02-12-2010, 08:57 PM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by awaisaftab</i>
<br />Dear kamran/Tariq Bhayee and Ajnabi
I was too busy on yesterday so I could not post any comment on the thread.
Tariq bhayee thanks a lot for giving explanation to Mr. Kamran on my behalf I think you have well defined my view point and there is no need to say something in this regard
Anyhow now I come on the discussion going on the thread.
Mr. Kamran
I, tariq and Ajnabi have discussed the issues relating to the improvement of the education and professional level of CMAâs. It shows that we are broad minded and optimistic. I have been member of the forum for one year but I have never seen any student or member of ICAP discussing the areas of improvement. But we are discussing the areas where improvements are required.
Although I have adopted a policy of Not to pass any comment about any institute with which I have no any affiliation. But Mr. Kamran always says that it is my own So Called ETHICAL STANDAR and the forum rules do not restrict him from discussing shortcoming of ICMAP.He is still writing articles of long pages to bring revolutionary changes in ICMAP. So for the time being I am getting exemption from this my self made ethical policy.
Mr. Kamran Kuch Nazre Karam ICAP per bhee enayat farmayee aakhir ap us k Associate Member hain.
Lets start our discussion with Code of Ethics of ICAP
The code of ethics is available on the ICAP website at following link
http//www.icap.org.pk/userfiles/file/CodeofEthicsRevised.pdf
Sub section 2 of section 260 of the code of ethics allow CAâs to accept gift from clients exact text is as follows
The significance of such threats will depend on the nature, value and
intent behind the offer. Where gifts or hospitality which a reasonable
and informed third party, having knowledge of all relevant information,
would consider clearly insignificant are made a chartered accountant
in practice may conclude that the offer is made in the normal course
of business without the specific intent to influence decision making or
to obtain information. In such cases, the chartered accountant in
practice may generally conclude that there is no significant threat to
compliance with the fundamental principles.
Dear Members we all know that the Auditors act on the behalf of shareholders. So it looks very inappropriate that the auditors are allowed to receive gifts from the clients but according to section
197-A of companies ordinance companies are prohibited to distribute any gift to members and shareholders in meeting and generally no gifts are distributed among shareholders. This is big contradiction in the code of ethics. Someone can say that the code allow the member to accept only the gifts with insignificant value but who shall determine the which gift having significant value???
This is the reasons the auditors accept gifts of huge value from clients.
Mr. Kamran you should give suggestion to ICAP that there should be complete restriction on receiving gifts by the CAâs from clients.
In repealed code of ethics which has been suspended by the ICAP due to revised code the word of âEntertainment was also included. But now this word has been replaced with the word âHospitalityâ. I donât know what the intension of this repulsion was? The old code of ethics is available in the book of Practical Auditing by Javed .H. Zuberi, a renowned Charted Accountant, According to Clause E of sub section 2 of section 1 of part A of the Repealed code chartered accountants were allowed to receive entertainment and gift from clients but in the <b>veil</b> of insignificant value.
It was my first experience the audit was continued in my company. Our company also provided lunch facility fortunately or unfortunately my director finance on leave. The menu of that day was Mix Vegetable. The audit supervisor came in my room and said that he and his team members didnât want to eat vegetable and demanded me lunch from a well known restaurant. In some situation I unintentionally response too aggressively.It was also happened at that time. I rejected his request very aggressively and ordered him to get out from my room. I also delivered a lecture on the ethical behaviour that should be followed by the auditor here is no space to reproduce that lecture.
Hydrocarbon Development Institute of Pakistan is an autonomous body of Ministry of Petroleum. One of my relative works here. Some month ago he met me he were very aggressive due to behaviour of their auditor . On my inquiry he told me long story of their auditors which include demand of delicious food, extensive use of organizationâs vehicle for visiting Murree, Aubia and other places.
One of my friend made the accounts of a partnership he wanted to get audited these accounts for getting loan and leasing of vehicles he was too worried. He called me fortunately I personally know some CAâs and trainees we visited some CA firms and finalised the deal against Rs.25,000/- only, It was 2007 I guess now the rates have increased.
Malik and Co, Chartered Accountants, was notorious for these fake audits. I think a corrective action has been taken by SECP against Malik and Co.
According to directives of SECP and the guidelines issued by ICAP auditors and Chartered accountants are restricted to provide only few services, especially in case of listed companies, I am sorry to say that I know about a big four audit firm which is providing share registration services to its one client. This is a confirmed violation of rules and regulations as well as ethical standards.
For auditors it is necessary that he must have the knowledge of all IAS but in hundreds of cases no Deferred Tax Asset/Liability are not booked in the audited accounts, this shows that in our country only few persons know about IAS-12. This is also happened in the company with which I am currently working. Incompliance with IAS-19 is also very common in many cases.
