Chartered Accountant Services
In’s ever-changing economic landscape, Chartered Accountants play a crucial role in India. Their specialized knowledge and skills are in high demand, as they perform various functions, ranging from bookkeeping to financial analysis, auditing to tax planning, running successful businesses to assisting with legal matters. The Institute of Chartered Accountants of India (ICAI) is the governing body that oversees the profession in the country. In this blog post, we will explore the various services rendered by Chartered Accountants in India and their significant contributions to the economy.
1. Importance of Chartered Accountants in India
Chartered Accountants play a significant role in India’s economy. With changes in taxation and financial rules, the demand for CAs has increased, making them an indispensable part of the country’s financial planning. As the economy grows, so does the need for individuals who are well-versed in tax regulations, stock markets, and finance. By hiring a CA, individuals can save taxes with expert-assisted ITR filing, making the process hassle-free and effective. But, what exactly is the importance of a Chartered Accountant?
“Chartered Accountants are recognised and knowledgeable professionals in India who are capable of performing audits for any organisation’s financial statements. A chartered accountant is someone who has varied knowledge in forex law, stock market, taxation, and finance. Chartered Accountants (CAs) assist in the comprehension of taxation regulations and norms. In the market, there is a huge requirement for Chartered Accountants who specialise in IPOs, equity mergers, acquisitions, and solvency,” confirms industry experts.
A CA’s primary responsibility is to maintain a company’s financial records and ensure that they comply with the accepted accounting principles. They prepare financial statements, conduct audits, and offer advice on taxation, costing information, and cost control measures. They also assist with secretarial services and provide relevant advice during the registration of societies and trusts. Moreover, CAs undertake financial investigations that help to improve management and administration.
In summary, the country needs a lot of CAs, and the profession offers numerous growth opportunities. “As India is on a path of globalisation, CAs play a crucial role in companies’ success by ensuring that the accounts presented before them are prepared on the correct accounting principles. Thus, having a CA on board is an added advantage for any organisation,” concluded industry experts.
2. Functions of Chartered Accountants in India
Char Accountants (CAs) in India have a wide range of functions, and they are varied and complex due to the fast-changing economic environment in the country. CAs play an important role in assessing tax-related issues and preparing accurate financial statements. According to The Institute of Chartered Accountants of India (ICAI), some of the most important functions of CAs are discussed below:
– Writing up of accounts and preparation of financial statements: This encompasses a wide area ranging from simple bookkeeping to complex financial analysis.
– Auditing: The purpose of auditing is to satisfy the users of financial statements that the accounts presented to them are drawn up on correct accounting principles and that they represent a true and fair view of the state of affairs of the organisation.
– Taxation services: The Chartered Accountant is in an advantageous position to represent clients before the Income-Tax authorities and render general advice on taxes.
– Cost accounting and management services: A Chartered Accountant can provide costing information for the guidance of management, introduce cost control methods, and assist the management in establishing appropriate selling prices.
– Company law and secretarial services: The services of CAs are frequently sought in connection with the formation, financial structure, and liquidation of limited companies. Secretarial and Registration work and the duties of a Receiver are also undertaken by them in addition to other company work.
– Financial investigation and valuation services: Chartered Accountants are often called upon to carry out investigations to ascertain the financial position of business in connection with matters such as a new issue of share capital, purchase or sale or financing of a business, reconstruction and amalgamations.
– Role of Chartered Accountants on Board of Directors: The advantages of having a Chartered Accountant on the Board of Directors are now well recognized, and the practice of making such appointments has grown rapidly.
CAs in India are an important part of the economy. They play a crucial role in auditing financial statements, representing clients before Income-Tax authorities, and providing financial advisory services. CAs are well respected and have a significant impact on the overall financial health of businesses and the country.
3. Auditing and Taxation Services by Chartered Accountants
Char Accountants in India are well-versed in the area of auditing and taxation. Audit forms an important part of the duties of a Chartered Accountant. The purpose of an audit is to ensure that the financial statements representing the state of affairs of an organization are drawn up on correct accounting principles and exhibit a true and fair view. As per Indian law, every assessee with a minimum turnover of Rs. 10 lakhs in case of professionals and Rs. 40 lakhs in case of business concerns is required to get their accounts audited under the Income-Tax law. Chartered Accountants with their experience in accounts are in an advantageous position to prepare the returns for tax purposes and render general advice on taxes to their clients. They also represent assessees before Income-Tax authorities. A Chartered Accountant’s specialized skill, judgment and training come into play when dealing with complicated cases having large revenue potential.
“Supported by their experience in financial accounting and accounts management, Chartered Accountants are well-suited to provide tax-related services. Their contribution towards advising clients on tax planning, representing clients before authorities, as well as legally minimizing the tax liability of an individual or an organization, cannot be understated.,” said the Institute of Chartered Accountants of India. As experienced professionals in finance and taxation, they also provide sound advice to clients on complex issues like tax evasion and avoidance.
