The Big Four firms ask employees and partners to disclose this year's crypto investments.

 The Big Four firms - Deloitte, PwC, EY and KPMG - have asked their executives and partners to disclose cryptocurrency investments made by them or their family members during the year.

Deloitte and PwC partners have to disclose investments as small as Rs.10. The firms fear conflict of interest if partners or their family members hold digital currencies.

As part of the annual risk-assessment process, the Big Four firms have also sought details of investments in non-fungible tokens (NFT) or other crypto assets.

A non-fungible token (NFT) is a unique and non-interchangeable unit of data stored on a blockchain, a form of digital ledger. NFTs use a digital ledger to provide a public certificate of authenticity or proof of ownership, but do not restrict the sharing or copying of the underlying digital files. The lack of interchangeability (fungibility) distinguishes NFTs from blockchain cryptocurrencies, such as Bitcoin.

Bitcoin and other cryptocurrencies are the most prominent uses of blockchain technology, and they are examples of fungible tokens.

-Please note that bitcoins crypto assets may be considered as fungible..

Execs could face fine or be sacked if they fail to make disclosures.

Many of the Big Four projects involve directly working with the Reserve Bank of India (RBI) and the government. And they want to be above board.

The focus is mainly on the partners of the Big Four firms. There are about 1,600 partners in the Big Four firms who head service functions like consultancy, taxation or audit.

In the Big Four, the compliance department is tasked with verifying whether partners are making full disclosures.     

ICAI is planning to make CA course simpler by removing some subjects. If this happens would it be a right decision? (Source Internal)

The following is my response to what CA Yogesh Verma, Associate Relationship Manager, IndusInd Bank has written above. He is conducting a vote with readers having to respond with a Yes or No.

CA Yogesh Verma - The bad things continue to happen in our community defined as Chartered Accountants and CA students. Given below are some of them but not in any order.

1. CA course is made still simpler. As updated by you.

2. Remove some subjects. As updated by you.

3. Do not introduce the case study method of learning. You can refer to the MBA syllabus and question papers in individual subjects to understand what this is. It is used and applicable to all MBA courses pan India.

4. Do not introduce the case study method of teaching.

5. Continue with the outdated MCQ pattern of exams (for any professional course) from Foundation till the CA final exams.

6. Continue with another outdated idea of a combination of half subjects in a professional course as important as this. Example. IPCC Paper-7. Enterprise Information Systems and Strategic Management. Or Information Technology and Strategic Management.

You may note here that Strategic Management is a very important and a compulsory subject in the MBA syllabus pan India. A subject I have taught for a decade till 2013 in some of the best business schools in Mumbai and Delhi NCR. 

But it seems for Chartered Accountants it isn't.

To be continued         

Who is to blame for the Indian government encroaching on ICAI's powers?

 #supriowrites #icai 

Who is to blame for the Indian government encroaching on ICAI's powers?

What has not Happened

I have written for long on the reasons and consequences of what has not happened for two decades due to The Institute of Chartered Accountants of India (ICAI) not having the power to punish an audit firm however big it is. For the unintiated, The Chartered Accountants Act, 1949 has not given this power to ICAI till date.

Why this most important requirement of ICAI has not happened in spite of the nation being looted in regularity by scamsters and fraudsters settled comfortably with the loot in some corner of this planet. 

Yes not even after the National Financial Reporting Authority (NFRA) formed in 2018 as our disciplinary regulator.

What is Happening Now

A Bill moved in Parliament to empower ICAI, ICMA and ICSI to take disciplinary action against erring firms. Something long overdue. I didn't expect this to happen. But it has.

It is a rude awakening for ICAI's rank and file.

ICAI is a statutory body set up by an Act of Parliament which enjoys a large amount of functional autonomy. 

In 2018, NFRA, having enhanced powers, was set up. And now, the bill seeks to overhaul the disciplinary mechanism of ICAI, as well as those for Company Secretaries and Cost Accountants - ICAI and ICMA.

The ICAI is understandably unhappy that its domain has been encroached upon. Once again, after NFRA. The bill puts a government appointee as the head of the Disciplinary Committee, the ultimate authority to punish members for violations. 

Our community says that only a Chartered Accountant can interpret accounting rules in a way to do justice to the role. However, the functioning of the Committee, headed by prominent members of ICAI leaves much to be desired.

Adjudications are inordinately delayed leaving room for much to happen. The final orders against the auditors of Satyam (PwC) came 5 years after the scandal broke out in 2009. The Satyam scam is the story of India's biggest corporate fraud. ICAI argued its hands were tied up because of judicial interventions.

