The name of a person is her identity. The name of an organisation is what it represents. The name of a person does not change in her lifetime. But that of an organisation changes as it evolves, to reflect the new environment and the evolutionary process it undergoes. We have seen such changes being reflected in many organisations in India. The metamorphosis of the Confederation of Indian Industry from the Confederation of Engineering Industry is a classic example. We can see a reflection of the new realities in the change of name of federal states or even countries. A feature common to all such changes is that the old names were coined in the British era, when our rulers perceived names as they thought fit.
The changes were designed to get ourselves out of the British mentality, reflecting the earthly realities that we face on a day-to-day basis. The ministry of corporate affairs, appropriately enough, recommended the name of The Institute of Cost and Works Accountants of India (ICWAI) be changed to The Institute of Cost and Management Accountants of India, when it introduced the Bill No. XXVI of 2010. This reflects the need to get rid of the British mentality; the words “works” and “costs” are products of the British legacy and are frozen in terms of concept in the first-half of the previous century. Though we freed ourselves from the British Raj, part of its legacy has remained. Let us stay independent as we have since 1947 in letter and spirit. The terms are condescending and demeaning and this is what we need to change.
The ministry that recommended the name change itself has undergone a metamorphosis. As an advisor to the ministry of corporate affairs, I was firmly of the view that the existing term “company” was condescending and was a British term, which did not reflect modern thought and action. All over the world, the word “corporate” is in vogue. So Mr Premchand Gupta, the then minister in charge of the companies and his successor, Mr Salman Khurshid, welcomed the new term “ministry of corporate affairs” wholeheartedly. Mr Anurag Goel, Secretary in the ministry at the time, also welcomed it and made the appropriate change.
Along the same lines, a think tank was set up and we created The Indian Institute of Corporate Affairs, another milestone in the ministry’s history. Mr Goel and his team, which consisted of me and other internationally renowned experts, created the charter document with the minister championing the Proactive and Visionary model. The Cabinet approved the new approach.
The accounting profession the world over is undergoing a major change reflecting the current realities. The chartered accountants or certified public accountants, as they are known in different parts of the world, are looking at the past and present and give the public a “Seal of Approval”, emphasising the role of auditing and tax as independent accountants.
Let me quote from the submission made to the standing committee on the issue of name change differentiating public accountants from management accountants.
From the 25th Report of the standing committee:
“Coming to the fundamental differences between cost and management accounting and financial accounting, financial accounting is all about recording the historical transactions, applying certain standards, compiling the financial statement of profit and loss account and balance sheet out of it and any interpretation arising out of it. It is more of historic in nature whereas the cost and management accounting does not focus that much on the historical areas, but it is more predictive. If you take the case of business, it relates that business whether it is competitive; what steps we need to take in terms of future strategy to sustain; how one should be seeking profit goals; and how one should be seeking goals of satisfying the society. So, all these futuristic ways of sustaining oneself with a business strategy with the governance requirements of what has been laid down in the law, that is, a futuristic approach is a part of the management accounting process. This is, in simple terms, the fundamental difference between financial accounting in which the chartered accountants are supposed to specialise and the cost and management accounting in which our body is supposed to specialise. This is the basic difference.”
The cadre of management accountants, thus, works as internal consultants, looks at the future, factors in uncertainties and provides as an internal consultant the advisory role for corporations, boards and stockholders at large. Why not change the name, like the US’ Institute of Management Accountants, giving the fair name that they deserve and in line with the rest of the world? We can have the National Management Association and a regulatory exam for Chartered Management Accountants (CMA). Thus, the two organisations complement and supplement both the attestation function and the advocacy function diligently and independently. Let India take the lead for the entire world, both developing and developed. Instead of being an “emerging” economy, we should be inclusive and become a “merging” economy leveraging the “E” where “E” stands for Excellence through Electronics and IT.
For the last 30 years, the ICWAI has been appealing to the government to change its name from the “Institute of Cost and Works Accountants of India” to the “Institute of Cost and Management Accountants of India”. This institute has been making this appeal so that its members may be known by the functions that they perform. This is also in line with the changing role of the professionals who were earlier known as cost and works accountants of similar institutes in developed and developing countries such as the UK, US, Canada, Pakistan, Bangladesh, Sri Lanka and so on. The appeal was also considered by the standing committee on finance, which strongly recommended the name change in 2004-05 in spite of objections. In the current environment, in which professionals are seeking to become global, it is beyond doubt that they should use titles that are in harmony with the ones used by their counterparts in the world. This will significantly enhance the brand value of such titles in a global economy where considerable outsourcing is taking place based on similarity of brand names and their global recognition. India will be lagging behind if its professionals continue to adopt titles purely based on political compulsions that inherently and permanently diminish the market values of Indian professionals and finally become defunct.
The writer is the J L Kellogg Distinguished Professor of Accounting & Information Management, Northwestern University, Illinois, USA. He also serves as Founder & Dean, Great Lakes Institute of Management, Chennai