One of my friend who is ICMA (Finalist) worked out deferred tax calculation but his auditor rejected his working saying that IAS-12 cannot by applied in Pakistan due to unique taxation system.
ISA requires the behaviour of susceptibility how we can expect this attitude from the auditors who fulfils their wishes during audit and demand tours of hill stations, delicious food, treats high teas, and use of clients vehicles.
Another thing which should be looked after by ICAP is the provision of accounting services to the clients by the auditors it looks too funny that a firm of Chartered Accountants provides accounting consultancy to a client and conduct the audit of its own made accounts. It is mentionable point that the audit manager of big audit firms (including big 4) are running their private accounting consultancy firms their clientele consists of majority of their firms clients. (Is ko kehte hain panchon unglian ghee main aur sir Karahi main)
Why ICAP and audit firms donât take actions against these audit managers.
Indeed due to current prevailing situation audit practice in Pakistan has become a joke. We observe many sorrowful audit practices in real life. A person who was part of an audit team during the audit of a partnership firm, the audit was made on the request of a sleeping partner, told me in very happy
mood about the VIP treatment. He told me during that audit they daily visited some good restaurant or hotel including five star hotel of twin cities like Marriott, PC Hotel (both PC Rwp and Bhurban)
Serena Hotel,Usmania Tabaq and Jhangir. So during 1 month period of audit the audit team did not leave any good hotel and restaurant of Rawalpindi and Islamabad.
It is questionable why ICAP do not cancel the registration of such notorious audit firms What is the mechanism of accountability of audit firm.
I am sorry to say the Quality Review Program of ICAP, which has been carried on for many years, has totally failed.
The bad audit practices give rise to the exploitation of minority shareholder and in some cases even of majority shareholders. Good auditing practices are key to good corporate governance. Without good audit practice we could not expect a corporate sector with best corporate governance.
It is the religious, ethical and legal responsibility of audit trainees, supervisors, audit managers and partners that all the audit performed by them should be fair and in honest way.
It is also fabulous reality that many practicing CAâs have gone in litigation against ICAP. These case are also part of books on company laws.
The above was a small picture of audit firms and malpractices in audit the big picture is more horrible and teasing. Those who are public practice as practicing chartered accountants know better than me. Keep in mind these are the some issues which I observed during my professional career of only about 4 years.
After all there may be some rare exceptional cases.
Regards,
Awais Aftab
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
This is copied here because you are continuously changing it. Editing for spelling mistakes is no issue but changing the material can affect the validity of replies.
Regards,
<br />Dear kamran/Tariq Bhayee and Ajnabi
I was too busy on yesterday so I could not post any comment on the thread.
Tariq bhayee thanks a lot for giving explanation to Mr. Kamran on my behalf I think you have well defined my view point and there is no need to say something in this regard
Anyhow now I come on the discussion going on the thread.
Mr. Kamran
I, tariq and Ajnabi have discussed the issues relating to the improvement of the education and professional level of CMAâs. It shows that we are broad minded and optimistic. I have been member of the forum for one year but I have never seen any student or member of ICAP discussing the areas of improvement. But we are discussing the areas where improvements are required.
Although I have adopted a policy of Not to pass any comment about any institute with which I have no any affiliation. But Mr. Kamran always says that it is my own So Called ETHICAL STANDAR and the forum rules do not restrict him from discussing shortcoming of ICMAP.He is still writing articles of long pages to bring revolutionary changes in ICMAP. So for the time being I am getting exemption from this my self made ethical policy.
Mr. Kamran Kuch Nazre Karam ICAP per bhee enayat farmayee aakhir ap us k Associate Member hain.
Lets start our discussion with Code of Ethics of ICAP
The code of ethics is available on the ICAP website at following link
http//www.icap.org.pk/userfiles/file/CodeofEthicsRevised.pdf
Sub section 2 of section 260 of the code of ethics allow CAâs to accept gift from clients exact text is as follows
The significance of such threats will depend on the nature, value and
intent behind the offer. Where gifts or hospitality which a reasonable
and informed third party, having knowledge of all relevant information,
would consider clearly insignificant are made a chartered accountant
in practice may conclude that the offer is made in the normal course
of business without the specific intent to influence decision making or
to obtain information. In such cases, the chartered accountant in
practice may generally conclude that there is no significant threat to
compliance with the fundamental principles.
Dear Members we all know that the Auditors act on the behalf of shareholders. So it looks very inappropriate that the auditors are allowed to receive gifts from the clients but according to section
197-A of companies ordinance companies are prohibited to distribute any gift to members and shareholders in meeting and generally no gifts are distributed among shareholders. This is big contradiction in the code of ethics. Someone can say that the code allow the member to accept only the gifts with insignificant value but who shall determine the which gift having significant value???
This is the reasons the auditors accept gifts of huge value from clients.
Mr. Kamran you should give suggestion to ICAP that there should be complete restriction on receiving gifts by the CAâs from clients.
