Institute of Chartered Accountants of Pakistan

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Institute of Chartered Accountants of Pakistan

Table of contents

Introduction

 CORE FUNCTIONS AND ROLE OF ICAP

 ROLE OF ICAP IN ACCOUNTING PROFFESSION

 ROLE OF ICAP IN AUDITING PROFFESSION

 REFERENCES

Introduction
Institute of Chartered Accountants of Pakistan is a professional
accountancy body in Pakistan. As of July 2010, it had 5,078 members
working in and outside Pakistan. The institute was established on July 1, 1961
to regulate the profession of accountancy in Pakistan. It is a statutory
autonomous body established under the Chartered Accountants Ordinance
1961. With the significant growth in the profession, the CA Ordinance and
Bye-Laws were revised in 1983.

In view of globalization of the accountancy profession, the Institute is in the

process of updating the Ordinance and Bye-Laws once again.

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The course of ICAP involves a blend of theoretical education and practical

training which run concurrently for a period of 3.5 years and equips a
student with knowledge, ability, skills and other qualities required of a
professional accountant.

The head office of the institute is in Clifton, Karachi where it has its own
premises. The institute also has regional offices at Lahore, Islamabad, Multan
and Faisalabad.

Accounting and auditing profession serves as the bedrock of the economy.

The public has very high expectations from it. Millions of investors, big and
small, rely on the opinion of accounting and auditing professionals on the
financial statements to determine whether they provide a true and fair view
of the state of affairs of the company or organization being reported upon,
and they even take business decisions on the basis of these statements.
There is no question that the international accountancy profession has a
unique, critical and practical role to play in building stronger and more stable
economies around the globe. In order to carry out this role fully, however, we
need to continue to enhance confidence in the profession and to build trust.
Investor confidence and public trust empowers our profession. Without it, the
credibility of the information we produce, indeed the future of our profession
itself, is put at risk. Whether we work in Pakistan or Portugal, we cannot
afford to take this risk.

Constitution of ICAP

Affairs of ICAP are governed by a Council comprising of 19 members. 15

members of the Council are elected by ICAP members and 4 council

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members are nominated by the Federal Government. Current nominees of

the Government are Chairman SECP, Deputy Auditor General of Pakistan,
Secretary Planning and Development (formerly Chairman FBR) and Secretary
Finance.

VISION STATEMENT OF ICAP

'The profession of Chartered Accountants in Pakistan should be the

benchmark of professional excellence upholding the principles of
integrity, transparency and accountability'.

MISSION STATEMENT OF ICAP

'ICAP’s mission is to achieve excellence in professional competence,

add value to businesses and economy, safeguards public interest;
ensure ethical practices and good corporate governance while
recognizing the needs of globalization.'

CORE FUNCTIONS AND ROLE OF ICAP

 Regulatory body : mandated under statute to regulate the

profession of accountancy
 Examinations and awarding of membership
 Practice license regulation
 Education and Training of members & students
 Continuing Professional Development
 Standard setter : accounting and auditing standards

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ROLE OF ICAP IN ACCOUNTING

PROFFESSION

 STANDARD SETTING
 QUALITY CONTROL
 INVESTIGATION
 PROMOTION OF CORPORATE GOVERNANCE
 TRANSPARENCY
 DISCLOSURE
 INVESTMENT ANALYSIS OF FINANCIAL MARKETS
 ADVERTISING POLICY
 CUT-OFF TIMINGS AND TIME STAMPING
 DISSEMINATION OF INFORMATION

Icap is playing a vital role in accounting profession to ensure

Reliability. Accuracy and Fairness. Following are the functions which
Icap is performing inaccounting profession.

1. Standard setting:

Sets the standards that are followed by its members in the audit of financial
statements to protect the interest of shareholder and to give the true and
fair view of the financial position of the organization.

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2. Quality Control

Controls the quality of financial reporting

The Institute of Chartered Accountants of Pakistan (ICAP) has, therefore, a

unique, critical and practical role to play not only in building a stronger and a
more stable economy, but also in establishing the credibility of the
information, accountants produce. Indeed, the future of the profession is at
risk unless we enhance confidence in it by building public trust. ICAP is
committed to work with regulators, practicing firms and other stakeholders
to strengthen the financial reporting system in the country. It is also
committed to improve its own disciplinary process, adhere to quality control
by inspecting practicing firms, and strengthens the rules of conduct, thereby
promoting stronger governance and greater transparency. ICAP has also
been instrumental in drafting a Code for Corporate Governance in the
country, adopting the International Auditing and Accounting Standards,
committing to adopt all IFRS by 2007, and drawing up a separate set of
standards for the SMEs.

