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An Overview of Attestation Services in India
The attestation function is a core
competence area of chartered
accountant professionals. The
society at large is relying on the
attestation services for ensuring
that the public funds are utilised
properly. In case where scams are
discovered and millions of dollars
gets into wrong hands, we should
realise that either there were
no attestation services utilised
or, if they were, then there were
lapses. The need of the hour is to
ensure that a significant section
of economic activities in the
country come under the ambit of
independent attestation services.
If all the financial transactions
are audited properly, no scam
can take place in the country, and
by ensuring proper utilisation of
funds we can improve the lot of
our citizens.
New Dawn of Accountancy
Profession in India
After India got Independence in the
year 1947, the national leaders realised
the need of an organised accounting
profession to contribute towards the
economic growth and development of
the country. Therefore, The Institute of
Chartered Accountants of India (ICAI)
was established as a statutory body
under the Chartered Accountants
Act, 1949 (Act No. XXXVII of 1949) for
regulating the profession of chartered
accountants in India.
CA. K. L. Chandak
(The author is a member of the Institute.
He can be reached at eboard@icai.org)
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THE CHARTERED ACCOUNTANT
Significance of CAs in
Attestation Services
The key role of profession of chartered
september 2010
accountants involves checking of
all types of financial statements and
certifying them. It inter-alia includes
services in the nature of Statutory
Audit, Internal Audit, Inspection Audit,
Tax Audit, Stock Audit, Certification and
allied various other attestation services.
Since the establishment of ICAI in the
year 1949, only the practicing members
who are holding either the part time
or full time certificate of practice, are
empowered to attest and certify various
financial statements which are then
relied upon by the society/stakeholders.
Thus, in a way, this entrusts an absolute
exclusivity to chartered accountants
in the field of attestation services as
described above.
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431
Expertise in the Field of
Attestation Services
The primary area of expertise rendered
to a student of chartered accountancy
is with respect to auditing and
accounts. But due to exceptional
quality of the course, the student gains
substantial expertise in the allied areas
of the Companies Act, Income Tax,
Wealth Tax, Gift Tax, Service Tax, Excise
& Customs, Sales Tax, FEMA and lot
of other enactments which directly or
indirectly affects financial transactions.
The reason for such a vast course
being that a chartered accountant has
to take a view in totality and need to
be capable of understanding the larger
picture before forming a view on the
micro topic. This provides him ability
to understanding complex situation
involving various enactments effecting
a certain transaction and ensures that
the position is reflected as desired and
any violation of any provisions can be
highlighted.
Expanded Area of Services
in Various Allied Areas
As the path to chartered accountancy
enables a professional student clear
At the time of setting
up of the ICAI, it
was thought beyond
doubt that the attestation
services shall be carried out and
treated as profession and not as
a business. Therefore, there was
no scope for advertisement, etc.,
for attestation services. Even the
size of name board was kept to
a limited size just to reach the
location of the member and not
for his publicity. It was presumed
that the clients will avail the
services of a professional by
considering the experience,
credibility, integrity and
capability. This basic theme was
very critical as the attestation
services were considered the
need of the society at large.
edge on various peers, the services
of chartered accountants are being
availed by many sectors in India as
well as abroad both in private- and
public-sector companies as well as in
the administration of the Central and
State Governments. These sectors
not only look forward to their expertise
in attestation services, but utilise the
overall capability of the chartered
accountants.
Since the setting up of the Institute
more than 60 years ago, till date about
165,000 candidates have qualified
as chartered accountants. Nearly 50
per cent thereof are in service and
a significant number thereof have
occupied eminent positions in their
respective organisations such as
chairperson at regulatory bodies,
chairperson of banks and insurance
companies, members of ITAT, etc.
The remaining about 50 per cent
members are in full time practice.
Because of their expertise, they not
only render attestation services but
have engaged themselves in other
areas such as providing services in the
field of Accounting, Taxation, Company
Law Matters, Financial Consultancy,
Corporate Governance, Due Diligence,
Transfer Pricing and various other
areas.
Need for Attestation
Services
With the rapid economic development
in the country in the last 63 years,
large sums are being spent on its
developmental projects both in
private as well as in public sector and
therefore so far as economic activities
are concerned they have increased
manifold. Billions are being spent
every year by the Central Government,
the State Governments and municipal
corporations, panchayats, etc., on
various developmental projects and on
providing civic amenities as well as on
the administration. Private sector in the
country has also grown tremendously.
Indian industrialists are expanding
throughout the world.
