The Hindu Business Line : Story of a `foundation' that got dismantled

LET'S say you are trying out a new dish in the kitchen, and so you taste every now and then to check if the thing is okay. At one point, everything really seems okay, and you pat yourself for the success.

Just then, you decide to enhance your performance by adding this and that, and you know what happens afterwards. Nothing uncommon because experimenting is human nature, and we learn continually through trial and error. Yet, what you can pardon in a kitchen becomes untenable when tinkering gets carried out at high levels, affecting many down the line, as in the case of exam at CA entry point.

Catch them young

Let us rewind to about two decades back. Aiming at a qualitative change in education so as to make it more responsive to the development goals of the country, the National Policy on Education (NPE-1986) of the government introduced the system of 10+2+3 as the common structure of education throughout the country. Taking this as the background for providing a linkage between the scheme of education and training for chartered accountancy course and the national education system, the Committee for Review of Education and Training (CRET-1987) set up by the Institute of Chartered Accountants of India (ICAI) recommended that students who have completed plus two, that is, 10+2 exams, should be allowed to take up Foundation exam for pursuing CA.

By this, the committee felt that there would be uniformity of input to the CA course. The idea was that the profession could attract talented students with the requisite aptitude at a relatively young age of 17-18 years. This would also bring entry requirements on par with those of the other professional courses as contemplated by the NPE, it was thought. However, graduates satisfying certain norms were to be exempted from Foundation. Such graduates and those who passed Foundation were to be allowed to register for the Intermediate exam and simultaneously for practical training too.

Enter, Foundation

It is with this idea that the ICAI introduced the Foundation course in 1992. The scheme attracted quite a number of students and so far around 75,000 students have completed the exam successfully till May 2003, out of a total of 3,50,000 enrolled. (See table: Foundation course was quite popular for a decade, using data sourced from the annual reports of the ICAI.)

Thus, on an average, about 7,000 students passed Foundation exam every year, at an approximate rate of 20 per cent of enrolment. Most of these students went on to pursue further levels of CA, that is, Intermediate and Final. However, when they registered for Intermediate, another stream of students too joined them, the graduates who were exempted from Foundation.

Comparisons are not good, they say, but if you want to know the truth, which the ICAI too accepted, it was that those coming through the Foundation route fared better than their graduate rivals, and went on to complete the CA course faster. Also, a large number of these Foundation students were able to obtain positions in the merit list of ranks. Quite smugly, therefore, after a review of the working of Foundation course, the ICAI observed in 1998 that the course was able to achieve most of its objectives, viz., ensuring uniform inputs for the course; reducing uncertainties perceived to be associated with the CA course; attracting young and bright students at the right point of time; and providing the facility for opting out of the course at a relatively younger age.

The demolition

When things were going smoothly with the Foundation course, a new wave of thinking grew in the ICAI: that there was no uniformity in the quality of inputs for CA course because graduates were allowed direct entry to Intermediate. Also, a more shocking rule started brewing in their works, that the number of attempts be restricted.

Thus, the Council went ahead to implement the Scheme of PE-I and PE-II System from October 1, 2001. (For starters, PE is not price-earnings ratio, but professional education, and II and I are two levels.) In a case of oppression of the majority, even as 63 per cent of students favoured practical training subsequent to the passing of Foundation, the ICAI's new rule shut the doors of practical training on those who were to finish PE-I, till they completed PE-II. After Foundation was thus demolished and the new experiment installed, completion of the CA course was fated to be delayed, thus jeopardising the competitive edge of students.

Worries on a time scale

Under the earlier system, a student coming through the Foundation stream was able to complete the CA course within a span of four years, that is, at the age of 21, in spite of passing the Intermediate and Final exams in two attempts.

Under the present system, since articleship can be undertaken only after passing the PE-II exam, and the Final exam only after 2½ years of articleship, the average age for completing the CA course gets extended by a minimum of two years.

Further, the compulsory gap of 2½ years between passing the PE-II exam and Final results in idleness, leading to possible loss of steam to pursue the course.

Exam versus training

A mere pass in exams cannot achieve uniformity, because it is common knowledge that a professional needs both education and practical training. When the profession started, the scope of training was in sync with the subjects tested in the exams. Over the years, many changes have happened in business practice, decision-making, technology and so on, though commensurate changes have not taken place in the area of training. However, training has the potential to enable a student to achieve better success in the exam even at the PE-II level.

The problem of in-betweens

From an overall analysis of enrolment and results of the exam one can observe that 35-40 per cent of students come out successfully. A similar percentage does not evince any interest and, therefore, opts to drop out. The problem therefore is of the in-between category, that is, 30 per cent who are neither here or there.

While one should find out reasons for the high dropout rate, it should not be lost sight of that the in-between group of students deserves special attention of the ICAI because their potential to complete is quite high.

To substantiate the above, a random sample was drawn of 200 students who have undergone, or are still undergoing, the CA course. Results of the analysis are in the tables `How the two streams fared in pursuing the CA goal' and `The bright, average, slow and dropouts'.

Key findings

The analysis reveals that 25 per cent of students dropped out of the course in between, and 64 per cent completed Intermediate; of them, 60 per cent completed within five attempts and around 11 per cent are yet to complete the course. Again, of those who completed Intermediate, 60 per cent completed Final; another 20 per cent are most likely to complete Final at the earliest. Effectively, the success ratio is around 40-45 per cent with a further potential of 10 per cent.

Gender-minders would observe that the ICAI has to work on increasing the proportion of girls joining CA. Also, the high percentage of dropouts at the mid-level of the course merits attention; a further study is required to find out where all those students end up.

The matrix of `The bright, average, slow and dropouts' shows how many finished in different attempts, combinations.

Thus, 20 passed Intermediate and Final in the first attempt, while 13 passed Inter in the first go, but cleared Final in the second attempt, and so on. It is sad that in the sample, three of these bright kids who had the ability to clear Inter in the first attempt dropped out. Those shown as yet to complete are the ones who are in the process of taking their exams.

Among the numbers you can spot many a Robert Bruce: Such as the ones clearing Inter in the sixth attempt and Final too in the sixth.

A secret that the ICAI may not like to hear is that some of these indomitable characters have gone on to set up successful practice.

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