Thursday, Aug 29, 2002
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S. Gurumurthy, Convener, Chartered Accountants Action Committee, writes:
The accountancy profession intimately connected to the world of finance which, in turn, dominates the world of commerce, is regarded as a critical area by all developed nations. Therefore none of the Western countries, including the U.S. which swears by free trade, has so far opened up their accounting sector to foreign players. But the Indian Government has precisely done what even the developed nations have not dared to do and opened up the accounting profession to foreign players, that too unilaterally.
This thoughtless opening of the accounting profession since 1991 particularly the consultancy services sector openly and the audit services sector surreptitiously has resulted in total and unfair advantage to the foreign CA firms even in India. Consequently, there is no level playing field for the Indian CA firms even in India, not to speak of level playing field abroad. This has gravely affected the interests of the India CA profession, an army of about 1,00,000 globally competent professionals in danger of being marginalised in their own country. This has directly messed up the national interests also, as the collective interest of the Indian CA profession approximates to national interest.
What has been missed in this mess is the fact that the Indian economy has been opened far ahead of the WTO schedule. For instance, the negotiations for opening the services sector is yet to commence at the WTO. But many areas of Indian services sector have been fully opened up unilaterally, allowing foreign players into the Indian economy without securing, by negotiation, corresponding rights for the Indian players to operate abroad. One of the professions so opened up very early is the consulting sector in which CAs predominate. Today, virtually the consulting work in India has been taken over by the multinational consultancy firms. This has doubly prejudiced the national interest. First, multinational consultancy firms have invaded the Indian market and marginalised the Indian CA firms, using their interface with global finance, which dominates the Indian financial sector also. Second, because the multinational CA firms are already in India, we have already lost our negotiating power in India to get something in return for the country in the WTO negotiations for allowing them into India.
In addition, there is stealthy and surreptitious entry of foreign audit firms into national audit work using local surrogates, which is totally illegal. The Government had given permission to these global audit firms to carry on only consulting business in India. Even this, as already seen, is unwise and against the national interests. But subsequent to their entry these firms have entered into separate arrangements with local firms allowing them an access to the audit and accounting professions. The official journal of the Institute of Chartered Accountants of India (ICAI) (June 2002 issue) charged this surrogate entry as ``circumvention of the law of the land''. Though they entered India surreptitiously, they nevertheless operate in India openly.
The global CA firms also engage in crass commercialisation to market their services as if such services are like soaps and toiletries, which will not pass the higher professional standards evolved and practised by the Indian Chartered Accountants profession. This has resulted in a cultural shock to the CA profession in India. With the can of worms of the frauds of the global CA firms opening in the U.S. what would happen to and in India if such substandard professional culture were allowed in India is evident.
It is against this background that an action committee has been constituted by CAs to create awareness in the profession and among the public and to initiate steps to correct the distortions and to re-establish a level playing field for the Indian Chartered Accountants both within India and outside.
The Action Committee has planned a mass contract programme at the all India level. As a beginning, the first convention of CAs is being organised by the action committee at the Bharatiya Vidya Bhavan, Mylapore, Chennai on Sunday, September 1, 2002, in which over a thousand CAs are expected to participate. This will be soon followed by similar conventions in Hyderabad and Bangalore, and later in other centres.
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