Gujarat National Law University
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Director(Vice-Chancellor) Speeches & Important Messages

"Accounting and Accounting Processes for the Restoration of Confidence in Government: Catalytic Role of Young Chartered Accounts", ICAI Convocation Address, Ahmedabad, Sunday, 19 May 2013.

It is a great privilege for me to deliver a Guest of Honour Address on the occasion of the 2013 convocation of the Institute of Chartered Accounts of India – Ahmedabad Branch. To deliver the address in the midst of the presence of Honorable Law and Education Minister of Gujarat Shri Bhupendrasingh Chudsama, CA Mr Subodh Kumar Agrawal, ICAI President, CA Mangesh Kinnare, CA Shri Khandelwal, CA Jay Chhaira, CA Amrish Patel, CA Shri Dhinal Shah, and distinguished CAs – the eyes of our nation’s accounting and audit system doubles my sense of privilege.
I extend my most warm congratulations to the CA and special compliments to those who have been recognized with distinction and awards for their outstanding performance.
Friends, I am standing before the audience of learned, experienced and new accountants, company secretaries and auditors. Thus, I will start begin with an age-old definition of an accountant? John H. Rose, CA answers – what is the definition of an accountant? He says, someone who advises you of a problem you didn’t know you had, can’t explain its full impact on you, and then proposes to solve it in a way you don’t understand. I know which risks I am thus taking this morning in addressing this morning. I will try to strike a balance between humour and heat – heat of scams, heat of media trial and sun-heat of 19 May. How does this profession manage to deal with one crisis after another crisis? How do you manage to account and audit sheer numbers involved in the Coal Scam, 2G Scam, Satyam Scam, Chit Fund, Spot-fixing? It is simply mind boggling.

Accountancy for the Accountable Government and Civil Society

In the last century, India witnessed a record growth and development in the field of science and technology, particularly in the field of communication and information technology. Predominantly, after 1990s, we have been swiftly and incessantly moving towards a new social and economic order, and ecological and political coordination all over the world. These developments have unwrapped new horizons in various fields, such as, trade, commerce, economics, science and technology, and law.
Globalization is playing an important role in changing the entire polity and society of financial structures and institutions. At present, the whole world is attaching mammoth significance to ‘knowledge economy’. To accomplish the imperative goal of the expansion of knowledge economy, the establishment of educational institutions of global excellence in conjunction with changed new curriculum of global standards have become the priority of all the countries, particularly the developed and the developing ones. Universities — the highest level of teaching, learning, and research centres — have a very special function to perform, rather a duty to discharge. Universities, across the world, are preparing themselves to face the challenges of globalization and the changing state of affairs of internationalization of education. Since accountancy is an organic subject which changes with change in society, therefore, the accountancy education should mould and develop itself so as to meet the ever growing demands of the society. Studies of accountancy should be comprehensively and systematically equipped to cater to the complexities of different situations. Hence, all functions of CA have, be it accountancy, auditing, taxation, cost accountancy, special company work, investigation, directorship, companies secretarial work, etc have significant role to play in the era of globalization – an era in which each nation is trying to control knowledge and adapt to new situations more than others, so that they command access to resources and power. An availability of a sound robust accounting and auditing infrastructure is a must for India to keep pace with the world to uphold the principles of accountable governance system.
Friends, we all discuss about accountability in the government system. Are we prepared to think and act to ensure accountability among institutions of civil society such as NGOs, trusts, associations, etc? How much do we know about accounting and auditing of these institutions? Do not they get funds from tax payers too? Do not they have trusteeship towards the entire society? If answer to any of these questions is yes, then the time has come and challenge is before the accountancy and audit education system of India to impart education and training so that each and every institution created by law are subjected to accounting and audit standards for an overall accountable system. Unless rigorous standards of accounting and audit reports will be observed by all legal persons, we will be unable to know the liability of individuals and institutions and will be unable to achieve the ultimate goal of governance – that is ‘responsibility towards all’.

