The institute of chartered accountants of India or (ICAI) has issued an advisory for its members on the government's demonetisation policy.
The advisory says that the ICAI has always been supportive of the bold initiatives taken by the Government in strengthening the economic growth of our country and also in its efforts to weed out black money and corruption from our country.
"However, it is a matter of grave concern and distress to our profession when certain news reports/video clippings have come in the public eye depicting certain Chartered Accountants indulging in such acts of illegality, which goes against the efforts of the Government," it says.
The advisory further says, in this backdrop, it has been decided that an advisory be issued to the members cautioning them to watch the national interest as the upper most while advising their clients.
Members are strictly advised not to indulge in any nefarious act as to subvert the intentions of the Government in any remote possible way. The members are also advised not to share /write any negative personal views by way of an article or interview on any platform regarding demonetisation, says the advisory.
To discuss what they make of the above advisory issued by ICAI, CNBC-TV18’s Shereen Bhan spoke to V Balakrishnan, Former CFO, Infosys and Amarjit Chopra, Former President, ICAI.
Both of them unanimously agree that ICAI must review and rethink on certain portion of the advisory, which says ICAI members are not to share or write any negative personal views on demonetisation. However, both support the initial part of the advisory which cautions its members to not act against national interest of the country.
But at the same time, Chopra believes if there are certain issues with regards to implementation, the members should be allowed to express their views. Because if some issues are raised by the members then it could in fact help the government in resolving those.
Bala says the advisory is quite unusual. Advisory on illegal activities by chartered accountants if any is welcome move but advisory not hearing any negative views on demonetisting by any ICAI member is a bit of an overreach. He says, the constitution allows every citizen the right of freedom of speech and I don’t think ICAI can curtail that.Below is the verbatim transcript of V Balakrishnan and Amarjit Chopra's interview to Shereen Bhan on CNBC-TV18.
Q: What do you make of this advisory while we appreciate the fact that the Institute of Chartered Accountants of India (ICAI) has been proactive in taking action against members who may have allegedly tried to sort of beat the law so to speak, but what you make of the other part of this advisory which talks about or warned the problem actually rising of speaking about demonetisation on any platform whatsoever?
Chopra: So far as this part is concerned I can only say that as regard ethical issues the institute is very well competent to do that and should do that, why should any member try to defeat the very objective of any of the schemes of the government for that particular matter and I personally feel to that extent that it is a very welcome move from the part of the institute and a very welcome advisory on the part of the institute, but so far as the other part is concerned like me, I have been saying openly that this is probably one of the boldest move that any PM could have taken in this country to achieve certain objectives, but at the same time if there are certain issues concerning the scheme of the implementation thereof. I think the members should be allowed to raise their voice and to express their views. I do not say raise their voice but to express their views in a matter because to me it is more important that if the members bring in their views it could help the government in resolving some of the issues also at the same time.
Like there are many issues going in the banking sector today and probably the chartered accountants could be very well placed to give the views in those matters and say that this is the way that these issues can be resolved.
Q: In your memory has there ever been an advisory which has advised from the ICAI in the past which has advised members to take a certain position or not take a certain position on a certain issue?
Chopra: I think not to my mind, but if it would be at least it is not in my memory because I entered the council in 1998 and since then I don’t think any such advisory has been issued that we have to either support or say anything negative against the government. We have to really ensure one thing that that there are certain good moves, bold moves by the government, any government for that matter, we had to support that and we have facilitate that and I think the ethical advisory is a step in that particular direction, but at the same time if tomorrow someone says that this is the Budget which is being presented and you will not say anything negative about it, I don’t think it has ever happened.
The chartered accountants had been appreciating, they have been criticising various provisions of the Budget, various issues in the Budget so I think this must go on, because again I must reiterate, to me this is the best way of providing even guidance to the government on certain issues and I can tell you the way certain things are happening in the banks today, if the chartered accountants are asked to express their views openly it will help rather than really negating the efforts of the government.
Q: Do you on your part intend to take this up with the ICAI, this issue on part of the advisory?
Chopra: I can definitely speak to the president of this particular issue, but I think president in office realises everything and there are certain reactions already from the members. We are contingent of more than 260,000 members and you can’t make every member to fall in line with the views of the government or of the institute in certain matters. Yes, on ethical issues absolutely, again I am reiterating, very welcome advisory and we must support and we must see that the government’s effort in this demonetisation process do not get negated by any of our members.
