"The Role of CAs in Eradicating Corruption"
Chartered accountant plays a very dynamic role for the eradication of corruption & in the economic growth of the Country. While discussing in this matter, let me explain the motto of ICAI.
‘YA ESA SUPTESU JAGRATI’ “A person who is awake in those that sleep” It was given to ICAI at the time of its formation in 1949 by Sri Aurobindo as part of its emblem. This motto is taken from Upanishads (kathopnishad)
By this motto each & every chartered accountants are bound to do their work very attentively with excellence.
Is It Possible To Eradicate Corruption?
Yes, It Is Possible. If each & every people can do his/her job sincerely, it’s possible but the fact is that no one is perfect. Every person thinks for the fulfillment of his/her extra ordinary requirements, excessive requirement. Even after fulfilling his/her needs, if he/she thinks for the Country, the corruption can be reduced and after the time gap it will be eradicated totally. This is what the ICAI and its members are trying to do, besides their own interest they give the best suggestion to the clients so that they can give tax to the government, make planning & contribute for the nation as a whole which give rise to the economic growth of the country.
However, there are some cases where negligence of CAs are notices, but I want to make it very clear that no one is perfect, there may be some mistakes by any person. Now this is our duty as younger Chartered Accountants to do the job in excellence & does something to eradicate corruption from the Indian economy. Because of their negligence the gloom of this profession get wreck sometimes, but as a younger Chartered Accountant and the future flag hoister of this profession we should provide our service in excellence & in best as we can.
How Corruption Arises.
We all know corruption does not arise by birth there is some reason behind its; generally:
- People try to earn more & more which gives rise in corruption
- Excessive requirement
Eradication of Corruption
Eradication of corruption should be the Nation’s 1st priority & Nation’s priority means priority of each & every individual/person either he/she is a CA or belongs to any profession, either literate or Illiterate. Eradication of corruption is possible only if there is a strong administration is available.
Role/Areas of CAs for Eradication of Corruption
In the Field of Reporting
Reporting is the core area of a Chartered Accountants. The Chartered Accountants are known because of their reporting skills. Reporting is required in the entire field either it is of Accountancy, Audit, Law, Taxation, Finance & others. The reports given by a Chartered Accountant is accounted as the true picture of the entity/organization. The reports prepared by CA give all the fact of the entity and show the true & fair picture of the entity. The whole nation relies on that report & the individuals take decision to make investment in that particular Company. Therefore it is the duty of chartered accountant to give his best reporting & professional judgment in well summarized way so that it will not make any encumbrance (burden) to its reader and it should be easily understandable to the interested parties. The important points should be written in bold/italics etc. If there is any lacuna in reporting due to non fair reporting in his work it will turn to the corruption with his professional etiquettes. A CA must have to work with full excellence & Independence.
In The Field of Accountancy
CA profession is well known by everybody because of its core competency in accounting from the very first day of its establishment & will remain in future as well. Accountancy is the only area where there is no one except Chartered Accountant, who can do better work. Generally in this field role of a CA is very different, they don not write accounts for the entity what they do is they check/verify the accounts of Companies in such a way that they would not make any fraud in their accounts with all the relevant procedures. Generally what the Companies use to do is that they do not follow the accounting procedures which is issued by ICAI with recommendation of NACAS (National Advisory Committee on Accounting Standards) known as C.AS rules 2006. Companies do not follow the accounting standards which is itself turns to corruption with the law. A CA as an auditor of the Company make them mandatory to follow the AS applicable to them to eradicate the corruption. CA role in field of accountancy is very broad, as an auditor they work for the nation. They make all the provision necessary for the Companies to follow them & to make their accounts true & fair view.
A Company generally do lots of fraud in their books to hide their actual profits/loss but the Institute (ICAI) restricts them, not to do window dressing by doing mandatory to follow the accounting procedure i.e. Accounting Standards which helps to eradicate the Corruption.
In The Field of Audit
Audit means examining of the financial statements of an entity by CAs, whether true or not, as a watch dog not as a blood hound. It has its own role in eradication of corruption. While conducting an audit the auditor should be straight forward, honest & sincere in his approach to his professional work. He must be fair & must not allow prejudice or bias to override his objectivity. He should maintain an impartial attitude and both be and appear to be free of any interest which might be regarded, whatever its actual fact, as being incompatible with integrity & objectivity (AAS 1, SA 200). There is so many ways by which corruption can arise in Companies which are not easy to identify during the year therefore to eradicate all that errors & frauds an audit work is done to check the mistakes & errors in the books. Auditor should be confidential that is he should not disclose any such information to third party without specific authority or unless there is any legal or professional duty to disclose. Auditor plays a vital role in eradication of corruption because it is mandatory for the companies to make their Accounts Audited at the end of financial year by none of other then Chartered Accountants. Here CA follow all the procedures prescribed by ICAI as AAS/Standards in Auditing which help them to identify the frauds done by the Companies in their accounts or the lake of internal control because of which corruption arise.
