RESTRICTED
WORLD TRADE S/WPPS/W/7/Add.17
1October 1996
ORGANIZATION
(96-3933)
Working Party onProfessional Services Original: English
COMMUNICATION FROM INDIA
Response tothequestionnaire ontheaccountancy sector
Thefollowing communication iscirculated attherequest ofIndia.
________
I. GENERAL
1. What aretheprofessional titlesofaccountants inyourcountry? Arethese professional titles
protected? Please specify how.
Theprofessional titles ofAccountants inourcountry are:
(a) Titles granted bytheInstitute ofChartered Accountants ofIndia (ICAI):
- A.C.A. (Associate member oftheInstitute ofChartered Accountants ofIndia)
- F.C.A. (Fellow member oftheInstitute ofChartered Accountants ofIndia)
(b) Titles granted bytheInstitute ofCostandWorks Accountants ofIndia (ICWAI):
- Grad-CWA (Graduate CostandWorks Accountant)
- AICWA (Associate member oftheCostandWorks Accountants ofIndia)
- FICWA (Fellow member oftheCostandWorks Accountants ofIndia)
Yes,thesetitlesareprotected bytheChartered Accountants Act,1949andtheCostandWorks
Accountants Act,1959 respectively.
2. Howistheaccountancy sector regulated inyourcountry: bylaw,professional self-regulation,
acombination ofboth?
TheAccountancy sector isregulated inourcountry through theCombination ofbothLawand
Professional self-regulation provided under thestatutes thatcreated theprofessional institutes.S/WPPS/W/7/Add.17
Page2
3. Arethere anyprovisions toprotect company names, whether national orforeign, inyour
country?
ICAI
TheChartered Accountants Act,1949enacted fortheregulation oftheprofession ofchartered
accountants bytheParliament ofIndiaallows practising chartered accountants toformpartnership firms.
Achartered accountant inpractice orafirmofsuchchartered accountants cancarry onpublic practice
under aparticular trade orfirm name, provided such name isapproved bytheICAI before
commencement ofpractice. Thetrade orfirmnames areapproved onthebasis ofguidelines framed
forthepurpose.
ICWAI
Thenames ofcompanies areprotected within theprovisions oftheCompanies Act.
Theprovision areinvoked atthetimeofincorporation ofthenewcompany, aswellas,ifit
comes tothenotice oftheGovernment thatthename ofanycompany issimilar toanyother company.
4. What aretheprofessional bodies inyourcountry? Aretheyrecognised bylawasaregulatory
ordisciplinary bodyfortheaccountancy profession inyourcountry, orarethese functions
fulfilled byother institutions (please specify)?
There aretwoprofessional accountancy bodies inourcountry:
(i) TheInstitute ofChartered Accountants ofIndia; and
(ii) TheInstitute ofCostandWorks Accountants ofIndia.
These Institutes areestablished under separate ActsofParliament asregulatory bodies having
disciplinary jurisdiction overtheirrespective members. These functions arenotperformed byany
other institute.
5. Howmany members dothese professional bodies have? What istheestimated proportion
ofthose:
- inpublic practice
- inindustry orcommerce
- inthepublic sector
- ineducation
- unoccupied (retired, etc.)
- other
ICAI
Ithasatotalmembership of70,963 ason1-4-1995, thebreakup ofwhich isasfollows:
Public practice
- infulltimepractice 42,739
- inparttimepractice 7,510
50,249S/WPPS/W/7/Add.17
Page3
Balance
inemployment withindustry -public 20,714
andprivate sectors -trade and 70,963
commerce, education andothers.
ICWAI
- inpublic practice approximately 1,300
- inindustry orcommerce approximately 12,000
- inthepublic sector approximately 12,000
- ineducation notavailable
- unoccupied (retired, etc.) notavailable
- other notavailable
6. What isthescope ofactivities regularly practised byaccountants inyourcountry?
ICAI
Thescope ofactivities regularly practised bychartered accountants inIndia are:
- statutory audit
- audit ofmergers (notasaspecific category)
- audit ofcontributions inkind(notasaspecific category)
- public sector audit
- other audits
- accounting
- insolvency practice (liquidators)
- taxadvice
- taxrepresentation
- investment advice
- consulting
- expert witness inaccounting
- other
- Advisor/Consultant toPublic Issues
ICWAI
- CostAudit forspecified products under theCompanies Act
- Special audit under Excise Laws.
- General Consultancy Services
- Various economic legislations provides foraudit/ certification byProfessional Cost
Accountants likeImport Export policy andprocedures.