Q: As Mr Chopra was pointing out, there is quarrel whatsoever in advising chartered accountants to actually to maintain the spirit of law and ensure that there is no activity or no misconduct on their part, but what you make of this paragraph as part of the advisory and I just read it out again members are strictly advised not to indulge in any nefarious act as to subvert the intentions of the government in any remote possible way. The members are also advised not to share or write on any negative personal views by way of an article or an interview or any platform regarding demonetisation?
Balakrishnan: I think it is a very unusual advisory from the ICAI. To my memory I have not seen the institute issuing any advisory in the past similar to this. So to that extent it looks very unusual. Having said that the advisory on the illegal activities and the chartered accountants helping to make it happen that is a good advisory I welcome that, but I think the advisory on not hearing any negative views on demonetisation by any member at least a little bit of overreach. The constitution allows every citizen the right of freedom of speech. I don’t think the ICAI can curtail that with a circular like this.
I think it is a little bit of overreach and the institute should rethink about it and without that part of the advisory, the other part on warning CAs, helping any illegal activities is good. I think it is a welcome move.
Q: Why do you believe that the ICAI has made this business of not speaking out against demonetisation a part of this advisory, both you and Mr Chopra are saying that you had never seen the ICAI take a position of this sort in the past, never issue an advisory for members to take a certain position on an issue in the past. Why do you believe the ICAI has chosen to make this a part of its advisory from issuing an advisory to take a certain position on demonetisation?
Balakrishnan: I don’t know I think only the institute can answer it question, but to my mind they have became overenthusiastic in showing themselves to be more supportive to the government. I don’t think that is a job of the institute. They should relook at it and withdraw that part of the advisory in the best interest of the institute and its image. I think some good reason will prevail on them.
Q: You both are speaking here as individuals but does your voice find majority within the membership of the ICAI?
Balakrishnan: I do not know. I think the institute has got its set of people who are running the institute. I do not know how far they listen to the members. I think if they listen to the members, they should relook at this advisory and without that part of the advisory, it's in the best interest of the institute.
Q: Would you agree with Balakrishnan that the institute must review, rethink and withdraw that portion of the advisory?
Chopra: We have to allow the freedom of the speech to the members and as I said earlier probably it will help the government, it will help the economy, it will help everyone to resolve some of the issues which could not have been forcing at while trimming it. So I personally feel, whereas we support the move and I been saying openly that I support this particular move but at the same time yes, there are certain issues which we must be able to say this is what needs to be done in this particular market. So I am of the opinion that institute may rethink on this particular subject and probably withdraw that particular portion of the advisory but members, on the whole, do feel that freedom of speech should remain under all circumstances. However, I agree with Balakrishnan, as he said that it could be more enthusiastic kind of an approach to support the government. I do not think there is anyone else to be blaming for it for that matter.
Q: If the institute chooses not to review or rethink this part of the advisory. What would the next course of action be? I mean in a court of law it's unlikely that this advisory will stand?
Balakrishnan: If somebody wants to legally challenge it, they can legally challenge but the fundamental freedom of expression is allowed under constitution. I think members should ignore this advisory and they should air their views because some are against and some are. I do not think this should restrict them from hearing their views. I think they should ignore this advisory and do what they want.
Q: How easy will it be, as Balakrishnan says members to ignore this advisory?
Chopra: I will only say that an advisory is an advisory in any case and so far as the first part is concerned with regard to the article, I think institute can enforce it under all circumstances and notices can be issued. I appreciate what you also said that the notices issued to the members concerned when certain things came to light recently. I think if at all it is required in future to issue more such notices, in fact if anything comes to light, it should be done.
So far as this particular part is concerned, I think the word 'advisory' itself is exercise caution; don't overstep anything and try to be very clear that whatever view you expect - one. I am of the view that we should not be political in our thinking and members also; we should be looking at this particular thing in the interest of the nation and then whatever reaction they can get, we will be able to give - that's the way I look at it.
Q: Would you interest to pick up on one of the words used by Mr. Chopra. Do you believe that through this advisory and just that particular paragraph and a half of this advisory because the rest of the advisory talks about the proactive action taken by the ICAI and issuing notices to four members for alleged conduct etc, which everyone welcomes and appreciates, but do you believe that this is now taken on a bit of a political undertone?
Balakrishnan: What is guaranteed under the constitution, no other authority can take it back? So it's not about political or non-political. I think some goodwill should prevail and ICAI should withdraw that part of the circular. I think what is guaranteed under the constitution, no other authority can take it back.
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