Subject NOT available

click here for IIIF manifest

REGISTERED No. D-(D)-72

The Gazette of India

EXTRAORDINARY

PART III—Section 4

PUBLISHED BY AUTHORITY

No. 9] NEW DELHI, THURSDAY, SEPTEMBER 30, 1976/ASVINA 8, 1898

Separate paging is given to this Part in order that it may be filed

asas e p a r a te c o m p i l a t i on

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

NOTIFICATION

(CHARTERED ACCOUNTANTS)

New Delhi, the 23rd September 1976

No. 48-CA(l)/76.—In pursuance of sub-section (5) of Section 18 of the Char- tered Accountants Act, 1949, a copy of the Report and the audited accounts of! the Council for the year ended 31st March, 1976 is hereby published for general information. TWENTY-SEVENTH ANNUAL REPORT OF THE COUNCIL FOR THE YEAR ENDED 31ST MARCH, 1976.

The Council has pleasure in presenting its 27th Annual Report for the year ended 31st March, 1976 in accordance with the provisions of Section 18(5) of the Chartered Accountants Act, 1949. The report covers broadly the salient features of- the Institute's activities upto the date of this report excluding matters to which reference has already been made in the report for the preceding year.

I. THE COUNCIL

1. Members of the Council and its various committees.—The Ninth Council was constituted on 17th September, 1973. The names of the members of the Council and its Standing and other Committees, as constituted at the Council meeting held in September, 1975, are given in Appendices I and II respectively. 2. President and Vice-President.—At the meeting of the Council held in Sep- tember, 1975, Shri P. M. Narielvala, Calcutta, who was the Vice-President during the previous year, was elected the President for a term of one year from 17th September, 1975. Shri B. R. Maheswari (Delhi) was elected Vice-President for a similar term.

(59)

6*

would be awarded to the member from the date on which he completes five years of continuous practice/experience or the date or receipt of the application com- plete in all respects, which ever is later. (This amendment will take effect only after the Chartered Accountants Act hag been appropriately amended for which a request has been made to the Central Government.)

6. Disciplinary Action.—Details of the orders of the High Courts on the findings of the Council in the cases referred by it for enquiry to the Disciplinary Committee under Regulation 11(8) (i) and the finding of the Council sine© the last report, are given in Appendix IV.

7. List of Members.-—The List of Members as on 1st April, 1976 has been prepared and brought out on 1st May, 1976. This was made possible due to the computerisation of the members' record. The list contains certain noval features, such as, a separate list of members residing outside India, an indication whether a member is in full-time or part-time practice and the statistics relating to such members.

8. Death of members.—The Council records with regret the sad demise during the year of the members whose names appear in Appendix V.

Among them, particular mention should be made of Shri P. Venugopal, a sitting Council member, who passed away on 19th December, 1975, Shri P. M. Trtvedl, a member of the Western India Regional Council and its former Chair- man and Shri M.A. Mohiaddin, a former member and Secretary of the Southern India Regional Council. At its 75th meeting held on 14th and 15th May, 1976, the Council passed appropriate condolence resolutions on the losg of these illustrious members and copies of the resolutions were sent to the bereaved families.

IV. ARTICLED AND AUDIT CLERKS

1. Fresh Enrolments.—The number of article and audit clerks registered during the year, compared to those registered in the preceding year, is given below:—

1975-76 1974-73

Articled Clerks Audit Clerks

5100 3523 154 36

The decline In the registration of students in the year 1974-75 was perhaps due to the new Regulations which prescribed that the entrants should either have secured in the decree examination 50 pre cent or mere marks or should have passed the Entrance Examination of the Institute.

This requirement came Into force on 1st October, 1973. and its Impact for a full year was felt in 1974-75. The Council is happy to note that entrants have adjusted themselves to the new Regulations and registrations have picked UP during the year under report.

2 Change In the procedure for registration of articled service.—To stream- line and simplify the procedure of registration of articled service, the relevant regulations have been amended with effect from 10th January, 1976, according to which the deed of agreement is not now required to be sent to the Institute for registration. One copy of the deed is to be kept by the employer and the other cony bv the articled clerk. The particulars of the articled clerk and the emplo- yer in form "18-A" are to be submitted to the Institute for registration purposes. Form "16" of the Regulations has been replaced by the new Form 16-A whlen has been made more comprehensive to bring on record all the necessary informa- tion.

3. Registration for a period which is less than the full term.-It has been noticed that irt some cases the deed of articles is not executed for the full term of articleship or for the full balance period in the case of transfer as the case may be In such cases, the articled clerk at times becomes ineligible to appear in a particular examination of the Institute apart from the inconvenience that may be caused to him in finding a vacancy of articles for the residual period, if the earlier employer for any reason, does not wish to enter into a fresh agreement The Council has therefore decided that a training under articles shall now be registered only if it is for the full term prescribed in the Regulations or for the full balance period, in the case of transfers.

4. Registration of articled/audit service under the old regulations — Registra- tion of articled/audit service on or after let October, 1973 la governed by new Regulations 34B and 48B but an exception is provided in a case where a person has already served under the old Regulations as an articled clerk for, a minimum period of b months or as an audit clerk for a minimum period of 9 months If such a student had discontinued his training before 1st October 1973, but came up for re-reglstration for the balance period on or before 1st October 1974 the service could still be registered under the old Regulations. A number of cases were brought to the notice of the Council of students who had discontinued their training before 1st October, 1973, but who did not re-register themselves as articl- ed/audit clerks before 1st October^ 1974. To avoid hardship to such students the Council had proposed amendments to the relevant Regulations extending' the date for re-registration under the old Regulations. The Council is pleased to announce that the Government of India have approved the amendments extend- ing the period for re-registration till 31st March, 1977.

5. Transfer of articled and audit gcrvice.—Certain instances have come to the notice of the Council where the articled and audit clerks have experienced diffi- culty in getting release from their employers where this was necessitated on account of transfer of their parents/guardians to another city. In order to remove hardship to articled/audit clerks in such cases, the Council has made an appeal to the members to agree to the termination of the articled/audit service of their apprentices, in order to facilitate their transfer.

