Speaking at an ICAI event, Govil said that his ministry is closely working with ICAI on creating large domestic CA firms out of India.
The ministry of corporate affairs (MCA) is in the process of bringing in new accounting standards for the insurance and banking sectors. “We will bring the new accounting standards for the insurance sector shortly. For the banking sector, the ministry is in discussions with the Reserve Bank of India. In addition to this, we are getting recommendations from NFRA (National Financial Reporting Authority) and ICAI (The Institute of Chartered Accountants of India) to draft new accounting standards for LLPs,” said Manoj Govil, secretary at MCA.
The new standard is expected to be rolled out soon and will likely be based on the global IFRS 17 standard. This is expected to bring more transparency to the insurance sector through stricter disclosure requirements. [IFRS 17 standard for insurance]
Govil said that to facilitate the ease of doing business, MCA has taken a number of steps. For example, the timeline to close a company has been brought down to 90 days as against 2 years a few years ago. “In FY22-23 Budget, the finance minister has asked us to establish a centre that would bring the company closure timeline to 6 months. We have already brought it down to 3 months. We aim to take it down further to 60-70 days,” Govil said.
The MCA secretary also said that IBC (Insolvency and Bankruptcy Code) has helped reduce the NPAs (non-performing assets) in the banking sector to 3.5% as compared to 10-11% some time ago. “So far, some 3,000 companies have been resolved under IBC. Low NPAs are partly due to the stricter lending policies of the banks. But IBC has also played a major role. We are aware of the challenges in the IBC such as delays and low recovery percentages in the resolutions. We are working on addressing these issues,” Govil said.
Speaking at an ICAI event, Govil said that his ministry is closely working with ICAI on creating large domestic CA firms out of India. “In 2017, prime minister Narendra Modi had said that out of 8 global audit, 4 firms should be Indian. A lot of work has gone into it. MCA and ICAI are working together to create an environment where Indian CA firms can emerge as global leaders,” he said.
There’s a recent push by the Ministry of Corporate Affairs (MCA) and the Institute of Chartered Accountants of India (ICAI) to create a stronger presence for Indian CA firms on the global stage. Here’s a breakdown of their efforts:
The Goal:
- Develop large, Indian multinational accounting and auditing firms that can compete with the “Big Four” (Deloitte, EY, KPMG, PwC).
Challenges:
- Fragmented market: The Indian CA landscape is dominated by smaller and medium-sized firms.
- Global recognition: Building trust and brand recognition for Indian firms internationally.
- Competition: The Big Four have a significant head start in terms of experience, resources, and global reach.
Strategies:
- Aggregation: Encouraging mergers and collaborations between smaller Indian CA firms to create larger entities with broader expertise.
- Standardization: Ensuring Indian CA practices are aligned with international accounting standards (IFRS).
- Upskilling: Providing continuous professional education for Indian CAs to equip them with the latest global knowledge and skills.
- Marketing and Advocacy: Highlighting the expertise and capabilities of Indian CAs to attract international clients.
Current Initiatives:
- Committee for Aggregation of CA Firms: Established by ICAI to support mergers and collaborations between firms.
- Focus on emerging fields: Encouraging Indian CAs to specialize in areas like sustainability reporting and FinTech.
Potential Benefits:
- Increased foreign investment: Strong Indian CA firms can attract more foreign companies to invest in India.
- Job creation: Growth of Indian CA firms can create more job opportunities for Indian CAs.
- Enhanced global standing: A strong presence of Indian CA firms can elevate India’s position in the global financial services sector.
Overall, it’s a work in progress, but the collaboration between MCA and ICAI shows a commitment to making Indian CA firms global players.