If ICAI wants to blame someone for this sorry state of affairs it is only itself. Once considered to be the most formidable of financial regulators it lost its domination over the last two decades, most of all among its own members. 

It has not been able to make any progress in the two areas members still look up to it the most – protecting small and medium audit firms from the dominance of large MNC-networked firms, Deloitte, PwC, KPMG, EY and so on; and to punish firms that facilitated the biggest financial scams over the last two decades. The latest amendment helps with the latter, as it gives ICAI the powers to proceed against audit firms.

It may be argued that this coincides with a fall from grace for institutions across the board, ICAI’s troubles are different in that they are mostly unsolicited. Perhaps a bigger soul searching is called for.

To be concluded  

The Big Four firms ask employees and partners to disclose this year's crypto investments.

The Big Four firms - Deloitte, PwC, EY and KPMG - have asked their executives and partners to disclose cryptocurrency investments made by them or their family members during the year.

Deloitte and PwC partners have to disclose investments as small as Rs.10. The firms fear conflict of interest if partners or their family members hold digital currencies.

As part of the annual risk-assessment process, the Big Four firms have also sought details of investments in non-fungible tokens (NFT) or other crypto assets.

A non-fungible token (NFT) is a unique and non-interchangeable unit of data stored on a blockchain, a form of digital ledger. NFTs use a digital ledger to provide a public certificate of authenticity or proof of ownership, but do not restrict the sharing or copying of the underlying digital files. The lack of interchangeability (fungibility) distinguishes NFTs from blockchain cryptocurrencies, such as Bitcoin.

Bitcoin and other cryptocurrencies are the most prominent uses of blockchain technology, and they are examples of fungible tokens.

Please note that bitcoins crypto assets may be considered as fungible..

Execs could face fine or be sacked if they fail to make disclosures.

Many of the Big Four projects involve directly working with the Reserve Bank of India (RBI) and the government. And they want to be above board.

The focus is mainly on the partners of the Big Four firms. There are about 1,600 partners in the Big Four firms who head service functions like consultancy, taxation or audit.

In the Big Four, the compliance department is tasked with verifying whether partners are making full disclosures.    

Has the Proposed Chartered Accountancy Bill Rubbed us the Wrong Way?

Has the Proposed Chartered Accountancy Bill Rubbed us the Wrong Way?

It seems our community (read - Chartered Accountants) feels that the three non-members (read - non CAs), supposed to have shallow knowledge of audit and assurance, cannot deliver fair judgement in the proposed Disciplinary Committee of ICAI. 

This alters the power equation in favour of the three non-members in the committee which oversees complaints and enquiries pertaining to misconduct of members. 

Our community interprets the move as another attempt by the government to assert control over us after the creation of the National Financial Reporting Authority (NFRA) in 2018.

The Bill proposes inclusion of two CAs and three non-CAs (government nominees) in the Disciplinary Committee from two non-CA nominees and three members.

It proposes to have a non-member as the presiding officer of the Disciplinary Committee. It seems this has annoyed our community a lot as the President of ICAI holds considerable influence over the committee's decisions.

The proposals have come after allegations that ICAI Disciplinary Committee has gone very slow and yet to take any tough decision.

The move will not affect the Big Four but small and medium audit firms have to be careful.

ICAI's powers to influence decisions of the Disciplinary Committee will be mostly diminished. 

Our community feels that the government wants to assert control as in NFRA.

It also feels that the approach in most fraud cases has been to go only after the auditors.

It seems the government is about to take away ICAI's powers and see to it that the President as well as ICAI can no more influence the decisions of the Disciplinary Committee.

There is a general inclination against self regulation in our community. The proposed Bill is an attempt by the government to act in an independent way and reduce ICAI's power and influence over the profession.

The main concern in our community is that non-members do not understand our profession, its practicalities and intricacies. If the proposed changes happen there would be an independent and unbiased view in several aspects. 

Over time auditing has become highly technical and specialised. The scope of audit is quite clearly defined through multiple standards. The proposed changes may result in more decisions based on individual judgement than those driven by the governing standards.

Conclusion

The government has proposed the suggested changes after frequent allegations that ICAI Disciplinary Committee had been very slow and too lethargic. It has never taken tough disciplinary actions against the members and particularly the respective audit firms. The cases dragged on for years together. 

I can give numerous examples of violations that have taken place in our community over the last three decades with nothing ever happening to the culprits. The members or the audit firm. I leave that discussion for another occasion.