7. Which ofthese activities areregulated inyourcountry?
ICAI
Functions relating toaccounting, auditing andtaxation havetobeperformed byChartered
Accountants inaccordance withtherespective legislations e.g.theCompanies Act,theIncome Tax
ActandtheCo-operative Societies Actandsuchlike.S/WPPS/W/7/Add.17
Page4
ICWAI
CostAudit byCostAccountants areregulated bytheCompanies ActandSpecial Audit for
Excise regulated intheIndian Excise andSaltAct1944.
8. Which oftheseactivities arereserved bylawtoaccountants, shared byaccountants withother
professions (please specify), orevenforbidden toaccountants inyourcountry, e.g.byfull
prohibition orbynotallowing cumulation ofcertain activities which areconsidered
incompatible ormutually exclusive?
ICAI
Reserved: Audits under statutory provisions suchaslawsrelating tocompanies, co-operatives,
taxation, banks, insurance, etc.
Shared: others.
ICWAI
Theactivities regulated byLaw(asgiven inresponse 7above) areexclusively reserved to
themembersofrespectiveaccountingbodies.However,therearemanyotherareassharedbyAccountants
withother professionals asthese activities arenotregulated byLaw.
II. QUALIFICATION REQUIREMENTS
9. What arethequalification requirements forthese activities inyour country interms of
university/higher education degree, practice andprofessional exam? Specify thenumber
ofyears required foreach element, andthedifferences according totheactivities (audit,
insolvency, tax,etc.)covered bythequalification.
ICAI
Inorder tobecome achartered accountant, aperson hastoundergo 3years ofpractical training
(includingoptionalindustrialtrainingforamaximumperiodof12monthsduringthelastyearofpractical
training) under aneligible member infull-time public practice andqualify intheprofessional
examinations i.e.,Intermediate andFinal examinations conducted bytheICAI. Thereafter, hehas
toobtain, themembership oftheInstitute onpayment ofprescribed feeandisalsorequired toobtain
thecertificate ofpractice onpayment oftheprescribed feeaftercomplying withtheconditions prescribed
forthepurpose before accepting/carrying outanyprofessional assignments.
ICWAI
ForAudit, theminimum qualification istobeaPractising Member oftheInstitute ofCost
andWorks Accountants ofIndiawhich ispermitted tothepersons whohavepassed thefinalexamination
oftheICWAI andobtained certificate ofpractice from theInstitute.S/WPPS/W/7/Add.17
Page5
10. Arethere anypre-conditions tomeet tostarttheprofessional education: minimum age,
particular diploma ortitle,prior education, registration withaprofessional body, payment
ofafee,other (please specify)?
ICAI
EverypersondesirousofregisteringhimselforherselfwiththeICAIasastudentofthechartered
accountancy course must satisfy thefollowing pre-conditions:
(a) He/she should havepassed theFoundation Examination oftheInstitute; or
(b) He/she should beagraduate having secured thespecified percentage ofmarks inthe
relevantdisciplinei.e,commerce,non-commercewithoutmathematicsornon-commerce
withmathematics; and
(c) He/she should havecompleted 18years ofage.
Itmaybeclarified thatentry through foundation course/examination ismeant forthose who
havequalified insenior secondary school leaving certificate examination i.e.,12thstandard passor
itsequivalent examination and/or those graduates whocould notsecure thespecified percentage of
marks inthegraduation examination andsuchentrants arerequired toundergo postal/tuition scheme
foraspecified period of10months before appearing intheFoundation Examination.
ICWAI
Tostarttheprofessional education oftheInstitute ofCostandWorks Accountants ofIndia,
minimumageis17plus,passedSeniorSecondaryexamination,passedtheFoundationcourseexamination
ofICWAI andregistered withICWAI asastudent member bypaying therequisite prescribed fee.
There arenorestrictions onthestudent Member while pursuing theprofessional education.
11. What arethesubjects tobecovered bytheeducation: accounting, audit, tax,general law,
economics, ethics, information technology, other (please specify)?
ICAI
Subjects covered are:
Foundation Examination
Fundamentals ofAccounting, Mercantile Law, Mathematics andStatistics andEconomics.
Intermediate Examination
Advanced Accounting, Auditing, Corporate andother Laws, CostAccounting, Income Tax
andCentral SalesTax,Organisation andManagement andFundamentals ofElectronic DataProcessing.
Final Examination
Advance Accounting, Management Accounting andFinancial Analysis, Advanced and
ManagementAuditingincludingprofessionalethicsandcodeofconduct,CorporateLawsandSecretarial
Practice, Advanced Cost Accounting andCost Systems, Systems Analysis, Data Processing and
Quantitative Techniques, Direct Taxes andIndirect Taxes.S/WPPS/W/7/Add.17
Page6
ICWAI
ThesubjectscoveredbytheProfessionaleducationoftheInstituteofCostandWorksAccountants
ofIndia (ICWAI) areAccounting, Audit, Economic Legislation, Economics, Corporate Law-Direct
andIndirect Taxation, General Management, Management Accounting, Strategic Management and
Information Technology.