8. Engagement in other business or occupation.—Several cases came to the notice of the Council In which articled and audit clerks were found to have been engaged In business or ofher occupations or had taken up courses of study,. In violation of the Regulations. Their attention was drawn by a note issued in the January, 1976, Issue of the 'CICA Newsletter' to the provisions o* Regula- tions 36 and 51 according to which they are forbidden to take up any other course of study or training, whether academic or professional, or engage in any busi- ness or occupation, during the period of their practical training, without obtain- ing the prior permission of the Council. They were also advised to take imme- diate steps to disclose the details thereof to the Secretary and seek permission immediately. Although many articled and audit clerks applied for permission to regularise the courses of study undertaken by them, instances still continue to arise where engagements in business or other occupations have not been reported and prior permission has not been obtained. It may be pointed out that violation of the above Regulations will, in future, involve severe punishment, including (1) non-recognition of the training undergone;

(2) cancellation of training; and (3) refusal by the Council to register train- ing for the balance period.

7. Training outside India.—The Council has decided that there is no objection to an articled clerk being trained outside the country when deputed by his Princi- pal on his overseas assignment/s but the responsibility for the overall supervi- sion and control of the articled clerk will remain with his Principal in India.

8. Maintenance of attendance register for articled/audit clerks.—Instances have come to the notice of the Council wherein It has been found that the princi- pals were not maintaining any attendance register or record of leave taken by their articled/audit clerks. This has led to disputes over the quantum of leave availed of by the articled/audit clerks.

The Council has drawn the attention of all the members training articled and audit clerks to this omission and have asked them to ensure that they maintain regular records of the attendance and leave taken by their articled and audit clerks.

9 Stipend to articled clerks.—Regulation 32B of the Chartered Accountants Regulations provides for compulsory payment of stipend to articled clerks engaged on or after 1st July, 1973. The Regulation provides that the stipend shall be payable in the cities of Bombay. Calcutta, Delhi, New Delhi, Madras and Kanpur at the rate of Rs. 60 per month in the first year of training; Rs. 100 per month in the second year of training and Rs. 150 per month In the remaining period of training. In places other than those mentioned above, the stipend is payable at the half the above rates.

The Council has decided to delete 'Kanpur' from the Regulation, with the result that the stipend will be payable in this city at half the prescribed rate,

63

when the Regulation is amended. The amendment in the Regulation in this behalf is at present pending with the Central Government.

10. Conciliation machinery to settle disputes between employers and their articled/audit clerks.—Under the Chartered Accountants Regulations, the pro- cedure for enquiring into the complaints of employers against their articled/ audit clerks or vice-versa involves reference to the Council and/or the Examina- tion Committee and protracted enquiries. Consequently, delays are unavoidable. These delays lead to frustration and dissatisfaction on both sides.

The Council has therefore evolved a conciliation machinery composed of Council Members, one of whom Is requested to act as conciliator with the object Of effecting a compromise between the parties and restoring healthy relationship, or if no compromise is possible, ensuring that the parting is devoid of rancour and bitterness. It may be clarified that the Council does not Intend to delegate its powers to enquire into complaints In a formal manner, but hopes that It will be possible to bring about a rapproachment between the parties in the initial stages. If the differences appear to be lrreconcillable or if the matter involves a serious breach of the provisions of the Act or the Regulations, it would still require to be placed before the Examination Committee and/or the Council for consideration.

11. Identity cards for students.—The Council has decided that articled and audit clerks should be issued identity cards, at their request, blank forms of which are available at the office of the Institute, The Identity cards will be issued by the Chartered Accountant under whom a particular articled or audit clerk is undergoing training.

It has been clarified in the identity card itself that it would lapse the moment the articled or audit clerk has ceased to work under the employer who has issued the card. Members are requested to kindly see that these cards are surrendered to them before their respective articled or audit clerks leave their service.

12 Coaching Board.—(a) Strejigth,—During the year under report, 5,254 stu- dents were enrolled (all under the new Regulations) for the Intermediate Course as against 3464 in the previous year.

For the Final Examination, 3146 students commenced tuition as against 3243 in the previous year. The number of students who completed tuition during the year was 5902 for the Intermediate Course as compared to 4320 in the previous year Also 2"17 and 2746 students completed tuition for Group I and Group II of the Final Course as compared Lo 1730 and 1775 students respectively in the previous year. Statistics regarding enrolment of students and other related matters are given in Appendix VI.

(b) Study Material.—The study material supplied to students was, as usual, constantly brought up-to-date. Also, the Board has been contributing to the Insti- tute's journal regular features by giving, in summary form, notes on current economic events, a summary of important articles relating to accounting and auditing in foreign journals, a digest of income-tax and company cases, income-tax law and company law quiz and current readings.

(c) Students' Libraries.—Th© number of students' libraries including those at regional headquarters remains at 29.

(d) Revision Classes.—These continue to be popular and are conducted at a number of places over and above those held at the regional headquarters. At Madras, the Intensified Course Classes continue to maintain their popularity with the students. Two sessions of four monthly courses for the Intermediate Examina- tion under the New Regulations were held at Delhi, Madras and Bombay. Stu- dents who attend 75 per cent of these classes and do 75 per cent of the tutorials satisfactorily become entitled to exemption from answering the test papers of the Board.

(e) Publications.—The Board Is up-to-date in respect of volumes of Suggested Answers to the questions set at the Institute's Examinations; the volumes In res- pect of the November, 1975 examinations have already been published.

(I) Merit and Loan Scholarships.—During the period under report, 10 merit scholarships and 107 loan scholarships were awarded.

(g) Academy of Accounting.—The Board decided to organise a pilot course of the Academy of Accounting at Madras. The Course commenced in June 1976 and will last three months. Tbe initial reports are very encouraging indeed.

(h) Entrance Course.—Pursuant to the Board's decision to offer an optional correspondence course to candidates who wish to appear in the Entrance Examina- tion conducted by the Institute, 208 students took up the course during the period under review.

13. Students Associations and their Branches.—The Students Associations and their Branches continued to function in all the regional constituencies viz. Western, Southern, Eastern, Central and Northern. Most of these were active and arranged several conferences, seminars, lectures, study circle meetings, educational tours, etc.

The following broad criteria have been laid down for setting up a new branch, of a Students' Association:.—

(a) There should be a minimum of 75 students within the city or within a

radius of 40 Kms. of the city limits,

(b) The request for setting up the branchl should be routed through the

Regional Council concerned.

