THERE'S an Aesop fable titled,
The Belly and the Members. It seems one fine day it occurred to `the Members of the Body' that they were doing all the work and the Belly was having all the food. "So they held a meeting, and after a long discussion, decided to go on strike until the Belly consented to take its proper share of the work. So for a day or two, the Hands refused to take the food, the Mouth refused to receive it, and the Teeth had no work to do," reads the story on
"But after a day or two the Members began to find that they themselves were not in a very active condition: the Hands could hardly move, and the Mouth was all parched and dry, while the Legs were unable to support the rest. So thus they found that even the Belly in its dull quiet way was doing necessary work for the Body, and that all must work together or the Body will go to pieces." The moral of the story is, `Unity is strength'.
On the same theme, there are many stories, such as the one that
http://thormay.netmentions. It's about a father instructing his sons on how the family was like a bundle of sticks, which when separated can be broken easily. Members of the accounting body, the Institute of Chartered Accountants of India (ICAI), are being told likewise, about the virtues of unity through networking, though results aren't too encouraging, as if the magic is not working.
Networking as a capacity-building measure
It has been about a year since the Institute put in place rules for the purpose. "The Council at its 245th Meeting held from August 31, 2004 to September 2, 2004 at New Delhi considered the
Report of the Study Group on Capacity Building Measures of CA Firmsand accepted the same with certain modification," beings a 30-page document titled
Rules of network and merger demerger, which came into effect in January 2005.
A key definition reads, "Network amongst two or more firms means an arrangement to facilitate the better functioning of the affiliate member firms in the interest of the profession and not for acquisition of any gain." Queerly, acquisition of `any gain' is frowned upon, though affiliation can be with "an accounting entity within or outside India such that it results directly or indirectly in a common professional economic or beneficial interest".
Network includes "the formal network to use the collective resources such as turnover, infrastructure, manpower, location for execution of professional services of one or more type." It may be tough to visualise turnover as a resource, the way the formal definition suggests.
`Formal network' is different; it means a network among two or more firms registered with the ICAI, "where the object of network is to use the collective resources of the affiliates for execution of professional services of one or more types at one and/or at multi-locational points".
Here, resources are spelled differently; they include `financial, technical and other logistic support required to execute the professional assignments'. Common resources may be pooled and exhibited together before the service user as those belonging to one particular set of professionals, explains the ICAI. "It is for each firm to decide whether its affairs and relations with another firm results in creation of a formal network. Network shall evaluate for itself whether or not it is a formal network requiring registration with the Institute."
Network may function without a name. Any name chosen should be approved by the ICAI, and end with `& Affiliates'. Formal networks are to be registered with the ICAI. Indian firms networked with a common Multinational Accounting Firm (MAF) are considered to be `part of a network', but registration with the Institute is not mandatory.
Old Boy Network
`Referral practice' doesn't require registration. This phrase, for starters, means the referring of professional work by a firm to one of its associate/affiliate either situated at a different place or rendering professional services not provided by it, to the user of the services. Though such referrals do network, their predominant objective is not to pool in the collective resources and exhibit them as those belonging to one particular set of professionals. And Mitchell Kapor would agree, when saying, "Inside every working anarchy, there's an Old Boy Network."
While the ethical bars on networked firms sound archaic, it is salutary that the ICAI insists upon networks to obtain "consent of the client to engage an affiliate in discharging the professional assignments." Also forward-looking are the easy exit provisions and the importance accorded to the network's internal byelaws.
Declarations such as, "the activities under the network will not tantamount to rendering services so as to constitute a commercial presence in India or in any way result in Mode 3 or Mode 4 rendering of services as per WTO terminology," can be a toughie, please note. Doubtful is the legal sanction that can be given to rules on `merger' and `demerger' brought in by the ICAI, as `natural corollary of globalisation', independent of the Indian Partnership Act.
