Chartered Accountants have a very important role in creating and providing financial accounting information to the different demographics of people. With such an important contribution to our society comes great responsibility, chartered accountants have the responsibility to create and manage accurate and impartial accounting statements.
The new Companies Act has not only expanded and improved the independent director’s position but also made sure that all businesses, both large and small, are making contributions using different Corporate Social Responsibility (CSR) strategies. The responsibility of a Chartered Accountant (CA) to ensure precise and transparent bookkeeping of the accounting information while keeping all of these regulations in consideration has now reached a new peak. Accountants are now expected to take a significant role in CSR initiatives on a voluntary basis, in addition to ensuring that laws are adhered to. In this article, we are going to tell you briefly about the social responsibilities a Chartered Accountant has to fulfil.
What is Chartered Accountancy?
A professional practice of accounting, auditing, taxation, and financial assessment for a person or organisation is called chartered accounting. Online CA is given to an accounting expert who has been approved by a statutory body as qualified to handle issues relating to a company’s accounting and taxation.
It entails a variety of tasks, such as creating and evaluating financial reports and documents, auditing financial accounts and business operations, keeping track of investments, filing tax returns, and many more.
How Are Accountants and Chartered Accountants Different From One Another?
According to the legislation, anyone can designate themselves as an accountant. However, the title ‘chartered accountant’ and the correspondence ACA or FCA signify that the individual has completed at least three years of intensive training.
To become a certified Chartered Accountant, you must complete three levels of training created by the Institute of Chartered Accountants of India (ICAI). The ICAI is a statutory body in India that governs and upholds the profession of chartered accountant. The same laws that apply to chartered accountants and unqualified accountants apply to ICAEW Chartered Accountants, but the latter are also obligated by Code of Ethics and are subject to our disciplinary processes. If they provide professional services to the general public, they must possess a practising license and professional indemnity insurance.
What Are the Social Responsibilities of a Chartered Accountant?
Since money is a massive motivator of human actions, the information in financial reports created by a Chartered Accountant must be precise and unbiased. Therefore, accountants are responsible for creating impartial, fair, and detailed financial reports that will be relied upon by members of various societal groups to make decisions that will direct their actions or behaviour. An accountant’s primary duty to businesses, investors, creditors, and the general public is to adhere to the laws, standards, and accounting principles. Let us learn how chartered accountants can fulfil these duties to these various groups of people in our society.
1. Investors
People who invest money in businesses typically do so because they think they will be profitable and have a strong financial future. Investors are a great source of much-needed capital and funds that these businesses require to function and become profitable entity. With all the investments they make, the companies are able to grow faster, which leads to economic prosperity. Many investors might incur losses and lose faith in the securities market if accounting information is misrepresented to make companies seem more inviting or profitable to investors on the surface. So, Chartered Accountants (CAs) must never falsify or alter any accounting information for the companies as it can lead to huge losses for the investors as well as the economy.
2. Creditors
To evaluate the economic standing and viability of entities that ask for loans, banks and other credit-providing institutions rely on financial statements, including income statements and balance sheets. The right evaluation of risks depends on creating and evaluating such information as accurate and true.
Suppose a Chartered Accountant creates and submits false financial statements that make it appear that an entity’s financial standing is higher than it actually is. In that case, the banks and other loan providers face a considerable risk of defaulted loans. In addition, the banks will be under the impression that the business is actually doing well, so they do not have any or significantly less credit risk.
This can cause huge losses to a credit provider or a bank. So much so that they may have to increase their interest rates charged on loans or even shut down their bank.
3. Companies or Businesses
Accounting records are a key tool used by businesses to evaluate their state of well-being. With the help of accounting records, they can also assess their financial position. These financial statements can help a company plan out its business operations in an effective manner so that they become profitable.
If a Chartered Accountant provides false or incorrect financial statements to these companies or businesses, they can become non- profitable or even go into severe debt.
Most companies hire employees to conduct business operations, but if the statements are falsified, the company will lose a lot of money. This financial mismanagement can result in the company firing employees and ultimately resulting in the company failing.
4. General Public
Government accounting reports are meant to reassure the general public that the funds belonging to the citizens are safe and fully accounted for. This task falls on government accountants and auditors, who must ensure that all appropriate accounting laws and standards are followed while creating such reports. False information and fake reporting can reduce the public’s faith in the system of government policies. This can lead to a lack of support and trust for the government responsible for finances and civil disobedience.
Conclusion
A Chartered Accountant can help the nation’s economy expand. Each chartered accountant has a specialised understanding of the financial markets, foreign exchange, legal issues, and financial taxation: https://www.incometax.gov.in/iec/foportal/help/ca/registration. They assist everyone in comprehending the laws and regulations regarding financial statements. With such an essential role in our country, they also need to fulfil their social responsibilities and obligations towards creditors, investors, companies, and the general public. For more information, get in touch with Vakilsearch.
