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I have never seen such nastiest comments in my life about the accounting profession in India where the readers have commented on the article “IFRS: The magnificent obsession of ICAI by P S Prabhakar”

The writer has makes a valid point,

ICAI draws a lot of consolation from the fact that the Standards Advisory Council — another organ of the IASB — has a 1/38th share for India (Sailesh Haribhakti, again not nominated by ICAI) among its members (including 7 representatives from organisations such as World Bank, Basel Committee, IFAC, UNCTAD, International Association of Insurance Supervisors, etc). The EU has 12 members, Africa has 2, Latin America has 3, the United States has 3, even Singapore has 2, while countries like Australia, China, Japan, Korea, Israel & Brazil have one each, like India.

If, in spite of such scant respect shown to the Indian accounting profession and conscious ignoring of India’s premier accounting body, the ICAI, if the IASB is able to make ICAI simply dance to the tunes of IFRS (like cheerleaders), then what could be the motive?

However I believe that adopting IFRS by all the countries in the world will bring about standardisation as well as comparability of financial reporting. No local GAAP… less burden on business.

The MCA is moving in right direction where the NACAS with comprehensive mix of people will discuss on Accounting Standards and recommend as necessary. The role of Accounting bodies like ICAI and ICWAI should be primarily to train its professionals / students on accounting and auditing standards. (Judges do not prescribe laws). Globally you will notice that the standards are independent bodies FASB, IASB, IRBA, AASB.

What about other professions in India where the practising members are more than accountants ? Does the apex bodies regulate the profession in practise. Read the objective they have been set up for. Click below:

The objectives of both the apex bodies mentions more about how they regulate the education standards rather than how it regulates the profession. The apex bodies do not mention how it promote standards in practise (professionals) and how does it protect the customer (patients). If the controlling body lacks tooth, how can professions its monitors recognised internationally.

I do not feel good to read comments like

However the bottom line is ICAI (and ICWAI) has been protected statutorily for long enough. Now time to gear their professionals to develop 360 and face the reality of globalisation.

Regards,

Santosh Puthran

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I read the Article “Waiver of cost audit, rules for industries not producing essential goods: CII” by Ganesh on 29-Jan-2008 and could not help pondering over the following point.

“Maintenance of cost accounting records entails a huge cost for companies in terms of time and money since they are required to be maintained in very minute and detailed manner. Details of all components of cost have to be included even though it may be insignificant. It may, at times, not be possible to extract such minute details even through a sophisticated ERP system. Maintenance of cost records is difficult for companies that produce multiple commodities, as actual consumption records have to be maintained for power, fuel and utilities per unit of production for each type of product. Moreover, non-application of these Rules to traded imported goods put our local industry to an unfair cost disadvantage, by unnecessarily increasing its transaction costs.”

When I read this, I have ask a simple question, “Is there any company in the world that does not maintain Cost Accounting Records ?”. In Middle East, it is not legal to get the Accounts Audited, but still the companies do it. Moreover they have Cost Accounting Records in place for decision making.

There was far cry in 1980s when the Railway was computerised in India and similar in 1990 in Banking Sector when Nationalised Banks were to be computerised - Loss of Jobs etc. You will notice now the private banks in India increased their business by the IT initiative bringing the Nationalised Banks to their knees by wooing their customers with superior services they can provide via their IT infrastructure.

I am not in favour of Tax Audit or middle men like CAs hired for dealing with government regulations by individuals and companies. They are a huge burden to the business in dealing and meeting up with Government regulations. In US, the companies have to comply with SOX and it is perculated in all American business across the world. Moreover the world is moving towards IFRS and segmental reporting which places increased responsibility on the business for comprehensive reporting. These inititatives were to contain the frauds that occured in large corporations like Enron, World.com etc. India should be proud that they have the Cost Audit Regulations in place from year 1959.

Management Accounting is required for the business (no one can argue). When MNCs operate, they implement the best information system in the world and their internal reporting is more focussed in Management Accounts rather than Financial Accounts.

The conclusion from report by Ganesh indicates that some companies wants to avoid Cost Audit with a excuse that it is too expensive to maintain. Internally, if you ask, these companies Financial Controllers, they will tell you how many they spend Excel to provide the same information to their management.

The only difference at the end of the day when the companies avoid investing in an ERP system with proper management accounting is whether they are going to survive in the long run. As Napolean said, “War is 90% information.”

Write to Ganesh - Click here

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Regards,

Santosh Puthran
Management Accountant Blog

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I read somewhere

“Too many choices, too little time,
Who’s gonna change the system.
If I don’t do it, someone else will.
Time is money, both add up!
Business is civilized warfare!
Go for the kill! After all we are capitalists!
The end justifies the means.”

I stumbledupon on the video, “Only in India” and was relating the passage above.

I worked in one of the top IT companies and was based in Noida. The city is well known for reputed IT companies.

When you look at Noida roads, you will see all soughts of vehicles plying on the road. I was appalled to see Cycle Rickshaw on the roads given the fact Noida is IT hub and not a remote village in UP.

The question that came to my mind, “How will you eliminate Cycle Rickshaw from Noida ?” The solution very simple…. but difficult to implement. What is alternate employment opportunities for Cycle Rickshaw puller and who will fund them ? Any thoughts …. how to find a solution ? please share them….

Another thing I noticed in Noida one foot high footpath along the road. So when you cross the zebra crossing, you have to climb the footpath !!!

The funniest was ” Yahaan per Thanda beer milta hai” - You get cold beer here.

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Regards,

Santosh Puthran
Management Accountant Blog

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