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Rashmin Sanghvi & Associates

Chartered Accountants

109, 1st Floor, Arun Chambers,
Tardeo Road,
Mumbai - 400 034,
Maharashtra, India.

Tel. Nos.: (+91 22) 2351 1878, 2352 5694.

Fax : (+91 22) 2351 5275.

Email : [email protected]

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Chartered Accountants & Internet

Chartered Accountants & Internet

Let us consider the potential of IT boom for Indian Chartered Accountants. The Internet industry has overtaken the whole world. It has made many millionaires out of upstarts. Does it offer the same potential for Indian chartered accountants?

1. I am relying on several concepts and presumptions in this article. Some of these are controversial. Some ideas may be liked by Indians. However, foreigners may consider the same as arrogance. I am simply mentioning these concepts, not elaborating these concepts. The reader may draw his own conclusions. I will only develop the theme of this article – potential of IT for the Indian Chartered Accountants.

2. The Internet (together with all the technologies that make it successful) industry is a great leveler. It has brought about economic democracy. It is no longer necessary to be the son of a rich man or to join a large industrial house for becoming successful. Any one with intelligence, hard work, access to Internet and some luck; can go into the Internet industry. This factor, though easily accepted has far more potential than normally appreciated. Let us elaborate.

3. Let us take stock of the present situation from different perspectives.

3.1 Monopolies

Some years back, a medium size industrialist was complaining that he cannot setup any industry where he may compete with established Indian giant groups. He said that the common man does not know this. The daily newspapers do not publish this information. However, it is a fact that if a medium sized industrialist becomes an irritation to an existing giant, he can be finished. The giant does not have to appoint mafia for this purpose. He does not need statutory help. He has enough ways to finish off a small competitor.

3.2 As luck would have it, shortly after the incident, I was discussing with a director of the then largest industrial house in India. The director complained that he wanted to diversify in the dairy industry. However, Mr. Kurien would not allow any one other than co-operatives to go into the dairy industry.

3.3 Businessmen have always created barriers for protecting their own industry and markets; and preventing competitors. Creating monopolistic or oligopolistic market environments for earning premium profits is a well-known method adopted all over history and geography. Coca-cola & Pepsi have well proven strategy of buying out competition and then finishing them off. Gillette acquires competing brands only to close them down. Gillette would like that ultimately all the shaving equipments produced in the world should be controlled by Gillette.

In the modern markets, one who becomes large at the early stage, gets immense benefits in the market. Visa & Master card – the global credit card companies have tremendous benefits because they were the first large credit card companies. Shops & Hotels would associate with them because they are large. Public would hold their credit cards because they are accepted at maximum number of establishments. The credit card industry has no great hidden technology. Yet, when credit cards were started in India, even large Indian banks tied up with one of the two establishments instead of making a success of their own independent credit card.

This is the tremendous advantage of being the first large company in any industry. A large company can keep competition away and can continue to remain large.

This is not to say that competition never succeeds. This is only to say that in the good old industries, upstarts face tremendous difficulties in acquiring a foothold.

4. India, an underdeveloped country

Whether we like it or not, let us accept the fact that we are twenty years behind the developed countries in the matter of several technologies. The developed world has a vested interest in keeping us behind. They exploit us has their markets.

If we do not have appropriate strategies, means and will power to bridge the gap. We remain poor.

5. The big five

Why are the biggest five firms in the accountancy profession – the biggest?

Because they are the biggest.

This is what we have seen earlier. A big firm remains big because it can buy out competition and can keep at bay those that cannot be bought.

Note : Some of the big five partners are my personal friends. I am neither criticising them nor praising them. I am simply making an objective analysis of the facts.

5.1 Whenever an Indian industrialist collaborates with a foreigner from the developed world, the Indian auditor is removed. He is replaced by the big five. Why? Because the big five are existing auditors of the foreign collaborator. They have ways of convincing the foreigner that their interest will be better protected only if they do the audits of the Indian company. It is a clear insult for the Indian auditors. The clear suggestion is that Indian auditors are not as independent and competent as the big five.

I do not agree with this view. However, my agreement or disagreement is irrelevant. The foreign collaborator does not trust Indian auditors. And the Indian collaborator does not have enough independence to retain his existing auditors.

5.2 Let us assume an Indian company wants to collaborate with a company in Netherlands & another company in Malaysia. The directors go to their existing auditors. They enquire whether the auditor has any associates or any relationships with good advisers in Netherlands or Malaysia! What will be the answers!

If the existing auditor is one of the Indian auditors, he will say, “Sorry, I have no information about these two countries’ laws and I have no contacts in these two countries.” On the other hand, if the existing auditor is one of the big five, he will say, “Yes, Of course. We have our own office in Netherlands & Malaysia. And we can get you all the information.”

This absence of global associations is the biggest factor which is hurting the Indian chartered accountant and which threatens to continue forever.

Is there a way to break this frustrating stranglehold?

6. The Great Leveler

Internet is the great leveler. An Indian chartered accountant can spend Rs. 50,000/- as capital cost and acquire computer with modem. He can spend further Rs. 10,000/- to 20,000/- per year and maintain Internet connections, web page etc.

