Tax Audits core expertise of CAs, would be unfair to treat others as Accountants: ICAI President Nanda

The President of the Institute of Chartered Accountants of India (ICAI), Charanjot Singh Nanda stated in an interview with journalists on Wednesday that tax audits are among the core expertise of chartered accountants and underlined the importance of preserving their forte.

This comes as the Institute of Company Secretaries of India (ICSI) has sought to include company secretaries in the definition of ‘accountant’ in the proposed new Income Tax Bill, 2025. Mr. Singh explained that the decision on the next steps would be made by the Ministry of Corporate Affairs’ coordination committee, which includes members from the relevant sister institutes.

Aside from that, the ICAI President emphasised the potential significance of artificial intelligence in accounting practices, as well as the importance of maintaining compliance with environmental, social, and governance (ESG) standards.

Audit Work mainly done by CAs

In answer to a question, Mr. Singh stated that audit work is primarily performed by CAs. “Since the day we start off, we study accounting,” he made clear.

“Audit is a very serious business and can be done only by people who have been doing so. The ICAI President extended on his position, citing observations made by the Delhi High Court (September 2023; Ruchir Agrawal vs Public Enterprises Selection Board) and the Supreme Court (May 2024; Shaji Poulose v. Institute of Chartered Accountants of India). In the former, Mr. Singh mentioned that the bench had observed that CAs are responsible for, among other things, “undertaking financial audits, providing financial advice, liaising with clients, maintaining accounting records, and preparing accounts information,” he added.

Looking forward to CAs performing data validation for AI modules

Mr. Singh expresses “full confidence” in artificial intelligence playing a complementary role in the accounting sector. In a broader sense, he stated that AI would not displace but rather “empower to perform better”.

More crucially, he envisaged CAs taking on the duty of data validation. He emphasised the importance of delivering the correct data and learning to such AI modules, saying, “We are very keen that all such information that comes out has to be checked and validated so that the output is also correct.”

Separately, as an example of efficient AI use, Mr. Singh highlighted how their CA GPT module could be used to rapidly retrieve historical data about a specific holding company or their CSR expenditure for future use.

In terms of relevant skilling and re-skilling, the ICAI President stated that over 3,000 CAs had been taught in the paradigm in the last twelve months.

Concerns over Greenwashing

The ICAI President noted that auditors who use certain data extraction or specifications ensure that the data comes from the correct sources and follows the correct path. He also stated that the data must be supported by documents and subject to appropriate checks and balances.

Mr. Singh stressed the importance of zero paperwork and remote auditing as ways to promote sustainability.

Work-Life Balance

The ICAI President also stressed the need of work-life balance. In response to a question about working hours during peak auditing periods, Mr. Singh suggested that because the work requires “indulgence,” compensatory leaves be provided. This is to maintain a steady work-life balance. Using an example, he stated, “When one travels frequently, they take some time off to unwind. That’s vital.”