India has been one of the worst hit countries by the Covid-19 pandemic; however its accountants have persevered and adapted to new ways of working to guide their clients through difficult times. Joe Pickard speaks to Institute of Chartered Accountants of India (ICAI) president Nihar N Jambusaria to find out more
The Accountant: Covid-19 has impacted every corner of the world. What impact has it had on India and its accountants?
Nihar Jambusaria: The world around us has been going through tough, unprecedented challenges arising out of the Covid-19 pandemic, such as disrupted professions and social strata globally. The Indian government took some drastic measures including locking down the entire country to impede the impact of this catastrophe.
ICAI members are committed as professionals to ensuring that financial reporting continues to be of high quality and reliable, based on applicable accounting frameworks, and audit opinions are formed through performing the best audit procedures laid down in standards on auditing.
ICAI also analysed accounting and auditing aspects of these challenging times and released an advisory, Covid-19 Disruptions – ICAI Advisory on Accounting and Assurance related issues for the Financial Year 2019-20, to guide preparers and auditors. Many other measures were also taken to help members continue their duties during Covid.
TA: How have accountants adapted to new working situations such as working from home, or advising on contingency plans in light of the pandemic?
NJ: Due to its positivity and perseverance, ICAI has always deftly dealt with hardships and responded in times of crisis.
In March 2020, with Covid-19 spreading globally, the professional environment turned itself into a virtual world, a computer-simulated environment that is persistent – always on – and that enables user participation by means of personal avatars that can, in turn, communicate, collaborate and interact with each other in that environment.
As the world entered a phase of technology convergence, accountants adapted with the changing environment. By merging real and virtual worlds to produce new environments, accountants and clients who relied on in-person office interactions now meet on virtual tropical islands, virtually ‘stand’ in front of presentations beamed around the world, or maintain banter and team spirit. These new mixed reality applications can help companies cut costs and boost revenues.
ICAI remained in touch with all its members through this period, and ensured that their learning did not stop. ICAI has always remained at the technological forefront through technology-driven initiatives like the Digital Competency Maturity Model, the Unique Document Identification Number and Digital Learning Hub, which allowed members to learn from the comfort of their homes. Members were also allowed to participate in many professional courses virtually at a very small cost and with ease of access.
All necessary guidelines around working under pandemic conditions were issued to the members from time to time by ICAI.
TA: How is business confidence in India? How is public confidence in the accountancy profession?
NJ: Currently, overall business confidence seems high in India, with improvements in conditions and expectations. The accountancy profession, since its inception, has retained the position of a trusted advisor to the government and other stakeholders.
Since the beginning of the pandemic, expectations of chartered accountants from the government, business and society have grown further. As members of a responsible profession, chartered accountants have always worked to uphold public confidence through service to the nation and economy.
Chartered accountancy derives its core sustainability from a strong regimen of ethics and integrity, and has continued to work towards augmenting and strengthening governance and accountability in the country. The profession at large realises that it doesn’t have to stand just for itself, but for the society and nation too, and this is what our ideals and principles have consistently and persistently stood for.
Chartered accountants have acted, and will continue to act, as conscientious preservers of public trust, by strengthening credibility among stakeholders.
TA: How are accountants positioning themselves as trusted advisers?
NJ: The changing economic environment has made chartered accountants shift from being just accountants and auditors to business advisors and strategists to businesses by guiding them in changing times. They are acting as a guiding force, which involves taking strategic decisions to boost business.
Chartered accountants are placing themselves in areas such as investment banking, equity and IPO research, fraud and insolvency analysis, merger and acquisition analysis to widen their scope and upskill themselves.
TA: Beyond the pandemic, what other challenges do accountants in India face?
NJ: The changing business dynamics are presenting both opportunities and challenges in equal measure. Rising costs, growing competition and decreased client retention are some of the challenges that chartered accountants are facing today.
Accountants also have to keep learning and unlearning quite a few things to maintain a competitive edge in their profession due to the dynamic environment. It is important for chartered accountants to remain updated in new areas like international taxation, forensic auditing and anti-money laundering laws. Technology is also a major challenge.
TA: What will be your organisation’s focus over the next 12 months?
NJ: ICAI will place further importance on its regulatory and developmental role, which sets the highest standards of professional and ethical conduct for its members as a core value. Every ICAI member will not only be obliged to maintain exacting standards of clarity, transparency and disclosure, and present an independent, informed and balanced opinion, but ICAI will make examples of delinquent members to ensure that this core value is embedded in members’ DNA.
In order to update the system of education and training with the aim of enabling aspiring chartered accountants to acquire the contemporary competence that the profession requires, a Committee for Review of Education and Training has been constituted by ICAI. The committee will review the adequacy of existing systems in the context of the emerging requirements and the changing environment.
It has decided to initiate the work of reviewing the system of education and training on account of changes necessitated due to the implementation of the National Education Policy 2020, the increasing emphasis on corporate governance and business ethics, the opening up of new professional avenues, and technological developments. The review will be carried out through a comprehensive consultative process involving academicians, regulators, industry, parents, members and other stakeholders of the accountancy profession.
ICAI will ensure that members regularly update themselves and have the right skills to serve global economies that are relevant in the changing economic order. The institute will provide holistic education, effective practical training and continuous professional development to ensure that the profession’s knowledge base keeps pace with emerging global practices and innovations.
TA: With COP26 recently taking place, what is the appetite for sustainability reporting in India?
NJ: More and more entities are developing sustainability disclosures and seeking external assurance of these. Business leaders are placing environmental, social and governance concerns to the forefront, and leading corporate sustainability initiatives in order to capitalise on the market opportunity created by tackling sustainability challenges.
In 2011, the Ministry of Corporate Affairs (MCA) released the National Voluntary Guidelines on the social, environmental and economic responsibilities of business to emphasise that businesses have to endeavour to become responsible actors in society, so their every action leads to sustainable growth and economic development. The guidelines were revised in 2019 as the National Guidelines on Responsible Business Conduct, to assist businesses to perform above and beyond regulatory requirements.
The Securities and Exchange Board of India (SEBI), the market regulator for India’s capital markets, introduced requirements with respect to business responsibility reporting in August 2012, which were gradually extended to the top 1,000 companies by market capitalisation in 2015. In August 2020, the Committee on Business Responsibility Reporting, constituted by the MCA, released the Report of the Committee on Business Responsibility Reporting.
In May 2021, SEBI provided formats for Business Responsibility and Sustainability Reporting (BRSR), intended towards having quantitative and standardised disclosures on ESG parameters to enable comparability across companies, sectors and time. This BRSR is mandated for the top 1,000 listed companies by market capitalisation with effect from financial year 2022-23, while disclosure is voluntary for 2021-22.