Indian Institutes of Accounting necessary to end monopoly of one ‘body’: Standing Committee

IIA, similar to IITs, IIMs, will provide higher quality education in the Accounting and Finance sector and students will receive a Certificate of Practice, called Certified Professional Accountants.

A Standing Committee of the Parliament has proposed setting up of Indian Institutes of Accounting, similar to IITs and IIMs. The Parliamentary Panel in its report has stated that creating IIAs is necessary to end the statutory monopoly of one body. Presently Institute of Chartered Accountants of India (ICAI) is the only body giving recognition to CAs.

The Standing Committee on Finance’s report on the amendment Bill on three professions Chartered accountants, company secretaries, and cost accountants has proposed the Government to set up an Institute of Accounting (IIA), similar to the Indian Institute of Technology (IITs), and Indian Institutes of Management (IIMs), with a view to providing higher quality education in the Accounting and Finance sector.

The panel has proposed that IIAs will start with a five-year undergraduate programme in accounting and admission will be through a national entrance. Those who qualify in the undergraduate programme will be given two degrees, a Bachelor of Accounting and a Bachelor of Business. The Students passing from such IIAs would be receiving a Certificate of Practice and they will be called Certified Professional Accountants.

The proposal for IIA was made as a part of observations on a report on the Chartered Accountants, the Cost and Works Accountants, and the Company Secretaries (Amendment) Bill, 2021, which was tabled in Parliament recently and was up for discussions on various aspects.

The Bill is being seen as a major setback to the ICAI, as the report stated that the qualification and licensing of Accountants in advanced countries like US, UK, and Canada are done by multiple bodies unlike in India where one Institute has a statutory monopoly over a whole profession. Raising concerns about the scope for improving the quality and competency of the profession, the report stated that multiple bodies shall be introduced in the sector to promote healthy competition, raise standards and quality of auditing and accounting and improve the credibility of financial reporting.

String of IIAs akin to IITs, IIMs

The report states that this proposal is for establishing a string of Indian Institute of Accounting (IIA) that will raise the standards of accounting education and offer competition to the Institute of Chartered Accountants of India.

The IIAs will be statutory bodies established by a Central law similar to IITs and IIMs, set up in different parts of India. Each IIA will have a board of governors consisting of experts, lay persons, and government officers drawn among others, from the Ministry of Finance, the Ministry of Education, and the Ministry of Corporate Affairs. The board size will be ten.

The board will have fully functional, financial and administrative autonomy for its efficient functioning. The chairman and the members will be eminent persons from business, public administration, accountancy, finance, academia, and so on. The board will appoint the chairman and the members and they must be free from conflict of interest of any kind i.e. professional, financial, or personal.

The board will appoint a Director (CEO) for a term of five years. The Director shall not be eligible for reappointment or extension in order to avoid entrenchment. This is particularly important because the board is part-time and the Director could develop deep roots.

Each IIA will have an Academic Council that will develop the curriculum. The undergraduate curriculum will have financial and cost accounting, auditing, tax, law, business strategy, organisational behaviour, management, governance and public administration, technology, data science, psychology and other fields relevant to the wide role that accountants play.

5 Yr UG programme in accounting

IIAs will start with a five-year undergraduate programme in accounting. Over time, they will develop post-graduate programmes in specialized areas such as forensic accounting, business analytics, cyber security, valuation, international tax, and other relevant fields. Once these programmes stabilise, they will develop PhD programmes.

Admission will be through a national entrance test after secondary schooling under the National Educational Policy 2020. IIAs will be research-driven, they will support research and publications efforts by their faculty generously. IIAs will work closely with national and regional educational institutions such as the Indian Institutes of Management, the Indian Institutes of Technology, the National Law Universities, and other universities and institutions.

They should price their education reasonably and provide liberal financial aid to needy students. Access, equity, inclusion, diversity, and fairness are important.

Those who qualify in the undergraduate programme will be given two degrees, a Bachelor of Accounting and a Bachelor of Business. This will give them a choice of the stream they want to go into.
They will be given a licence to practise similar to CAs. The licence-holders will be called Certified Professional Accountants (CPAs). They will be required to register themselves with a Central Licensing Authority (such as NFRA) which will handle their disciplinary matters.

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