On July 1st, 1949, an act of Parliament gave birth to the Institute of Chartered Accountants of India (ICAI). Founded a year before the Constitution of the country was formalized, the ICAI counts itself among the oldest professional institutions in the country. It is the second largest professional accounting and finance body in the world in terms of members, with a current roster of about 2.5 lakhs members.
The ICAI is the sole licensing and regulatory body for the financial audit and accounting profession in India, and its recommendations are followed by everyone – from the National Financial Reporting Authority (NFRA) to companies and accounting organizations. To be a part of the ICAI’s member list as a bona fide Chartered Accountant is a prestigious honor indeed – one that is celebrated every 1st of July, as the ICAI Foundation Day or, the Chartered Accountants Day.
ICAI: The History
The genesis of the CA profession can be traced back to the pre-independence days. Back in 1913, the British government in India passed the Companies Act, which had a prescribed list of books that every company registered under the Act had to maintain. The Act also provided for the appointment of an Auditor who had the power to audit these books. Five years later, the Government Diploma in Accountancy course was launched in Bombay (present-day Mumbai). This course had a pattern similar to today’s CA course, complete with a three-year training period. Those who completed the course could practice as an Auditor throughout India.
In 1930, the then Government of India decided to maintain a register of accountants and proffered the title of Registered Accountant to those accountants whose name was entered into this roster. However, even with all these practices, the accountancy profession remained unregulated until an expert committee created in 1948 suggested that an autonomous body should be formed, for enhanced regulation. By then though, many Indians had already become members of the Institute of Chartered Accountants in England and Wales (ICAEW) and were known by the term Chartered Accountants. Despite the controversy surrounding the term, it was retained as it was already widely used. Thus, when the Chartered Accounts Act of 1949 was passed and the ICAI came into being, the term Chartered Accountant became the preferred title instead of the previously used Registered Accountant. Since then, 1st July has been commemorated as the ICAI Foundation Day or CA Day in India.
Just to be clear, unlike in other Commonwealth countries, the word ‘Chartered’ when used for Indian accountants, has no relation to the royal charter of the British (as India is a republic)!
The ICAI Motto and What It Means
The ICAI has a very strict code of ethics. Its official motto is a quote from the Upanishad which reads “Ya esha supteshu jagriti”. It translates as “the one who is awake in those that sleep”. A CA is honour-bound to follow the ICAI’s regulations and to always be compliant and vigilant. Even when a client is lax about their taxes, it is the CA’s duty to help them become better tax-paying citizens of the country. Businesses small and large need an expert’s help, and a CA is always willing to come to the rescue. It’s something that is ingrained in their DNA, and the CA Day is just a ruse to celebrate and acknowledge the profession’s importance to the country’s economy.