Once he is on the Internet, he can have a world of information. He can contact his counterparts in the whole world. He can get the latest information and supply to his clients.

Through the Internet he can develop contacts with like minded professionals all over the world. It is not that he can build professional relations through Internet alone. However, if he can make the preliminaries through the Internet, he can always establish personal relationships wherever necessary by telephone calls and personal visits.

7. Wipro & Infosys both had no problems from either Indian or foreign established monopolies. Purely on the strength of their abilities and of course Indian Government’s support, they have grown. Today they have market capitalisation larger than the market capitalisation of established giants in India. Even though, the established giants have their own companies in the software industry, they could not prevent Wipro & Infosys from growing.

Similar opportunities are available for the Indian chartered accountants. If we master the Internet, no one can prevent us from growing globally.

8. Let us shed humility for a moment. Let us accept the fact that the Indians are genetically intelligent people. When it comes to analysis, science and software; we are great people. Software comes naturally to our children.

This genetic superiority in the software industry is our core strength.

9. It is an established management strategy to leverage one’s core strength.

It makes plain sense to leverage our software capabilities.

The middle aged and the old chartered accountants may not be at ease with software and Internet. This is no cause for worry. We have enough youngsters to help us. In any case the next generation is more important than the present generation. Let us create a ground work for the next generation so that they can take over the world.

10. In this light I have following sincere requests to the Institute of Chartered Accountants.

10.1 Make Internet & software capabilities a part of our syllabus. The syllabus should be modern and pragmatic. It should constantly be updated as modern technologies keep changing. It should be our endeavour to ensure that every year the new chartered accountant that enters the profession is well equipped to take on the Internet world.

10.2 The Institute must have a large web page data. Place good enough data about all our members on the web page. Let any one from the world visit the Institute’s web page and find out the basic information about our members.

10.3 Encourage all existing members into acquiring Internet capabilities – hardware & software.

10.4 Encourage the members in having their own web pages on the Institute’s server. This way, the Institute can make it easy for the members to have their web page and at the same time prevent unethical advertisement.

The Institute may provide transparent guidelines for the web pages. For example, nobody can advertise on the Internet. One cannot claim to have large clients, large turnover or large staff strength. These restrictions will place the large firms and the small firms on the level field.

Just as direct advertising cannot be permitted, intellectual dishonesty should also not be permitted.

At the same time, it must be made known to the world that we are capable to deal with all the professional needs of whether Indian or foreign clients.

This is a delicate task. It needs resources. It will need a will power to accomplish. I am confident that we have all the requisites.

11. Competence

I submit that in competence – intelligence, skill, hard work and strategies; Indian chartered accountant is in no way, inferior to any foreign chartered accountant. If anyone claims that the foreign chartered accountant has more competence than the average Indian chartered accountant, I am not prepared to buy that argument.

The only factors the Indian lacks are :

(a) His syllabus does not equip him to be a truly global professional;

(b) He does not have exposure to global information; and

(c) He does not have financial resources.

Syllabus can be revised by the Institute.

Internet gives global exposures.

Internet does not come free. But at the same time, it does not demand impossible resources.

Give these practical resources to the Indian chartered accountant and see that he will prove his superiority in global competence.

12. Video / Internet Conferences

The Institute can popularise the Internet facilities by arranging several Video Conferences. A typical Video Conference may work as given below.

12.1 All branches and several chapter offices of the Institute may have Video Conference facilities. All these may be connected by Cable Internet.

12.2 A conference may be organised at say, Delhi in a Video Conference Hall (VCH) which can accommodate 100 participants.

12.3 Two faculty members and one Internet expert are present at the VCH.

12.4 At Bombay, Hyderabad, Chennai and Ahmedabad simultaneous conference are held. Local members in groups of twenty to fifty are present in those cities’ Institute VCHs.

Bombay VCH may have two more faculty members present physically in the hall.

Each centre will have its own IT expert available at the VCHs.

12.5 Simultaneous conferences may be held at Singapore and Hongkong.

Local Professional bodies may join Indian Conference.

Their participants may join in their conference rooms. They have their own faculty members also.

12.6 The Delhi expert can control entire visual display.

Whenever any faculty member from any centre is making a presentation, participants from everywhere can watch & listen to the faculty member. The scene may shift from Delhi to Bombay to Singapore / Hongkong & back to Delhi.

12.7 When any participant from anywhere wants to raise a query, he may indicate his desire. The chairman may permit him to raise the query. If permitted, the camera will shift to the querist. All the participants world over will watch & listen the querist.

12.8 Individual members having VCH facilities in their own offices can join the conference from their own offices.

12.9 If these conferences are globalised, we can present our true worth before the global community; & win them over.

12.10 Technically, it is not possible today. It should become easier when the Cable Internet facilities are available.

Internet Competence is our greatest help in achieving a global status that we truly deserve.

13. The Institute may provide its own server to the members. The members may select Institute’s server or any other server. However, every member having a web page may be required to intimate the web page address to the Institute. Wherever, it is found that an existing web page needs modifications to avoid the charge of “advertisement”, the Institute can advise the member for making necessary modifications. If the member does not comply, then the disciplinary action may be taken.

14. I am confident, we will achieve are true place in the global market with solid help from our Institute.