, 000 members, is the second largest accounting institution in the world. it is not sufficient that the institute merely responds to and adopts global standards. it should, in fact, go further and actively participate in the formulation of these standards. 14. i am happy to learn that the president of icai has recently been elected as a member of the board of the international federation of accountants ( ifac ) and that there is an indian member on the iasb. i also want to commend the institute for its active participation and involvement in several international committees and projects aimed at improving accounting systems and processes. i would only urge that going forward, icai should proactively take the lead in the formulation of accounting standards in areas where we have specific concerns as an emerging market economy ( eme ). 15. another task the profession needs to address in regard to managing globalization is how it will select, from within its membership, persons of the requisite competence to participate in the global forums, and how it will provide them both financial and professional support to make this participation rewarding to them individually and to the profession more broadly. needless to say, the process of selection of persons for representing the institute in international forums should be strictly meritocratic and transparent. information technology ( it ) 16. next on my list is the challenge of information technology. in the past, one of the main objectives of audit was ensuring the arithmetical accuracy of financial statements. with the advent of it, this task has now been taken over by machines. this has both nudged and facilitated the profession to move up the value chain. the main task of the profession has now shifted to judgments of value, and to discharge this task, auditors have to demonstrate much higher levels of maturity, integrity, independence and balanced judgment. the development of these qualities will be a major challenge in the future. 17. let me make a comment with regard to it in banking. over the past decade, most commercial banks have successfully implemented core banking solutions. this has created both opportunities and challenges for auditors. challenges come by way of lack of visible evidence, risk of undetected system errors and bugs and frauds hidden in a labyrinth of data. retrieving information in the computerized environment and assessing the implementation of computer related processes will also be critical to the audit process. opportunities come by way of increasing use of computer assisted audit tools ( caats ) to access databases beneath the accounting software to create queries, write

need to have skilled and qualified persons on the acbs to make them truly effective. accordingly, in september 1995, we advised banks to ensure that there is at least one non - executive director who should be a chartered accountant on the acb. acbs have since been contributing immensely by providing direction and also by overseeing the internal control function in the bank. we have kept the ceo of the bank outside the acb to keep it independent. however, the second in command, the executive director concerned is a member of the acb to bring the insider perspective to bear on the committee ’ s deliberations. however, the presence of an executive director may be seen on compromising the independence of the acb. i will be interested in your views on this. 36. returning to the larger issue of a value system, the challenge before the profession is therefore to demonstrate by its own conduct, its concern for upholding a value system within itself and consequently within its clientele as also to initiate programmes which create sensitivity to the need for greater ethical conduct. in this context i would only like to reiterate that you have a significant role as the conscience - keeper of the business world. conclusion 37. let me now sum up. i have started with briefly identifying the shared professional domain of the auditing profession and the reserve bank. i have alluded to the uniqueness of the reserve bank ’ s balance sheet, or indeed balance sheets. i then went on to indicate, what in my view, are some of the key challenges that the profession has to address in order to remain effective and to add value to the real sector. where relevant, i have given contextual references and illustrations from the reserve bank, particularly stemming from its role as the regulator and supervisor of the banking system. 38. i wish your deliberations over the next two days all success. bis central bankers ’ speeches