India produces 900,000 engineers
annually and the total number of CAs
has reached only to about 165,000
over a period of 61 years. For any
project where the services of engineers
are required, there must be a need for
the services of a chartered accountant,
although not be in same ratio/
framework. Where there is expenditure
whether revenue as capital, there is a
need of the services of the chartered
accountant to check the transaction to
control any misuse or misappropriation
of funds. Thus, both in the private as
well as in the public sector there are
ample opportunities for work for CAs.
And if entire spectrum of financial
transactions in the country is brought
under the ambit of audit, it is for sure
that the current strength of CAs will
be far insufficient to carry out just the
attestation services.
Attestation Services:
Serving the Society
At the time of setting up of the ICAI,
it was thought beyond doubt that the
attestation services shall be carried
out and treated as profession and
not as a business. Therefore, there
was no scope for advertisement, etc.,
for attestation services. Even the size
of name board was kept to a limited
size just to reach the location of the
members and not for their publicity.
It was presumed that the clients will
avail the services of a professional
by considering the experience,
credibility, integrity and capability. This
basic theme was very critical as the
attestation services were considered
the need of the society at large. Just
like the code of conduct of medical
profession doesn’t allow a doctor to
carry on his profession like a business,
CAs are expected to follow the dignity
of their profession to the society.
Let’s understand the criticality of
distinction between profession and
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432
While the Institute
has been trying to
help the members in
developing other practice areas,
it is equally important to note
that the basic area of operation
or dominance for CAs is the
attestation services. Thus, we
should do our best to ensure that
a significant section of economic
activities in the country move
under the ambit of independent
attestation services and the
entire work is distributed evenly
among the members at large
and not concentrated with few
players.
business at this stage. The basic
motive behind profession is to provide
service to the society while maintaining
complete integrity and trust and, thus,
while the professional will charge for
the service, the motive will not be to
earn abnormal profits. On the other
hand, a business focuses primarily
on making profits and while it may be
servicing society indirectly, that’s not
the primary objective of a businessman.
For instance, due to his profession, a
doctor is expected to treat the patient
with right medicine and not refer
medicines purely for making money
from the pharma company. Similarly,
when a bank relies upon audited
financial statements for lending to
a company, its social money at the
bank which is at stake. If CAs consider
this as a way of making money from
any given opportunity, they will be
tempted to sign wrong certificates
which will help the company mislead
the bank. Thus, CAs should strictly
maintain the dignity and high standards
in the profession to maintain social
respect.
No Compromise in
Attestation Function
The society at large is relying on the
attestation services for ensuring that
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THE CHARTERED ACCOUNTANT
the public funds are utilised properly.
In case where scams are discovered
and millions of dollars gets into wrong
hands, we should realise that either
there were no attestation services
utilized or, if they were, there were
lapses. In such cases, the society starts
to feel that the chartered accountants
are not performing their duties which
negate the entire purpose of having an
independent eye. It is very important
for the entire profession to ensure that
the quality of attestation is so high that
any stakeholder should be able to
completely rely on the same without a
doubt. This will ensure that the public
as well as private finances are utilized
in the manner they are supposed to.
There is a strict need for the chartered
accountants to follow Code of Ethics in
letter and spirit for everlasting reliability
of the profession and continued trust of
society at large.
Due to the environment of intense
competition, there may be situations
in which few members may find it
difficult to earn in proportion to their
skills and hardwork. In such situations,
some of the members may get ready
to take up an assignment at a lower
remuneration which may not justify
the time/skills required to perform the
same. This may result in compromise
of quality on that assignment, which is
completely unacceptable for the sake
of profession.
The concentration of work with
larger firms may be one of the reasons
for smaller firms/individual practitioner
not getting allocated sufficient work
/ value for their work. While the large
firms are welcome for the infrastructure
they introduce in the system, we must
not ignore the fact that the attestation
services is all about individual
responsibility and an individual
practitioner can perform the same with
same (or better) quality.
We all must ensure that the quality
levels are not compromised upon and
thus society should be able to respect
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all CAs for their skills, quality and
integrity.
Ensuring Quality of
Attestation Services
We as professional members need
to brainstorm as to how to ensure an
environment that none of the members
is ready to compromise on the quality.
As a backgrounder, the primary
object of establishment of our Institute
as an autonomous body through an
Act of Parliament 61 years ago was to
regulate the accountancy profession
in India and thereby to mean to have
a proper check on its members to
ensure that various attestation services
which are being rendered suit the
needs of the society. To achieve this
object a disciplinary committee is
effectively working in the Institute takes
disciplinary actions against errant
members.
