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This is a guest post by Mr. V R Kedia B.com FICWA. He is a practising Cost & Management Accountant from Mumbai

Shape of the things to come

• Effect of LPG – Liberalisation, Privatisation, and Globalisation – Global competition, Fittest will survive, sub – optimal units have to die.

• Size, strong balance sheets and a history of achievements are no longer guarantees of continued success.

• Global competition – strategic alliance networks and massive engineering efforts place new demand on all professionals.

• Many of old hierarchies will be replaced by flat structures.

• Every organisation is undergoing a process of internal churning.

• Employees will be judged by their delivery of agreed output and level of services, not on spending 8 hours a day attending their place of work.

• Financial information will be considered as only one portion of the balanced scorecard of measures used in organisational decision making.

• Knowledge will replace physical and financial capital as an organisations primary resource.

• Knowledge and application of knowledge will create competitive advantage.

• People will have to be accustomed to work in permanent stage of emergency.

• More empowerment at the individual level.

• Adoption of team based organisation.

• Internet is rapidly transitioning businesses into real time.

Source: Megapixel

Present role of Management Accountants – Conceptions & Misconceptions

• Cost and Management accounting system had often become of little importance to managers. Many regarded them as minor routine belonging to the accountants, used to evaluate stocks and prepare monthly results speedily.

• There are all the obvious things to do: Statutory and Financial accounting, Taxation compliance, Funding, Management reporting and so on. All of this tends to be in the background; it just has to happen in any event. Management Accountants have not yet progressed more towards bridging the gap between managers and accountants and they have yet to concern more with looking towards the future – at where business is going and what is going to happen.

• Very few conceptual modifications have been brought in, in the cost and management accounting in the last 40 years.

• Cost is too important to be left to the cost and management accountant.

Futuristic role of Management Accountants

• Most of us will be doing the job, which we have never learnt and quite different from what we have been doing so far

• The illiterate of the 21^st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.

• We have to undergo the process of “Learning, Un-learning and re-learning” more frequently.

• Industry will be requiring “learning” professional rather than “learned” professional.

• Future will be “knowledge era”. So obsolesce of knowledge will be very fast and more visible among accounting professionals.

• Management Accountant must re-orient its capabilities, otherwise he will be overtaken by other professionals.

• Management Accountant has to be futuristic instead of provider of historic or current information. He should ask “how better” and help management in decision-making level and for performance improvement.

• ‘Imagination is more important than knowledge’. – Albert Einstein.

• The responsibility of the management accountant is less on forecasting the future and more on contributing to its creation.

• Management Accountant will more often play the role of a catalyst / changing agent rather than an accountant.

• Management accountant will have to be more adaptable to be a versatile professional rather than an accounting specialist.

• Quality of “leadership” will be more in demand than that of a “manager” or an accountant.

• Out –cost ascertainment, product costing and cost control. In –cost management, activity-costing etc.

• Re-positioning of the management accountant – make it more relevant and useful to the organisation.

• Management accountant to change the “Accountant” from their name to information manager/Cost manager.

• Shift from “informational” role to an “influential” role.

• To develop alliance with- finance, MIS/IT, industrial engineering, corporate planning.

• To actively participate along with managers in decision making and strategy implementation.

• Change in mind-set from product profitability to customer profitability analysis.

• No more a scorer of the cricket match – but to be manager advisor to develop appropriate strategy to win the match.

• Management accountant needs to lead the effort in training managers to use accounting information along with balancing it with other key data sources.

• FOREX and Treasury function will be important profit centres.

Training needs

• “If you want to remain employed, you have to remain employable” – Jack Welch, CEO-GE.

• Dilemma for the management accountant will be to either change or cease to exist.

• Management accountant must learn fast, forget even faster and focus on winning.

• Management accountant requires very different skills from those that accountants needed to fill the narrow role that has been adopted by many finance professionals over the last three decades.

• Continuing Professional Education (CPE) programme be made compulsory by the institute for skill upgradation and aquiring the latest technology.

• Able to work well under pressure.

• Development of multi-disciplinary skill.

• Good communication skill – oral, written and presentation and a team player.

• Ability and drive to work against strict deadlines and targets.

• Ability to work with minimum supervision and a busy and dynamic work environment.

• Ability to prioritise multiple urgent tasks.

• Possessing good public relations skill.

• Adding a new skill to executive skill-set, every few years.