3. Investigation

Investigates the inappropriate reporting issues. It regulates all that issues

which are raised while conducting investigation.

4. Contribution for promoting corporate governance

Apart from its core functions, ICAP contributes in promoting corporate

governance, formulating economic policies of Federal and Provincial

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Governments including federal budget making with specific focus on

taxation.

Fraternity, we offered approx. 300 ambassadors to the local and

international market in the year 2006.”
5. Transparency

There is a saying is that”Transparency is assurance” The saying perhaps

reflects the central point of transparency, whether it is related to the
transparency of financial statements or the transparency of business
operations. Transparency does not just deal with the publication of numbers,
facts and figures -- indeed, all of these things can be used to obfuscate,
unless they are accompanied by genuine transparency. In other words
transparency is the ability to conduct business in a clear and accountable
way, especially associated with the human part of the business.
Transparency is one of those things that Quality Assurance programs try to
engender, but so many corporations completely miss the mark, because they
do not understand the fundamental goal. When we apply the above
definition, then the conditions prevailing in CSIBL were clearly to obfuscate:
the regulators investigation report mentioned that there were a number of
different sets of accounting records, kept at different locations so Icap
ensure transparency in the area of accounting.

6. Disclosure

There are various meanings but the most relevant is that disclosure is the
fundamental principle of accounting under which all material facts (whose

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non-disclosure may render a financial statement misleading) must be

disclosed. Icap has given disclosure principles which states that any and all
Information that affects the full understanding of a company's financial
statements must be included with the financial statements. Some items may
not affect the ledger accounts directly. These would be included in the form
of accompanying notes. Examples of such items are outstanding lawsuits,
tax disputes, and company takeovers while in some cases the company may
have to opt for self disclosure in an effort to be transparent. Self disclosure is
not simply providing information to another person. Instead, scholars define
self disclosure as sharing information with others that they would not
normally know or discover. Self-disclosure involves risk and vulnerability on
the part of the person sharing the information.

7. Investment analysis of the Financial Markets

Icap has made it possible to conduct investment analysis of Financial
Markets. Icap focus on the traditional investment analysis of the financial
markets. Fundamental and investment analysis are two names of the same
thing. Though in the developed world, in addition to fundamental analysis,
technical analysis has taken roots as an alternative method of analysis, it is
still in its infancy in Pakistan.
8. Advertising policy

ICAP have consciously tried to follow internationally accepted norms for

Mutual Funds advertising by ensuring that our ads are not misleading in any
way, particularly avoiding advertising our Funds' returns for short, selective
periods or giving anticipated future returns, etc. This policy is now followed
by the industry association.

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9. Cut-off timings and time stamping

Icap have always enforced this concept stringently, to pre-empt any client
taking unfair advantage of the Unit Prices to the detriment of the other Unit-
holders. This not only became an issue in the US a few years ago but has
also been made mandatory for all by relevant directive from SECP.

10. Dissemination of information

Icap pioneered the practice of sending to each and every one of their Unit-
holders a Monthly Fund Manager's Report, giving a synopsis of the activities
in the Equity and Money markets and how their Funds fared during the
preceding month. This practice was gradually adopted by others (some,
initially, purely copying our format) and has now become the market norm.

ROLE OF ICAP IN AUDITING

PROFFESSION

 ICAP’S ROLE AS REGULATORY AUTHORITY

 ICAP’S ROLE AS WHISTLE BLOWER
 RESTORING PUBLIC CONFIDENCE IN AUDITING PROFFESSION
 CORPORATE AND SOCIAL RESPONSIBILITY
 EMPLOYEE INVOLVEMENT ANC EMPLOYMENT PRACTICES

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1. ICAP’s role as Regulatory Authority

QCR Program is a key part of the Institute’s regulatory framework,

established to develop and maintain compliance of professional standards
amongst the firms engaged in the audit of limited companies particularly
listed entities, as the Code of Corporate Governance requires that a
satisfactory QCR rating is mandatory for CA firms to conduct audit of
listed companies.

The primary objective of the QCR process continues to be monitoring the

compliance by audit firms with appropriate levels of professional standards
in the performance of the audit function. The secondary objective is to
provide guidance to practitioners to assist them to improve their standards.

The Institute perceives liaison with the regulatory authorities of the country
as essential to the ongoing success of its QCR Program.

