History Of Chartered Accountants in India

 Chartered accountants are the ones who are specialized in the field of accounting, auditing and taxation. They also serve as management and corporate caretaker. In recent days, Chartered Accountants have become popular as a profession.

According to the Company Act, only CA's in professional practice are allowed to be appointed auditors of companies in India. They are also responsible for handling accounts and finance-related matters, dealing with money management. Chartered Accountants are the ones who are accepted as a member of the Institute of Chartered Accountants of India (ICAI) after having passed the Final examination of the Chartered accountancy course conducted by the institute.

History

Chartered Accountants were the first accountants to form a professional accounting body, at the very first it was established in Britain in 1854. The Edinburgh Society of Accountants (formed 1854), the Glasgow Institute of Accountants and Actuaries (1854) and the Aberdeen Society of Accountants (1867) were each granted a royal charter almost from their inception. Chartered Accountants' specialised areas are business and finance, including audit, taxation, financial and general management. Some are engaged in public practice work, others are appointed in the private sector and some are employed by government bodies.

A long time ago, when our country was under the rule of the British East India Company, an act came into effect which prescribed several books that were required to maintain by a registered Company under The Companies Act, of 1913. The requirement for an auditor was also there to maintain these books.

At that time the auditors need a Certificate from the local government to act as an auditor, as a basic qualification. There are two types of certificates, the first one is an Unrestricted Certificate which gives that person the freedom to act as an auditor throughout the country and the other one is a Restricted Certificate. The restricted Certificate holder could only act within the allotted province or language specified in the certificate.

In the year of 1918, a diploma course was launched in Bombay, which is known as Government Diploma in Accounting (GDA). In this diploma course, the intended candidate was required to do articleship for three years and had to pass the examination, and qualified candidates were rewarded with an unrestricted certificate.

After that in the year 1930, the Society of Auditors was established in Madras. Then the government of India decided to keep records of members practising as auditors, the person whose name was enlisted in the register alias as a Registered Accountant. After two years in 1932, a separate accountancy board was established which is called Indian Accountancy Board. Indian Accounting Board advises the Governor General in the Council of India on the points of Accountancy and the required conduct along with qualification standards of the auditors. The Indian Accountancy Board held its first examination in the year of 1933 and in the same year GDAs has been exempted from taking the examination of auditors. GDA has been completely extinct in 1943.

After the independence of our country, a step was taken by an expert committee that recommended starting an autonomous association of accountants. The association aims to regulate the profession of auditors was taken. The Government of India accepted the report of the expert committee and passed the Chartered Accountant Act in 1949. However, the Chartered Accountant Act came into effect on 1 July 1949 and the Institute of Chartered Accountants of India (ICAI) was introduced. Related to the same, as per section 3 of this act, the ICAI is established as an autonomous body corporate with perpetual succession and a common seal.

Chartered Accountant is a very controversial term, cause Charter refers to the royal charter in many so countries. Many accountants have registered themselves as a member of the Institute of Chartered Accountants in England & Wales and other societies of Chartered Accountants and they are practising as Chartered Accountants. Many titles were suggested at the time of the passing Chartered Accountant Act. After so much contention in the Indian Constituent Assembly, the term Registered Accountants has been replaced with Chartered Accountants and it came into effect on 1 July 1949. 1st July we celebrated Chartered Accountants day every year.

Role of a Chartered Accountant in Nation Development

Chartered Accountancy not only deal with debit-credit of accounts but they play a very significant role at a high level in the country's economic development. It was well said by Dr APJ Abdul Kalam that Chartered Accountants are partners in the nation building. Chartered Accountants are the economic pillar of the country. By utilizing financial expertise, the nation gets the right direction in various financial and economy-related measures to enhance the decaying Indian economy and enhance the economy along with industrial growth. A normal person can see the participation of Chartered Accountants in every crucial field. Chartered Accountant contributes in fields of Taxation planning, capital budgeting, budget forecasting, financing or any other activity, preparation of books of accounts, and in every field as well. In the current scenario, after GST implementation, the role of Chartered Accountants has become very important. From the drafting of rules to provisions to the implementation of GST, the role and expertise of CAs were utilized to the fullest.

Chartered Accountant's role in the field of taxation is praiseworthy. They are the masters of taxation. Due to their prudence, they help in tax planning. It is significant to understand the difference between tax evasion and tax planning. Tax evasion is illegal and it attracts penal consequences, on the other hand, tax planning is legal which is beneficial to the common man and our nation both. Tax planning is the analysis of a financial situation from a taxation perspective. For the growth of the country, its commercial sector must grow. Chartered Accountants provide the absolute necessary knowledge to business entities which helps in the smooth functioning of the business. A famous business entrepreneur Ratan Tata has made a statement that “I need MBAs for running my business but Chartered Accountants to teach them how to run the business.”

In the era of globalization, business entities and even the government of our nation try to shake hands with foreign companies. When any business entity starts functioning on a global level, many complications take place like complying with laws of the Foreign Exchange Management Act or complying with the rules and regulations of governments of every country where the business is operating. Conducting business on an international level also involves inflows and outflows of foreign currencies. A Chartered Accountant helps to solve all these matters of business entities. A Chartered Accountant also has expertise in these laws and he/she guides a business in all these matters.

They also help in regulating foreign currencies by entering swap contracts forward contracts, futures contracts etc. which in turn helps to regulate foreign exchange inflow and outflow in the country. A nation’s growth is in direct proportion to the growth of its citizens. Investment opportunities are gaining their charm day by day. An investor wants to invest in those stock portfolios which have the chance of giving the highest return. Businesses, as well as investors, have to comply with laws relating to the investment field like rules and regulations of the SEBI Act, 1992 and SCRA Act. Government frames various laws and rules in this regard to protect the interest of investors and to maintain the economical growth of the nation. Chartered Accountant plays an important role in this field also. They also provide sufficient advice to investors as well as companies. They even have contributed to drafting policies regarding laws of investment. We all know that the e-commerce sector is also growing at a rapid speed. Google tax Equalization Levy, Various provisions of TDS, and TCS attract the e-commerce industry. A Chartered Accountant helps this sector by providing guidance and by handling their taxation matters.

The next important area in which the Chartered Accountant's role is important in nation-building is warding off Corruption, malfunctioning, window dressing, detecting frauds in companies etc. A nation will grow only after the end of corruption. Chartered Accountants help to minimize corruption by following rules and regulations and by creating awareness in people about wrong practices and their penal consequences. In a company, an auditor (Chartered Accountants) is required to express his opinion on the true and fair view of financial statements. An auditor tries to search for wrong practices done by management or staff and he has to express his opinion on it. As per orders of the Comptroller and Auditor General (CAG) of India, Chartered Accountant also express his opinion on the financial statements of a government company. Auditors’ opinion increases the trust of investors as well as helps in restricting any malfunction.

Conclusion

A Chartered Accountant is an important pillar in the economic growth of the nation. The View of a Chartered Accountant to solve the financial problem is different from others. Due to their knowledge and expertise in the field of finance taxation, stock market, company law matters, FOREX, etc, it helps even the common man or residents of the country in understanding the rules and regulations.

So it is justified that Chartered Accountants are partners in nation-building.