In the good old days, it was common for any doctor to be accosted at a dinner party and treated to a litany woes. Today, even a layman has come to realise different doctors belong to different specialisations and a dermatologist is as different from a pediatrician as a plumber is from a fireman. Unfortunately, this consciousness is yet to develop among chartered accountants (CAs), who, to a layman are supposed to be experts in taxes and audits.
But there is a rapid revolution happening in the CAs' world today. The staple diet of accounting, corporate laws, direct and indirect taxes, that most CAs have grown up on, would all be totally replaced and changed within the next couple of years. In order to survive, all CAs would have to relearn the new laws. Chartered accountants themselves have moved on to more value added services. If you are contemplating a merger or an acquisition, whom do you go to for structuring the deal, for advising you on the tax and capital market implications, for arranging finances? For distressed asset restructuring, what do Institutions do? Who does the due diligence for mega corporate match makings? Who does valuations of assets and intangibles and businesses? Who does business modellings? In financial frauds, investigations and disputes, which profession excels in providing services? Who are increasingly relied upon for enterprise risk management mapping and remediation studies; transforming and outsourcing internal audits; information security architecture, designing and auditing; supply chain process efficiencies? The short answer to all these questions is — 'Chartered Accountants'. And notice that in the previous lines I have not even touched upon the traditional areas of taxes and audits. Even within this traditional domain today, tax experts specialise in as varied areas as transaction tax; international tax services like transfer pricing and cross border income taxes; customs; VAT; sales tax and GST; and most of these sub-specialisations today would not understand quite a bit of each other’s language.
While the bouquet of services is endless, most medium to large companies would require the entire gamut of these services for running a successful business. They would, therefore, more often than not prefer going to a departmental store, which, like a multi-specialty hospital, houses all specialisations. At the same time, for niche or highly-specialised requirements, sophisticated boutique firms would parallely thrive, provided they can establish and underline their super specialist skills.
The three pillars that would be required for this new incarnation of the accounting profession are -- quality control, multi disciplinary practices and branding. The government and The Chartered Accountant of India’s (ICAI) support to the concept of limited liability partnership (LLP), augurs well on the road for enabling multi-disciplinary firms. The present proposals on the anvil include, providing LLPs (with at least 50 per cent chartered accountant partners), the right to audit. LLPs would help professional partnerships to transcend borders (since partners can be from any nation), and professional barriers. This would enable professional services to thrive in India.
The time has come to also open our mind to the power of branding. A brand builds up its reputation on the basis of quality and uniformity of services rendered. While a brand is a powerful asset, one slip, anywhere in the brand’s spectrum, can result in the total collapse of the brand. Witness, Andersen. The success or failure of a brand is dictated by the market and that is the basic yardstick by which any profession should be judged. In today’s world of instant information, no amount of advertising alone can make a brand rise or sink. At the end of the day, it is quality that matters. In India, we have to come out of our self denial and aversion to branding. If hospitals, hotels and global consulting organisations can be branded, why not the CA profession?
We need public and visible commitment to quality. This would be evidenced by CA firms evolving detailed quality architecture and who knows, perhaps even getting certified as per quality standards. Work should find its own level and left to the market, quality perception of the firm would be the predominant determinant. We must totally reject the obsolete command economic model whereby the state and regulators actively intervene and divide and distribute work with the help of caps, limits and restrictions and centralised appointing authorities. However, quality will only be emphasised if there is a quick track, rigorous, impartial disciplinary mechanism with the mandate to take exemplary action against errant service providers. We are far from achieving much on this ‘pillar’ as well.
The Indian profession has been making giant strides. But unless the two pillars of quality and branding are also addressed, we will land up with suspect quality malls hawking pirated wares, as a halfway house between where we are today and the boutique — departmental store future that I envisage.
Email: rahul.roy@in.ey.com
Rahul Roy, director, Ernst & Young India Pvt Ltd
(The views expressed herein are the personal views of the author and do not necessarily represent the views of Ernst & Young Global or any of its member firms)