Chartered Accountants also offer transaction-based services, such as mergers and acquisitions. In these transactions, due diligence that involves a comprehensive review of a target company’s financial and legal affairs is a critical component. As experts in accounting and taxation, Chartered Accountants weigh in on the financial implications of such transactions. Their knowledge of tax law, mergers, and acquisitions, as well as the application of International Financial Reporting Standards (IFRS), gives them an edge in all transaction-based services. Overall, Chartered Accountant’s command over financial accounting, taxation procedures and statutory compliance makes them an indispensable asset to any organization looking to optimize their financial potential.
4. Cost Accounting and Management Services
Cost accounting and management services are an integral part of the duties performed by Chartered Accountants. With their expertise in accounting principles and financial analysis, they are capable of providing costing information and guidance to management. They play a crucial role in ascertaining the production costs at different levels in both manufacturing and service industries.
One of the primary functions of a Chartered Accountant is to control costs and assist management in establishing appropriate selling prices. As per their training, they are equipped to provide costing information for the guidance of management and introduce cost control methods. The valuation services provided by Chartered Accountants extend beyond pricing products but also include inventory costs, direct labor costs, and other manufacturing costs.
In addition to cost accounting, their services include creating financial reports and statements with detailed analysis. By performing a thorough financial analysis, they can identify areas in which the company can make improvements to increase profitability. They can also provide guidance to management on how to optimize resource allocation, streamline processes, and develop strategies to improve overall performance.
Chartered Accountants have specialized skills in taxation, which enables them to provide valuable insights to their clients. Their knowledge of tax laws and regulations can provide an assessment of indirect and direct tax rates and their impact on revenue and profitability. The assessment of taxes is closely linked with financial accounts, and Chartered Accountants excel at providing tax advice to clients.
In conclusion, Chartered Accountants play a vital role in managing costs and guiding management to establish selling prices. They provide valuable insights on how to optimize resource allocation and streamline processes to improve overall business performance. Their expertise in taxation laws and regulations enables them to provide valuable advice to clients on tax planning and management.
5. Company Law and Secretarial Services
Company and Secretarial Services are areas where Chartered Accountants play a vital role. They are well equipped to provide expert advice on these subjects, and help companies navigate the legal framework to ensure compliance.
Under Company Law, Chartered Accountants can assist with company formation, registration, compliance and even dissolution. They can also help to draft and review legal documents such as Memorandum and Articles of Association, shareholders agreement and even provide assistance with respect to mergers and acquisitions.
“Chartered Accountants are legally authorised to sign various company documents including the statutory financial statements and tax returns. They also play a crucial role in advising the board on corporate governance and regulatory compliance,” says a leading CA firm.
Secretarial services require a great deal of specialist knowledge, and Chartered Accountants are well equipped to handle them. These services include the drafting of board minutes, resolutions, annual reports, and the maintenance of statutory registers and records.
“The secretarial components of a company’s operation are critical and it is important to maintain a proper and well-documented history. This is where Chartered Accountants can step in to provide expert advice and guidance,” says a senior Chartered Accountant.
With the assistance of Chartered Accountants, companies can remain compliant with the constantly changing rules and regulations. This helps to ensure a smooth functioning of the organisation, and can prevent costly penalties or litigation.
In summary, under Company Law and Secretarial Services, Chartered Accountants are the go-to experts. They provide a range of services including ensuring compliance, offering expert advice on legal documents and guiding clients through the regulatory environment.
6. Financial Investigation and Valuation Services
One of the many services that Chartered Accountants offer is financial investigation and valuation services. These services are important to businesses and individuals alike as it helps determine financial strength and weaknesses and provides clarity on the true worth of a business.
Financial investigation involves a thorough analysis of financial statements, transactions, and records to identify any fraudulent activities, misstatements, or irregularities. This is crucial in maintaining the integrity and credibility of financial statements, as well as preventing financial losses and legal repercussions.
Valuation services, on the other hand, involve determining the true value of a business, investment, or asset. This is important for business owners who are looking to sell their business, investors who want to determine the worth of their investments, or individuals who are going through a divorce or estate planning and need to know the value of their assets.
“Valuation is a demanding profession, requiring specialized knowledge, rigorous standards and a deep commitment to quality,” says the International Valuation Standards Council. Chartered Accountants, with their expertise in accounting principles and financial analysis, are well equipped to provide accurate and reliable valuation services.
Financial investigation and valuation services are crucial for any business or individual who wants to make informed financial decisions. Chartered Accountants play a vital role in providing these services, ensuring that financial statements are accurate and businesses are valued correctly.
7. Role of Chartered Accountants on Board of Directors
Char Accountants (CAs) play a significant role in the effective functioning and growth of businesses in India. Besides their conventional roles of maintaining accounts and preparing financial statements, CAs are increasingly being seen as trusted advisors who can understand the dynamics of a business and offer valuable insights to clients. One area where CAs have been sought after is in serving as directors on the board of companies.