(c) The request should be accompanied by a report on the utilisation of the library, If any, which may have been set up In the city as well as a report on any activities such as lectures, seminars, etc. which may have been organised by or for the local students in the last three years.

V. EXAMINATIONS

1. The examinations were held, as usual, in May and November 1975, at various centres all over India. New centres were opened on an experimental basis of Ludhiana, Mysore, Udaipur and Visakhapetnam. The statistics relating to the numbr of candidates who appeared and who were declared successful are tflven in Appendix VII,

2. Priaes and Certificates of Merit.—The names of candidates who were award- ed prizes and certificates of merit In the examlnatione held In May and November 1976 are given in Appendix Vill.

3. Action against examinees.—The Council has debarred 4 candidates who were found to have resorted to unfair means in the examinations from appearing in the examinations, for varying periods,

4 Exemption in certain papers of the Entrance Examination.—The Chartered Accountants Regulations have been amended to provide that commerce graduates who are required to pass the Entrance Examination of the Institute should he exempted from paper (1), namely, Elements of Accounting, and paper (4) namely, General Commercial Knowledge and Economics, of the Entrance Examination. There would, however, be no reduction in the fees payable for admission to the Entrance Examination in such cases.

VI. PROFESSIONAL DEVELOPMENT

1 Solf-regtdatory measures.—Two changes have been introduced by the Council

in the self regulatory measures. These are reproduced bek>w.

1 "Non-acceptance of audit of Government compantet and Corporations under certain circumstances.-Except in the case of newly formed companies before the exrArv of one accounting year from the date of commencement of their operations, B member whto has been In full time practice for 10 years or more or a partnership firm to which any partner has been in full time practice for 10 years or more, should not accept appointment as auditor of a government company or corpora- tor!unfeas tL audit fee Is B& 2,800/- or more."

9 "CMina on audits of companies.—Section 224 of the Companies Act provides that" no practising tan of auditors shall accept the audit of more than the speci- fieddumberof companies. The ceiling on the number* of audits whicp a firm can a c c e p t K i vm i n t he Explanations I and II after Section 224(I-C) of the Act.

The Council of the Institute has suggested to the Government to amend the above provisions to the effect that if a member in full time service is a partner to fwactistag firm of Chartered Accountants, he should not be counted for the pur^ Uslal determining the number of audits which the firm can accept in terms of F^DlanatioS l a nd II after Section *24(I-O of the Act Pending amendment of ffSSK recommended that a praciMng firm of - Chartered Accountant., shall nflt?count for the above purpose any partner who is In full time service.

65

2. Professional Development Committee.—(a) A three day "National Conference of Accountants In Industry's was organised at Bangalore on 6th, 7th & 8th June, 1975.

(b) In commemoration of the Silver Jubilee Celebrations of the Institute, three sessions at the Workshop on "Social Coat Benefit Analysis" were held in June, July & September, 1975 at Bombay and New Delhi. Arising out of the recom- mendations of the Workshop, a research project has been taken up on devising methodology of measuring social responsibility.

(c) In the series of technical guides proposed to be brought out, two guides have been released for sale viz. a technical Guide for Audit of Sugar Industry and a Technical Guide to Cost Audit—Cement Factories.

(d) Courses on "Audit of Banks" were organised at two centres—the first at Calcutta on 13th December, 1975, and the second at New. Delhi on 9th & 10th January, 1976.

3. Research Committee.—(a) The Committee gratefully acknowledges the dona- tions received towards scientific research from donors mentioned at Appendix IX to this report.

All donations given to the Institute for the above purpose will qualify for tax deduction under Section 35(l)(li) of the Income-tax Act Though the response so far has not been very encouraging, the Council hopes that in view of the tax exemption which is available, the Industry would, in its own interest, see the need to support the research efforts of the Institute.

(b) On Its views and suggestions being sought on the under-noted subjects, the Committee was happy to place them before the Government:—

(i) Appointment of statutory auditors as internal auditors. (ii) Provision of liability for taxation in accounts. (iii) Allocation of equity and borrowing in pricing of products (drugs).

(c) The Committee is glad to report that it has completed the following Guidance* Notes and Statements; —•

(i) Guidance Note on surprise checks, (ii) Guidance Note on Provision of liability for taxation, (iii) Guidance Note on provision of proposed dividend. (iv) Exposure draft of the Guidance Note on the Manufacturing and other Companies (Auditor's Report) Order, 1975 Issued under Section 227 (4A) of the Companies Act, 1956.

(v) Statement on Accounting for Foreign Currency Translation, (vl) Guidance Note on issue of bonus shares.

(d) Further, it has prepared a Statement on the Treatment of Retirement Gratuity in Accounts in the light of the amendment of ttfe Income-tax Act.

Te) The following projects are under the consideration of the Committee: —

(1) Social Cost Benefit Analysis, (ii) Precedents in published accounts. (Ill) Accounting for inflation, (iv) Auditors' reliance on internal control procedure.

The project on Social Cost Benefit Analysis is of special significance to industry particularly in the Private sector In view of the need to develop the technique of analysis based on social—rather than financial—coat and benefits.

* * • The trend of thinking clearly indicates that thk method of analysis may, In future, be applied to major private sector projects jatfore Gov- ernment sanction is accorded to sueh projects. The Project is expected to take about two years to complete. An appeal ha® been issued to Industry to contribute towards Its financial coat It has been clarified that contributions made by Indus- try would be fully tax deductible flinoo too Institute is recognised aa a Research Institution under Section SlKlXli) "lf the Income-tax Act. 1961,

(f) The final version, of the following International Accounting Standards have been received: —

IAS—1. Statement on Disclosure of Accounting Policiea *AS—2. Valuation and Presentation of Invantories In the Context of the Historical Systdm.

IAS—3. Statement on Consolidated Financial Statements and the equity method ofj Accounting.

Tg) The comments of the Committee on the following Exposure Drafts of the International Accounting Standards Committee have been finalised and forward- ed:—

r

(1) Exposure Draft No. 4—Proposed Statement o* Depreciation Accounting. (ii) Exposure Draft No. 5—Proposed Statement on Information t0 be dis- closed in Financial Statements.