III. TECHNICAL STANDARDS AND ETHICS
12. Inrelation towhich activities donational standards exist(audit, accounting, insolvency,
other)? Please specify theirmain policy objectives.
ICAI
TheInstitute ofChartered Accountants ofIndia establishes national standards intheareas of
accounting andauditing byissuing Accounting Standards andStatements onStandard Auditing Practices
(SAPs). Themainpolicy objective ofissuance ofaccounting standards assummarised inthePreface
totheStatements onAccounting Standards issued bytheICAI isasfollows:
"The Institute willissue theAccounting Standards foruseinthe
presentation ofthegeneral purpose financial statements issued tothe
public bysuchcommercial, industrial orbusiness enterprises asmay
bespecified bytheInstitute fromtimetotimeandsubject totheattest
function ofitsmembers. Theterm ‘General Purpose Financial
Statements 'includes balance sheet, statement ofprofit andlossand
otherstatements andexplanatory notes which formpartthereof, issued
fortheuseofshareholders/members, creditors, employees andpublic
atlarge."
Similarly, themainpolicy objective oftheStatements onStandard Auditing Practices (SAPs)
hasbeensummarised inthePreface totheStatements onStandard Auditing Practices issued bythe
Institute ofChartered Accountants ofIndia, asfollows:
"The SAPs willapply whenever anindependent audit iscarried out;
thatis,intheindependent examination offinancial information ofany
entity, whether profit oriented ornot,andirrespective ofitssize,or
legalform (unless specified otherwise) when suchanexamination is
conducted withaviewtoexpressing anopinion thereon. TheSAPs
mayalsohaveapplication asappropriate, toother related functions
ofauditors."
ICWAI
Assuchnonational standards existforanyoftheactivities. However, CostAudit aresubjected
totheCostRecord Rules forspecified products andCostAudit Report Rules forallproducts prescribed
bytheGovernment under theCompanies Act,1956. Themain policy objective ofthese rules isto
ensure thatunitsinthespecified industry maintain CostRecords inamanner thatwould helpinreflecting
theCostManagement/Cost information intheunitsandsubjecting themtoaprofessional investigation
byprofessional CostAccountants.S/WPPS/W/7/Add.17
Page7
13. Which bodyorinstitution develops thesestandards andmonitors theirimplementation? What
aretheconsequences ofabreach ofthestandards (fortheprofessional, forclients, etc.)?
TheInstitute ofChartered Accountants ofIndiahasestablished anAccounting Standards Board
(ASB) which comprises members oftheCouncil oftheInstitute, representatives oftheGovernment,
public sector undertakings, industry andother organisations. TheAuditing Practices Committee
established bytheInstitute ofChartered Accountants ofIndia frames Statements onStandard Auditing
Practices. Theaccounting standards/SAPs are,however, issued under theauthority oftheCouncil
oftheInstitute ofChartered Accountants ofIndia. Atpresent, 15Accounting Standards ondifferent
subjects havebeenissued, ofwhich 13aremandatory. Theresponsibility ofthemembers withregard
tothemandatory Accounting Standards hasbeen laiddown inthePreface totheStatements on
Accounting Standards asfollows:
"While discharging their attest function, itwillbethedutyofthe
members oftheInstitute toensure thattheAccounting Standards are
implementedinthepresentationoffinancialstatementscoveredbytheir
auditreports. Intheevent ofanydeviation fromtheStandards, itwill
bealsotheirdutytomake adequate disclosures intheirreports sothat
theusers ofsuchstatements maybeaware ofsuchdeviations."
With regard totheStatements onStandard Auditing Practices, thePreface totheStatements
onStandard Auditing Practices describes theresponsibility ofmembers oftheInstitute isasfollows:
"While discharging their attest function, itwillbethedutyofthe
members oftheInstitute toensure thattheSAPs arefollowed inthe
audit offinancial information covered bytheiraudit reports. Iffor
anyreason amember hasnotbeen abletoperform anaudit in
accordance withtheSAPs, hisreport should draw attention tothe
material departures therefrom."
Incaseofanybreach inrespect oftheabove, theCouncil oftheInstitute isempowered under
TheChartered Accountants Act,1949, totakedisciplinary action against themember inaccordance
withtheprocedure laiddown.
Asfarasthecompliance withtheAccounting Standards bytheclients isconcerned, itmay
bementionedthattherearecertainorganisationswhichrequirecompliancewiththeAccountingStandards
inthepreparation ofthefinancial statements. Forexample, theReserve Bank ofIndiainitsPrudential
NormsforIncomeRecognition,AccountingStandards,ProvisioningforBadandDoubtfulDebts,Capital
Adequacy,etc.,requiresthatthenon-bankingfinancialcompaniesshouldfollowtheAccountingStandards
issued bytheInstitute withregard toincome recognition anddepreciation. Similarly, thepublic sector
undertakings arerequired tofollow theAccounting Standards.
