BREW YOUR TEA #3 Sunday Reflections with CA Hemant Gupta

Dear Esteemed Professional Colleague,

I am thankful to many of you readers for your response and feedback and few good reviews to my reflections, please continue to do so.

Few of my readers suggested I cover steps for Indian firms to scale to bigger levels, accordingly with my other mix of choices. I, present this edition for a plain reading to you all. 

Enjoy your brew.

         How to be a part of Big 8 by 2022.

"People talk of the Big 4 accounting firms. Sadly, there is no Indian firm there. By 2022, let us have a Big 8, where 4 firms are Indian" ---Honorable PM of India Mr. Narender Modi.

Though our PM is known for giving steep targets of achievements but politics aside, one may agree that any target achievable easily is really not an achievement.

We are still far from it aren’t we? This raises many questions both internally and externally:

• ·      How much support has the Government provided?
• ·      What defined roles the ICAI has prepared for uplifting the CA firms?
• ·      How many CA Firms or CA s have seriously thought about?
• ·      Do our CA firms have enough money, skills and passion to achieve these goals?

If we look at it from small and medium practitioner’s perspective then following issue comes up.

• ·      The big ticket works floated by the Government itself encourages only the Big 4 to be eligible and compete among them.
• ·      There is huge transparency required in tendering process.
• ·      The ICAI offers different theoretical courses, but practical knowledge is below par and not available.
• ·      Many CA firms have networked, partnered, built many partners, but end up to struggle in scaling up and organise themselves.

What is needed?

• ·      Let the government along with ICAI set bench mark wherein top 100-200 firms qualify and give preference in awarding works to them and allow them to collaborate among themselves, if required.
• ·      SEBI to allocate audit of listed companies as CAG does to the public sector undertakings.
• ·      ICAI should ensure to support these firms for resource building, technology support, practical trainings and recommendations for Joint audits. Promote more technology adoption to the smaller and medium sized firms.
• ·      The smaller CA firms should not only venture into numerous partnerships or networks, but to ensure there are meaningful partners with specialisations and target to reach the goals.
• ·      We CAs need to plan and project our practices at par with any business we need to come out of mind set that only investment in practice is out time and skills. We often invest money as it comes, but I feel we need to be aggressive and invest money upfront (be it loan or savings), may be calculate our payback period and invest right at the beginning in infrastructure and resources. 

There is no doubt that big four provide best practices and numerous employment opportunities to professional but work opportunities are generated here only. If those opportunities are ceased by our able brothers and sisters with the help of Government and Institute then no one can stop the transformation from being employee to employer.

We should broaden our vision and increase our capacities.

         Data And Audit Committees

Sometimes corporates are known to be wayward in their Corporate Governance standards, as for vested interests the data that turns around to the governance committees at times is rinsed data.

For instance, in a recent news in Times of India about the coverage on The God’s own Kitchen “The Akshaya Patra Foundation” the audit committee members after being the founder members for 20 years have all resigned being the result of serious differences between those who resigned on the one hand and the chairman and vice chairman of APF on the other. The four who resigned include former Infosys CFOs Mohandas Pai and V Balakrishnan, Raj Kondur and Abhay Jain who were all closely involved in APF’s founding 20 years ago.

The reason for these members to resign are learnt to be the governing and related party issues which are not addressed by the Governance in spite of several written communications from the core members of the audit committee.

As once Warren Buffet said about Audit Committees:

“Audit committees can’t audit. Frequently, auditors know about deceptions. Too often, however, they remain silent. The key job of the audit committee is simply to get the auditors to divulge what they know. Auditors should worry more about misleading Audit Committee members than about offending management. In recent years, auditors have generally viewed the CEO, rather than the shareholders or directors, as their client.”

At least in the case of TAPF the audit committee members held a voice and they know how to make noise for the issues to be rectified and brought into the notice of the donors and other key members associated with the organisation. But in other corporates the committees must be equally powerful and the data submitted to the committees should have guarantees of the auditors for its trueness.

Sometime I feel had GOD not given tooth and nails to Lion would he still have been the king because he was named Lion.

Take care of yourself to take care to your loved ones.

Thank You!!

CA Hemant Gupta