In repealed code of ethics which has been suspended by the ICAP due to revised code the word of âEntertainment was also included. But now this word has been replaced with the word âHospitalityâ. I donât know what the intension of this repulsion was? The old code of ethics is available in the book of Practical Auditing by Javed .H. Zuberi, a renowned Charted Accountant, According to Clause E of sub section 2 of section 1 of part A of the Repealed code chartered accountants were allowed to receive entertainment and gift from clients but in the <b>veil</b> of insignificant value.
It was my first experience the audit was continued in my company. Our company also provided lunch facility fortunately or unfortunately my director finance on leave. The menu of that day was Mix Vegetable. The audit supervisor came in my room and said that he and his team members didnât want to eat vegetable and demanded me lunch from a well known restaurant. In some situation I unintentionally response too aggressively.It was also happened at that time. I rejected his request very aggressively and ordered him to get out from my room. I also delivered a lecture on the ethical behaviour that should be followed by the auditor here is no space to reproduce that lecture.
Hydrocarbon Development Institute of Pakistan is an autonomous body of Ministry of Petroleum. One of my relative works here. Some month ago he met me he were very aggressive due to behaviour of their auditor . On my inquiry he told me long story of their auditors which include demand of delicious food, extensive use of organizationâs vehicle for visiting Murree, Aubia and other places.
One of my friend made the accounts of a partnership he wanted to get audited these accounts for getting loan and leasing of vehicles he was too worried. He called me fortunately I personally know some CAâs and trainees we visited some CA firms and finalised the deal against Rs.25,000/- only, It was 2007 I guess now the rates have increased.
Malik and Co, Chartered Accountants, was notorious for these fake audits. I think a corrective action has been taken by SECP against Malik and Co.
According to directives of SECP and the guidelines issued by ICAP auditors and Chartered accountants are restricted to provide only few services, especially in case of listed companies, I am sorry to say that I know about a big four audit firm which is providing share registration services to its one client. This is a confirmed violation of rules and regulations as well as ethical standards.
For auditors it is necessary that he must have the knowledge of all IAS but in hundreds of cases no Deferred Tax Asset/Liability are not booked in the audited accounts, this shows that in our country only few persons know about IAS-12. This is also happened in the company with which I am currently working. Incompliance with IAS-19 is also very common in many cases.
One of my friend who is ICMA (Finalist) worked out deferred tax calculation but his auditor rejected his working saying that IAS-12 cannot by applied in Pakistan due to unique taxation system.
ISA requires the behaviour of susceptibility how we can expect this attitude from the auditors who fulfils their wishes during audit and demand tours of hill stations, delicious food, treats high teas, and use of clients vehicles.
Another thing which should be looked after by ICAP is the provision of accounting services to the clients by the auditors it looks too funny that a firm of Chartered Accountants provides accounting consultancy to a client and conduct the audit of its own made accounts. It is mentionable point that the audit manager of big audit firms (including big 4) are running their private accounting consultancy firms their clientele consists of majority of their firms clients. (Is ko kehte hain panchon unglian ghee main aur sir Karahi main)
Why ICAP and audit firms donât take actions against these audit managers.
Indeed due to current prevailing situation audit practice in Pakistan has become a joke. We observe many sorrowful audit practices in real life. A person who was part of an audit team during the audit of a partnership firm, the audit was made on the request of a sleeping partner, told me in very happy
mood about the VIP treatment. He told me during that audit they daily visited some good restaurant or hotel including five star hotel of twin cities like Marriott, PC Hotel (both PC Rwp and Bhurban)
Serena Hotel,Usmania Tabaq and Jhangir. So during 1 month period of audit the audit team did not leave any good hotel and restaurant of Rawalpindi and Islamabad.
It is questionable why ICAP do not cancel the registration of such notorious audit firms What is the mechanism of accountability of audit firm.
I am sorry to say the Quality Review Program of ICAP, which has been carried on for many years, has totally failed.
The bad audit practices give rise to the exploitation of minority shareholder and in some cases even of majority shareholders. Good auditing practices are key to good corporate governance. Without good audit practice we could not expect a corporate sector with best corporate governance.
It is the religious, ethical and legal responsibility of audit trainees, supervisors, audit managers and partners that all the audit performed by them should be fair and in honest way.
It is also fabulous reality that many practicing CAâs have gone in litigation against ICAP. These case are also part of books on company laws.
The above was a small picture of audit firms and malpractices in audit the big picture is more horrible and teasing. Those who are public practice as practicing chartered accountants know better than me. Keep in mind these are the some issues which I observed during my professional career of only about 4 years.
After all there may be some rare exceptional cases.
Regards,
Awais Aftab
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
This is copied here because you are continuously changing it. Editing for spelling mistakes is no issue but changing the material can affect the validity of replies.
Regards,
