The accountancy profession is in the throes of a crisis as never before. A student about to embark into this field has the benefit of a rich history none too distant, one is tempted to add to learn and improve. One need to look only into the immediate past and all that he or she gets to see are a sea of red flags which fly in the face of the profession Enron, WorldCom, Lehman Brothers, and closer home Satyam.
Whether a deterrent or an opportunity would largely depend on the manner in which the profession responds at every stage be it training, coaching, internship, curriculum, organisation processes employed by professional service firms, bridging the chasm between society s perception of the profession s role and its performance etc. We need to recognise that the needs of the profession are changing at a pace faster than even the world of derivatives.
On the one hand, there is the clarion call for it to get back to the basics and follow the rulebook to the letter whilst on the other, there is an opportunity for developing new skill sets such as international financial reporting standards (IFRS) to prepare financial statements and this would mean a completely different outlook to the world of auditing and accounting.
The challenges confronting the profession range from the poor perception of the profession in the eye of the public i.e. the performance gap vis- -vis the expectation to the need to dispel the notion that at the doors of accounting lies the root of all that is wrong and evil with the financial world as has come to be believed as the global financial crises unfolded and the financial world came to a stunning halt.
The ills in the profession lie in the transformation of the course from being a class one to one of mass . The evidence of this can be seen in the mushrooming training and coaching institutes dotting the cities. This, in effect, has reduced potential professionals to bookworms and the ability to grapple with matters that require analytical skills is conspicuous by its absence.
Given the fact that the accountancy profession has changed over time from a business run as a profession to a profession run as a business, one is tempted to ask if the training imparted has kept pace with this metamorphosis. One would be guilty in the extreme if the answer is to be in the affirmative, for apprentices ( articles ) have generally come to be viewed by professional service firms as cheap labour with little or no organisational commitment towards helping these worthies to make a mark in their career if they were to choose to serve the profession.
Whilst the body that regulates the profession mandates intensive training, the ability and wherewithal of the practicing professionals to impart the same is open to question. Understanding in a student of this profession entails applying standards and accomplishing them to a conceptual framework. It is different though that the standard setters of the day have lost the art of communicating in unambiguous, clear, concise and precise language. If the profession has grown leaps and bounds, the change in business environment and technology has been much faster and far more complex and threatening to get more incomprehensible by the day.
Accounting today is far removed from days of mere number crunching. Anyone disbelieving this only needs to read a few paragraphs of the accounting standard on financial instruments to realise the heady amalgam the profession is wrestling with today. In the midst of all these developments, we need to bear in mind that the global financial crisis has changed perspectives on the appropriate balance between market freedom, regulatory frameworks and government intervention.
Thus, the stage is set for the profession to really assess where it wants to head. This is, possibly one decision which would largely rest on the agencies and users who had placed faith and trust and today believe that we have outlived our usefulness. The problem of perception is not destined to go away any sooner.
Is it that society placed too large an expectation which was beyond the realms of possibility or is it simply that we are incapable of such heights which are seemingly halcyon? Answers will not be easy to come by, but then it is worth pondering as to why the accounting profession alone cannot have two answers to any given situation? The legal profession continues to thrive even though there is prescriptive legislation and corporates continue to consult lawyers and get differing opinions.
Ditto is the case with the medical profession dealing with life and death where it is not uncommon to get differing opinions on diagnosis and treatment. This can be improved only with better and quality education both within and outside the sooner this is done, the better it is. The author is partner and national leader of audit and enterprise risk services at Deloitte. His colleague, K Rajashekhar contributed to the article. This is the fourth of a 5-part series. The following will be on cost and works accountancy