"I believe in having each device secured and monitoring each device, rather than just monitoring holistically on the network, and then responding in short enough time for damage control," visualises Kevin Mitnick. Merger can be a challenge, especially when it manifests as hostile takeover, and damage control can be difficult. For, there are just too many powerful voices in favour of mergers.
"To have an orderly and sustainable growth of the CA firms, it is desirable that the coming together of the firms begins with networking and then matures to mergers," wishes the ICAI. "Networking will enable the firms to develop working relationships with each other. However, it is not to suggest that there cannot be mergers without networking." But the suggestion is loud and clear that firms going in for networking may see merger moves happening, with this benediction from the ICAI: "A merged big entity will always be superior to a network arrangement."
Mergers of accounting firms are only too common all over the world. For instance, "Gosling Chapman, one of New Zealand's leading mid-tier accounting firms, today announced it is joining forces with Burns McCurrach," reads a story dated February 1 on
www.scoop.co.nz. "McCutcheon & Company, a Denver CPA firm specialising in providing audit, tax and consulting services to the non-profit sector, has combined with accounting and consulting firm Anton Collins Mitchell, LLP," informs
Drawing inspiration from `the history of accounting profession in the West', the
White paper on multinational accounting firms operating in India(
www.dca.nic.in) had noted that `the natural evolution' through `consolidation and merger of small firms or their networking in to big ones' can lead to the creation of `large firms', to take on `the sudden invasion of the Indian market by the MAFs.' Anticlimax would be when the ultimate takeover happens at the portal of the very foe the tinier firms were battling against.
Yeas and nays
No ready statistics are available from the Institute about how many have opted for networking. Nor are any names being dropped in what seems to be a hush-hush affair. Yet, you can find firms talking about their vision of `national presence, without duplicating infrastructure and organisational structures'. For instance, a CA firm in the
City of Nawabs(
www.agarwalassociates.com) has not only offices `well equipped with eight computers networked together', but also "aspires to establish a network of CA firms across the nation... to offer one-stop services to clients." On
www.cpamerica.org, catch up with CPAmerica International, "one of the world's largest networks of independent CPA and consulting firms". One learns that it consists of "more than 70 large, closely integrated CPA firms across the US and, through CPAmerica's strategic alliance with Horwath International, more than 15,000 professionals in nearly 90 countries around the world."
Horwath International network has "more than 110 independent accounting and management consulting firms, with 400 offices in 280 cities worldwide," informs
www.horwathindia.com. Horwath is ranked among `the ten largest network of accounting firms'. While each member firm assumes full and exclusive responsibility for its professional services, common operating standards for international work have been developed and are monitored continuously through a system of reviews and quality controls, informs the site.
"Knowledge comes to us through a network of prejudices, opinions, innervations, self-corrections, presuppositions and exaggerations, in short through the dense, firmly-founded but by no means uniformly transparent medium of experience," says Theodor Adorno.
Find, therefore, some network knowledge in the
Old Testament. Such as, "Thou shalt make for it a grate of network of brass; and upon the net shalt thou make four brasen rings in the four corners thereof," in
Exodus. A `brasen grate of network under the compass', in a different chapter; and `ninety and six pomegranates on a side', and the hundred pomegranates `upon the network', in
To wrap, here's a helpful and befitting old lyric: "Ring a ring o' roses, A pocket full of posies, A-tishoo! A-tishoo! We all fall down." We can adapt it too for the professionals: "Ring a ring o' CAs, A network full of forces, A-dishoom! A-dishoom! Biggies all fall down."
The Big Four needn't fret, as yet. Because, the `ringa ringa' rhyme has a suspected ring of tragedy behind it, the Great Plague of London in 1665. "The roses refers to the rosy coloured rash displayed by sufferers; the posies were a little bundle of herbs and spices said to ward off the plague," explains
"A-tishoo was of course, the sneezing which accompanied the final fatal moments of the victims when they would all fall down dead!" Not something easy to digest by the members of the accounting body.