. It recommends the accounting standards to be followed by companies in India to the National Advisory Committee on Accounting Standards (NACAS) and sets the accounting standards to be followed by other types of organisations. ICAI is solely responsible for setting the auditing and assurance standards to be followed in the audit of financial statements in India. It also issues other technical standards like Standards on Internal Audit (SIA), Corporate Affairs Standards (CAS) etc. to be followed by practising Chartered Accountants. It works closely with the Government of India, Reserve Bank of India and the Securities and Exchange Board of India in formulating and enforcing such standards.

Members of the Institute are known as Chartered Accountants. However the word chartered does not refer to or flow from any Royal Charter. Chartered Accountants are subject to a published Code of Ethics and professional standards, violation of which is subject to disciplinary action. Only a member of ICAI can be appointed as auditor of an Indian company under the Companies Act, 1956. The management of the Institute is vested with its Council with the president acting as its Chief Executive Authority. A person can become a member of ICAI by taking prescribed examinations and undergoing three years of practical training. The membership course is well known for its rigorous standards. ICAI has entered into mutual recognition agreements with other professional accounting bodies world-wide for reciprocal membership recognition.

ICAI is one of the founder members of the International Federation of Accountants (IFAC), South Asian Federation of Accountants (SAFA), and Confederation of Asian and Pacific Accountants (CAPA). ICAI was formerly the provisional jurisdiction for XBRL International in India

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Motto	Ya Aeshu Suptaeshu Jagruti
Formation	July 1, 1949 (1949-07-01) (61 years ago)
Legal status	Body corporate established by a special Act of the Parliament of India
Objective	Regulate the auditing and accounting profession in India
Headquarters	New Delhi, India
Coordinates	28°37′40″N 77°14′32″E / 28.627815°N 77.242135°E / 28.627815; 77.242135
Region served	India
Membership	>161,516
Students	>874,694
Member's designations	A.C.A. and F.C.A.
Official languages	English, Hindi
President	CA.G.Ramaswamy
Vice President	CA. Jaydeep N. Shah
Secretary	Mr. T. Karthikeyan
Governing body	Council
IFAC member since	October 7, 1977
Regional Offices	New Delhi (NIRC) Mumbai (WIRC) Kolkata (EIRC) Chennai (SIRC) Kanpur (CIRC)
Branches	118 Indian Branches and 12 Overseas Chapters
Website	icai.org

Motto

Ya Aeshu Suptaeshu Jagruti

Formation

July 1, 1949 (61 years ago)

Legal status

Body corporate established by a special Act of the Parliament of India

Objective

Regulate the auditing and accounting profession in India

Headquarters

New Delhi,

India

Coordinates

28°37′40″N 77°14′32″E / 28.627815°N 77.242135°E

Region served

India

Membership

>161,516

Students

>874,694

Member's designations

A.C.A. and F.C.A.

Official languages

English, Hindi

President

CA.G.Ramaswamy

Vice President

CA. Jaydeep N. Shah

Secretary

Mr. T. Karthikeyan

Governing body

Council

IFAC member since

October 7, 1977

Regional Offices

New Delhi (NIRC)
Mumbai (WIRC)
Kolkata (EIRC)
Chennai (SIRC)
Kanpur (CIRC)

Branches

118 Indian Branches and 12 Overseas Chapters

Website

icai.org

Role

The Institute of Chartered Accountants of India was established under the Chartered Accountants Act, 1956 passed by the Parliament of India with the objective of regulating accountancy profession in India.^[1] ICAI is the second largest professional accounting body in the world in terms of membership second only to AICPA.^[2] It prescribes the qualifications for a Chartered Accountant, conducts the requisite examinations and grants license in the form of Certificate of Practice. Apart from this primary function, it also helps various government agencies like RBI, SEBI,^[3] MCA, CAG, IRDA, etc. in policy formulation. ICAI actively engages itself in aiding and advising economic policy formulation. For example ICAI has submitted its suggestions on the proposed Direct Taxes Code Bill, 2010. It also has submitted submitted its suggestions on the Companies Bill, 2009. The government also takes the suggestions of ICAI as expert advice and considers it favourably. ICAI presented an approach paper on issues in implementing Goods and Service Tax in India to the Ministry of Finance. In response to this, Ministry of Finance has suggested that ICAI take a lead and help the government in implementing Goods and Services Tax (GST).^[4] It is because of this active participation in formulation economic legislations, it has designated itself as a "Partner in Nation Building".

