The Hindu Business Line : `CA is a professional course where the cost involved is minimal'

We do not propose to have restrictions on the number of attempts in the new curriculum, likely to be introduced by mid-2006 after approval by the Government. As the new curriculum will blend theoretical education and practical training, we propose to leave it to the discretion of the student on the number of attempts and not impose any restriction ourselves.

Mr T. N. Manoharan, newly elected President, the Institute of Chartered Accountants of India

IN THE hallowed precincts of the Institute of Chartered Accountants of India (ICAI), something happens every year, around this time. The sceptre passes without much fanfare. And the new helmsman takes charge of the premier accounting body for a whole year, steering it through the imponderables that the profession may have to face. This year, T. N. Manoharan, a Chennai CA with more than two decades of experience, assumes responsibility as the President. Shortly before he dons the new mantle, Manoharan answers a few questions from D. Murali on matters of importance to CAs and students.

Excerpts from the interview:

What are your immediate priorities? For members, and for students.

The priorities range from providing impetus to the anchoring role of the profession in the growth of the Indian economy to promoting brand value of the profession. It is time the chartered accountancy profession played an active role in social and rural development. As an intellectual force to reckon with, we shall strive to contribute to the reforms in government accounting and provide valuable inputs in the policy-making of the various Ministries of both the Central and State governments.

For members, the priorities will be to introduce e-governance, promote networking and mergers, conduct training programmes in emerging areas and bring out technical guides to equip them. We will also step-up brand building measures.

As regards students, launching of new curriculum is top priority. Besides, deployment of learning management system (LMS) under e-learning and broadcasting modes will be attempted. Upgrading quality of study material, initiatives for providing scholarships and counselling will be also taken up.

Will you be initiating any long-term measures which will, say, bear fruit after five years or more?

Long-term measures will be initiated with a view to establishing State of Art Centres of Excellence in major centres in the country. Every such centre will facilitate research and academic activities. Programmes and workshops for training of members to achieve excellence in emerging areas will be carried out to equip them face global challenges. The centres will house IT laboratories and other related infrastructure to conduct orientation programmes and workshops for small and medium practices (SMPs) and young members at nominal cost.

Similar measures will be taken to encourage and enable branches to acquire own premises and other infrastructure across the country. Measures will also be initiated to deploy LMS under e-learning and broadcasting modes, initially for students and later for members.

The ICAI has been the premier accounting body of the country. But fundamental research in the field of accounting has been lacking. Do you have any programme on this issue through the Accounting Research Foundations, especially by collaborating with renowned universities?

Through the Accounting Research Foundation (ARF) and the Research Committee of the ICAI, original research is being carried on even today. Collaboration is in place with Infosys to promote Research Fellowship. In the ensuing year, special efforts will be made to further original research by collaborating with renowned universities and other institutions which will culminate in industry-specific technical guides. Research activities will also focus on evolving technical guides in accounting, auditing and allied areas.

If the Indian CA is on a par with any global accountant, how does he reap the benefits of such parity? Have we been waiting for reciprocity and mutual recognition far too long?

Although mutual recognition agreements are not in place, our CAs are well recognised abroad, as evidenced by the fact that over 10,000 of them are in important positions in foreign governments and also in corporate and other business enterprises world over. This has been possible solely because of the quality of qualification, and the performance track record of Indian CAs. We would continue to build the brand image of our CAs in international markets. Nevertheless, we are keen on securing mutual recognition agreements but with no disadvantage to our members. Accounting bodies of even developed nations seem to hesitate in this regard perhaps due to apprehension of Indian CAs emerging stronger in their turf. We are in the process of negotiation with the Singapore Institute of Certified Public Accountants (SICPA). Similar negotiations will be taken up soon with corresponding professional accounting bodies in the UK, Sri Lanka and Nepal.

How far do you think networking of CA firms will help build capacity?

Majority of CAs are practising either as individuals or in small- and medium-size firms. While the scope continues to exist for SMPs and proprietary firms, the need to consolidate or network cannot be undermined as business enterprises and other service users are also expanding in size. Merger, restructuring and networking are the order of the day, not only in the business segment but also in profession. Merger will certainly make small firms grow medium and medium firms grow big to facilitate execution of increased volume and magnitude of work flowing in the service sector. For those who do not have the inclination to merge, networking will certainly help in capacity building. Networking, apart from enabling retention of existing status, helps harness increased manpower, diversified skill set infrastructure and database, thereby promoting greater efficiency and larger geographical reach and spread.

The ICAI is toying with the idea of allowing students to launch upon the course after completing 10th standard. How far will this be successful compared to other professional challenges, such as medicine and engineering, where students take up the course after writing 10+2?

We do not intend allowing students to take to CA curriculum immediately after the completion of 10th standard. All that we propose is to permit 10th completed students to register with the Board of Studies and obtain the study material. It is at this point of time, the parents of students themselves choose a career (discipline) path. Further, during the two-year period in the 11th and 12th standards, students will have ample time during vacation, weekends or at such other leisure time to prepare on core areas of accounting, mercantile law, quantitative techniques and general aptitude which are subject matter of the Common Proficiency Test (CPT).