Despite theurgent needfordeveloping CostAccounting Standards, there isnosystem for
developing suchastandard inourcountry.S/WPPS/W/7/Add.17
Page8
14. Aretheinternational standards developed byIFAC (International Education Standards and
Guidelines, International Standards onAuditing) andIASC (International Accounting
Standards) recognised orusedinyourcountry? Ifyes,please explain how. Ifno,please
explain why.
TheInternational Accounting Standards (IAS) issued bytheInternational Accounting Standards
Committee (IASC) andtheInternational Standards onAuditing (ISA) issued bytheInternational
Federation ofAccountants (IFAC) areusedbytheICAI forissuance ofitsAccounting Standards and
Statements onStandard Auditing Practices, respectively, asexplained below:
Preface totheStatements onAccounting Standards issued bytheInstitute ofChartered
Accountants ofIndia states asfollows:
"The Institute isoneoftheMembers oftheInternational Accounting
Standards Committee (IASC) andhasagreed tosupport theobjectives
ofIASC. While formulating theAccounting Standards, ASBwillgive
dueconsideration toInternational Accounting Standards, issued by
IASC andtrytointegrate them, totheextent possible, inthelightof
theconditions andpractices prevailing inIndia."
Similarly, theInternational Standards onAuditing issued bytheIFAC areusedinissuance
ofSAPs asdescribed inthePreface totheStatements onStandard Auditing Practices issued bythe
Institute ofChartered Accountants ofIndia asfollows:
"The Institute isamember oftheInternational Federation of
Accountants (IFAC). Thebroad objective ofIFAC isthedevelopment
andenhancement ofacoordinated world-wide accountancy profession
withharmonised standards. TheIFAC hasconstituted theInternational
Auditing Practices Committee (IAPC) toformulate theinternational
auditing guidelines. While formulating theSAPs inIndia, theAPC1
willgivedueconsideration totheInternational Auditing Guidelines
issued bytheIAPC andtrytointegrate them, totheextent possible,
inthelightoftheconditions andpractices prevailing inIndia."
AsfortheInternational Education Standards andGuidelines, itmaybementioned thattothe
extent possible, thevarious recommendations/guidelines issued bytheEducation Committee ofthe
IFAC areincorporated inICAI system ofEducation andTraining -Pre-qualification aswellasPost-
qualification Education &Training Programmes.
15. Inrelation towhich activities does aparticular ethical code exist (audit, accounting,
insolvency, other)? Please specify itsmain policy objectives.
ICAI
Themainpolicy objective oftheEthical Code istogiveanassurance tothepublic thatinthe
event ofthemember straying fromthepathofduty, hewould besuitably dealtwithbytheprofessional
body. Ithasagreat dealofpractical significance alsoinsofarasitproclaims tothepublic thatthe
members oftheprofession willcarry ontheirduties andresponsibilities having regard tothepublic
1Auditing Practices Committee oftheICAI.S/WPPS/W/7/Add.17
Page9
interest. Inother words, abroad objective oftheCode ofConduct hastobeinferred fromtheevolution
being quality assurance, public confidence andpride ofservice.
TheInstitute 'sEthical Code exists inrelation toallactivities ofaChartered Accountant
irrespective ofwhether heisinpractice (i.e.inaudit, accounting, insolvency orothers) orinservice
orgenerally.
Thedifferent actsofomission orcommission onthepartofamember while conducting audit,
accounting, insolvency orother services, which would bedeemed tobeprofessional misconduct within
themeaning oftheChartered Accountants Actarecomprised intwoSchedules totheActi.e.,theFirst
Schedule which isdivided intothree parts andtheSecond Schedule which isdivided intotwoparts.
PartIoftheFirstSchedule deals withthemisconduct ofaChartered Accountant inpractice which
would havetheeffect generally ofcompromising hisposition asanindependent person. PartIIof
theFirstSchedule deals withmisconduct ofmembers inservice andPartIIIdeals withthemisconduct
ofmembers generally requiring action bytheHigh Court. PartIoftheSecond Schedule deals with
themisconduct inrelation toChartered Accountants inpractice andPartIIdeals withthemisconduct
inrelation tomembers generally requiring action bytheHigh Court. Theoffences covered inthe
FirstSchedule aretobeadjudicated upon bytheCouncil exclusively except inthree circumstances
viz.,
(i) When theaggrieved member prefers anappeal totheHigh Court;
(ii) When theHighCourt onitsownmotion orotherwise revises theorder oftheCouncil;
(iii) Where theCouncil decides toremove themember 'sname foraperiod exceeding five
years orpermanently;
Thefinding oftheCouncil intheSecond Schedule isrequired tobereferred totheHighCourt
forfinaladjudication. TheHigh Court decides suchcases asunder:
(a) direct thattheproceedings befiled, ordismiss thecomplaint, asthecasemaybe;
(b) reprimand themember;
(c) remove himfrom membership oftheInstitute either permanently orforsuchperiod
astheHigh Court thinks fit;
(d) referthecasetotheCouncil forfurther inquiry andreport.
