Personal numbers for chartered accountants tell stories about the economy

In 2019, the Institute of Chartered Accountants of India (ICAI) introduced a Unique Document Identification Number (UDIN) for CAs, aimed at preventing fraudsters issuing fake certificates. ICAI chairman Ranjeet Kumar Aggarwal said the demand for attestation of documents and transactions to be provided to various statutory authorities and financial institutions is increasing sharply, reflecting strong economic growth.

One can check the authenticity of the certificate on the designated portal run by ICAI and many government agencies are now using this facility. The new system is proving to be a measure of economic activity across the country, at the district level, Agarwal said in an interview.

Maharashtra, Gujarat and Delhi led the way in hiring the services of chartered accountants, considered a barometer of economic activity, in the last five calendar years till 2023. Tamil Nadu, which was at the fourth position for three years till 2021. It was replaced by Uttar Pradesh in 2022, but the industrialized southern state took fourth place a year later, relegating the most populous state to fifth. Among the top ten states, West Bengal, Karnataka, Punjab, Rajasthan and Haryana will occupy the remaining spots by 2023, data from ICAI shows.

Aggarwal said the performance of CAs can be measured by capturing the service provided by UDIN—that is, which CA provided what service in which district. “This metric helps us know what kind of economic activity is going on in each part of the country because our services are related to economic growth… We have decided to compile this data district wise and present it to Parliament. „This can be one of the criteria for a district program of interest,” said Aggarwal. Various regulators are now using UDIN, and ICAI is helping countries like Bangladesh, Nepal and Bhutan develop similar systems, he added.

According to ICAI data, in 2023, over 17.29 million UDINs were generated, as against 16.99 million in the previous year. Of this, CA certificates are the largest component issued by Income Tax, GST and Customs authorities, financial institutions and other agencies for various purposes including use for grants and subsidies. More than 10.1 million UDINs were generated for certificates in 2023, which is 40.3% more than the number accumulated in the previous year. This is a steep rise from the 3.7 million UDINs generated in 2019.

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

Documents signed as part of GST and tax audits rose 87% year-on-year to 6.18 million in 2022, but declined 36% to 3.9 million in 2023. Two chartered accountants, who did not wish to be named, said the GST authorities may now have allowed businesses to file self-certification of sales reconciliation statements, which were earlier certified by CAs and cost accountants, as part of the ease of doing business. Aggarwal said the issuance of these documents is expected to grow further in line with economic growth.

Documents signed by CAs as part of the statutory audit and assurance process increased by 28% annually to 3.16 million in 2022, but decreased by 6% to 2.95 million in 2023. In 2023, more than 1.15 million statutory audits were performed on companies, the largest class of audit services performed in that year. Other sought-after services for CAs include audit of non-corporate entities, internal audits, stock audits, audit of government projects and issuance of limited review reports, the data shows.

“UDIN helps to verify the authenticity of the certificate. Certificates without UDIN are not valid and issuance of certificates without it will lead to disciplinary action. This has helped in uncovering frauds and frauds in the name of CAs have come down drastically,” Agarwal said.