The Committee Is considering the Exposure Draft No. 6—"Proposed Statement on Accounting Treatment of Changing Prices" and Exposure Draft No. 7—"Pro- posed Statement of Source and Application of Funds".

(h) A note has been finalised for the guidance of members as to the duty of the auditor of a bank in a case where the aggregate market value of investments as at the balance sheet date Is significantly lower than the value at which they are stated in the balance sheet and no provision—or disclosure—is made for the shortfall.

(i) The Committee has finalised the code list of all publications brought out by the Institute and the revised code numbers of the various publications have been published in the July 1976 issue of the "CICA Newsletter". A key to. the Publica- tions Code List has also been printed in the same issue of the "Newsletter" to facilitate easy reference and members have been advised to re-number the pub- lications withl them according to the revised code numbers.

(]) The Manufacturing and other Companies (Auditor's Report) Order, 1975, Issued under Section 227 (4A) of the Companies Act, 1956, In consultation with the Institute has cast certain new responsibilities on auditors, e.g. reporting on:

(i) the existence of internal audit system (for companies with paid-up capital exceeding Rs. 25 lakhs);

(ii) the adequacy of Internal control procedures on purchases: (111) the physical verification and valuation of stocks; (iv) the physical verification and proper recording of fixed assets: (v) loans taken from companies etc. In the same group; (vi) the regularity of repayment of loans (and interest thereon) granted by

the company;

(vil) compliance with requirements regarding deposits from the public; (viil) regularity m depositing provident fund dues etc.

The additional audit requirements notified are basically reporting requirements and many of these are based on developments which have already been taking place in the profession. The Council is therefore confident that these responsi- bilities would be shouldered in the same effective manner as the existing report- ing responsibilities have been handled by th© members. The Council has. how- ever, decided to issue a Guidance Not© to the members, as early as possible, to secure uniformity of compliance by them to the extent possible, having regard to the diverse circumstances under which different companies operate. As already Btated, the Exposure Draft of the Guidance Note has already been published for comments.

4 Shield Panel.—After consideration of 125 entries- received for the competi- tion for the Best Presented Accounts the following awards were presented-.

'(a) Shield for the Beat Presented Accounts for the year 1973-74 to the Britannia Biscuits Co., Ltd.

(b)-Plaques foj- highly commended accounts to:

Bharat Earth Movers Ltd, (for the year ended 31-3-1974). Bharat Heavy Electrlcalg Ltd. (for the year ended 31-3-1974). Coromandal Fertilizers Ltd. (for the year eo^"i 31-12-1973).

67

5. Taxation Committee.—'(a) Since the submission of the last report, the Taxa- tion Committee hdd its Seventh All India Seminar on Taxation at Katipur on 6tb and 7th December, 1975 with "Taxation and Economic Development", as its theme.

(b) The Eighth All India Seminar on Taxation was also held at Hyderabad on 12th and 13th June, 1976 with "The Recent Trends and Changes in Tax Legisla- tion" as its theme.

(c) As part of the pre-budget exercise, the Institute had the privilege of being consulted by the Finance Minister on matters relating to fiscal, monetary and economic policies. For this purpose the President and the Secretary participated in a meeting called by the Hon'ble Finance Minister. Some of the suggestions given by the Institute, it is gratifying to note, have found a place In the Finance Act, 1976.

(d) The Institute has also been closely associated by the Central Board of Direct Taxes in drawing up the rules on Compulsory Maintenance of Accounts and the form of report on Tax Audit.

(e) Workshops were organised at Bombay, Madras, Calcutta, Baroda and Jaipur on Compulsory Maintenance of Accounts and Tax Audit and the views of the members expressed thereat have been taken into consideration while sending the Institute's representations to the Central Board of Direct Taxes.

(f) The Taxation Committee had submitted to the Central Board of Direct

Taxes/Finance Minister thie following representations: —

(i) Representation dated 1-12-1975 to the Central Board of Direct Taxes in regard to the scope and applicability of Section 10(21) of the Income- tax Act to enable Scientific (Research Institutions to accumulate their Income for purposes of future application to scientific research. (ii) Representation dated 1-12-1975 to the Finance Minister suggesting amend- ment to enlarge the scope and applicability of Section 80E of the Income-tax Act,

(ill) Representations dated 1-12-1975 & 13-4-1978 to the Finance Minister for the inclusion of our members in the Settlement Commission under the Income-tax Act and the Wealthi-tax Act.

(iv) Representation dated 31-1-1976 to the Dy. Secretary, Ministry of Finance and representation dated 27th February, 1976 to the Chairman of the Central Board of Direct Taxes on Compulsory Maintenance of Accounts.

(v) Representations dated 15-3-1976, 23-3-1976 and 20-4-1976 to the Central Board of Direct Taxes on Tax Audit.

(vi) Representation dated 29-3-1976 to the Finance Minister on the exemption from wealth-tax in respect of outstanding professional fees,

(vll) Representation dated 15-3-1976 to the Central Board of Direct Taxes on introducing a time-limit for the completion of the proceedings for . acquisition of Immovable properties under the Income-tax Act.

(viil) Pre-Budget Memorandum containing the views of the Institute submitted to the Finance Minister on 17-12-1975,

Ox) Representation dated 23-1-1976 regarding vacancy allowance in comput- ing income from house property.

(x) Post-Budget Memorandum containing the views of the Institute on the Finance Bill 1976 submitted to the Finance Minister on 23-4-1976.

(xi) Representation to the C.B.D.T. dated 14th June, 1976 in respect of allowance of expenses incurred for training apprentices.

(g) CampuUory Maintenance of Accounts.—The Council, at its meeting held in May, 1976 has decided to render free advisory service to small tax-payers on com- pulsory maintenance of accounts as a measure of tax-payer education. The benefit of this service would be made available to all those persons carrying on business or profession, whose turnover, or gross receipts, or expected to be Rs. 5 lakhs or less or whose estimated taxable income is Rs. 50,000 or less in any year.