ICWAI
Withregard totheMembers oftheICWAI, professional misconduct byanymember iscovered
byChapter 5oftheCostandWorks Accountants ofIndia Act,1959. (Annex I).S/WPPS/W/7/Add.17
Page10
16. Which body orinstitution develops thiscodeandmonitors itsimplementation? What are
theconsequences incaseofbreach oftheethical codebyaprofessional orafirm?
ICAI
Theenactment regulating theprofession ofchartered accountants enumerates specific actsof
omissions orcommissions inthedischarge ofduties byamember oftheProfession which would
constitute professional misconduct andalsoprovides forother actsofomission orcommission which
could beconstrued ashaving brought about disrepute totheProfession generally. TheInstitute as
suchcontinuously develops theCode andmonitors, under thestatutory authority given toit,the
adherence ofthecodethrough theprocess ofdisciplinary jurisdiction. Anybreach oftheethical code
byaprofessional orafirmofprofessionals attracts disciplinary action. TheCouncil oftheInstitute,
through itsStanding Committee, viz.,Disciplinary Committee, enquires intotheconduct ofthemember
alleged against andthereafter awards either onitsownorrecommends totheHighCourt, (inselective
cases) punishment which could range from reprimand toremoval.
ICWAI
Answer asperdetails inAnnex I.
17. Arethere restrictions onmarketing, solicitation, advertising?
ICAI
Yes,there arerestrictions onmarketing, solicitation andadvertising.
ICWAI
According totheCostandWorks Accountants Actof1959, advertisement, soliciting clients
forprofessional work whether directly orindirectly andmarketing areactions which aredeemed to
beprofessional misconduct andtherefore aCostAccountant inpractice shallbedeemed tobeguilty
ofprofessional misconduct duetosuchactions.
18. Arethere restrictions onfee-setting (minimum/maximum levels imposed, indicative scale,
etc.)?
ICAI
Thescale offeespecified bytheInstitute isonlyrecommendatory innature. Professionals
arefreetoaccept thefeeslower orhigher thanthose specified bytheInstitute without ofcourse resorting
tounder-cutting. However, firms ofcertain sizecannot accept assignments ofspecified nature below
acertain feelevel.
ICWAI
TherearenorestrictionsonfeesettingbythePractisingCostAccountants,however,theInstitute
hasfixed minimum levels forfeewhich isindicative innature.S/WPPS/W/7/Add.17
Page11
IV. LICENSING REQUIREMENTS AND PROCEDURES
19. Apart fromthequalification requirements, whatarethelicensing requirements forindividuals
inyourcountry?
ICAI
- Membership oftheICAI
- Absence ofanycriminal record
- Minimum Age-Completion of21years ofage.
- other:
(1) Obtaining aCertificate ofPractice afterfulfilling specified conditions.
(2) Payment ofpractising fee,asspecified bytheCouncil fromtimetotime, and
itsannual renewal.
ICWAI
Thelicensing requirements forindividuals desiring tobePracticing CostAccountants, isto
beaMember ofICWAI andholder ofCertificate ofPractice issued bytheICWAI. There arenoother
requirements.
20. Arethere anyconditions imposed tobeeligible formembership oftherelevant professional
body(ies)? Please specify.
ICAI
Please refertoanswer toQuestion No.9.Inaddition, inorder tobeeligible formembership
oftheInstitute aperson should notsuffer from anyofthefollowing disabilities:
(i) Should notbeofunsound mind andstand soadjudged byancompetent Court; or
(ii) Should notbeanundischarged insolvent; or
(iii) Being adischarged insolvent hasnotobtained fromtheCourt acertificate stating that
hisinsolvency wascaused bymisfortune without anymisconduct onhispart.
ICWAI
Theconditions imposed formembership ofICWAI iscovered under theInstitute ofCostand
Works Accountants Act,1959. Theconditions aregiven inAnnex II.
21. Arethere specific licensing requirements forprofessional firms?
ICAI
- number ofpartners being notmore than20
- membership oftheICAI-registration withtheICAIafterfulfilling specified conditions.
- withreference tonatural persons carrying outaccountancy activities onbehalf ofthe
firm
- other -Approval ofafirmname inaccordance withtheguidelines specified toforthe
purpose.S/WPPS/W/7/Add.17
Page12
ICWAI
Nospecified licensing requirement havebeenprovided byICWAI regulation.