Accounting education in general

It is a matter of great pleasure for me to perceive that the ICAI, WIRC along with the other branches in India, is doing well and is productively facing the challenges of globalization. However, I believe, the ICAI still have a long way to go. All institutions should proactively participate with relevant stakeholders and agencies such as companies, banks, stock-exchanges and governmental institutions. Our curricula should include optional courses in new areas, understanding of professional ethics, implications of globalization on legal field (nationally and internationally), mainstreaming accounting and audit aid programs and innovative pedagogic methods. In view of the world having been converted into a global village, it has become, all the more, important to include international and comparative perspectives along with necessary understanding of domestic standards.
Since economies, accounting and legal markets adapt to globalization, therefore, our education does need to transform accordingly. Meeting the present challenges does not merely mean introduction or inclusion of new subjects in the curriculum. While that is, no doubt, an important matter, the broader issue is to prepare the accounting and audit professionals to tackle the challenges of globalization. For this, the individual courses and the curriculum, as a whole, must amalgamate perspectives from civil and common law jurisdictions because our current standards are heavily tilted in favour of common law countries. I may be wrong but believe that, like in our legal education, where we have adopted largely common law system, our accounting and audit systems will be devoid of laws and practices followed in civil law countries. Why I am emphasizing this division because five of the top 10 investor nations namely Mauritius, Netherlands, Japan, Germany, France follow civil law systems. This leads me to address one immediate challenge faced by our accounting system – namely, IFRSs.
International Financial Reporting Standards (IFRSs) have issued 35 Ind Ass but these are yet to be adopted for implementation pending resolution of various implementation issues including tax related issues with the concerned departments to ensure smooth transition. More than 100 nations currently follow the IFRS and we have been missing the timeline again and again. Merits and demerits of the system apart, the fact remains that the larger the number of companies that follow IFRS, the easier it will be for them to list overseas and access foreign capital. This will free up domestic capital for use by companies that cannot go abroad. This is particularly useful for our MSMEs.
The most perceived challenge for lack of implementation are; Increase in cost initially due to dual reporting requirement which entity might have to meet till full convergence is achieved; secondly, Unlike several other countries, the accounting framework in India is deeply affected by laws and regulations. Changes may be required to various regulatory requirements under The Companies Act, 1956, Income Tax Act, 1961, SEBI, RBI, etc. so that IFRS financial statements are accepted generally; third, If IFRS has to be uniformly understood and consistently applied, all stakeholders, employees, auditors, regulators, tax authorities, etc would need to be trained. Fourth, entity would need to incur additional cost for modifying their IT systems and procedures to enable it to collate data necessary for meeting the new disclosures and reporting requirements. Fifth, Differences between Indian GAAP and IFRS may impact business decision / financial performance of an entity. Sixth, Limited pool of trained resource and persons having expert knowledge on IFRSs.
We, in legal education face similar difficulties because as you know lack of reciprocity and requirement to protect our legal profession from onslaught of foreign law firm are imperative. However, being the third largest economy, we shall be able to turn the table in our favour and ensure that while these regimes are being decided upon, we play crucial role by actively participating and not remain moot spectator and sulking observer to the global phenomenon of IFRS.
Please allow me to share another humoristic observation on this profession. On 6 February this year the Honorable Chief Minister Mr Narendra Modi gave an interesting way of looking at the famous phrase – glass is half empty or half full. As we know to the optimist, the glass is half full. To the pessimist, the glass is half empty. Mr Modi said, the glass for him was half water and half air. If the same is asked to the accountant, then they would say the glass is twice as big as it needs to be.

On a more serious note – gender disparity in the accounting and audit profession:

Women are 49.4% of all auditors, accountants, and investment professionals in Canada. Women are 60.9% of all accountants and auditors in the United States and in the UK the percentage is around 43%. I am sure the WIRC-ICAI must be having statistics and I hope the statistics will be in favour of women, but I doubt. What are the reasons: like most other professions, women generally still have greater responsibilities outside of work that they find incompatible with current Firm and professional norms, secondly, there are not enough female role models and women leaders are often not as visible as male leaders. The third reason is related to career navigation and guidance. For a number of very tangible reasons many women do not have the same access to career development and advocacy relationships with senior leaders in the Firm as their male counterparts.
As Mary Benett argues and I reinforce her questions to investment, accounting and audit firms that hHow much visibility is there to this topic (i.e., of the importance of accounting firms developing and retaining experienced women professionals) in your market? Has your firm documented its business case for engaging in a strategic effort to retain and develop female talent? And Is your firm actively engaged in broadening its talent recruiting, training, development, and retention programs in order to appeal to and retain experienced women professionals?
Friends, the issue of accounting and reporting standards, IFRS are not alone the issue the challenge before us is also to encourage and ensure active participation for women professionals in the largely male dominated fields. In a lighter remark and I hope no offense is meant, men are brain and executive in global, national and local accounting and audit scams and frauds. Ethics, value, care and concern which are dominant qualities of women can effectively halt the erosion of standards in this particular profession worldwide. I have learnt from CA Dhinal Shah that out of 502 registered CAs getting certificates today, 35% are young women graduates. I hope the number grows by leaps and bounds.
Various high positions in the country have been held by women – president, prime minister, foreign secretary and now there is a big likelihood that Ms Sindhushree Khullar, current Planning Commission Secretary, may become the first Comptroller and Auditor General of India. I am sure women CA in the audience will have illustrative career like her and hope that various high positions in accounting and audit system of India will be filled by brilliant women officers.