• To develop expertise in new ‘Green Field’ projects like-

• Infrastructure sector (Energy, Transport etc.)

• Information and Communication sector

• Service sector

• Agro based industries

Source: National Geographic

Changes in tools and techniques

• Target costing v/s. Historical costing.

• Life cycle costing.

• Activity Based Costing (ABC) – ABM.

• Total Cost Management (TCM)

• Business Process Re-engineering (BPR)

• Benchmarking.

• Kaizen costing.

• EVA / CVA

• Total Quality Management / ISO.

• Cycle time reduction (time compression).

• Supply chain management (SCM).

• Just in time (JIT).

• Elimination of dysfunctional activities.

• Out sourcing and co-sourcing activities.

• Defect prevention v/s. fault rectification.

• Zero Based budgeting.

• Traditional budgeting v/s. New budgeting (comparative Table enclosed).

• Full year budget exercise v/s reactive rolling forecast (computer generated budgets are obsolete the minute they are printed).

• Dis-continuity of time cycle – month end and year end- and to invent information system to handle multiple time horizons simultaneously.

• Radical change in IT/MIS e.g.

• Integrated database that meet the total business requirements (like ERP Software).

• MIS that is accessible and easy to use by all staff.

• Rich supply of information in the form of a variety of report.

• MIS for decision-making.

‘It is never safe to look into the future with eyes of fear’. – E. H. Harriman.

‘My interest is in the future, because I am going to spend the rest of my life there.’ –

C. F. Kettering.

You can contact Mr V R Kedia on +9193241 80717 or email vrkedia@vsnl.com

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Recently it is in news that ICAI and ICWAI has made proposals to Ministry of Corporate to start Accounting Technician Course.

According to ICAI website

The need for a suitably qualified accounting technicians is imminent to ensure that value chain in the accounting process does not suffer. The ICAI has technical resources, infrastructure facilities including its own computer labs throughout the country, and a large membership base in the industry as well as in public practice and is, therefore, most suited to launch the much needed accounting technician curriculum.

Although the details are not clear now, there are news in the press from the office bearers of ICAI.

Economic Times 09-July-08 - CA institute to start new course for `Accounting Technician’

Dhiraj Khandelwal, Secretary, ICAI (western region) :

Those wanting to join the course will need to appear for the entrance examination similar to the regular CA course. Students who would complete one year articleship and pass one group will be given the certificate of Accounting Technician.

Economic Times 05-July-08 - A ray of hope for unsuccessful CA candidates

Candidates who could not clear CA finals will just have to appear for 100 hour computer training to get the accounting technician certificate. They will not have to follow the procedures like other students. We are expecting that about one lakh students who could not clear examinations beyond CA inter will now have even better opportunities in the job market,” said ICAI vice president Uttam Agrawal. He added that the institute is expecting to create one lakh accounting technicians as a second rung of skilled manpower to the core accounting professionals in next couple of years.

There is an interesting comparison made by Mohan R Lavi in Hindu Business Newsline on Accounting Technician

The blockbuster growth of Indian accounting software such as Tally has created a separate market for Tally Accountants — a direct threat to the AT. While a B.Com is considered to be only a basic qualification now, an M.Com could also give the proposed ATs a run for their money. Institutes such as the Institute of Certified Financial Analysts of India (ICFAI) which teach students the fundamentals of accounting are possible competitors too.

To me, Accounting Technician course is for those people who have passed 10th

Standard but unable to become a university graduate. With Accounting Technician qualification, they can work in Accountancy firms…. The next progression would to pursue professional accounting qualification like CA or ICWA.

The passouts of Accounting Technician should get exemptions in pursuing CA/ICWA courses. However no word on that.

It looks to be a different story. The officials of ICAI like to promote Accounting Technician qualification to those who are unsuccessful in passing the CA course …. a fall back to become Accounting Technician . They are making a monkey of students pursuing professional qualification. Imagine an analogy… if you are unable to qualify as a doctor, you can become a nurse.

A student pursuing CA qualification will be a university degree holder or becoming a university degree holder and this is better than Accounting Technician Certificate. Why should anyone with a degree devalue himself by gaining an Accounting Technician qualification ?

Accounting Bodies should know whom they want to train as Accounting Technicians. Otherwise it is another way of making money from the exisiting students whose primary aim is to become a professional accountant and not Accounting Technician.