Such students, however, would be allowed to appear for CPT only after appearing in the 10+2 examination, as in medicine and engineering. The CPT shall be on objective basis to test the proficiency and aptitude of the student. After qualifying, in both the 10+2 examination as well as CPT, students will be allowed to take up the chartered accountancy course which involves three-and-a-half years of practical training. During the practical training, after 18 months, a student will take up the Professional Competency Examination (PCE) and after the training period the Final examination. Information Technology Training (ITT) and communication skills training will also be imparted during such training period.

It may not be out of place to mention that the CA course is one of the very few professional courses where the cost involved is minimal, less than Rs 20,000 for the entire course. Besides, a student will earn stipend during the period of practical training. With reasonable hard work, a student can hope to become a CA within four years of joining the course.

Therefore, it will prove attractive to the cream of the younger generation to pursue the CA curriculum.

Why should there be a restriction in the number of attempts for CA students?

There is no restriction in the number of attempts for students taking the Final examination. It applies only to the PE-I and PE-II examinations. This is to help the students change their course curriculum in case they are not successful beyond the specified number of attempts.

However, such restriction of five attempts has been extended with additional attempts up to December 2007. We do not propose to have any such restriction in the number of attempts in the new curriculum, likely to be introduced by mid-2006 after approval by the Government. As the new curriculum will blend theoretical education and practical training, we propose to leave it to the discretion of the student on the number of attempts and not impose any restriction ourselves.

Is the ICAI thinking of any specific reforms in the examination system?

We have a robust examination system, which is rated best at the international level. The checks and balances provide no room for any criticism. However, in every filed there is scope for reforms to be carried out. We will strive to upgrade the methods of testing the student's ability for application of knowledge as well as in the procedures followed in quest for further excellence. This will be an on-going process to achieve the required fine-tuning and to change in tune with the times without lowering standards or compromising quality.

Do the post-qualification courses of the ICAI succeed in helping members gain an edge in practice? Are there any new courses in the offing?

As of now there are no new courses in the offing. The existing ones, such as ISA, DIRM and WTO, do provide an edge in practice to the members. Efforts will be taken to provide adequate practical exposure to members who have been successful in the ISA course. Besides, the post-qualification courses relating to management accounting and taxation management will be reviewed so as to make the syllabus suit the needs of the market and globalised business environment. New certification courses, without any examination, will be conceived and conducted to train members in new areas such as forensic audit, treasury audit, SOX, US GAAP and IFRS.

While mandatory CPE credit is good in theory, what one finds in practice is the reduction of the entire scheme to a formality.

Shouldn't continuing education be voluntary? And wouldn't it be better if credit were based on the nature of work done by the CA, such as conducting a specialised project?

I would not agree that the CPE scheme has become a formality. Exceptional instances cannot be generalised. CPE programmes have become popular on account of the value addition given to the members. The work of a chartered accountant should inspire confidence in the minds of service users and stakeholders. This could be achieved only by the technical excellence and competence of the members of the profession. CPE helps in achieving this objective. In future, the focus will be in conducting training programmes and workshops more than conferences and seminars so that in-depth study and orientation is imparted through the CPE mode.

You have been a popular teacher of income-tax, and author of textbooks for students.

Can the Income-Tax Act be made simpler?

The Finance Ministry has taken the initiative to modify the tax law by constituting an expert group. There is scope for simplification if the social objectives and other policies are not built into the taxation system, by providing various exemptions and, thus, making it complicated. A simpler law can be achieved by taking care of equity on grounds of earning capacity. Rationalising of tax policy will facilitate greater voluntary compliance. If tax rates are reasonable and policy is rationale, there is no need for concessions and deductions which pave way for complication and litigation. In our country there is potential for at least 10 per cent of the population, that is, 100 million, as against the present 35 million, to be paying taxes and we will work with the Finance Ministry to achieve this.

In terms of the Right to Information Act, 2005, can people look forward to knowing more about the Institute, in areas such as expenditure and examinations?

The ICAI had no reservation even in the past for transparent functioning and disclosures. In terms of the Right to Information Act, 2005, the ICAI can certainly furnish information relating to expenditures.

As regards information relating to examination matters also, the ICAI would have no problem in terms of the Right to Information Act. The law itself provide for certain exceptions, considering the sensitivity of the information.

What's your view on governance, both corporate and that of the ICAI?

With regard to governance in the corporate world, Clause 49 of the Listing Agreement and CARO provide the required thrust and focus. The emerging significance of the role of the audit committee and that of independent directors will enhance and establish better corporate governance. Similarly, better disclosure practices in respect of corporates sourcing funds from public and financial institutions will pave the way for greater accountability and credibility.

As regards the ICAI, being an autonomous body, the functioning has been with greater degree of accountability and responsibility. The ICAI will strive to maintain standards and excellence in its regulatory function as well as in the rendering of service to members and students.

And on what you think can be the main thrusts of the forthcoming Budget.

To my mind, the main thrust of the forthcoming Budget would be on increased allocations to the agriculture sector, particularly food processing, and small-scale industries. Infrastructure, health and education will receive the desired focus for development. The economy is growing at close to 8 per cent.

The growth of the service sector, which is contributing in a large measure to the GDP of the economy, will lead to expansion of the list of services for service tax levy. Generation of employment is expected to drive certain policy decisions.

On the income-tax front, the Finance Minister has promised that the fringe benefit tax levy will be fine-tuned.