A TRUE AND FAIR VIEW OF #CAs….?

COLD, HARD FACTS AND FIGURES – THESE are an Accountant’s domain.  As I write this, the #Institute of Chartered Accountants of India (#ICAI) is celebrating the 66th Chartered Accountants’ Day.  It is also pertinent to note that there are over 237,000 CAs registered with ICAI and amongst them is Mr #Piyush Goyal, the Honourable Minister of State for Power, Coal and New & Renewable Energy.  Unless I am mistaken,  he has the distinction of being the first CA to hold ministerial office.  For a portfolio involving complicated power tariff calculations, transmission and distribution systems and subsidies, #Narendra Modi has probably made the right choice for the position.

A  CHARTERED ACCOUNTANT (“CA”) does indeed go through a real, hard grind before he earns and secures the privilege of certifying books of accounts.  For a starvation stipend termed “articled fees”, the aspiring CA simply has to sweat his way through during his apprenticeship to an audit firm, even as he struggles hard trying to make sense of a whole array of tax laws, tax treatments, accounting standards, et al.  The list of subjects with respect to which “expert knowledge” is expected of the CA is indeed mind boggling.  My respect for CAs has been greater than the respect I accord to other professionals quite simply because one rarely meets CAs who are capable of bullshitting – it is simply against their grain.

NONETHELESS, WHEN FINANCIAL FRAUD is discovered, the first person to be contacted is the in-house CA who is usually a Financial Controller (also usually armed with cost accounting and company secretarial qualifications ) and the in house Internal Auditor – (usually also a CA) before reaching out to statutory auditors.  Unless the fraud has been discovered or unearthed in the course of day to day operations, the post mortem of fraud has usually proceeded from an examination of accounts which have been certified as representing a true and fair view of the financial position of the company and the lens of scrutiny widens to the examination of the professional conduct of the CA.

ASIDE OF JUGGLING FUNDS TO MEET DAY TO DAY financial needs of the business, an occupational hazard of a CA occupying the senior most financial position in a company is the  constant pressure to approve particular expenses which may either be irregular in nature or beyond permissible limits.  They are under stress too when it comes to valuations (be it goodwill or opening/closing stock), accounting for receivables and inventory, booking of extraordinary income, depreciation et al – the list is endless and a pliable CA or a careless one may well end up window dressing the financial position of his company. The pressure on CAs has also risen immensely ever since listed companies are required to file quarterly results.  #Jairam Ramesh compared  this “quarterly production of results” drill to the title of the  popular Hindi film #Qayamat Se Qayamat Tak – he called it the #Quarter Se Quarter Tak  syndrome. Nearly two decades ago, I think, #Pradip Shah, #CRISIL’s first CEO and himself a distinguished CA, created a stir when he sounded a note of caution  to his fellow CAs to ensure that they remain mindful of their analytical rigour and depth  of scrutiny so that the  the financial statements they certify do indeed reflect a true and fair view. His warnings are relevant even today.

NOT SO LONG AGO I HAD THE PRIVILEGE OF being present at  Board Meeting of a company where the item of discussion was the selection of the CFO.  Interestingly, a key member of the Board managed to convince his other colleagues that the short listed candidate (with the highest recommendations from a powerful section of shareholders)  should be rejected on the ground that “this chap does not have it in him to meaningfully challenge the CEO on financial matters.”  It was a telling testimony I think of  the present day expectation from CAs who are aspiring for senior financial/audit positions.

THE ICAI HAS ITS HEART IN THE RIGHT PLACE.  Its motto* is taken from Aditya Hridayam of the Yudha Kanda of Valmiki’s Ramayana.  It is part of the exhortation by Sage Agastya to Rama before his imminent duel with Ravana.    The sage offers salutations to the Lord who abides in the heart of all beings keeping awake when they are asleep:  Ya Esa Suptesu Jagruti*.  

We need wakeful and alert CAs more than we needed them yesterday !!

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