The Hindu Business Line : The opportunity cost

Wafers had just qualified in the May 2006 CA exams. The results that were announced in July saw her bag the all-India ninth rank. Naturally she was jubilant but China had wondered that if Wafers could crack it into the top 10, it spoke poorly of the CA talent pool.

For a moment Wafers was hurt but soon she burst out laughing; after all China was her best friend. At the campus, job offers were flowing in thick and fast. It was a problem of plenty and Wafers had quite a hard time selecting an offbeat job that offered her a C2C (cost to company) of Rs 10.5 lakh.

Today when she was hanging out at the Chennai coffee pub, the question centred on the new education scheme that the ICAI had announced. The race to "catch them young" meant that a wannabe could take the entry level exam as soon as he or she finished class XII. That would mean that only a few months after class XII, the candidate would be in a position to take up articleship.

Wafers had passed her class XII in March 2001. She had cracked the PE 1 in May 2002. She had completed PE 2 in May 2003. She completed her articleship in September, 2006. So, she was qualifying a good 5.5 years after completing class XII. A year-and-a-half ago her engineer friend China had qualified from IIT. She had cursed the unfairness of it all.

Now the new scheme was shortening the time span. Had the new scheme been in vogue when Wafers finished class XII her life would have run thus. She would have cleared CPT in May 2001. She would have immediately joined her articleship of 3.5 years and completed it in December 2004. It would have saved her about 20 months. Phew! She wondered how nice it would have been had she been born a few years later.

China asked her not to worry. After all, she hadn't paid much to do her CA. Clearly, it was one of the cheapest courses. The total fee across the years payable to ICAI was about 10k. Exams and classroom instruction included, it would have been 30k. Which course gives you a professional qualification for 30k? Not engineering. Not medicine. Not management.

Her professor had once famously explained that CA wasn't all that cheap a course as it was made out to be. He had told Wafers that if she had taken up graduation upon finishing class XII she would have graduated in May 2004.

Between May 2004 and September, 2006, i.e., for approximately 30 months, she could have worked in a BPO. Given her school and college background she could have easily earned Rs 20,000 a month. This translated into Rs 6,00,000 for the 30 month period not counting bonus and increments. "That's the cost of doing CA," he had remarked. Wafers had listened with rapt attention. The class had murmured, "Opportunity cost."

Today, a transition provision in the CA programme was going to place the opportunity cost at a higher plane. Alternatively, it could throw out a few spanners. She was aware that those whose articleship would get over in October 2007, were under the transition provisions eligible to take the November 2006 exams. That's almost 12 months before finishing articleship. If they were to crack the exams, as they would, in January 2007, then for nine months i.e., between January and October, 2007, they would continue to be in their articleship.

Now, even the best accounting firms didn't pay a fancy stipend to their interns. If a CA could earn say Rs 9 lakh per annum the opportunity cost of staying in articleship during that final phase would be a cool Rs 9 lakh, give or take a few thousands here and there! Would the audit firms compensate the interns for it?

Wafers was having an animated conversation with China on the issue. China felt that she was making a mountain out of molehill. After all job offers were made in the fourth year even in engineering colleges. No IITian talked about opportunity cost.

"But which IIT graduate opts for a job after IIT?" asked Wafers with righteous indignation. "They go abroad for further studies or land up at the IIMs," she pointed out. China agreed. Also there was the issue of the job being contingent on qualifying as an engineer whereas in the case of CA, the intern had already qualified.

China said, "May be the intern could discontinue the articleship and accept the job offer." Wafers agreed. After all, there was no compulsion to continue with the articleship once you qualify. She asked, "Would the ICAI ask companies not to enrol?" China disagreed. "That would send a wrong signal to the market; that the ICAI is not able to shepherd its own herd."

Wafers pointed out, "If a CA dropped out of the articleship, he would not be able to enrol as a member of ICAI. He wouldn't be able to call himself a chartered accountant."

"How important is it to get membership? How important is it to call oneself a CA? Are you a CA because you have a certificate or because you have passed the CA exams?" asked China.

Wafers got the point. She recalled that not everyone in employment held a CA membership. It hadn't affected them anyway. The qualified CA could duck articleship. After all, Rs 9 lakh wasn't a small compensation. And then it struck her. Well, the CA need not duck articleship for employment. He could actually grab the job and garb it as "industrial training" if there were enough CAs in the industry to sign for industrial training.

She wasn't sure how things would pan out. "Why do you want to break your head over it?" China asked Wafers. Fair enough, she thought. Time after all would tell how things would turn out to be.

Racy@TheHindu.co.in

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