22. Cananapplication forlicensing befiledatanytimeoftheyearorarethere specific dates
torespect? Howlongdoesittaketocomplete thewhole licensing procedure? Please specify
incaseofdifferences between individuals andfirms.
ICAI
There arenospecified dates when application forlicensing istobefiled. Itcanbedone
throughout theyear. Normally, ittakes about 7daystocomplete thewhole licensing procedure for
individuals and15daysforfirms.
ICWAI
Application forlicensing maybefiledatanytimeoftheyear. However, thefeeiscollected
for6months ifapplication forlicence ismade afterOctober 1andfeefor12months iscollected if
applied before October 1st.(year isform April -March 31st).
23. Arethere differences interms oflicensing requirements and/or procedures, according to
theactivities covered bythelicence (audit, insolvency, etc.)? Please specify. What kind
ofdocumentation isnecessary/accepted? Aredocuments issued inother countries acceptable?
Please specify.
ICAI
Theterms oflicensing requirements arenotdifferent fordifferent types ofactivities. An
application inprescribed form accompanied byprescribed feeandevidence ofpassing thefinal
examination ofICAI aretobesubmitted toICAI. Currently, documents ofother countries arenot
accepted. However, incertain cases, where thelicensee wants toactasaRegistrar/Adviser/Consultant
toanissue andfortransfer ofsecurities, afurther license from theSecurities andExchange Board
ofIndia would benecessary.
ICWAI
Documentation necessary forgranting forLicensing iscovered asperprovisions ofICWAI
Act,1959. Documents issued inother countries arenotaccepted.
24. What happens when thelicensing conditions arenolonger respected bytheindividual or
thefirm?
ICAI
Ifthelicensing conditions arenotrespected bytheindividual orthefirm, thelicensee isliable
topunitive action including cancellation ofmembership/certificate ofpractice.
ICWAI
Iflicensing conditions arenotrespected bythePracticing CostAccountants, member 'slicense
isliable forcancellation, aswellas,themember maybesubjected todisciplinary action bytheCouncil
oftheInstitute within theprovisions oftheAct.S/WPPS/W/7/Add.17
Page13
V. RECOGNITION OFQUALIFICATIONS
25. Arethereanypossibilitiesfortakingaccountofqualificationsacquiredbyforeignprofessionals
inanother country? Arethere bilateral agreements withother countries inthisrespect?
ICAI
Perseterms ofrecognition offoreign qualification isonthebasisofmutual reciprocity. The
criteria forsuchreciprocity isatpresent under consideration.
ICWAI
No.Within theexisting regulations.
26. Arethere anyautomatic recognition ormutual recognition agreements between your
professional bodies andtheircounterparts inother countries? Ifso,please specify themain
characteristics ofsuchagreements; ifnot,please explain why.
ICAI
Thecontinuance oflimited automatic recognition incases ofsome foreign qualifications is
alsounder review. Themembership oftheICAI isapre-requisite forlicense topractice.
ICWAI
No.
27. Where possibilities oftaking account offoreign qualifications exist, isafulllocalexamination
oralocaltraining exceeding 12months required? Please specify. Isalocallicence always
necessary topractice aregulated accountancy activity? Please specify when thisisnotthe
case.
Notapplicable;Thecertificateofpractice(licence)issuedbyICAIorICWAIisalwaysnecessary
forpractising theregulated accountancy activity.
28. Whataretheaccreditation/licensingrequirementsimposedonforeignprofessionalsauthorised
topractice intheirhome country? Maycertain (regulated) activities becarried outonthe
basis ofaforeign licence?
ICAI
Notapplicable inview ofanswers toQuestions No.25and26;noregulated activities can
becarried outonthebasis ofaforeign licence.
ICWAI
Notapplicable (regarding foreign qualification, anyperson whohaspassed thefinalexamination
ofInstitute ofCost&Management Accountants ofLondon, nowChartered Institute ofManagement
Accountants, before 1959i.e.enactment ofInstitute ofCost&Works Accountants ofIndia Act,1959
andalsonotresident inIndia isrecognised).S/WPPS/W/7/Add.17
Page14
VI. REGULATIONS GOVERNING THE ESTABLISHMENT OFACOMMERCIAL
PRESENCE
29. Arethere anyrestrictions ontheform under which onecanestablish (partnership,
incorporation, other)? Please specify.
ICAI
InIndia, theprofession ofchartered accountants canbecarried onbyChartered Accountants
being members oftheICAI andhaving beengranted certificate ofpractice andtheycanestablish as
individual orpartnership, butnotthrough acorporate entity.
ICWAI
Only partnership firms ofCostAccountants having practising membership oftheICWAI.
Companies arenotallowed toobtain certificate ofpractice.