The Institute proposes to publish a monograph In simple and non-technical language on compulsory maintenance of accounts explaining the principles of double entry book-keeping, The monograph would be first published in English and subsequently translated Into Hindi and various regional languages so that

tax-payers from all regions could take the benefit of the service provided by the Institute, The Institute also proposes to form panels of Chartered Accountants in consultation with the Regional Councils and their branches for the purpose of rendering the free advisory service to small tax-payers as indicated In the preceding paragraph. It is earnestly hoped that the provision of this service by the Institute would be welcomed by all tax-payers tax practitioners and tax authorities as part of the scheme of financial discipline through the maintenance of accounts under a scientific system of double entry accounting The maintenance of accounts would, in the long run, facilitate the carrying out of audit thereby making the accounting records and documents more reliable.

(h) The Institute will soon issue guidelines for the benefit of members In the matter of carrying out audits of companies which have made a voluntary dis- closure of their income and wealth under the Voluntary Disclosure Scheme, 1975.

6. Company Law Committee.—(a) The Committee brought out a number of publications for guidance of members, of which the notable ones are the following:—•

(i) Guidance Note on Section 293-A of the Companies Act. (ii) Statement on amendments to Schedule VI to the Companies Act. (Hi) Guidance Note on Auditors' duties under the Additional Emoluments Compulsory Deposit (Employees other than employees of Government and Local Authorities) Scheme, 1974.

(iv) Guidance Note on Section'45MA of the Reserve Bank of India Act.

(b) It made representations to the Government on the following matters:-—

(i) Representation to the Government in regard to signing of Form 23-B under the Companies Act, 1956, in the name of the firm.

(ii) Representation to the Government regarding Implementation of the Companies (Transfer of Profits to Reserves) Rules, 1975.

(c) The Committee has decided to hold the second AH India Seminar on Com- pany Law in the last week of October, 1976. The theme of the Seminar would be "COMPANY LAW AND SOCIAL OBJECTIVES" and twelve papers dealing with different aspects of the subject would be discussed in six technical sessions.

(d) The Department of Company Affairs, Government of India were approached with a view to obtaining their support in implementation of the IASC Standards in India from January 1977 as some of the Standards might require amendment of the statutes. It was therefore considered desirable to take the Government into confidence and seek their assistance and help in ensuring proper compliance of these Standards by the members. The Council is happy to say that the Govern- ment has promised support in thls behalf.

7 post-Graduate Coarse Committee—(a) The details regarding the Manage- ment Accountancy Course Examination* (Part-I) held during the year appear in Appendix X.

(b) Three candidates completed practical training under Part-II of the Course. (rt In order to enable them to function more effectively a Guidance Note to assist the S Guides appointed for the candidates for Part-II of the Course was finalised.

fd) Merit Scholarships of Rs. 500 under the Incentive Scheme were granted to 7 candidates for purchase of books for the Management Accountancy Course.

(e) The amendments in Schedule 'C to the Chartered Accountants Regulations

from the November, 1976 MAC Examination.

(f) The list of institutions recognisedI for imparting P ^ ^ ^ ^ ^ ^ rS

for training under Part-n of the Course.

" ,o r H^

6<>

passing the Management Accountancy Part-I Examination (Both Groups) at one sitting, with effect from the Management Accountancy Examination to be held in November, 1976.

8. OontinuHmr Education Programme.—The (Fost-Graduate Course Committee organised the following Cour"es/Semlnars under the Continuing- Education Pro- gramme:—

(i) "Tax Planning and Financial Management" at Jaipur on lflth, 20th and 21st April, 1975.

(il) "Taxation and Business Decisions" at Madras on 25th, 26th and 27th July, 1975.

(ili) "Financial Management and Specified Tax ' Planning Problems" at Bangalore on 10th, 11th and 12th October, 1975.

(iv) "Tax Planning for Non-corporate Tax-Payers" at Panjim, Goa on 19th, 20th and 21st December, 1976.

(v) "Tax Planning with reference to Companies (including Hotels) & Co- operative Societies" a New Delhi on 19th, 20th and 21st February, 1976.

9. Expert Advisory Committee.—The Expert Advisory Committee rendered its opinion on three queries received by It.

The Committee has decided to bring out a compendium of opinions so far given by it.

10 Employment Commlttee.~The number of members on the Employment Register on 31st March, 1976 was 135 as against 184 on 31st March, 1975.

With a view to ascertaining the usefulness of the service of sending clippings from leading newspapers regarding vacancies for Chartered Accountants to the members borne on the Employment Register, a circular was sent to all the candi- dates. The replies received indicate that this service is greatly appreciated by the members.

A list of candidatea who passed the Final Examination, held In November, 1975 and who opted for service in the public sector undertakings was sent to all the Council members with the request to help the young candidates by recommending S names to some of the leading public sector undertakings which needed Char- tered Accountants.

The Third All India Convention of Chartered Accountants in Industry at Bombay was scheduled to be held on the 4th and 5th September, 1976 but has been- postponed to a subsequent date due to unavoidable reasons.

A monthlv statement of vacancies of Chartered Accountants as per advertise-

a close understanding, co-operation and flow of ideas la necessary lor tne Den™ of students and prospective members.

The University Liaison Committee has proposed that V i s i n g l O g j i^ Ac-

throplsts outside the profession.

The council ha, oitered to IW, - ' f ^ r' All.&d""^? Deffi " S i S iS

annum against t*"- normal iftbialptlan of Rs. 30,

The possibilities of holding a meeting between the All-India Commerce Panel constituted by the University Grants Commission and the members of the Uni- versity Liaison Committee, are being explored lor discussing matters of common . Interest.

Regional workshops and seminars are also proposed to be organised in co- operation with the universities for establishing closer links with them.

The Committee has approached various universities and through them their affiliated colleges for making available their library facilities to our articled and audit clerks.

The normal qualification for admission to the Ph.D. course in Commerce and allied subjects in a university is a Master's degree. The universities all over the country were approached for recognising our membership^ as equivalent to a Master's Degree for the purpose of admission to the Ph.D. course. We are glad to report that sixteen universities have so far accorded such recognition. A de- tailed note on the subject was published in the December 1975 issue of the 'CICA Newsletter'.

12. Ethical Standards Committee.—The Ethical Standards Committee was sped, ally constituted by the Council during this year and was charged with the task of evolving proper ethical standards and providing guidelines in order to ensure : the maintenance of the latest ethical standards by members. It was recognised that the negative—though useful—work of disciplining, specific acts of professional misconduct would not be complete without a continuing surveillance over ethical ¹ standards.

