Audit Renaissance: Uniting the Powerhouses of CA, CS and CMA

[Shashank Shukla]

The fierce rivalry between India’s Premier Professional bodies—The Institute of Chartered Accountants of India (ICAI), The Institute of Company Secretaries of India (ICSI) and The Institute of Cost Accountants of India (ICMAI) is back in the spotlight. This time, the skirmish is centred around the rights to conduct tax audits, triggered by the draft Income Tax Bill, 2025, which has rekindled old tensions between these professions. At the heart of the issue is Section 515(3)(b) of the new Income Tax Bill, which defines the term "Accountant." Much to the dismay of Company secretaries (CS) and Cost accountants (CMA), the bill continues to reserve the role of tax auditors exclusively for Chartered Accountants. Both the ICSI and ICMAI had hoped that this bill would widen the definition of "Accountant" to include their members, allowing them to perform tax audits which is a lucrative and prestigious function that has traditionally been dominated by CAs. However, the government's decision to maintain the status quo has now led these professionals to rally before various authorities, including CBDT, Ministry of Finance, and even Parliamentarians pushing for their inclusion in the tax audit regime. They argue that they too possess the knowledge and expertise required to perform tax audits, a domain currently monopolised by CAs. Let’s delve deeper into this debate and explore whether these professionals genuinely have the necessary acumen or if this is merely a case of professional ego.

Understanding the Role of Tax Audits

A tax audit, as prescribed under Section 44AB of the Income Tax Act, 1961, is an audit of the accounts of a taxpayer to ensure that their taxable income is correctly calculated and complies with the provisions of the Act. In other words, tax audits are intended to ensure that tax records are transparent, accurate, and in accordance with the law. This necessitates a sound knowledge of Financial Reporting Frameworks (FRF), accounting standards (AS), and, in the case of large corporations, Indian Accounting Standards (Ind AS).

The Argument from Chartered Accountants: Defending the Turf

Chartered Accountants, represented by the ICAI, are determined to retain their exclusive rights to conduct tax audits. They argue that their training, curriculum, and practical experience make them the most qualified professionals to perform such audits. ICAI President Mr. Nanda has defended the exclusivity of CAs in tax audits, while at the same time indicating that other professionals can assist in tax representation before judicial authorities. The Chartered Accountancy qualification is structured to provide comprehensive knowledge in both accounting and taxation. The CA curriculum includes in-depth study of Accounting Standards (AS) and Indian Accounting Standards (Ind AS), which are essential for understanding how financial statements are prepared. At both Intermediate and Final levels, CA students undergo rigorous training in financial accounting, audit, and taxation. Additionally, the practical training requirement for CAs, known as articleship, ensures that students gain hands-on experience in taxation, financial reporting, and audit engagements. The argument in favour of CAs, therefore, is that their education and experience uniquely equip them to handle tax audits. Tax auditors are not merely "number crunchers"; they are expected to apply professional judgment, interpret tax laws, and understand the broader financial implications of their work. CAs believe that they are the only professionals who possess the technical knowledge and practical experience to carry out tax audits effectively.

The Case for Company Secretaries: More Than Just Compliance Experts?

Let’s now turn to Company Secretaries. As someone pursuing both the CA and CS qualifications, I can offer an insider’s perspective. While the CS curriculum does touch upon accounting, it is not covered in depth. At the Executive level, there is only one paper on Corporate Accounting, and even that only covers the basics. The focus is on providing CS professionals with a working knowledge of accounting sufficient to read and interpret financial statements. This aligns with their role as corporate governance experts, primarily involved in corporate law, compliance, and board management. Additionally, the practical training for CS professionals focuses more on secretarial practices, corporate compliances, and board management, rather than accounting or tax audits. While CS professionals play a vital role in corporate governance, their training and expertise may not provide them with the depth of knowledge required to carry out tax audits. Unlike CAs, CS professionals are not exposed to the intricacies of accounting standards or taxation laws in the same detail. Therefore, while they may have a working knowledge of financial statements, their ability to conduct a thorough tax audit may be limited.

Cost Accountants: A Potential Contender?

Cost Accountants (CMAs) possess the acumen to perform tax audits based on their curriculum. The CMA syllabus includes taxation at both the Intermediate and Final levels, similar to the Chartered Accountancy (CA) course. However, when it comes to accounting, Accounting Standards carry a weightage of 10% and 20% in the respective Intermediate papers. At the Final level, these standards account for 25% of the Corporate Financial Reporting paper. Beyond Accounting Standards, the CMA syllabus covers a vast range of accounting topics. At the Intermediate level, accounting topics have a weightage of 150 marks, while at the Final level, they hold a weightage of 100 marks. This comprehensive coverage shows that CMAs have the potential to perform tax audits based on their academic background.