Our international recognition

As a former international civil servant and one who has dealt with the CAG of India and its counterpart in Pakistan, my limited experience suggests that our CAG have had illustrative achievements in field of undertaking international audits of world’s leading reputed international organizations such as World Food Program, World Tourism Organisation, World Intellectual Property Organisation, International Atomic Energy Agency, International Organisation for Migration, World Health Organisation, International Maritime Organisation, International Centre for Genetic Engineering and Biotechnology, Food and Agriculture Organisation and the Organisation for the Prohibition of Chemical Weapons among others.
ICAI has been the interface of our account professionals with the outside world and I am very happy that the ICAI is constantly undertaking efforts to ensure that advanced countries recognize the qualification, training of each other and admit the members in good standing by prescribing a bridging mechanism. Its recent initiatives such as breakthrough in its efforts with regard to autonomy of bank audit, report on strengthening capital market, practicing CAs engaged as lectures in academic institutions show that how the ICAI has been able to build the nation’s capacity. What interests me most is the engagement of CAs with academic institutions. They can effectively bridge the gap between the theory and practice in most crucial areas like accounting, auditing and taxation. Not only commerce education, but their engagement with legal education will make this education more meaningful, practical and effective. Appointment of CAs as faculty will go a long way to benefit the ICAI community in particular and the nation in general. On a personal note, I am happy that we have several CAs, including Mr Dhinal Shah contributing to the practical learning of our inter-disciplinary commerce subjects at the GNLU.
Demands of CA institutions: I continue to draw comparisons with legal education and hence I feel that there is a need for better and bigger institutions imparting CA education and training. Hon’ble Chief Minister Mr Modi last year, during ICAI golden jubilee celebration speech, anticipated the need for 25,000. I am sure the regional branch has been paying heed to this emerging requirement and will do its utmost to produce adequate number of CAs in this golden jubilee year. On 1 July 2022, when it will kick off the diamond jubilee celebration, let’s hope it would have indeed achieved this target in handsome manner. GNLU organized a training program for IPS and police officials last week on preventing and curbing money laundering and white collar economic offenses and friends each and every session emphasized the need for important role played your profession and professionals.
On this too, let me share some meaningful humour: A fellow is walking into a hospital and sees two doctors down on their hands and knees in one of the flower beds. He goes over and says, "Can I help? Have you lost something?" No," says one of the doctors. "We're about to do a heart transplant on an accountant and we're looking for a suitable stone." While this is a joke, the fact remains that the accountants and auditors care and concern shall always remain with tax payers and transparency and ethical standards, he can ill-afford to be a stone-hearted human being because the price is too high.

Future professionals of accounting and audit system:

My dear young friends, you have a degree in hand which empowers you to change the face of the profession by playing an active inside role. India needs accounting and audit professionals who have not only been imparted rigorous training but also groomed with high ethics and values. Unless you will consciously attempt each and every day, hour and second, to actualize these in your profession, our dream for a fair and just society will always remain distant. This great nation has great expectations from her star performers in the field of accounting and audit. I encourage each of you to dream high and have a clear aim in life. Keep acquiring knowledge, not only accounting, audit but also legal, social, economic and political knowledge as these all faculty bear influence of developments in these fields and respond and govern mechanics of implementation of governance. Work hard and keep perseverance in life.
I am sure you all will live up to the motto of the ICAI-WIRC – Ya esa suptesu jagarti kamam kamam puruso nirmimanah, tadeva sukram tad brahma tadevamrtamucyate, tasminlokah sritah sarve tadu natyeti kascan, etad vai tat.
Like our great saints used to remember each chapter and verse of our great epics, remember the professional code of conduct and moral compass at each and every juncture. Have a global vision but firm footing on the grassroot platforms.
Thank you and once again all the best wishes, but before taking my chair, let me end with a yet another humour which is most apt for graduating batch every year and which relate to my profession of law and your profession of accounting, While reading CA club of India, I came across an interesting interdisciplinary joke on law and CA: A Good example of Double taxation avoidance agreement Once a CA and his doctor friend died.... Doctor was punished and sent to Hell and CA was promoted to Heaven Doctor asked God Yama, what is the reason for sending me to the Hell?? God replied:- This CA has already done article ship and ICAI exam at earth, so how can a person be punished for same offence twice...
Bimal N. Patel,