Never before in the his-tory of the Indian accountancy profession, has there been a time like the present. Traditionally account-ants were staid backroom boys dabbling in conventional accounting (without the benefits of accounting standards) and helping people pick their way through the complex web of tax laws. The backroom boys have come to the forefront now. The critical person on nearly every board or audit committee of major corporates is a chartered accountant (CA)
Over the next two years, CAs in India would be spoilt for professional opportun-ities. There will be a new Companies Act; Indian Accounting Standards would progressively give way to complex International Financial Reporting Standards (IFRS); the Income Act looks prepa-red to undergo the greatest change it has in the last century even if a part of the proposed tax code were to be actually enacted; goods and services tax (GST) have the capacity to absorb more CAs in the indirect arena, than ever before; the arrival of Extensible Business Reporting Language (XBRL) would demand the services of a huge number of accountants for conversion and designing systems; with government accounting shifting to an accrual base there will be demand from both the accounting and auditing sides of the government, an area where today CAs are not significantly involved; increasing public-private partnerships, particularly in the infrastructure sector would require involvement of CAs as consultants, strategists and auditors; climatechange and sustainability initiatives of corporates would warrant attestation of sustainability reports; a growing demand for forensic audits, need for internal control certifications and validation of systems and processes the demand for CAs is endless.
Multi-disciplinary partnerships have officially been permitted by an amendment to the CA Act and limited liability partnerships have been introduced for the first time in the country. This will act as strong enablers for accountants to venture forth into non-traditional areas and conquer new markets. The accountants have really never had it so good.
However, where there are opportunities, there will also be threats. The dark side of the moon in this entire scen-ario is that the rate of knowledge obsolescence and skill-set irrelevance will be very high. Parallel to the explosive growth in opportunities for CAs, there will be a dearth in number of skilled accountants. Against an average of one accountant per 1,000 people of the population that most developed economies have, India has approximately only one chartered accountant for every 10,000. Today, when we are talking of CA interface even at the village panchayat level, this will be clearly inadequate. The other pitfall is the huge issue of expectation gap.
Even other than the recent high profile cases in which a few chartered accountants are behind bars without any guilty finding against them for more than half a year, I am told, there are quite a few other cases where chartered accountants have been incarcerated on allegations of negligence/collusion while discharging their professional duties. This s a very worrying trend where the system is bypassing the disciplinary mechanism of the Institute and seeking to treat a professional negligence case as a criminal or economic offence.
The disciplinary system of the Institute ensures that there are people knowle-dgeable in aspects of audit and law who can fairly inqu-ire into a case against a professional. The police and administrative system and other investigating authorities for the most part would be at sea while dealing with cases involving intricate auditing regulations.
For another example of a desire for a quick fix solution, one can visit the official site of the Central Vigilance Commissioner (CVC). There, prominently on the home page, is a proposed Code of Ethics for CAs. The authors seem unaware of the detailed code of ethics promulgated by the ICAI. This Code addresses certain specific issues regarding certification of valuation of inventory/ investment/other assets, related party transactions, status of sundry debtors/sundry creditors, status of loans and provisions and makes certain generalised remarks that appear to indicate that these are areas where the performance of CAs is below the mark and appears malafide leading to control lapses by banks in dispensation/ monitoring cre-dits. The code goes on to comment that since the ICAI has limited powers to punish, there should be a parallel track where such cases could be treated as criminal or economic offences. It also demands that the ICAI should publish a list of tainted/banned chartered accountants.
While the inentions of the code are very clear it is a classic example of not only the consumers significant dissatisfaction (and mind you the Chief Vigilance Commissioner is no ordinary consumer) but also an illustration of how, in spite of the best intentions, in the hands of non-professionals, a good desire to codify ethical requirements end up as a half-baked effort addressing only certain specific areas.
The existence of the code speaks volumes of the consumers desire for better services and frustration with the limitations of the disciplinary system. It is in this era of explosive growth that we must pay attention to these writings on the wall otherwise we will stumble while attempting to enter the brave new world.