Institute of Chartered Accountants of India-ICAI | History & Significance
The Institute of Chartered Accountants of India (ICAI) is the national professional accounting body of India. It was established on 1 July 1949 as a statutory body under the Chartered Accountants Act, 1949 enacted by the Parliament (acting as the provisional Parliament of India) to regulate the profession of Chartered Accountancy in India. ICAI is the second largest professional Accounting & Finance body in the world in terms of membership, after American Institute of Certified Public Accountants.
ICAI is the only licensing cum regulating body of the financial audit and accountancy profession in India. It is solely responsible for setting the auditing and assurance standards to be followed in the audit of financial statements in India. The Institute of Chartered Accountants of India also issues other technical standards like Standards on Internal Audit (SIA), Corporate Affairs Standards (CAS) etc. to be followed by practicing Chartered Accountants. The Institute of Chartered Accountants of India 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.
Institute of Chartered Accountants of India – History:
- The Companies Act, 1913 passed in pre-independent India prescribed various books to be maintained by a Company registered under that Act and also required the appointment of a formal authorized Auditor to audit such records.
- In 1918 a course called Government Diploma in Accountancy was launched in Bombay, passing which and on completion of three years of articled training under an 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.
- 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.
- In the year 1948, just after independence in 1947, an expert committee recommended that a separate autonomous association of accountants should be formed to regulate the profession.
- The Government of India 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.
- When the Chartered Accountants Act, 1949 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.
Power, Significance and scope of CA:
CA enjoys a statutory monopoly in audit of financial statements under the Companies Act, 2013, Income Tax Act, 1961 and various other statutes in India. Financial statements audited by a chartered accountant are presumed to have been prepared according to GAAP in India. However, not all Chartered Accountants work in audit. Firms of accountants provide varied business services, and many accountants are employed in commerce and industry. Their areas of expertise include Financial Reporting, Auditing and Assurance, Corporate Finance, Investment Banking, Financial Modeling, Equity Research, Fund Management, Credit Analysis, Capital Markets, Arbitration, Risk Management, Economics, Strategic/Management Consultancy, Management Accounting, Information Systems Audit, Corporate Law, Direct Tax, Indirect Tax and valuation of businesses. Apart from the field of professional practice, many CAs work in the industry and commerce in financial and general management positions such as CFO and CEO.
The CA course is designed to combine theoretical study with practical training. The CA course is considered to be one of the toughest professional courses both in India and worldwide with only 3–8% of the students passing in every attempt in Inter and Final Level, though earlier it was mostly in 1-2% range. At Present, pass rate in Foundation is Approx 15%, Inter 5-8%, Final 3-8%, that means students who take admission in CA Course, only 0.0225% to 0.096% actually pass CA. For instance, in the November 2013 CA Final exam, the pass percentage was merely 3.11% (Both Groups) As of April 2014, the Institute has 11,75,000 students, studying various levels of the CA course. The CA course exams are divided into three stages as recommended by The Institute of Chartered Accountants of India:
The Common Proficiency Test, or CPT, covers four basic subjects:
- Fundamentals of Accounting
- Mercantile Laws
- Quantitative Aptitude.
The IPCC or Integrated Professional Competence Course is the second level of CA course exam. A person can take the IPCC Examination after passing CPT and nine months of study. IPCC has two groups of seven subjects. Group – I consists of four subjects and Group – II of three subjects.
- Business Laws, Ethics and Communication
- Cost Accounting and Financial Management
- Advanced Accounting
- Auditing and Assurance
- Information Technology and Strategic Management
As per The Institute of Chartered Accountants of India, passing grade in IPCC is awarded if the candidate obtains 40% marks in each subject (each subject is attributed 100 marks) and an aggregate of 50% in the aggregate in each group (or 50% of total marks in case of both groups). Benefit of set-off is also available if the candidate appears for both groups together and obtains 50% collectively in both groups, even if he fails to obtain an individual aggregate of 50% in the each group independently.
The CA Final Examination is the last and final level of Chartered Accountancy Examinations. It is considered as one of the toughest exams in the world. Any person who has passed both the groups of IPCC, during the last six months of article ship can take the Final Examination. This exam consists of two groups of four subjects each.
- Financial Reporting,
- Strategic Financial Management,
- Advanced Auditing and Professional Ethics,
- Corporate and Allied Laws,
- Advanced Management Accounting,
- Information Systems Control and Audit,
- Direct Tax Laws
- Indirect Tax Laws.
However, the passing grade for this exam is the same as the second level, i.e. IPCC, as mentioned above. CAI conducts CPT exams in June and December, IPCC and Final examinations in May and November each year.
Changes in the CA CPT Exam to be applicable from 2017
The entrance exam CPT will be termed as CA Foundation course. CPT was a MCQ based exam but CA Foundation exam will be partially subjective. CA Foundation Exam will be of 400 marks. As the CA Foundation exam will be partially subjective more time gap is given to students for preparation. So the students shall register for CA Foundation exam 8 months prior to the exam which was 6 months for CPT. Two new subjects have been added and the marking scheme and exam pattern has also been changed. This CA Foundation exam came into effect from 1 July, 2017.
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