To the Members of ICAI Accounting Research Foundation

The Directors have pleasure in presenting the Ninth Annual Report of the ICAI Accounting Research Foundation (ICAI ARF), together with the Audited Balance-sheet, Income and Expenditure Account and Cash Flow Statement for the Financial Year ended 31st March 2008.

The ICAI ARF promoted by the Institute of Chartered Accountants of India (ICAI) has accelerated its work programme during the year as an academy for imparting, spreading and promoting knowledge, learning, education and understanding in the various fields related to the profession of accountancy. The ICAI ARF has undertaken many projects involving basic and applied research. The ICAI ARF believes that proper research inputs are necessary condition for raising the level of corporate governance, management, accounting and financial reporting. High quality research projects based on practical experience with theoretical extrapolations would also provide valuable inputs in formulation of policies and implementation thereof at macro and micro levels.

Performance Highlights:

The ICAI ARF has completed another successful year, 2007-08 in establishing the Foundation as a core research body in the areas of Accounting, Auditing, Fiscal Laws and policy, corporate and economic laws and policies, economics, financial management, financial services, capital and money markets and other related disciplines.

Recognizing the impetus required to promote quality research in the country, Board has adopted and pursued a multi pronged action plan to support research projects of contemporary national and international significance in the areas related to accountancy profession. The ICAI ARF has extended an open invitation to undertake research to various institutions, research bodies, research scholar and the practitioners. Focussed advertisements were also put up on the website of ICAI ARF, and ICAI, and in the Journal of ICAI ‘The Chartered Accountant’, inviting expression of interest from the members and others to carryout research in the areas of contemporary interest with requisite financial support from ICAI ARF with an option of pursuing the research in the course of a PhD degree or for taking up of systematic study in relevant areas. As a consequence, during the year numbers of research projects have been commissioned, including bodies like IIM, Bangalore and Oxford University and some of the projects undertaken earlier have successfully been completed.

• Study on Outcome Budget undertaken by the High Level Committee on Outcome Budget setup under the Chairmanship of Shri Suresh P. The Project was based on the study of the review of the structure, process, and format adopted for preparation of Outcome Budget by the Government of India. The Project has been completed and the final report of the project was presented to Shri P.Chidambaram, Hon’ble Finance Minister of India ,by Shri Suresh P. Prabhu,Chairman,High Level Committee on Outcome Budget and Dr. Ashok Haldia, (Former Secretary), ICAI along with some members of the Committee on 25th July,2008.The Finance Minister has assured that the suggestions contained in the report would be considered by the Government for making the Outcome Budget an effective tool for financial and programme accountability.

• Kolkata Municipal Corporation (KMC) Project to assist KMC in preparation of its financial accounts, carrying out number of studies on business processes, conducting training programme for capacity building, etc has successfully been completed in September, 2007. The Mayor of Kolkata Municipal Corporation has accepted, by passing a resolution in January, 2008 all the recommendations of ICAI-ARF, except restructuring of accounts department of KMC.

• DFID Project relating to Strengthening Rural Decentralization (SRD) at Gram Panchayat Levels in West Bengal which primarily involved field visits to various Gram Panchayats (GPs) and Gram Unnayan Samitis (GUSs) spread across the six SRD Districts of West Bengal and other non-SRD Districts to study accounting, auditing and procurement functions and on that basis suggesting a detailed methodology and road map for under pinning the issues on a logical framework has also been successfully completed.

• Project on Introduction of Accrual Accounting on pilot basis in identified units of Government of India undertaken under the Memorandum of Understanding (MOU) between the office of Controller General of Accounts (CGA), Government of India, and ICAI having a twinning arrangement with ICAI ARF was finalised in May 2006. The project is funded by the World Bank. The final version of financial statements of five pilot units comprising of Dr. RML Hospital and the four separate divisions of CPWD for the financial year 2006-07 following the accrual accounting has since been submitted to the office of CGA. An action plan for capacity building measure is being undertaken in consultation with CGA.

• Research Study on Recognition, Measurement and Disclosure issues in Bio-Technology and other life science companies, Information Technology (IT) Companies and advertisement companies, has been completed and published with a title ‘Accounting Issues in Knowledge and Technology Intensive Industry’.

• Study of Fixed Income Securities Market in India has been completed and currently under review.

The following research projects have been undertaken/continuing during the year:-

• A High Level Committee has been setup to look into the aspects relating to Sustainability Reporting. The Committee is in the process of suggesting a framework for Sustainability Reporting in India.

• Developing a code of Governance for Non-Profit Organisations (NPOs):

• Impact of International Accounting Standards/ International Financial Reporting Standards on the wider stakeholders

• Economic Impact of Quarterly Reporting

• Emerging opportunities for Environmental Audit.

• Early warning signs of frauds.

• Valuation of Intangibles

The research study on the following topics has been approved in principle by ICAI ARF subject to modification in methodology /scope for the research.