13 Audit fees payable in the case of Government undertakings and corpora- tions—The Council considered at great length the question of fixation of audit fees lor government companies and corporations and appointed a special committee to consider the entire question of fixation of audit fees in consultation with the Company Law Board.

The matter was fully discussed with the Company Law Board which has been kind enough to issue guidelines to government companies regarding fixation of auditors' remuneration. A note on the subject has been published In the April 1976 issue of the "CICI Newsletter" for general information of the members.

14 Newsletter and Journal of the Institute,—A Newsletter Is being brought out slnce'july 1975 and is supplied to all members of the Institute, free of charge to serve as a channel of communication with the members. Since July 1976, the Newsletter has also been made available to articled and audt clerks at an annual subscription of Rs. 10 and non-members at an annual subscription of Rs.15. ihe ..Journal has now become a priced publication ?nd is distributed only to those who have been enrolled as subscribers. Since July 1976, the Journal has also been made available to students studying commerce in the various Univ"siUes/co^eB at the same concessional rate of Rs. 20, as in the case of articled and audit clerk£ Consequent on the Journal being priced, efforts have been made ^ Improve Us quality by adding new features, e.g. advance d gest of Supreme Court J u d g- ments and sections and features relating to Banking and Finance, 25 y w a |o , Internal Auditing, Commerce and Industry, Parliamentary News The circulation of the Journal from September 1976 has crossed the 1L000 mark.

VII. OTHER MATTERS

Se lnstHutePPCon'equently. the ban on all forms of canvassIng In_the OouncU and the Regional Council elections became legal and b.l n d^n^t a

r

r^nS ty of

ag a benefit to the candidates,

7r

or after filing his nomination paper. The membership of the Council and the Regional Councils Involves an acceptance of onerous responsibilities in a spirit of service to the profession and the Council expects that the ban on canvassing would be enforced by members themselves on a self-regulatory basil.

2. Review Committee for Accounting Education.—The Council at its meeting held in September 1975 appointed a Special Committee designated as "Review Committee for Accounting Education" to go into all aspects of training and. education.

The members of the Committee are—

1. Shri P. M. Narielvala, Chairman. 2 Shrl B. R. Maheswari, Vice-Chairman. 'i. Shrl H. M. Damania. 4. Shri S. K. Gupta. 5. Shrl V. Jagadisan. 6. Shri B. L. Kabra. 7. Shri B. S. Mehta. 8. Shrl R. K. Seth.

The terms of reference of the Committee are*—

1 to review the existing system of education and practical training for- membershlp of tho Institute in order to determine whether it is ade- quate in the context of existing requirements and anticipated changes- in public expectations;

2 to consider in particular, whether the existing system of education and practical training adequately meets the needs of Industry;

3 to enquire generally into all issues concerning the education, training and system of examinations for membership having particular regard to the need for co-ordination and reciprocal arrangements with other Institutes which are charged with the duty of regulating similar or allied professions;

4 to make recommendations to enable Chartered Accountants to adequately face the changing environment, new challenges and problems of tne. future; and

5 to consider such other matters of a similar nature or any matters arising from the above as the President may determine.

Questionnaires were framed and sent to all members of the Institute selected studentsusersTndEducationists. A large number of replies to *e Quest^nnalre. were received and these have been tabulated for consideration of the Committee.

The Committee in the course of its work settled the basic issues ito ** f°™' Intn nnd visited important places to interview eminent industrialists, educa- fonists senior memLrs of the profession and . ^ e nt representatives. The evidence recorded is under the consideration of the Committee.

1 Library —Durine the year 656 books were added to the Central Council Librar^ a t r Lv Delnf brfn/ne the total number of books to 12731. Increasing use of the library was made by members and students.

TbP Council trratefully acknowledges the offer of Shri G. P. Kapadia, the-

include some of the rare issues of various journals and the library oi me insu tute will be richer by this addition.

4 Chartered Accountants' Benevolent FmuU-During the year ^e number of members increased from 198 to 200 and a sum of Ra ⁸,30O/- was disbursea

"r1tofioTa?^^^^

year.

pon<;e from the member* has been relatively poor.

3. 8. Vaidyanath Alyar Memorial Fund.—The number of members of the Fund Increased during the year from 44 to 50. At the end of the year, the balance to the credit of the Fund was Rs. 26,848/- as against Rs. 26,323/- at the end of previous year. A sum of Rs. 3,600/- was paid by way of scholarships to students.

Vill. REGIONAL COUNCILS AND THEIR BRANCHES

1. Regional Councils.—The Regional Councils continued to function in the ilve Regional Constituencies viz., Western (Bombay), Southern (Madras), East- ern (Calcutta), Central (Kanpur) and Northern (Delhi). The Regional Coun- cils were active and arranged several conferences, seminars, lectures, study circle meetings etc.

The Council Is happy to report that the new building of the Eastern India Hegional Council at Calcutta has nearly been completed and part of it has already been occupied by the Regional Council.

2. Branches of Regional Councils.—Five branches of the Western India Re- gional Council viz., Ahmedabad, Baroda, Goa Poona, and Surat; eleven of the- Southern India Regional Council at Bangalore, Belgaum. Colmbatore, Erna- kulam, Hyderabad, Madurai. Mangalore, Salem, Tiruchirappali, Trivandrum and Vijayawada; four of the Central India Regional Council viz., Indore, Jaipur, Jamshedpur and Ghaziabad, two of the Northern India Regional Council, viz., Chandigarh and Ludhiana and one of the Eastern India Regional Council at Asansol, continued to function.

The Council has closed down the Nagpur Branch of the Western India Re- gional Council as it was not functioning in accordance with the "Directions" of the Council.

IX. INTERNATIONAL RELATIONS

1 ICCAP meetings.—Our Invitation for the International Co-ordination Com- mittee for the Accountancy Profession (ICCAP) to meet in New Delhi in Febru- ary 1D77 has been accepted. This Committee of representatives of 11 leading countries would be meeting for the first time in this country. The Council re- gards this as a recognition of the place occupied by the accountancy profession of India in the world of accountancy.

