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REBOOT: The Second Coming
REBOOT: The Second Coming
The profession that once enjoyed a huge brand value and was looked upon with awe for the quality of its output and its moral fiber, today stands colored by scandals. Its reputation has taken a serious public beating. Yes, we are talking about the 200,000 plus strong audit and accounting profession,

In 2002, when Enron sank, it took along with it, audit major, Arthur Andersen, to the cleaners. The perpetrators were jailed and are now serving a long prison term. America justified the twin collapse saying the government’s non-interference was a triumph of the doctrine of market economy.

In 2009, when Satyam happened, the world’s top assurance firm, PricewaterhouseCoopers (PwC), escaped going the Arthur Andersen way. For the first time in Indian history, two assurance professionals, chartered accountants, were jailed over alleged work related crimes. And unlike their US counterparts, the Indian government intervened. In a fine show of astuteness, the six-man government appointed committee turned Satyam around.

Two of those six saviours, ace banker Deepak Parekh and ICAI’s ex-president T N Manoharan, were hard-core chartered accountants.


Role of a CA … In profession and in industry

Traditionally, chartered accountants (CAs) audit and certify financial statements; giving the users of those statements a sense of comfort, that as regards accounts, everything is prim and proper in the entity. Earlier, audits were conducted manually using sampling techniques and the periodicity was annual. The other major part of an auditor’s work involved taxation: preparing tax returns and representing in tax litigation.  

Interacting with the office of the Registrar of Companies was an incidental third part.

Times have changed. And so have the roles. Today, audits are almost completely automated. They are no more an annual affair; with increasing need for compliance and stakeholder protection, we have multiple audits for the same entity. Internal audit, statutory audit, systems audit, fraud audit, compliance audit, and half yearly review of financial statements. Each of them differing in their scope, depth, process and outcome.  Yes, despite all that, frauds do take place!

But whatever the change, the underlying rationale has remained unchanged. Auditors are the interface amongst the various stakeholders, and the company gives the stakeholders an independent professional’s  unbiased opinion about its financial health.

Traditionally, 50 per cent of CAs went into industry. They were the ones who held the forte in accounting and in finance functions. They were the ones who added value by improving the internal control system. They were the ones whose work got audited. The smart folks stayed out of accounting and tax and got into corporate planning, international banking, and stock market. Over time some of them graduated to become CEOs. The other 50 per cent set up independent audit firms. Friends and family were the first clients. The growth would be slow but steady. The majority was content with that. A handful grew to become very large entities. Few really turned global.

The Changing Profession

Today, 90 per cent of CAs prefer industry.  Practise is passe. Short on patience and long on the desire for material benefits they are in a tearing hurry. For them, no more the starting from scratch.  No more the long waits. No more the setting up of offices. They want it in a capsule. Even those opting to be in profession join well-established firms.

This trend of fresh talent moving into the corporates will continue as the corporate world comes with its own share of benefits. Like roles and responsibilities are clearly defined, working conditions are more upmarket, the brand carries a greater aura and of course there is the higher pay. For accounting firms, getting the right talent and retaining them is a mighty challenge.  

The profile too has changed. Gone are the days when number crunching and post mortem of books of accounts were considered the crux of being a CA. Those days there was little scope for innovation, with high focus on getting the numbers, balance sheets and audits right. The technology boom in the 1990s changed the course of the profession forever. It  made work for CAs easier, reduced or virtually eliminated mundane, repetitive tasks and paved way for use of advanced skills.

And then the economy opened up. It was like manna from heaven. From just being peddlers of audit and taxation, CAs began to more aggressively look at investment banking, corporate finance and equity research. The process has accentuated in the last 10 years with the arrival of BPO and KPO and an army of professionals are now making their way to these destinations.

Today, one is looking at cross-border taxation, financial research and why even journalism as options.  Conservatism is passé, innovation is the key. The industry demands smarter professionals who can innovate and generate ideas rather than excel in the job process. Expertise is just the first step, quality and innovation are the keys. The kind of change that this profession is undergoing is three dimensional: simultaneous, fast and massive, all rolled in one.

Key drivers


Two factors are driving this change.

One, the arrival of the global village: Now, it’s “think global, act local”. In such a scenario, it’s impossible for CAs to sit within the confines of their office doing what they’ve always been doing. The scope now extends to different geographies around the world. Indian firms, because of their expertise and low costs, visit foreign countries to carry out audits there.

Two, the speed of technology: Technology is travelling at supersonic speed. Files and folders on the desk have been converted into files and folders on the computer. A calculator’s many  digits and the piles of papers on the desk have been converted into rows, columns and tabs on an excel sheet, pages in a word document and slides in a PowerPoint presentation. In a paperless office, with networking beyond boundaries, technology has taken over conventional form of working.  Tablets and smart phones are pushing desktops out. Conferences happen globally in different time zones through the Internet.

