CMA Ashwin G Dalwadi (AD), President, ICMA shares about the major transformation and important game changers that would shape the cost accounting and management profession.
IE: Evolution of profession over the years?
AD: Over the years, the role of Cost & Management Accountants (CMAs) has undergone a complete transformation. Today, CMAs are serving the government, policy makers, industry and the corporate world in building a strong and resilient economy. They play a crucial and decisive role in enabling management to make effective decisions and suggest corporate-favoured policies and schemes. The main role is to assist in evaluating and improving the adequacy and effectiveness of operations, internal controls, governance processes, risk management and control systems. This helps entities improve their performance, efficiency, productivity, profitability and sustainability in a volatile complex business environment.
CMAs also assist the government and various government authorities in areas such as costing, pricing and framing appropriate fiscal and tax policies and monitoring them. The importance of the profession in the economic development of the nation is underlined by the fact that the central government constituted the Indian Cost Accounts Service in 1978 at par with other Class-I services such as IAS, IFS, etc. Further, under the Companies Act, the government has introduced a provision for certain industries including service sector to maintain statutory cost accounting records and audit.
With about 100,000 qualified CMAs and half-a-million students pursuing, the Institute of Cost Accountants of India (ICMAI) has grown to become the world’s largest professional body of cost and management accountants. Today, CMAs are playing a key role in supporting the Aatmanirbhar Bharat initiative with the aim of helping India become cost-competitive, capture export markets, catalyse wider employment generation and GDP growth – all of which are necessary to achieve the goal of a USD 5 trillion economy.
IE: Significant changes in the profession?
AD: The concept of cost as an independent entity first emerged during the early years of World War II. Due to the prohibitive cost of defense operations, governments at war found it difficult to ascertain the price of defense purchases, leading to the evolution of cost + contracts. This forced contractors to submit the cost of their work in order to be awarded contracts.
Later with industrialisation, the importance of cost accounting in shaping government policies provided the foundation for the rapid growth of the profession. What began as a mere exercise in estimating cost, later developed into a movement for efficiency and optimal utilisation of scarce resources.
In India, the institute was established by a special act of Parliament, namely, the Cost Accountants Act, 1959 as a statutory professional body for the regulation and development of the profession of cost accountancy. Since then, the Institute has continuously contributed to the growth of India’s industrial and economic climate.
CMAs play a larger role in organisations, with not only serving as internal analysts and consultants but also participating in top-level decision-making. The main focus is on value creation through effective use of resources. Regulation is a complex balancing act between advancing the interests of consumers, competitors and investors while promoting a wider ‘public interest’ agenda. Reliable and certified cost information provides a necessary basis for regulatory bodies to make decisions that ensure justice for everyone in the market. Mere collection of financial information for reporting is not sufficient. It must be supplemented with a costing system that draws on the same data and proper analysis to help management make informed decisions. A strong auditing system ensures an efficient corporate reporting system. Cost audit, supported by cost accounting standards, provides relevant and credible cost and revenue data to regulators as well as revenue authorities to support their decisions.
IE: Future of the profession?
AD: Over time, there has been a positive paradigm shift in our profession, which has evolved and undergone major changes in all aspects, from curriculum to responsibility. There have been many milestones, with CMAs now working in fields such as taxation, corporate laws, arbitration, insolvency, valuation, social auditing, independent directorship, banking and insurance.
Today, most of the businesses are facing major disruptions and VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) challenges. In this disruptive scenario, cost and management accounting has acquired a prime spot in ensuring survival, continuity and sustainability. As CMAs act as a driving force in all economic activities, they hold top management positions in MNCs, private and public sectors, state and central governments.
The future holds great promise for the profession as it continues to evolve and adapt to the changing business landscape. CMAs will continue to play a crucial role in helping organisations navigate the challenges of the modern business environment and achieve their goals.
IE: The BFSI sector is contributing the highest in the service sector. What are the initiatives taken towards this sector?
AD: ICMAI has formed the Banking, Financial Services, and Insurance Board (BFSIB) with the objective of establishing our presence as a service provider in the sector. We are organising various certificate courses in domains such as credit management, treasury and international banking and concurrent audit, where not only CMAs but also bankers can join the forum and receive training at very nominal fees.
We have collaborative courses with the National Institute of Securities Markets (NISM), National Insurance Academy (NIA), and Memorandum of Understanding (MoU) with them, along with the NSE Academy. We also have robust publications in areas such as MSME, infrastructure financing, stock audit and internal audit in general insurance, among others. Seminars, symposiums and webinars are organised throughout the year on various topics to keep our members and others abreast of the latest developments in the sector.
The BFSI board also keeps our members and students informed of daily updates. These initiatives are aimed at providing knowledge and skills necessary to succeed in the rapidly evolving BFSI sector, which is providing the highest employment among all sectors.
IE: What are the areas where CMAs can provide advisory services to the BFSI?
AD: CMAs can provide a wide range of advisory services to the BFSI sector, leveraging their expertise to help organisations improve performance and achieve goals.
CMAs are also employed in the BFSI sector in various credit appraisal processes, treasury management, forex dealing, risk management, and other functionalities. They bring their specialised knowledge and expertise to these roles, helping organisations in the BFSI sector navigate complex and rapidly evolving business environment.
IE: Social audit is gradually gaining momentum in India. What is your take on this?
AD: In today’s competitive globalised world, sustainability and social responsibility are increasingly important factors in the viability and credibility of organisations. Improving performance and creating a positive image in the eyes of shareholders and stakeholders are becoming more relevant goals. This has led to a growing need for non-financial audits that consider the relationship of an organisation with factors that may affect its reputation, such as the environment, health and safety standards, society and governance within and outside the organisation. The main reason for the push for social audit is the significant disconnect between what people need, what the government thinks and what is actually done. A social audit helps to narrow gaps between vision/goal and reality, between efficiency and effectiveness.
I believe that CMAs can add value to social audits. They possess expertise in performance evaluation, cost-benefit analysis, variance analysis, management reporting, social audit, social cost-benefit analysis and benchmarking. They have rich and varied experience in analysing the productivity of human, physical, and financial resources of an enterprise and ensuring that enterprise resources are channeled to deliver optimal, productive and intended/desirable outcomes.
CMAs have also played a proactive role in monitoring and evaluating various social schemes launched and implemented by central and state governments. This expertise and experience makes them the most preferred professional option.