Your thoughts please.

Regards,

Santosh Puthran

PS: Did you know that University Degrees are favorably considered in immigration and work permit application as compared to CA / ICWA qualification. Recent B.com graduates, if you are considering to work globally, please consider to pursue M.com degree (no matter what people say). You will benefit in the long run.

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I was trying to analyze  the definition of words Profession, Professional Body and Professionalism on www.reference.com.  (These words are interchangeable used when the Accountants discuss among themselves.)

Profession:

A profession is an occupation, vocation or career where specialized knowledge of a subject, field, or science is applied. It is usually applied to occupations that involve prolonged academic training and a formal qualification. It is axiomatic that "professional activity involves systematic knowledge and proficiency." Professions are usually regulated by professional bodies that may set examinations of competence, act as a licensing authority for practitioners, and enforce adherence to an ethical code of practice.

Professional Body:

A professional body or professional organization, also known as a professional association or professional society, is an organization, usually non-profit, that exists to further a particular profession, to protect both the public interest and the interests of professionals. The balance between these two may be a matter of opinion. On the one hand, professional bodies may act to protect the public by maintaining and enforcing standards of training and ethics in their profession. On the other hand, they may also act like a cartel or a labor union (trade union) for the members of the profession, though this description is commonly rejected by the body concerned.

Many professional bodies perform professional certification to indicate a person possesses qualifications in the subject area, and sometimes membership in a professional body is synonymous with certification, but not always. Sometimes membership in a professional body is required for one to be legally able to practice the profession; see licensure.

Professionalism

Oxford Dictionary: the competence or skill expected of a professional.

Graham Ward in IFAC website: Professionalism,  is about individual modes of behaviour that command respect and build trust. It is about excellence in service as measured by recognised standards.It is about delivering services or working to standards that meet the needs of and are expected by our clients.

Such behaviours are indeed a necessary part of belonging to a profession but almost any trade could be described as professional in these terms!

As any of us here knows, what separates the professionalism of members of a professional body from the behaviours of other types of so-named professionals, is the requirement to continually reinforce and demonstrate our professionalism, not merely assert it through a one-off qualification. And it is our membership of a professional body – one which embodies the distinguishing features I have defined – that confers on us the obligation to abide by professional standards and regulation.

Of the above three words, I had to search a lot on the word "Professionalism" to find a true meaning to suit  accountancy profession. Members of accountancy profession will be normally be expected to take actions that contribute to the public interest.

The Principle of Professional Conduct on AICPA, US website  summarizes Professionalism in a precise manner.

Section 51: These Principles of the Code of Professional Conduct of the American Institute of Certified Public Accountants express the profession’s recognition of its responsibilities to the public, to clients, and to colleagues. They guide members in the performance of their professional responsibilities and express the basic tenets of ethical and professional conduct. The Principles call for an unswerving commitment to honorable behavior, even at the sacrifice of personal advantage.

Section 52: In carrying out their responsibilities as professionals, members should
exercise sensitive professional and moral judgments in all their activities.

Section 53: Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism.

Section 54: To maintain and broaden public confidence, members should perform
all professional responsibilities with the highest sense of integrity.

Section 55: A member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services.

Section 56: A member should observe the profession’s technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member’s ability.

Section 57: A member in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided.

I would like to see your comments and views on this topic. Please feel free to comment on the blog post.

Regards,

Santosh Puthran

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The real test lies is “What is the benefit of being a member of a particular accounting body ?” Or to rephrase “What is the added value of being a member of premier accounting body ?”

I looked at the membership section on the website of each of the professional body and analysed what each institute offers their members in promoting the profession. Of course, it is difficult to make a judgement looking at the website but it gives a fair view what an Institute can do for its members and profession.

ACCA, UK : Offers CPD, learning opportunities and Job portal for members. Access to publication, booklet and fact sheet for the members. Online resource providing free access to UK and international Accounting and Auditing Standards. Global support to the members who are spread across 80 countries.

CIMA, UK: The members section does not have much details. The section which states, “As a student, member or one of our business partners, you will already have a unique Contact ID. You can use this to create your own My CIMA sign in and access our wide range of personalised services and resources that are all tailored to your needs.”

ICAEW, UK: The member section has a wealth of information. This ranges from Members News and Event, Branding the Profession, Online library with collection of over 40,000 books, Business Essentials, Practise Information, Resources and Support, Products and Services, Special Interest Groups and much more. The Institute also has Press and Policy comments. Also see Service Standards.