However, the articleship for CMAs is generally restricted to the domain of cost and management accounting. Despite this, the CMA’s liberal articleship policies allow aspirants to gain exposure in accounting firms operated by Chartered Accountants (CAs), where they are involved in taxation and financial accounting matters. A CMA candidate who has had exposure to such environments during their articleship is well suited to conduct tax audits. CMAs are already recognised for their role in GST audits. Additionally, many Public Sector Undertakings in India recognise CMAs as equivalent to CAs for several managerial positions, such as Accounts Officer, Accounts Head, CFO, and Finance Controller. Their engagement with manufacturing entities through cost audits under Section 148 of the Companies Act, 2013, further demonstrates their ability to pursue tax audits. Moreover, CAs and CMAs share a common cadre in the Union Public Service Commission (UPSC) through the Indian Cost Accounts Service (ICoAS). These officers are directly involved in various divisions and authorities under the Ministry of Finance, including the GST and Income Tax departments. If CMAs have the potential to lead such departments, it stands to reason that they are equally capable of conducting tax audits.

The Double Standards of Governance

The debate over who is qualified to perform tax audits highlights a broader issue of double standards in public governance. Why is it that professionals from non-accounting backgrounds such as engineers, doctors, and bureaucrats can serve as Income Tax Commissioners or even hold positions like Accountant General, while CS and CMAs are denied the right to conduct tax audits? For example, the Accountant General’s office, responsible for auditing government accounts, often recruits individuals from a wide range of academic disciplines, including humanities and science. Similarly, the role of Income Tax Commissioners is frequently filled by officers from the Indian Revenue Service (IRS), many of whom do not have formal training in accounting or taxation. If these professionals are deemed capable of overseeing the taxation and audit functions of the government, why are CS and CMAs, who have received formal training in accounting and taxation, excluded from performing tax audits? This exclusion seems inconsistent with the broader trend of recognising diverse professional qualifications in public administration.

Beyond Tax Audits: Diversifying Professional Services

While the battle over tax audits has captured the attention of the professional community, it’s worth considering whether this focus on audit services is too narrow. Audit and attestation services are important, but they represent only a fraction of the services that professionals like 

CAs, CS, and CMAs can offer. In today’s rapidly evolving business environment, there are many other areas where these professionals can make valuable contributions. For example, the demand for consulting and advisory services is growing as businesses seek expert advice on regulatory compliance, financial planning, and risk management. Forensic audits, internal audits, and IT audits are also gaining prominence, especially in light of increasing concerns about cybersecurity and data privacy. These services require specialised skills that go beyond the traditional audit function, and they present opportunities for professionals to diversify their service offerings. Moreover, the rise of multi-disciplinary firms where professionals from different fields such as law, technology, and engineering collaborate to offer a new model for delivering comprehensive services to clients. In such firms, CAs, CS, and CMAs can work together to provide a holistic approach to business advisory, combining their expertise in finance, law, and management.

Empowering CS and CMA Professionals: A Call for Expanded Roles in Compliance, Auditing, and Legal Representation

My advice to the government is to open doors for my CS and CMA brothers and sisters in their respective fields. The RBI issued a consultation paper in 2020, which included provisions for secretarial audits of banking branches. I believe it is high time to propose such changes, creating opportunities for Company Secretaries in small towns and fostering a compliance-friendly environment in every banking branch. The government should also mandate cost audits based on a GST turnover limit of ₹50 crores or more, irrespective of business form. This would help curb bill trading and discourage the practice of bogus billing culture in both trading and manufacturing sectors. However, with great powers comes great responsibility, and any professional misconduct should be punishable.

Apart from these recommendations, the government should develop tribunal networks at the district level to create legal representation services for CA, CS, and CMA professionals. Whoever possesses the necessary skills will get the job. Tribunals related to various laws, such as labor laws, corporate laws, FEMA, and others, can be established to help businesses handle legal trials efficiently, allowing them to focus on their core business operations. Cases related to the SARFAESI Act create significant problems for banks, financial institutions, and auction winners due to a lack of legal consultancy and a robust judicial delivery system, which also hampers government revenues. For instance, if I win an auction, I still need to take possession of the property by appealing to the ADM court and engaging other law enforcement agencies. These issues could be resolved through tribunals where professionals like CA, CS & CMA can represent their clients. Given that Tier 2 and Tier 3 cities often lack the necessary knowledge and expertise, this could be an area where CA, CS, and CMA professionals could excel. It would be a win-win situation for all professionals, the business community, and law enforcement agencies. There are many more areas where the CA, CS, and CMA community can contribute, particularly in the domain of legal representation.

Conclusion: Friends, Not Foes

In the end, CAs, CS and CMAs are not competitors but allies with distinct roles and competencies. It is crucial to respect each other’s expertise while focusing on serving clients who drive the economy. Instead of engaging in turf wars, professionals should prioritise creating wealth for their clients by providing holistic solutions and embracing new opportunities. The government, too, must acknowledge the contributions of all these professionals and create an inclusive framework. It’s time to foster unity rather than division, for in doing so, we can better support the economy and protect it from downturns.