ICAI not to recognise part-timers

Rule to come into effect from April 1, 2005

The Institute of Chartered Accountants of India (ICAI) has said members engaged in businesses other than chartered accountancy will not be entitled to hold or obtain a certificate of practice from April 1, 2005.

The members engaged in teaching assignments for up to 25 hours a week in a recognised university, college or institution affiliated to a university and those in consultancy services would, however, be allowed to hold a certificate of practice. They would not be entitled to undertake any attest function, said ICAI in a press statement.

ICAI President Sunil Goyal said the modalities for implementing the above resolution were being worked out by the council. There were sufficient full-time practicing chartered accountants and such a restriction would have no adverse effect, he said in the statement.

According to the ICAI council, this would ensure that the profession is practiced only by the members who are able to devote full time and do justice to the complexities of the assignments and the attendant responsibilities. The council felt the need of the hour was to strengthen the profession and uphold the quality of attest functions performed by the members.

Moreover, ICAI has also made Accounting Standard 26 inapplicable to voluntary retirement scheme (VRS) expenditure, which means companies will not need to expense VRS expenditure in a single accounting year and can stagger it. The change in rules for VRS expensing will be effective for accounting periods commencing on or after April 1, 2003.

"To ensure that the practice of the profession is being undertaken by only those members who are able to devote full time to do justice with the complexities of the assignment and the responsibilities involved, we felt that the need of the hour is to strengthen the profession and to uphold the quality of the attest function performed by the members," Goyal said at a press conference in Hyderabad.

ICAI members will have a full year to decide on whether they want to be consultants or be eligible to attest. "We have allowed members to go in for teaching assignments for 25 hours a week in a recognised university and also offer consultancy services. But such members who are engaged in businesses will not be allowed to undertake any attest functions," he said.

It is estimated that only 50 per cent of the 1,20,000 membership base of the ICAI is active and engaged in practice. Of the 60,000 members engaged in practice only 20 per cent are engaged in consultancy.

Goyal said that the ICAI had approved the limited revision of Accounting Standard 26, Intangible Assets, so as to make it inapplicable to expenditure in respect of termination benefits including VRS expenditure.

The Indian industry, according to Goyal, had represented to the ICAI that in IAS 38, which is the corresponding international accounting standard to AS 26, the provisions related to VRS expenditure was not incorporated.

"Instead they are incorporated in IAS 19 on 'Employee Benefits' corresponding to AS 15 in India, which is for 'Accounting for Retirement Benefits in the Financial Statements of Employers'," he said.