The Hindu Business Line : World theatre for CAs

Seeing the WTO (World Trade Organisation) as an integral part of today’s economic activity, the Institute of Chartered Accountants of India has brought out Introduction to WTO and Opportunities for Chartered Accountants in International Trade Laws and WTO ( www.icai.org ).

“The basic skills required are an understanding of world tariff regimes, costing, taxation, accounting and economic trends — skills that every good CA should be possessing in any case,” the book begins. It then calls for an application of these skills to the detailed requirements of WTO agreements, at three levels — Government, Revenue authorities, and business units.

For instance, “CAs can assist the Government in the verification of claims and help draw up documents recommending the need for higher budgetary support to meet technical and financial requirements of a particular industry or service.”

Quite encouragingly, there is a long list of professional opportunities listed in a section titled ‘specific areas for involvement of CAs.’

Among the opportunities are these: applying specialised current cost methodologies in ‘hyperinflationary’ economies; conducting arm’s length pricing analysis of inputs provided by affiliated parties; accounting of intellectual property rights; financial evaluation of FDI (foreign direct investment) proposals on behalf of industries and Government; and acting as arbitrator for international commercial disputes.

Educative material.

Exit options

Upon setting up a company, small business owners should have some idea of their exit strategy, says Belinda Steffan in Essential Management Accounting ( www.vivagroupindia.com ).

Since not all SME owners are looking for an exit, she lays out two options for those who would like to stay on. “One option is to grow the company and retain ownership and, in most cases, the management of the company, while overseeing the development of the strategy.” And the second option is to grow the company to a level that provides the owner with a good level of income through salary and dividends.

However, to those who have ambitions beyond the current SME, exit plans become necessary. Methods of exit discussed in the book range from trade sale to financiers, to BIMBO (brought-in management buyout).

A key task in the exit exercise is valuation, ‘to obtain a sensible and realistic range of valuations of the company.’ Three methods that Steffan discusses are: comparable public companies, comparable transactions, and discounted cash flow.

Highly instructive.
Cost of corruption

While bribes paid by citizens for getting work done can be categorised as petty corruption, the going rate paid in the case of public works and procurement deals was large scale corruption involving commissions up to 65 per cent of the total cost in Karnataka, reports one of the essays in Development in Karnataka: Challenges of Governance, Equity and Empowerment, edited by Gopal K. Kadekodi, Ravi Kanbur and Vijayendra Rao ( www.academicfoundation.com ).

“For example, in a procurement deal in zilla panchayats which cost Rs 65 lakh, the president of the panchayat received a proportion of up to 10 per cent, the chairperson of the committee received 15 per cent, officials shared 20 per cent and the key individuals (which also included the representative in whose constituency the work was implemented, i.e., if it is not a procurement contract) shared 20 per cent.”

The crucial link in the payment of bribes was the ‘fixing’ activity by middlemen in panchayats. These links were of two types…

Alarming read.

D. MURALI
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