Excellent ecosystem for start-ups, there are always aberrations in any sector, says ICAI President

The start-up ecosystem in India continues to be robust and one-off issues like those at edtech major BYJU’S can help improve corporate governance for the sector, believes Aniket Talati, President of the Institute of Chartered Accountants of India (ICAI).

“I think it’s an excellent atmosphere in India to encourage start-ups. We have over 90,000 start-ups in India today, there’s a wonderful ecosystem. So many unicorns are being created,” Talati told Business Today in an interview, adding that aberrations are always present in any sector.

While declining to comment on the specific case of BYJU’S, he said that there are certain lessons to learn from issues such as these. “But I think all in all, this only helps improve the corporate governance going forward and which is being reviewed actively,” he said, adding that a lot of the start-ups, especially the ones which have raised substantial amount of capital, are now also looking at best practices that they can adopt.

According to sources, the ICAI has referred the financial issues at BYJU’S to its disciplinary committee for investigation. The financial reporting review board (FRRB) of the ICAI had been examining financial statements of the edtech firm and was of the view that it requires further investigation. Congress MP Karti Chidambaram had in October last year written to the ICAI stating that there were various red flags in the company's financials for 2020-21 period.

ICAI already has a separate committee on MSME and start-ups, which works with the sector to help them in issues and provide information and awareness about regulations.

Meanwhile, Talati also said that ICAI is working with Chartered Accountants and students to upskill them for the digital economy and use of Artificial Intelligence. Set up by an Act of Parliament in 1949, the ICAI is responsible for regulating the profession of chartered accountancy in the country.

“We are now looking at technology, how do we upskill our members and include technology for our students. There is so much happening on the technology front – AI, cyber security have gained a lot of importance. Assurance is not just going to be the traditional in nature. Good cybersecurity assurance and cyber audits are those coming into play. How do we make sure that Chartered Accountants are geared for these,” he noted.

Further, with digital transactions such as UPI and wallets gaining traction, the scope of auditors in terms of looking at the number of transactions has increased and requires digital tools. “It is not now possible for you to flip through a bank statement as it was maybe 10 years ago, you need digital tools. So, you need to have excellent data analytics,” he said, adding that the ICAI runs a lot of courses on data analytics. Members are also being provided training for use of AI to assist them in their professional duties.

Talati said the ICAI has a very stringent system of continuing professional education under which every chartered accountant is required to do 30 hours of continuous professional learning every year. This helps them stay ahead of the curve in terms of new challenges such as those posed by technology.

With over 360,000 members and over 780,000 students, ICAI is the world’s second largest accounting body. 

The ICAI also has a digital accounting and assurance board, which focuses on how technology impacts accounting and assurance, as well as forensics.