30. Arethere restrictions onforeign direct investment andownership, including restrictions
applying tonotlocally qualified individuals orfirms? Please specify.
ICAI
Allpartners offirms havenecessarily tobemembers ofICAI.
ICWAI
No.Within theprovisions oftheICWAI Act.
31. Isthere arequirement ofaminimum number orpercentage oflocal directors, managers
orstaff(please specify)?
Notapplicable inviewofanswer toQuestion No.30.
32. Arethererestrictionsontheabilityoflocallyestablishedfirmstodevelopinternationalrelations
(membershipofaninternationalnetwork,associationwithforeignfirms,etc.)?Pleasespecify.
Currently, thelocally established firms arenotallowed tomake representation ofanykind
orinanymanner totheeffect ofanyassociation withforeign firms inanyform.
33. Istheuseofinternational orforeign names restricted forfirms?
Thenames offirms aretobeapproved bytheInstitute before theiruseandsuchnames are
approved inaccordance withtheguidelines framed forthepurpose.S/WPPS/W/7/Add.17
Page15
VII. REGULATIONSGOVERNINGTHEENTRYANDTEMPORARYSTAYOFNATURAL
PERSONS FOR THE PURPOSE OFSUPPLYING ACCOUNTANCY SERVICES
34. Istheentry andstayofprofessionals subject tolabour market testsoranyother restrictions?
Please specify.
No.
35. Isthere anyprocedure facilitating thetemporary entry andstayofprofessionals tosupply
accountancy services? Please explain.
Notapplicable.
36. Arethere anyrestrictions onhiring oflocalprofessionals byforeign firms andprofessionals?
Please explain.
Persethere arenorestrictions. However, under thepresent conditions, foreign firms and
professional cannot carry onpractice ofaccountancy inIndia unless theconstituents ofsuchfirmare
members oftheICAI orICWAI.
VIII. NATIONALITY/RESIDENCY REQUIREMENTS
37. Isacondition ofnationality/citizenship imposed topractice certain activities, tostartan
education, toobtain alicence, tobecome member ofaprofessional body, etc.? Please specify.
No.
38. Isacondition ofestablishment, prior residency orresidency imposed topractice certain
activities, toobtain alicence, tobecome member ofaprofessional body, etc.? Please specify
theconditions andthedefinition ofestablishment, residency, etc.when relevant. Isitpossible
tohaveaprofessional establishment inmore thanonecountry?
Please refertoanswers toquestions under theheads, Qualifications Requirements, Licensing
Requirements andProcedures .Yes,itispossible tohaveaprofessional establishment inmore than
onecountry.S/WPPS/W/7/Add.17
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ANNEX I
Chapter V
Misconduct
21. Procedure ininquiries relating tomisconduct ofmembers ofInstitute :
(1) Where onreceipt ofinformation by,oracomplaint made toit,theCouncil isprima
facieofopinion thatanymember oftheInstitute hasbeenguilty ofanyprofessional
orother misconduct, theCouncil shallreferthecasetotheDisciplinary Committee
constituted under section 17,andtheDisciplinary Committee shallthereupon holdsuch
inquiry andinsuchmanner asmaybeprescribed andshallreport theresult ofitsinquiry
totheCouncil.
(2) Ifonreceipt ofsuchreport theCouncil finds thatthemember oftheInstitute isnot
guilty ofanyprofessional orother misconduct, itshallrecord itsfinding accordingly
anddirect thattheproceedings shallbefiled, orthecomplaint shallbedismissed, as
thecasemaybe.
(3) Ifonreceipt ofsuchreport theCouncil findsthatthemember oftheInstitute isguilty
ofanyprofessional orother misconduct, itshallrecord afinding accordingly andshall
proceed inthemanner laiddown inthesucceeding subsections.
(4) Where thefinding isthatamember oftheInstitute hasbeenguilty ofaprofessional
misconduct specified intheFirstSchedule, theCouncil shallafford tothemember
anopportunity ofbeing heard before orders arepassed against himonthecase, and
maythereafter make anyofthefollowing orders, namely:
(a) reprimand themember;
(b) remove thename ofthemember from theRegister forsuch period, not
exceeding fiveyears, astheCouncil thinks fit.
Provided thatwhere theCouncil isofopinion thatthecaseisoneinwhich thename
ofthemember ought toberemoved fromtheRegister foraperiod exceeding fiveyears
orpermanently, itshallnotmake anyorder referred toinclause (a)orclause (b),but
shallforward thecasetotheHigh Court withitsrecommendations thereon.
(5) Where themisconduct inrespect ofwhich theCouncil hasfound anymember ofthe
Institute guilty isamisconduct other thananysuchmisconduct asisreferred toinsub-
section (4),itshall forward thecasetotheHigh Court withitsrecommendations
thereon.