In The Field of Company Law
Nothing can be said for the law as it itself means the perfection. This is the area where only planning works; where nothing is impractical each & every thing is related with common life and based on the judgments. A CA has to follow all the compliance and procedures laid down in the Act, which is mandatory to follow by the Companies. CA do follow all procedures relating to Companies Act, which is mandatory like filing of returns to ROC, notice which include date, place, time of meeting and all the matters as per the rules of Companies act 1956. Every thing is settled in law. Law is the area where corruption is also possible relating to application of compliance procedures because it is made by all due diligence and is not possible for the general person to understand the law therefore a CA is required to follow up the procedures laid down their in. CA understands the provisions & made the planning’s for the clients in such a way, which directly help somewhere to eradicate corruption from the society. They follow all the compliance on behalf of the entity.
In The Field of Taxation
Tax is the very broad area, every person in his mind has the fear of provisions relating to tax, it is not because that they don’t know the procedures, it is because no body wants to pay tax to the govt. i.e. they do not plan the tax, what they do is tax evasion. Generally nobody like to pay tax without getting convinced by the benefits of paying tax to the government. Chartered accountants also give the best idea to avail the benefits, deductions & exemption provided by the tax laws by following the proper procedures. CA plays an incredible role in convincing the person to pay tax by doing some planning, planning here means taking the benefits provided by the tax laws. Chartered accountant restricts the person, not to do the tax evasion because it is somewhere causing loss to the each & every person of the nation. Tax is the basis earnings source for the government which is utilized for the welfare of the nation. If the government will not get the tax then how it can work for the development of nation, how it can make roads & provide various facilities to the public. Tax is the core area of corruption, where every people want to evade tax simply by not paying it to the govt. A chartered accountant plays a very important role to make aware the public with the benefits of tax payment and makes them comfort in payment of tax by doing some planning which is allowed by the Income Tax Provisions. The provision of tax is not only tough to understand but also it is tough to read as the case may be. It is very easy to comprehend but for that purpose you need to have a grip on it. This can only be done by professionally qualified persons. CA being a well qualified professional provides well planning regarding tax & help in plunging tax evasion i.e. it helps in eradication of corruption.
In The Field of Finance & Others
Besides the core competency in Accountancy, Audit & Tax. Finance is the focal area of this profession. Each & every member of ICAI is having good knowledge in finance generally the profession called MBA are also required to take the technical help in the matter of finance by a chartered accountant, regarding the best source/means of finance, its pros & cons and to make proper utilization of the same to make the business profitable. In this field very high risk is involved and if there is a risk, the high profit is required. Some of the major concepts are also given by this profession like how to manage the flow of cash & fund etc. Accounts, tax, finance are all inter related to each other. Without having the advance knowledge in accounting & taxation, it is not possible to make proper planning for the best means of finance & its utilization in optimum manner. To identify which source of finance is better for the company and at what interest rate & for how much period it is to be taken, these all can be possible only by proper planning with having good knowledge all above areas. It is because there is many types of adjustments is required while calculating cost of capital, B.E.P, Return on capital employed, E.P.S etc., some times by the mixture of several ratios a single ratio is also derived known as DU Pont Analysis. Theses can be done only by a qualified person, method of capital budgeting, working capital requirement are all can only be prepared by a good professional. If these data is prepared by the person who has not having the full knowledge, there can be some loss cause to the Company.
Today the Finance Function is much more than the ‘Bean Counter’ of the past. Bean Counter here means an accountant or practitioner of accountancy (called accountant in United States).
There is some cases related finance corruption all over the World;
a.Case Study : World Com
WorldCom, which has $104 billion in assets, overshadowed collapsed energy trader Enron as America's largest bankruptcy.
b. Satyam Scam ‘Satyam Computers Services Limited’. Where there is a fraud of Rs 7000 cr. by Ramalinga Raju, MD of the Company.
Conclusion
From the above, it is very much clear that the Chartered Accountants role for the eradication of corruption is very important, no doubt CAs play their role in different ways, sometimes they act as an auditor to examine the Company as a whole or sometimes they act as a consultant in the field of Finance, Tax, Law etc.. What they provide to the Company is best for the growth of that organization. As an auditor a chartered accountant is also known as a watch dog not a blood hounds.
Besides all these there are some negative factors also, where a chartered accountant does some un-law full and unethical work by using his professional skill. Because of their negligence the gloom of this profession get wreck sometimes. But as a younger Chartered Accountant and the future flag hoister of this profession we should provide our service in excellence & in the best interest of the Society.
ASHM & Associates
Gaurav Kumar Agarwal
Chartered Accountant (M.No: 524167)
9015449229
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