Need to Put More Emphasis
on Attestation Services
Coming back to the basic question of
why are the members diversifying to
other areas from the core attestation
services. As we discussed above, many
members feel that the overall pie of the
assignments available in the economy
are not sufficient and some members
do not get sufficient work. This induces
them to other practice areas.
While the Institute has been trying
to help the members in developing
other practice areas, it is equally
important to note that the basic area of
operation or dominance for CAs is the
attestation services. Thus, we should
do our best to ensure that a significant
section of economic activities in the
country move under the ambit of
independent attestation services and
the entire work is distributed evenly
among the members at large and not
concentrated with few players.
Sometimes, it is noticed at the
study circles, that the value addition for
CAs gets limited to understanding the
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433
technology for filing TDS returns and
VAT. While members of the Institute are
willing to take up additional activities,
let’s not ignore the fact that this is not
our core area of competence and we
have a much larger canvas to work and
serve the society.
The Institute is taking active steps
to ensure that there are ample new
opportunities for members to take
up attestation services and that there
are set processes to ensure proper
distribution of the same among all
members with healthy competition.
Further, there is a need to more strictly
ensure the quality of deliverables from
members, meeting the highest norms
and conforming to related standards.
This fact should be communicated to
the stakeholders at large to re-build
the credibility which was somewhat
lost after the Satyam episode. It’s an
ongoing process where dialogues need
to undergo between the Government
and the Institute, and the Institute and
various stakeholders.
Enhancing the Value of
Attestation Services
The value of attestation services can
be enhanced in the following ways:
(1) By putting more emphasis on
attestation services as the area
of core competence for CAs –
Diversification to other areas of
professional expertise can be
accorded a second priority and
other services can be treated as
incidental.
(2)By expediting disciplinary actions
against errant members.
(3)By educating stakeholders about
the importance of getting their
accounts audited
(4)By giving more importance to
individual’s knowledge, skills,
experience, integrity and credibility
instead of the size of the firm and
infrastructure.
(5)By
ensuring
allocation
of
attestation work in a justifiable and
equitable manner – There should
be a mechanism whereby as far
as the entire audit assignments
available in the country be allotted
to the maximum number of
chartered accountants in practice
in a justifiable manner based on
the skills, knowledge, experience,
integrity, credibility of the members
and not on infrastructure and size
only. It is for this reason that a ceiling
has been fixed as to the number of
audits a firm can audit under the
provisions of the Companies Act,
1956.
(6)By putting more stress on moral
and ethical standards for CAs –
Framing number of Accounting
Standards or enforcing stringent
Rules and Regulations alone
would not serve the desired
purpose unless the principles of
high moral values are adopted to
ensure integrity of our members.
(7)By ensuring that the profession
is not deviating from the path
originally thought.
What Practicing Members
can Contribute
(1) Ensure that attestation is a
profession of service to the
Society: Practicing members
should know that this is a
If all the financial
transactions are
audited properly
no scam can take place in the
country. Corruption shall also
be eliminated altogether and
if corruption is eliminated
India can become one of the
advanced countries in the
world. ICAI and its members
can play a significant role in the
elimination of corruption and at
the same time through proper
utilisation of funds we can
improve the conditions of our
citizens.
(2)
(3)
(4)
(5)
profession of service to the society
where service is first and profit is
secondary motto. Keeping this
in mind, they should render their
services.
Ensure high moral character,
ethical standards and integrity:
While
rendering
attestation
services, members must ensure
high moral character, ethical
standard and integrity that alone
can bring good results.
Do not try to snatch the work of
others: Without communicating
the previous member, no member
should accept any attestation
work.
Render the services without
favour and fear: While rendering
services CAs’ report thereon should
be without favour and fear so as to
ensure the public confidence.
Proper utilisation of your
experience, knowledge and
skill: While working on attestation
services, CAs should utilise their full
skills, knowledge and experience.
Conclusion
The need of the hour is to ensure that
the credibility of attestation services
is retained and to ensure that all
financial transactions taking place
in the Government sector as well as
all transactions of private sector in
which public funds are involved are
brought under the ambit of audit by an
independent auditor who should be a
practicing member of ICAI.
If all the financial transactions are
audited properly no scam can take
place in the country. Corruption shall
also be eliminated, altogether and
if corruption is eliminated, India can
become one of the most advanced
countries in the world. ICAI and its
members can play a significant role in
the elimination of corruption and, at the
same time, through proper utilisation of
funds, we can improve the conditions
of our citizens.n
september 2010
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