Where is the CA profession headed?

ACCOUNTANCY

Being a member of the Institute of Chartered Accountants of India (ICAI), I received the July 2007 issue of the Chartered Accountant, the house journal of ICAI. This was a special issue of the journal, which aimed to "put the present profession in the future perspective". The articles and news items in the journal were thought provoking.

On the Chartered Accountant (CA) day (July 1) this year, the profession unveiled a new logo that symbolises the profession in India. According to Sunil H Talati, the President of ICAI, this is a brand-building exercise. During the last couple of years, a common dress code for members has been introduced as also the practice of prefixing the CA title to the name of the members. It is appropriate that a profession repositions itself to address changing needs of the market segment it serves. However, the branding initiatives raise a few fundamental questions. Is it that a section of the members is suffering from loss of identity? Is it that the profession is afraid of competition from international firms?

Maybe, the partners of domestic CA firms located in the metros are worried that audits and other assignments from large companies are flowing to firms which have global presence. It is a fact that international firms could create competitive advantage by managing their brands (including capability building) well. They need to expand geographically to maintain their growth and emerging economies like India provide the opportunity. Indian professionals resisted their entry in India for long and did not allow Indian firms to build their brand on the understanding that the accounting profession offers personalised services. Now it appears that this perception was incorrect. It may have been correct when the average size of Indian business firms was small and most of those were primarily managed by promoter managers. A large company, which employs large number of professional managers looks for high-quality knowledge-based services. The ICAI could not stop the entry of foreign accounting firms. Many big and capable Indian firms have joined hands with foreign accounting firms. The association is mutually beneficial for both the firms. In this situation, it is natural that those big firms which could not forge an alliance with foreign firms are uneasy. It appears that the Council of the ICAI, which is the policy making body of the institute, is addressing this issue. Talati argues strongly in favour of consolidation of small and medium firms. It is a fact that consolidation will help to pool resources (including financial capital) to build capability required to handle large and complex assignments. This seems to an effective way to build capabilities to face new challenges. But this will help only those domestic firms which are located in the metros. It will not help those CAs who are located in small town and cities.

ICAI, through its branches, organises continuing education programmes in those cities. Organisers arrange eminent experts to speak at those programmes. Yet those programmes turn into damp events because of lack of motivation for learning among participants. Young CAs, after obtaining the qualification, join industries in metro cities. The situation will get worse with change in the trading structure. Therefore, I see a decay creeping into the profession in small cities and towns. It is high-time that we debate whether we need to produce accounting technicians to serve small and medium enterprises, who will not be able to pay for the services from CAs located in metro cities.

Another important change in the profession is that the proportion of members in industry is increasing dramatically. Today, only 48 per cent of the ICAI members are in full-time practice.

Till date, the profession boasted for its size in terms of number of members. It argued for seats in international accounting bodies on the basis of this. Those days have gone.

In coming years, ICAI will find it difficult to attract talent to the profession. Therefore,brand-building efforts through symbolic means will not bring much result. Rather, ICAI should focus on brand management through capability building. ICAI has taken number of initiatives in this direction, in terms of change in the curriculum and strengthening the continuing professional education programmes. The efforts are commendable. However, it should be careful that symbolic approaches like dress code and new logo should not dominate over the more substantive capability-building efforts and efforts to reposition the profession in the market place.