1) What are the key accounting and financial reporting standards that a Chartered Accountant ( CA ) must be proficient in?
A: a) International Financial Reporting Standards ( IFRS ) can be defined as a set of accounting rules for the financial statements of public companies that are meant to make them uniform, transparent, and simple to compare globally.
b) Indian Accounting Standards ( Ind AS ) (for Indian CAs): These are converged with IFRS and applicable to companies in India for compliance with regulatory requirements.
c) Generally Accepted Accounting Principles ( GAAP ): It is a widely accepted set of guidelines used in corporate accounting and financial reporting, predominantly in the US. The knowledge of GAAP specific to the country of practice is essential for accurate financial reporting.
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d) Standards on Auditing ( SAs ): These guide the auditing process to ensure transparency and reliability in financial reports.
e) Industry-Specific Standards: Understanding sector-specific accounting rules and practices is vital for providing tailored financial solutions.
2) What are the major taxation laws and regulations a CA must know?
A) First of all, a CA must be well aware of the existing tax laws and regulations. A CA should definitely have in-depth knowledge about direct and indirect taxes such as GST ( Goods and service tax ), income tax, and corporate tax, etc. A CA should know how to carry out tax planning and tax management effectively.
3) What is the audit and risk management that every CA should master?
- Every Chartered Accountant must understand these are the core principles of audits and risks, which include:
- Independence and Objectivity: Maintaining an objective view in the whole audit process
- Risk Assessment: Identification of risk that may affect the financial and operational performance of the organization
- Internal Controls: Relating to the understanding, testing, and advice towards improvement within a firm’s control environment
- Materiality and Evidence: Focusing on material items as well as having sufficient and appropriate audit evidence.
- Adherence to Standards: Adhering to all applicable standards on auditing.
- Communication and Reporting: Providing an audit report that is clear, accurate, and comprehensive to relevant stakeholders.
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4) Why is adhering to ethics and professional standards important in the field of accounting?
- A CA should always adhere to the professional standards provided in the field of accounting.
Ethics, as we all know, is a set of moral obligations. It is important for every CA to be committed to the work assigned and to transparency and confidentiality.
5) How does a CA effectively apply financial analysis and management techniques in decision-making?
- A Chartered Accountant shows the effective application of financial analysis and management techniques in making decisions.
- Financial Statement Analysis: It is a process that involves the interpretation of a firm’s balance sheet, income statement, and statement of cash flows, aiming to afford insight into the performance and health of the firm.
- Ratio Analysis: This involves the use of distinct financial ratios such as profitability, liquidity, and solvency in the assessment of operational efficiency and strategic posture.
- Budgeting and Forecasting: It is the process of developing budgets and financial forecasts to plan for appropriate resource allocation and future challenges.
- Cost Management: Determine cost drivers and how to minimize spend and enhance profit
- Investment Appraisal: It is the calculation of proposed investments with respect to tools such as NPV, IRR, and payback period for strategic decision support.
- Risk Assessment: To analyse financial risks and develop strategies to effectively mitigate the risks while maximizing returns.
6) What is the difference between Internal Audit and Statutory Audit?
- In simple terms, internal audit is the audit that is conducted by an organisation voluntarily and by the inside employees of the organisation or company. It is not compulsory in nature. But in the case of statutory audit, it is mandatory in nature and is carried out by an external person.
7) What are the major aspects of corporate governance that a CA should monitor?
- It is the responsibility of a Chartered Accountant to keep a watch over structural aspects of corporate governance ensuring that the company meets the legal requirement of the Companies Act, SEBI guidelines, and other regulatory authorities. Ensuring transparency and integrity in their Financial Reporting so that the confidence of the Stakeholders is not abused in the course of the ordinary business, and there are no malpractices in the conduct of business. Further, an assessment of the performance of the Board of Directors and of any audit committees should also be conducted in such a way that there is no compromise in accountability and independence, and in the way business risks are managed.
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8) What should a CA do to handle situations in which there is a conflict of interest with the client?
- In order to handle the conflicts of interest with clients, the CA must ensure strict adherence to the Code of Ethics for Chartered Accountants, which gives importance to independence and integrity.
It is vital to identify and disclose the conflict to all relevant parties and should maintain complete transparency. If necessary, the CA may seek written consent from the affected clients before proceeding with any engagements. To avoid the conflict, CA can establish safeguards, such as separating teams or limiting access to sensitive information. If
9) Give an example in which a CA was reprimanded by the ICAI for engaging in non professional activities.
A . In the month of August a CA was reprimanded by the Institute of Chartered Accountants of India ( ICAI ) for providing the complainant with invoices pertaining to the supply of building materials. The Board observed that the participation in non-professional activities, particularly the issuance of invoices for building materials, tarnished the reputation of the profession and violated the ethical standards and responsibilities established by the Institute.
Read More: https://www.taxscan.in/icai-reprimands-ca-for-engaging-in-non-professional-activities-by-supplying-building-materials/432918/
10) What are the major consequences of professional misconduct by a CA?
- In order to ensure that a CA adheres to the code of ethics provided under the Chartered Accountant Act, 1949, several measures such as reprimanding a CA for minor issues. It also includes the removal of the name of the CA from the ICAI’s registrar, fines, suspensions and penalties.
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