CAs can provide a unique perspective on the workings of a business and help companies navigate complex financial matters. According to the Companies Act, 2013, at least one-third of a company’s board members have to be independent directors, and CAs are often seen as the go-to professionals for these positions.
Their knowledge of laws and regulations, accounting practices and financial analysis can enable them to contribute significantly to the decision-making process of a company. CAs can also offer valuable advice on matters related to mergers and acquisitions, risk assessment, and financial modeling.
In addition, CAs can bring an objective and unbiased view to board discussions and ensure that the company adheres to ethical standards and financial regulations. As Satyam’s founder B. Ramalingam Raju infamously admitted to inflating profits, the role of an independent director becomes even more critical.
As the Institute of Chartered Accountants of India (ICAI) states – “The CA, as a Director on the Board, with his rich knowledge base, can facilitate effective discussion at Board meetings. In times of crisis, he can be a great asset to the Board with his professional skills and understanding of legal and regulatory implications.”
Thus, CAs can add immense value to a company’s board as they combine their technical expertise and business acumen to help the business achieve its goals and objectives. Their contributions can aid in creating a culture of transparency, accountability and help the company gain the trust of its stakeholders.
8. Human Resources and Development Programs
Chartered Accountants in India offer not only accounting and financial services but also assist companies in human resources and development programs. With their expertise, they guide organizations to develop and implement effective HR policies that ensure employee satisfaction and retainment.
One of the major benefits of availing of such services is that HR and development programs can be tailored to meet the requirements of the organization. Services such as planning and implementing policies, training programs, performance appraisals, and recruitment processes can be designed to fit the needs of the organization.
Human resource management is an essential aspect of any organization as it ensures that the employees are well taken care of, and the welfare of the employees is looked after. Thus, CA firms assist in establishing and implementing HR policies for companies in a timely and effective manner.
In addition to HR and development programs, Chartered Accountants in India also help in setting up Non-Banking Financial Companies (NBFCs), which are regulated by the Reserve Bank of India. This is important as it streamlines the procedure of setting up an NBFC and ensures compliance with all legal requirements.
To sum up, the assistance provided by Chartered Accountants in India for human resources and development programs as well as other services such as registration assistance for societies and trusts and setting up NBFCs ensures efficient and regulatory compliance with legal requirements in a hassle-free manner.
9. Assistance with Non-Banking Financial Companies
Non-Banking Financial Companies (NBFCs) have emerged as an essential segment of the Indian financial sector. Unlike traditional banks, NBFCs do not hold a banking license and cannot accept monetary deposits from individual customers. However, they offer a range of financial services, making them an alternate source of finance for small-scale and retail sectors. NBFCs offer a range of facilities like equipment lease finance, hire purchase finance, personal loans, vehicle financing, and housing loans, among others. They also provide wealth management and advisory services, handling portfolios of stocks and shares, and discounting services.
NBFCs offer all types of financial services similar to banks, but with two major differences: innovative marketing strategies and competitive prices, resulting in attractive rates of return on deposits and simplified procedures. In the past few years, increased competition from banks in the retail finance segment has led to excess diversification by NBFCs from their core business activities. NBFCs have introduced various innovative products and services, such as IPO financing, three-wheeler financing, small personal loans, finance for tires and fuel, asset management, mutual fund distribution, and insurance advisory, among others.
“NBFCs are aspiring to emerge as a one-stop-shop for all financial services,” says an industry expert. In recent years, NBFCs have begun to create niches for themselves, which are often neglected by banks, such as providing finance to non-salaried individuals, traders, transporters, stockbrokers, etc. Unlike banks, NBFCs have a customer profile concentrated on the self-employed segment.
Overall, NBFCs are an important financial intermediary and complementary to the banking system, providing credit facilities to unmet credit demand in the market. They offer a range of products and services, attracting customers with their competitive prices, simplified procedures, and innovative marketing strategies.
10. Registration Assistance for Societies and Trusts
Balrishna & Co, with over 30 years of experience in providing CA services to small and medium enterprises (MSME) in Bangalore, offer registration assistance for societies and trusts. Starting a business in India requires choosing a type of legal entity to conduct business, and one may choose from five different types of legal entities depending on various factors such as taxation, owner liability, compliance burden, investment, funding, and exit strategy. Balakrishna & Co assists in choosing the right form of business registration in Bangalore after understanding the business need, taxation impact on the registration, future expansion plan, ownership structure, which will best suit their business needs. They help in setting up sole proprietorship firm, partnership firm, limited liability partnership (LLP), private limited company, and one-person company (OPC). Apart from business or entity registration, they also assist startups in all statutory registration, licenses, and permissions necessary for starting a business in India such as Karnataka VAT registration, service tax, professional tax, shops and establishment, MSME registration, BBMP license, IEC, ESI/PF, etc. Their team of specialized consultants assists startups in complying with statutory compliance required under the Limited Liability Partnership Act 2008 and the Companies Act 2013. Balakrishna & Co also provides assistance in income tax return filing for trusts in India, and such trusts have many tax incentives under the Income-Tax Act because they don’t normally participate in commercial operations.