In the changed economic scenario of liberalisation and globalisation, chartered accountants will have to come out of their traditional expertise in taxation and auditing and take up consultancy services covering all aspects of industry, the President of Institute of Chartered Accountants of India (ICAI), G Sitaraman said at Nagpur.

Sitaraman said that the future belonged to consultancy services. Overseas firms, which are operating in the country, like McKinsey and Arthur Anderson, have taken the lead in offering consultancy services and though there are only five big foreign firms in the country at present, their number is destined to grow in future, he said.

Sitaraman was in the city to deliver the keynote address on “Institute vision and changing role of chartered accountants in the new millennium,” at a meeting of ICAI, Nagpur Branch members.

Till recently, Indian CAs had difficulty in giving consultancy services as the law did not permit partnerships with other professionals like engineers, legal experts, architects, etc. However, the government has now given permission in principle to have such partnerships, thereby opening the doors to CAs to start consultancy services, he said.

CHALLENGES: ICAI has identified entry of foreign professionals and information technology as the two greatest challenges facing the CA fraternity. These challenges can be converted into opportunities by developing core competency and skills. CAs will have to switch from the present assurance services to value-added services, Sitaraman said.

CAs should prepare themselves for the future, which will be ruled by corporate service practices, he predicted. Corporates would want the CAs to give solutions to an entire gamut of problems. They would expect the kind of solutions from CAs, which would prevent future problems, he said.

Keeping in view the expected growth in this decade, the ICAI has come out with a Vision Statement to equip members with ammunition to face competition from foreign professionals, to have accounting standards at par with international ones, and to adopt information technology in a big way, Sitaraman said. The ICAI has decided to move out, rather than restrict itself to the national boundaries.

ICAI has taken up as its duty to update the knowledge of its members and is fully aware that the developments in IT will have major impact on accountancy and CAs should not be found lagging in adopting it. It has, therefore, started two IT courses for its members, namely, IT Systems Audit and Auditing in Computerised Environment, he said.

TALK WITH FOREIGN INSTITUTES: ICAI has started dialogue with institutes in the UK and USA to have reciprocal arrangements so that not only foreigners come to India, but Indians too get opportunity to practise in foreign lands. The dialogue with the chartered accountants’ body in UK is at an advanced stage and the deal would probably be finalised by the year end, he said. The ICAI made a new beginning two years ago by assisting in setting up of the Institute of Chartered Accountants of Nepal, which has academic syllabi and training programme similar to that of ICAI, he said.

The WTO agreement, to which India is a signatory, states that nations will have to open their accountancy sectors and remove the unnecessary barriers to foreign professionals. The ICAI has made it clear to the Indian government that it was not against foreign professionals but wanted a level playing field in which foreigners are not given preferential treatment or special concessions, Sitaraman said.

The government, therefore, should make it mandatory that foreign professionals keen to practise in India will have to pass ICAI taxation and law exams since the legal system in the country is unique and complex. They will compulsorily have to learn India’s national language or a regional language, and they must subject themselves to ICAI’s code of conduct. The government must also facilitate passage of Indians wanting to set up practice in another country by removing visa regulations, he said.

Sitaraman pointed out that it was time Indians asserted themselves and told the world that they were second to none. The ICAI, which is the only body in the world, which formulates accountancy guidelines, has laid down guidelines, which are more or less equal to international standards, he said. “We have to establish such a reputation in the world that other institutes accept our standards,” he affirmed.

An Indian chartered accountant is second to none in the world, he said, adding that this perhaps was the reason why other countries do not want to take them in. However, their only drawbacks are communication and documentation skills.

They will have to give more attention towards presentation of financial facts as also sharpening their technical knowledge, he said.

MERGER: On the proposed merger of the ICAI with Institute of Cost & Works Accountants of India and Institute of Company Secretaries of India, Sitaraman said that the major hurdle was in the quality of syllabi and practical training of the three institutes. The ICAI has higher standards than the other institutes and hence merger will not be possible till they upgrade their standards. The upgradation, moreover, is essential since the ICAI was going in for reciprocal arrangement with foreign institutes. The three institutes, however, have not been able to reach consensus on uniformity of standards. He however pointed out that merger will become necessary after five years, if not at present.

Sitaraman said that the ICAI has served notices on C R Bhansali, the Chairman of C R Bhansali group of companies who was charged with malfeasance and a chartered accountant by qualification, but it was not empowered to debar him from practising. The ICAI has, therefore, urged the government to give it powers to debar such members temporary till inquiry is completed, he said.

LOW SUCCESS RATIO: Sitaraman said that the area of worry for ICAI was the low percentage of candidates who succeed in the CA exam. The success rate at present was only five per cent, which has created a slur on the image of the ICAI as people unfairly levelled charges that the institute was deliberately keeping the pass rate low to maintain the position of its members, he said. Practising CAs, therefore, should take up the responsibility of educating articled clerks at their firms and spending time on honing their skills, he said. A CA should make at least one CA out of his articled clerks, he said.

Giving a background on ICAI, Sitaraman said that it was an autonomous body set up by an Act of Parliament in 1949 to regulate the profession of accountancy and to train students in the profession. Today, ICAI is the third largest body in the world, having a membership of one lakh and a student membership of two lakh. It has five regional councils and 90 branches all over the country. Of the 1 lakh members, 60,000 are in practice and 40,000 in service, including 10,000 based in foreign countries, he said.

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