Motto and mission

The motto of the ICAI is Ya Aeshu Suptaeshu Jagruti (Sanskrit:या एष सुप्तेषु जागतिॆ). The motto literally means "a person who is awake in those that sleep". It is a quotation from the Upanishads (Kathopanishad). It was given to the ICAI at the time of its formation in 1949 by Sri Aurobindo ^[9] as a part of its emblem. CA. C. S. Shastri, a Chartered Accountant from Chennai went to Sri Aurobindo and requested him through a letter to give an emblem to the newly formed Institute of which he was an elected member from the Southern India. In reply to this request, Sri Aurobindo gave him the emblem with a Garuda, the mythical

eagle in the centre and a quotation from the Upanishad:Ya Aeshu Suptaeshu Jagruti. The emblem along with the motto was placed at the first meeting of the Council of the Institute and was accepted amongst many other emblems placed by other members of the Council.

Apart from its emblem, ICAI also has a separate logo for its members. As a part of a brand building exercise, ICAI introduced this separate new CA logo for the use of its members in 2007.^[10] The logo is free for use by all members of ICAI subject to certain conditions.^[11] The logo was launched by the then Minister of Corporate Affairs, Prem Chand Gupta at the occasion of the Chartered Accountant Day (1 July). Members of ICAI cannot use the ICAI emblem, but they are encouraged to use the CA logo instead on their official stationery.

The Mission of the ICAI as stated by it is: “The Indian Chartered Accountancy profession will be the Valued Trustees of World Class Financial Competencies, Good Governance and Competitiveness.” [12

History

The Companies Act, 1913 passed in pre-independent India prescribed various books which had to be maintained by a Company registered under that Act. It also required the appointment of a formal Auditor with prescribed qualifications to audit such records. In order to act as an auditor a person had to acquire a restricted certificate from the local government upon such conditions as may be prescribed. The holder of a restricted certificate was allowed to practice only within the province of issue and in the language specified in the restricted certificate. In 1918 a course called Government Diploma in Accountancy was launched in Bombay (now known as Mumbai). On passing this diploma and completion of three years of articled training under a approved accountant, a person was held eligible for grant of an unrestricted certificate. This certificate entitled the holder to practice as an auditor throughout India. Later on the issue of restricted certificates was discontinued in the year 1920.

In the year 1930 it was decided that the Government of India should maintain a register called the Register of Accountants. Any person whose name was entered in such register was called a Registered Accountant.^[13] Later on a board called the Indian Accountancy Board was established to advise the Governor General of India on accountancy and the qualifications for auditors. However it was felt that the accountancy profession was largely unregulated, and this caused lots of confusion as regards the qualifications of auditors. Hence in the year 1948, just after independence in 1947, an expert committee was created to look into the matter.^[14] This expert committee recommended that a separate autonomous association of accountants should be formed to regulate the profession. The Government of India accepted the recommendation and passed the Chartered Accountants Act in 1949 even before India became a republic. Under section 3 of the said Act, ICAI is established as a body corporate with perpetual succession and a common seal.

Unlike most other commonwealth countries, the word chartered does not refer to a royal charter, since India is a republic. At the time of passing the Chartered Accountants Act, various titles used for similar professionals in other countries were considered, such as Certified Public Accountant.^[15] However, many accountants had already acquired membership of the Institute of Chartered Accountants in England and Wales and other Chartered Societies of Great Britain and were practising as Chartered Accountants. This had created some sort of brand value. This designation inherited a public impression that Chartered Accountants had better qualifications than Registered Accountants.^[16] Hence the accountants were very stern in their stand that, the Indian accountancy professionals should be designated only as Chartered Accountants. After much debate in the Indian Constituent Assembly, the controversial term, chartered was accepted. When the Chartered Accountants Act came into force on 1 July 1949, the term Chartered Accountant superseded the title of Registered Accountant. This day is celebrated as Chartered Accountants day every year.[17]