The Securities and Exchange Commission of Pakistan (SECP), through the

Listing Regulations of the three Stock Exchanges namely Karachi, Lahore and
Islamabad, has made mandatory QCR rating for the firms of chartered
accountants engaged in the audit of listed entities.

Accordingly, no listed company shall appoint as external auditors a firm of

Chartered Accountants which has not been given a satisfactory rating under
the Quality Control Review Program of the Institute of Chartered Accountants
of Pakistan.

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2. ICAP’s role as whistle blower

Ultimate responsibility for discouraging and preventing corruption, whether

within the business world or in the public sector, rests with management. By
introducing proper systems of corporate governance and "setting the tone at
the top," management can significantly reduce the opportunities for
malpractice. But Icap have a key role in society's efforts to reduce
corruption. First, as professionals with a duty to protect the public interest,
they are bound by rigorous codes of professional and personal ethics calling
for the highest levels of integrity and objectivity. Second, their key strategic
positions within an enterprise or organization - whether in an internal
position or as an external auditor or adviser - mean that they very often have
access too highly
Privileged and confidential information.

3. Restoring public confidence in auditing profession

The quality control standards require the audit firm to implement quality
control procedures which ensure that the leadership, human resource,
independence, quality processes and related activities meet minimum
standards. The procedures adopted and
Implemented are required to be documented. The regulators will
Inspect the extent of compliance of the audit firm with these quality control
standards.
The quality processes defined in the standard include the assessment and
consideration of the acceptance of proposed audit clients. Included in the
quality control

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Standards are requirements which fix the responsibility for quality

management on the Chief Executive or the managing board of the firm.
Further, the quality control standard
Requires an independent partner to review and concur the opinion reached
on all public interest entities and other entities identified by the audit firm as
requiring this level of quality assurance.

4. Corporate and social responsibility

ICAP aims to conduct its business in a socially responsible manner, to

contribute to the communities in which it operates and to respect the needs
of its customers, employees, investors, regulators, suppliers and other
stakeholders.

ICAP’s role as an interdealer broker is to facilitate trading in the wholesale

financial markets, thereby helping to ensure the smooth functioning of the
global financial markets. These markets are critical to the global financial
system. The vast majority of financial asset classes exist only in the OTC
environment and, consequently, the efficient functioning of these markets is
essential for the free flow and availability of capital, the mitigation of risk and
issuer and investor choice. These markets play a major role in global
economic development and are the hub of developments that benefit savers,
investors, businesses and governments.

We facilitate trading by using our voice brokers and electronic broking

platforms to match buyers and sellers and create liquidity in the OTC
markets, enabling our customers to achieve their business objectives and to
hedge their risk exposures to numerous markets, including interest rates, FX

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and energy. We have spent many years facilitating the flow of trades to
clearing houses on behalf of our customers and aim to improve the overall
resilience of the financial system. In addition we offer a wide range of post
trade services, which help our customers reduce the overall level of risk.

The past twelve months have seen increased focus by regulators and
politicians on these markets and proposals continue to be debated by
governments across the world. There is no doubt that an overhaul of some
areas of the regulatory framework supporting the OTC markets is necessary
and ICAP continues to consult extensively with both politicians and
regulators as part of this process.

We believe that our role as a key participant in the OTC markets best
positions us to contribute to society, while maximizing shareholder returns
over the long term.

5. Employee involvement and employment practices

ICAP is committed to achieving and maintaining the highest standards in the

workplace. This commitment is underpinned by policies on equal
opportunities, harassment and discrimination, to which all employees are
required to adhere and which are regularly monitored and enforced. The
Group undertakes diversity training designed to prevent harassment and
discrimination and retaliation against individuals who report problems in the
Group’s workplace.

The Group recognizes the importance of effective internal communication in

promoting employee engagement and uses a variety of methods, including

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ICAP’s global intranet, to keep staff informed about developments in the

business, policies and procedures and training and advancement
opportunities in a timely manner.

REFERENCES

• www.icap.org.pk/

• www.icap.org.pk/userfiles/file/news/IAASB_IFAC.pdf

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• www.icap.org.pk/.../Tax_Audit_Chartered
%20_Accountants_SM_ICAP_JAN _2010.pdf

• www.icap.org.pk/userfiles/file/Pakistancasestudyprtn.ppt

• www.accountancy.com.pk/newsprac.asp?newsid=600

• www.iasplus.com/asia/0711pakistanupdate.pdf

• www.secp.gov.pk/CS/ChairmanSpeeches/PDF/160404_ICAP_Lhr.pdf