The President Shri P. M. Narielvala, attended a meeting of the Education Sub-committee of the ICCAP in Paris in October, 1975. Shri S. K. Gupta, our representative on the ICCAP, attended the last meeting of the ICCAP at Hono- lulu in February, 1976.

2 International Accounting Standards Committee.—The Institute continued as an associate member of the International Accounting Standards Committee (IASC) It has been elected as a member of the Steering Committee of the IASC on Accounting for certain types of long-term contracts. The first meeting of the Steering Committee was held In March, 1978 in London and was attended by Shri Y. H. Malegam, the Chairman of the Research Committee, who is our representative on the Steering Committee.

3. International Federation of Accountants.—An International Federation of

Accountants is proposed to be constituted.

The proposal has been, made in an interim report issued by the International Coordination Committee for the Accountancy Profession (ICCAP), the group which is sought to be replaced by a more permanent body The Committee has proposed to the professional accounting organisations of 70 nations the forma- tion of an International Federation of Accountants, to be known as IFAC, with a permanent secretariat in New York City.

The American Institute of Certified Public Accountants, one of the organi- sation! which established ICCAP in 1972, has agreed to provide accommodation ;and services for the staff of the new Federation.

73

The broad objective of IFAC is the development and enhancement of a co- ordinated world-wide accounting profession with harmonized standards. It would encourage efforts to establish international technical, ethical and educa- tional guidelines for the accountancy profession.

The views of the Institute have been Invited on the proposed constitution of the IFAC. These are being forwarded to the ICCAP.

4. Eighth Conference of Asian and Pacific Accountants.—A delegation Is being sent to attend the 8th Conference of Asian and Pacific Accountants to be held in Honfl Kong in September, 1976. It will be led by Shri B. R. Maheswari, the present Vice-President. The theme of the Conference Is "The Accountants' Role in a Changing World". An invitation for the 9th Conference to meet in India In 1979 hag been extended jointly with the Institute of Cost and Works Accountants of India.

A paper on "Training Accountants for the Future" prepared by the Institute on the invitation of the CAPA organisation for discussion at the Chief Delegates meeting at the Conference, has been sent to the Conference authorities,

5. Eleventh International Congress of Accountants.—As already reported, the Institute Is participating in the 11th International Congress of Accountants to be held in Munich (West Germany) in October, 1977. An invitation jointly with the Institute of Cost and Works Accountants of India has been extended for the next (12th) Congress to meet in India in 1982.

Shri N. C. Krishnan, a past President of the Institute has, on the invitation of the organizers, prepared a commentary on tjie General Report for one of the plenary sessions of the Congress.

0 Reciprocal agreement with the Texas State BOMM ol Public Accountancy

Similarly, a C.P.A. of Texas would be eligible to be enrolled as a member of our Institute after a review of his education, experience and other require- ments by our Institute.

7, Appreciation.—The Council wishes to place on record its grateful thanks to the Government for its continued support and assistance.

The Council wishes to record its appreciation of the valuable contribution of the members of the Institute who were co-opted on its various Committees as also other members of the Institute and other distinguished persons who parti- cipated in the variojs Conferences, Seminars, etc., organised by the Institute.

The Council further wishes to place on record its appreciation of the work done by the officers and staff during the year under report,

NEW DELHI;

Dated: 14th Sept., 1976.

APPENDIX I

(Reference : Section I-i of the report)

MEMBERS OF THE COUNCIL

Narielvala, P.M.

President

Maheswari, B.R.

Vice-President

I.

Argade, S.G

. Bombay

2. Bhandari, B.C.

. Jaipur

Bhattacbarya, Siikumar . . ..

3-

. Calcutta

Chakraborty, A .K

. Calcutta 4-

5. Choudhury, A. .

. New Delhi

6. Damania, H . M. . . . . •

. Bombay

. New Delhi Ganapathy, C. C

7-

8.

. Calcutta Gupta, S. K

. Madras Jagadiaan V.

9-

10.

, Bombay Kabra, B L.

. . ..

. New Delhi I I. Khanna, R. K. . . . ..

12.

. Madras Kriahnan^ N. C

, Bombay Malegam, Y. H

13-

. Calcutta

Mallifc, P. K.

14-

. Bombay Mehta, B. S

15.

. Modinagar •16. M o d i, K .N

. Bangalore Narasimhamutthy, A.R

17-

. New Delhi.

18. Nigam, R. S

. Bombay

Parikh, Anil, M

19.

. New Delhi Raj'araman, V. .

2 0.

. Madras 2 1. Ramanujam, G. . . . ..

. New Delhi 2 2. Ranga, R. P

. Bombay

Sbah, P. N

23-

. Kanpur

Scth3 R. K

24-

. Ahmedabad

Vasa, H. V. .

25-

. Hyderabad

-26. Venugopal, P

. Madras Vijayaraghavan, P. B.

27.

•Nominated in place of Shri C. Balkrishnan (New Delhi) for the period 17th September, 1975 to 16th September, 1976.

**Died on 19th December 1975.

75

APPENDIX H

{Reference : Section I-i of the report) ,

MEMBERS OF THE VARIOUS COMMITTEES

(a) STANDING COMMITTEES (i) Executive Committee :

Shri P. M. Narielvala, President (ex-offlcio) Shri B. R. Miheswari, Vice-President (ex-officio) Shrj B. C. Bhandari Shri N. C. Krishnan . . .. Shri B. S. Mehta

(ii) Examination Committee :

Shri P. M. Narielvala, President (ex-offlcio). Shri B. R. M^heswari, Vice-Pr~sident (ex-officio). S hi S. G. Argade Shri A. K. Chakraborty Shri P. B. Vljayaraghavan

(iii) Disciplinary Committee :

Shri P. M. N "riclvala, Prcsid-m (ex-offlrio).* ' . Shri B. R. Miheawarl, Vice-president (ex-offido) Shri A- Choudhury Shri Y. H. Milegam Shri P. K. Mami-

es) NON STANDING COMMITTEES

(0 Research Committee :

\ Co-opted members

Shri V. H. Malegam, Chairman Shn P. N. Shah, Vici-Chairman Shri P. M. NarWvala, Presid:nt (ex-offlcio) Shri Sukurtur Bhattacharya Shri P. B. Vijayaraglwvan Shri B. M. Mirza Shri M. Sundararaman Shri V. N. Riiji