All these do not mean that the professional will become obsolete. Repetitive processes will be automated, but without the brain of a professional, it will only remain data. Technology will continue to lead the drive of our profession in the coming years. With the cloud becoming ubiquitous, gadgets becoming smaller and more savvy, audits will be taken over by technology, fully. There will be more electronic frauds and more emphasis will be placed on confidentiality, firewalls, system security and forensic audit. Quality, not quantity, will matter.

Audits will happen from remote locations with the client seated many miles away. Just like the spreadsheet killed the 13-columnar sheet and the calculator, technology will kill paper audits.  Frauds will increasingly turn white-collar; the new fraudster would be the boy-next-door, well dressed, well articulated and well educated. The challenge will lie in auditing processes rather than in outcomes because that is where value is going to be delivered. Most companies will have compulsory forensic audits. Of course while technology will put many things in auto-motion, it will neither kill the accountant nor the auditor. Instead, accountants and auditors with a knowledge and understanding of technology will kill accountants and auditors who don’t have a knowledge and understanding of technology.


Pithy Quality

It began in 2009-10. Around that time, the Institute of Chartered Accountants of India (ICAI), decided whether by design or by happen-stance, whether by choice or by chance, that it would add significantly to the membership. So much so that in the space of the next 3 years it produced 60,000 CAs; a number that is 30 per cent of the number that it had produced across the first 60 years. There is the fear, ever so small, that this might water down the profession; that from a course for the middle class, it could end up being a middle-class, rather than a top class, course.  Remember, a few years ago, CAs were well placed the moment they graduated. Today, the scene is changing with fresh qualified CAs on the search for jobs months together after they graduate.

V Suryanarayanan, CFO of an insurance major, feels that the young CAs only concentrate on academics and lack conceptual knowledge and experience in handling real life situations. In a way it is true, as the course is heavily oriented towards passing exams, rather than gaining practical skills. In contrast, Ankur Gupta, a CA in the hospitality industry in Dubai, feels that the course has become more comprehensive with the introduction of GMCS and residential seminars.

The profession would ill-afford to take things light. It can’t take things for granted. It’s wrong to believe that CAs don’t face competition. Actually, automation has ensured that graduates can pass journal entries, and post graduates can conduct audits. Okay, when it comes to compliances, CAs still take the cake. However, B-School graduates, are fast catching up. Analysis and decision making is still done by MBAs, while CAs crunch numbers and manage data. Further, competition is getting tougher globally with increasing number of ACCA, CIMA and CFAs in the industry.  And if the government decides to open the doors of audit to non-CAs it could really and truly hurt the ICAI big time. Eternal vigilance is important.


Quo Vadis

The common man expects the auditor to identify all the frauds that happen in the corporate world. He further believes that CAs have, in most cases, knowledge of the scandal and do not bother to bring it to the notice of the regulators. This is evident from the fact that CAs are of late, associated with frauds, black money, tax evasion and fudging of accounts. There clearly is an image crisis.

At a different plane, plenty of opportunities are opening up for the CA.  While technical skills is the area of strength, value added analytical skills, understanding of business drivers, and thinking out of the box is the need of the hour. .

V Suryanarayanan believes that it is time to move on from being functional experts to value drivers. In order to achieve this, administrative reforms within the ICAI, and unbiased long term goal setting by the Institute’s members is critical. Today, whether one likes it or not, the ICAI is run as a cosy old-boy’s club, with transparency being a casualty. This will not wash in 21st century India.

As we close out, we believe that there are a few things that ought to be the focus for the accounting profession. Like: a course structure tuned to times, with greater focus on practical and communication skills that ensures that the quality of the pass-outs is good. Two, continuous professional education to help the members stay at the leading edge. Three, ensure that the auditors’ independence is not compromised. There is an urgent need to be to extra vigilant in the current scenario.  Four, seriously look at the concept of super-specialisation like in the medical profession.  Five, have a strict compliance to strong ethical values. Justice should not only be done it should also be seen to be done. And finally, transparency in the way the ICAI itself is administered is imperative.  That will be the profession second coming.

Author Shankar Jagannathan hits the nail on its head when he says that the second coming lies in refocus on professional ethics and creation of a new domain of social ethics. Just as enlightened businesses focus on triple bottom line, CAs should also focus on one such triple bottom line: professional ethics, social ethics (social responsibility) and economics.

The profession has a long distance to walk to stay current and relevant. ICAI’s size should not numb it to sleep. Bigness is not an insurance against failure. The story of the dinosaur is testimony to the fact that if some bigness is good, too much of it is not. The profession did take a beating but it has in it to do a second coming.






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