• A study on Special Economic Zone
• Study of efficiency, volatility and liquidity of derivatives market in India
• A study on Business Valuation
• A Study of the processes employed by Indian Companies for encouraging creation of Intellectual Assets and fostering of thriving IPR Culture.
• A study of cartels vis-à-vis Joint Ventures, in view of the provisions of the Competition Act, 2002
• A study on Goods and Service Tax

In financial terms, during the year the revenue from research activities has been Rs. 60.66 lakh as against Rs. 60.41 lakh in the previous year. The revenue surplus during the year was about Rs. 70.69 lakh as compared to about Rs. 51.54 lakh during the year 2006-2007. A sum of Rs. 70 lakh has been appropriated towards the building reserve.

ICAI University:

The ICAI/ICAI ARF continued to pursue the Government of Rajasthan for allowing use of land allotted to ICAI ARF for university, for setting up of Centre of Excellence by the ICAI pursuant to the stand taken by the Ministry of Corporate Affairs, Government of India as was also apprised in the last Annual Report. The Government of Rajasthan has cancelled the land allotted to ICAI ARF for setting up of university, and instead, approved allotment of 25 acres for setting up of Centre of Excellence by ICAI at village Chosala, Tehsil Chaksu, District Jaipur at 50% of DLC rates. The amount paid to the Government of Rajasthan for allotment of land for setting up of university would be adjusted against the allotment of land to ICAI for setting up of Centre for Excellence.

Future Plans:

Recognising the fact that considerable efforts are required to promote research in accounting in India, ICAI ARF has taken a number of proactive measures for undertaking applied research, and carrying out research studies. The ICAI ARF would further intensify promotional campaign for establishing direct contact with the Universities and other bodies on the one hand, and reaching out to the potential researcher through out the country, on the other. The list of proposed research projects of contemporary national and international significance and proposed research projects for PhD degree would be further expanded, and expression of interest invited. In selected areas, ICAI ARF may directly undertake research. Possibilities for networking with research organisation of repute, within and outside India would be explored. Series of technical documents are proposed to be published and focussed training programmes organised for dissemination of technical knowledge and skills to the Chartered Accountants and other stakeholders. Initiative for applied research in newer areas including already initiated with the office of Controller General of Accounts on the lines of those taken up under MCD and KMC projects would also be considered, because they provide good base for applied research.

In order to strengthen the infrastructure base, ICAI ARF has decided to obtain a portion of ICAI building measuring 20,000 sq. ft. under construction at Sector 62, Noida on sub lease for a period of 10 years on annual lease rental of Rs.5,000/-. ICAI ARF would be paying Rs.5,00,00,000/- to ICAI towards the acquired built up space and furnishing thereof.

Conservation of energy, technology absorption, foreign exchange earnings and expenditure:

Conservation of energy: The level of energy consumption is minimal

Technology absorption: Being a research organization, all the functions and resources are devoted towards research purposes. The KMC and CGA projects have been instrumental in building expertise in conversion of accounts to accrual basis.

Foreign Exchange earnings & Outgo: Foreign Exchange earnings: Nil

Foreign Exchange Outgo: Nil

articulars of Employees: Pursuant to provisions of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, it is stated that no employee was in receipt of remuneration exceeding Rs.24 lakhs per annum or Rs.2.00 lakhs per month during the year 2007-08.

Director’s Responsibility Statement:

As required by section 217(2AA), Board of directors confirms that:

1. In the preparation of annual accounts, applicable accounting standards have been followed with no material departure;

2. We have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Foundation as at 31st March 2008 and of the income and expenditure of the Foundation for the year ended 31st March 2008;

3. We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; and

4. We have prepared the annual accounts on a going concern basis.

Industrial Relation

The foundation has maintained the Cordial and harmonious relations on all levels. Efforts were made to inculcate team spirit and motivate the employees to fully develop there potential.

Human Resource Development

During the year 2007-08 in order to professionalise the executive strength of foundation and also to infuse fresh blood two Management Trainees were appointed in foundation.

Staff welfare

Welfare of the employee received due attention during the year.

Board of Directors

During the year CA. Sunil Talati relinquished the charge of Chairman held by him Ex-Officio. The Board places on record its appreciation for the commendable services and contribution made by CA. Sunil Talati

M/s. Bubber Jindal & Company Chartered Accountants, retire as Auditors at the conclusion of this Annual General Meeting and have further confirmed their eligibility under 224(1B) of the Companies Act, 1956.

The Board take this opportunity to place on record their appreciation for the continued assistance, support and co-operation received from the Ministry of Corporate Affairs- Government of India, State Governments and their urban local bodies, M/s Infosys Technologies Ltd, Office of Controller General of Accounts, Government of India, Guru Gobind Singh University, Department for International Development, UK (DFID) and other authorities, experts, research scholars and individuals during the course of execution of the research projects and in other disciplines.

The Board of Directors sincerely appreciate and commend the valuable contribution made by the employees of the foundation at all level in the pursuit of achieving excellent result for another year in succession.

On behalf of the Board
For ICAI Accounting Research Foundation

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