/

(ii) Post Graduate Course Committee :

Shri H. M. Dammia, Chairman Shri V. Rajaraman, Vice-Chairman Snri B. R. MiheBwari, Vicc-President (ex-offlcio' Shri S. K. Gupta Shri P. Venugopal (died on 19-12-1975) ' Shri A. B. Rabadi "I Co-opted m"mbfm Shri S. V. Ghatalia

/

(iii) Professional Development Committee :

\Co-opted member*

Shri Anil M. Parikh, Chairman Shri R. K. Srtb, Vlc:-Chairman Shri P. M. Ni-ielvala, Pr;sid'nt (ex-offido) Shri V. Rajaraman 1 Shri R. P. Ranga Shri P. R. Kh'tt".na Shri A. Ven gopal

f

(iv) Taxation Committee :

\ Co-opted members

Shri Sukumar Bhattacharya, Chairman Shri H. V. Vasa, Vice-Chairman Shri P. M. Narielvala Presidcrt (ex-offlcio) Shui C. C. Ginapathy Shri V. Jagadisan Shri B. L. Kabra Shri B. S. Mehta Shri K. K. Mitrfl Shri S. D. Nargolwala

/

(v) Coaching Board :

Shri P. N. Shah, Chairman Shti A. R. NarasimhamWrthy, Vice-Chalrman Shrl B. R. MjhesVratf, Wto-Wisideftt ("x-offido) Shri H. M. Damania Dr. R. S. Nlgam Shri A. Roy Chowdhury *l Co-opted members Shri G. V. Raman

/

(vi) Employment Cotmtdttee :

\ Co-opted members

Shrl B. L. Kabra, Chairman Shri H. V. Vasa, Vice-Chairman Shri B. R. Mahwwari, Vice-President ("n:-

/

(vii) Expert Advisory Committee :

Shri V. Rajaraman, Chairman Shrl A. K. Chakraborty, Vice-Chairman Shrl P. M. Narielvala, President (ex-orBcio) Shri R. K. Khanna Shrl N. C. Krishnar Shii P. K. Mallik Shri Rag'iunath Rii "lCo:-bpted; members Shri T. R. Swaminathan f

(vii) Company Lain Committee :

\ Co-opted member*

Shri S. K. Gupta, Chslrnwr Shri K. N. Modi, Vice-Chairman Shri P. N. Narlelvala, President (cx-officio) Shrl A. Choudhury Shrl A. R- NttmlnttnunUfthy Shri P. V-nugopal (died on 19-12-1975) Shri K. Gar.(8an Shri S. N. Desai

/

(lx) University Liaison Committee:

Shrl V. Jagadisan, Chairman Dr. R. S. Nlgam, Vice-Chalrman Shrl B. R, Matteswarl, Vice-President (ex-officio) Shrl S. G. Argade Sfiri Anil M. Parikh Shri V. B. Haribhaktl \ Co-opted members Shri B. Bakthvatsalu Naidu /

(x) General Purposes Committee;

Shrl P. M. Narielvala, Chairman Shri B. R. Maheswari, Vice-Chairman Shri B. C. BhSMdart Shrl N. C. Krishnan Shri B. S. Mehta

(xl) Ad hoc Committee for decentralisation and branches:

Shri Anil M. Parikh. Chairman Shri P. B. Vijayaraghavan, Vlce-Chalrman Shrl B. C. Bhandarl Shri A. K. Chakraborty Shrl N. C. Kriahnan Shri B. R. Maheswari Shri P. M. Narlelvala

77

(xii) Editorial Board:

gini P1. it aftartelvala. President. EdJttOr-In-Chlel

Shw B. ft. tyaheswpi V}qe,TPjeaid"ht

Shri Sjikumar Bhatjacharya

Sbri A-JL Qiakraboxty

Shri S, K, Gupta

Shri P. K. Mallik

(xiii) Review Committee /or Accounting; Education:

Shri P. M. Narielvala, Chairman

Shri B. R. Maheswari, Vice-Chairman

Shrl H. M. Damanla

Shri S. K. Gupta

Shrl V. Jagadfsan

Shri B. L. Krftett

Shrl B. S. Mehta

SIM ft K. Seth

(TAV) Ethical Standard* Committee:

Shri P. M. Narielvala, Chairman

thri B. R. Maheswari, Vice-chairman

hri A. Ch6Uahury

Shrl Y. H. Maleuam

Shri P. K. Mallik

APPENDIX m

(Reference : Section III-I of the Report)

NUMBER OF MEMBERS AS OK 1ST APRIL, 1975 AND i&t APRIL, I97"

Total

ist April 1976 1975 1976

ist April 1975

Fellowii.

f 4189

(§ Solely in practice •

E n g a g ed in other o c c u p a t i on in a d d i t i on to p r a c t i ce

. . ..

I . 748

449"

4842

5333

( i i i) N ot in p r a c t i ce . . ..

4937 396

346

A s s o c i a t es

( ij S o l e ly in p r a c t i ce . . ..

J 4130

( i i) E n g a g ed In o t h er o c c u p a t i on in a d d i t i on to p r a c t i ce • • • •

(_ 2162

5925

4618

6292 5138

11430 ( i i i ): N ot in practice . . ..

10543

16763

G r a nd T o t al

15385

15385

16763

APPENDIX IV

(Reference: Section III-6 of the report)

4. Disciplinary action aftallnWt members:

(i) Failure to communicate with the previous auditor.—A member was found

guilty of professional misconduct for having failed to,comply witl> the require-

ments of communication under clause (8) of Part I of the First Schedule to the

Chartered Accountants Act, 1"4& which was required to be sent to the previous

auditor before accepting the audit. He had only sent a letter under certificate

of poetine without obtflinlnK wy acknowledgement thereof. The CPuncil under

Section 21(4) ordered that the nam© of the member be removed from member-

ship of the Institute for a period of one month.

On an appeal made by the member against the order of the Council, the High

Court reduced the punishment to a reprimand, as the misconduct was of a.

technical nature.

INTERMEDIATE  EXAMINATION  (OLD  SYLLABUS)
MAY  1975                                                         6,638               1,767
November  1975                                                     6,121              1,363