ICAI, India: Members section focussed on what services Chartered Accountant can provide rather what the institute can offer. However Resource section is very impressive with list of Accounting Standards, Guidelines and circular which is useful for the members as well as the general public.

ICWAI, India: Membership section has resources and download section with Cost Accounting Standards and few other items.

The best institute to reckon is ICAEW, UK with maturity it displays on the website in all matters concerning the profession. The depth of information contained in the website demonstrates its leadership in the profession and the other accounting bodies are bound to follow. The cross recognition with the other accounting bodies will help the mobility of members globally. The service standard section acknowledges the Institute has a strong infrastructure to respond.

Yesterday I was browsing Management Accountants on Spock to know whether there any celebrity accountant in the list. I found Mr. Praveen Kadle, Managing Director of Tata Capital Ltd, a newly formed company of Tata Group.

One of the profile I came across is Usha Murali and impressed by the introduction on her profile.

“B.com, FICWA, CS with around 10 years experience in Cost and Management accounting. Presently working in the shared service centre of a multinational bank spearheading their Activity Based costing initiatives. Am interested in exchanging info and views on ABC,developing models in SAS etc”

The profile looks very impressive for anyone to connect. I read her views on cma_india yahoogroups about how she got a job offer for the position not open for ICWAI members. Her email below:

“Recently I was chased by a headhunter to attend an interview in an IT company for the post of “Sr manager-costing and MIS” but in the job profile given to me , they had mentioned “BE& MBA” with 8-10 years experience in costing/mis/pricing/lob wise profitability analysis/activity based costing etc..

I was initially not comfortable attending this interview as they had not asked for ICWAs.But the company called me up after going through my profile.I did the interview very well and I also got an offer (though I rejected it due to timing constraint being US company and also I got a better offer from a mnc bank which I will be joining in the new year).

Apart from domain knowledge, what they look for in a candidate is soft skills like good communication skills, negotiating skills, leadership skills and team spirit. In this competitive world, I think all these qualities help in contributing productively to the company and the profession at large. Hence I feel ICWAI should give lot of importance in developing these skills in the students. We “management accountants” as a group should take pride of being a member of ICWAI and help the profession to get the recognition it duly deserves by contributing to the growth of the company where we work.”

The role model for students who are pursing a qualification or junior members of profession are those who have reached the top of the corporate ladder or profession. You will find CIMA and ACCA publish articles in their magazine about their successful members and interviews how they managed to read the top. I feel, ICWAI journal - Management Accountant should take a cue from it and publish the profile of successful members, interview and views in the journal. For e.g. D K Sarraf , Director Finance, ONGC.

What about you ?

• Linkedin: You should start building your professional network on www.linkedin.com of people who you know and worked with them. Linkedin had impressive profiles of Management Accountants. Do not accept invitation from people you do not know as it may comprise your network.
• Spock: Start building your network on www.spock.com . This may be people who do not know them but you know they have got good credentials to be associated in your network. Spock validates the results about you on the internet and your network validates the results about you. I find people are shy to put their photo !!! Unless the network feels about you how they are going to get interested to connect. The objective of building and promoting yourself on spock is promoting yourself as a “Professional“. (Atleast you will never be out of any work at any time in life).

I gave a feedback to Spock, how will people be interested in their website. There should be some tangible benefits for the user. Here is something the website

What is my Search Network? Your Search Network is defined as the group of people that are most relevant to you when searching. Members of your network do not have to be members of Spock; the only requirement for inclusion in your network is that Spock has a search result for them from the internet.
Your Search Network includes: Trusted Contacts Users that you establish a Trust Relationship with on Spock Second Degree Trusted Contacts Users that have established a Trust relationship with your Trusted Contacts Saved Search Results People you have bookmarked through searching your address book, saving a search result on the site, or adding to your related people.
Your Search Network allows you to quickly aggregate all of the people in your life in one place so you can easily find information about them. You can search for people who are within two degrees of you, discover people that share mutual interests, activities, or professions, and make meaningful connections.

So start building your connections. So when you find a successful ICWAI on spock, please let me know the profile on spock. I will show it on the MA blog.

Share your comments on the blog post and I will happy to respond.

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Regards,

Santosh Puthran
Management Accountant Blog

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