(6) Onreceipt ofanycaseunder sub-section (4)orsub-section (5),theHigh Court shall
fixadateforthehearing ofthecaseandshallcause notice ofthedatesofixed tobe
given tothemember oftheInstitute concerned, Council andtotheCentral Government,
andshallafford suchmember, theCouncil andtheCentral Government anopportunity
ofbeing heard andmaythereafter make anyofthefollowing orders, namely:S/WPPS/W/7/Add.17
Page17
(a) direct thattheproceedings befiled, ordismiss thecomplaint, asthecasemay
be;
(b) reprimand themember;
(c) remove himfrommembership oftheInstitute either permanently orforsuch
period astheHigh Court thinks fit;
(d) referthecasetotheCouncil forfurther inquiry andreport.
(7) Where itappears totheCourt thatthetransfer ofanycasepending before ittoanother
High Court, willpromote theendsofjustice ortendtothegeneral convenience of
theparties, itmaysotransfer thecase, subject tosuchconditions, ifany,asitthinks
fittoimpose, andtheHigh Court towhich suchcaseistransferred shalldealwithit
asifthecasehadbeenforwarded toitbytheCouncil.
ExplanationI-Inthissection"HighCourt"meansthehighestcivilcourtofappeal,notincluding
theSupreme Court, exercising jurisdiction intheareainwhich theperson whose conduct isbeing
inquired intocarries onbusiness, orhashisprincipal place ofbusiness atthecommencement ofthe
inquiry:
Provided thatwhere thecases relating totwoormore members oftheInstitute havetobe
forwarded bytheCouncil todifferent High Courts, theCentral Government shall, having regard to
theendsofjustice andthegeneral convenience oftheparties, determine which oftheHigh Courts
totheexclusion ofother shallhearthecases against allthemembers.
Explanation II-Forthepurposes ofthissection "member oftheInstitute" includes aperson
whowasamember oftheInstitute onthedateofthealleged misconduct although hehasceased to
beamember oftheInstitute atthetimeoftheinquiry.
(8) Forthepurposes ofanyinquiry under thissection theCouncil andtheDisciplinary
Committee shallhavethesame powers asarevested inacivilcourt under theCode
ofCivil Procedure, 1908, (5of1908) inrespect ofthefollowing matters:-
(a) summoning andenforcing theattendance ofanyperson andexamining him
onoath;
(b) thediscovery andproduction ofanydocument; and
(c) receiving evidence onaffidavits.
22. Misconduct defined -Forthepurposes ofthisAct,theexpression "professional misconduct"
shallbedeemed toinclude anyactoromission specified inanyoftheSchedules, butnothing inthis
section shallbeconstrued tolimitorabridge inanywaythepower conferred ordutycastontheCouncil
under sub-section (1)ofsection 21toinquire intotheconduct ofanymember oftheInstitute under
anyother circumstances.S/WPPS/W/7/Add.17
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ANNEX II
Thecostandworks accountants regulations (1959)1
Chapter II
Members oftheInstitute
3. Register -TheRegister ofMembers oftheInstitute shallbeinForm 'A'.
4. Qualifications forMembers -Subject totheprovisions ofSections 4and5,noperson shall
beentitled tohavehisname entered intheRegister unless he:
(a) haspassed theexaminations andcompleted thepractical training prescribed in
Chapter V;or
(b) possesses qualifications recognised bytheCentral Government ortheCouncil as
equivalent tothetestsandpractical training referred toin(a)above; or
(c) iseligible under clause (i)orclause (iii)orsub-section (1)ofSection 4.
5. Qualifications forFellowship -Forpurposes ofsub-section (4)ofSection 5anAssociate who,
foracontinuous period ofnotlessthanfiveyears immediately before thedateofhisapplication
hasheldaposition asChief CostAccountant oranequivalent appointment, bywhatever name
designated, inanorganisation approved forthepurpose bytheCouncil shallbedeemed to
haveexperience equivalent totheexperience acquired asaresult ofcontinuous practice for
aperiod offiveyears asacostAccountant.
6. Application forMembership
(1) Every person whodesires tohavehisname entered intheRegister, andanyAssociate
whodesires tobeadmitted asaFellow, shallsubmit anapplication, together with
documentary evidence about hiseligibility formembership andthefeesprescribed in
these Regulations totheSecretary inForm 'B'.
(2) Theapplicant shallfurnish suchfurther information bearing onhisapplication asthe
Council mayatanytimerequire from him.
1These Regulations framed bytheCentral Government inexercise ofthepowers conferred bySection 39(4)
oftheCost andWorks Accountants Act1959 were firstnotified byNotification No.10(13)-Inst./59 dated
25May1959publishedinPartIISection3Sub-section(i)oftheGazetteofIndiaExtraordinarydated25May1959
(GSR 611).