A unique number for chartered accountants tells tales about the economy

Ranjeet Kumar Agarwal, president, ICAI.
Ranjeet Kumar Agarwal, president, ICAI.

Summary

  • ICAI's unique document identification number for CAs reveals growing demand for certification services and economic activity nationwide, with Maharashtra, Gujarat, and Delhi leading in CA services.

A unique numbering system for chartered accountants rolled out five years ago is beginning to reveal new insights about CAs' services in high demand, and economic activity at the state level.

In 2019, the Institute of Chartered Accountants of India (ICAI) had introduced a unique document identification number (UDIN) for CAs, aimed to prevent crooks issuing fake certificates. A study of the new system found demand to certify documents and transactions to be presented to various statutory authorities and financial institutions is growing sharply, ICAI president Ranjeet Kumar Agarwal said, mirroring robust economic growth.

One can verify the authenticity of the certification on a designated portal run by ICAI and many government agencies are now using the facility. The new system is proving to be a gauge of economic activities across the country, down to district level, Agarwal said in an interview, quoting the analysis.

Maharashtra, Gujarat and Delhi led the race in getting the services of chartered accountants, regarded as a barometer of economic activities, in the last five calendar years through 2023. Tamil Nadu, which was in the fourth position for three years up to 2021, was replaced by Uttar Pradesh in 2022, but the industrialized southern state regained the fourth position a year later, pushing the most populous state back to fifth position. Among the top ten states, West Bengal, Karnataka, Punjab, Rajasthan and Haryana held the remaining positions in that order in 2023, data available from ICAI showed.

Agarwal said the work of CAs can be measured as the UDIN captures the service rendered—that is, which CA in which district rendered what service. “This measurement allows us to know what kind of economic activity takes place in every part of the country because our services are related to economic development… We have decided to compile this data by district and give to the Parliament. This can be one of the criteria for the aspirational district programme," said Agarwal. Various regulators are now using UDIN, and ICAI is helping Bangladesh, Nepal and Bhutan also to roll out similar systems, he added.

ICAI data showed that in 2023, over 17.29 million UDINs were generated, up from 16.99 million in the year before. Of this, the largest component is CA certificates issued for various purposes including for use by income tax, GST and customs authorities, financial institutions and other agencies for grants and subsidies. Over 10.1 million UDINs were generated for certificates in 2023, a 40.3% jump over the numbers raised in the year before. That is also a steep jump from 3.7 million UDINs generated in 2019.

In a sign of rising demand for CAs, top professional services companies and dedicated CA firms are offering pay hikes of as much as 50% for lateral hires, Mint reported in February. Unlike many sectors, only a limited number of candidates qualify to be CAs every year, making their services more valuable in a growing economy.

Documents signed off as part of GST and tax audits shot up 87% annually in 2022 to 6.18 million but shrank by over 36% in 2023 to 3.9 million. Two chartered accountants, who did not wish to be named, said this could be because the GST authorities now allow self-certification of a sales reconciliation statement to be filed by businesses, which were earlier certified by CAs and cost accountants, as part of improving ease of doing business. Agarwal said that in line with the economic growth, issuance of these documents is expected to further grow.

Documents signed off by CAs as part of statutory audit and assurance function saw a 28% jump annually in 2022 to 3.16 million, but shrank 6% in 2023 to 2.95 million. In 2023, over 1.15 million statutory audits were done on corporations, the largest class of the audit services done in the year. Audit of non-corporate entities, internal audits, stock audits, audit of government schemes and issuing limited review reports are among the other sought after services for CAs, data showed.

“UDIN helps in verifying the authenticity of the certificate. Certificates without UDIN are not valid and any CA issuing certificates without it will face disciplinary action. This has helped in unearthing frauds and the frauds that were happening in the name of CAs has come down drastically," said Agarwal.

 

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