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OBSERVATION AND ANALYSIS
Implications(2.1)
Implications for the Profession(2.1.1)
  The implications studies performed on the Core Purpose and Vision Statement at various Forums revealed that CAs working in all segments of the profession have common points from which they will drive change. An overview of the top rated implications from the Forums, along with examples for segments of the profession, are as follows:-
  Major implications
 
A broader focus beyond "Numbers" to strategic thinking will lead to increased opportunities, professional respect and increased rewards.
Expanded knowledge, education, experience and the seamless use of technology will create more opportunities to provide value, communicate solutions, and enhance the attractiveness of the profession.
Pre and post - CA education must be revamped to meet the demands of the profession in the future.
More competition will require a more aggressive marketing orientation and increased capital needs.
The profession's culture will need to adapt in order to attract and retain highly qualified members. The profession must address marketplace pressures from competitors in compensation packages, opportunities for rewards and advancement and who are accommodating leisure, Life Style and Culture performances.
Implications on various Segments of the Profession (2.1.2)
 
CAs working in industry will consolidate their base of business, operational and tactical skills, their understanding of operation and markets, and will expand their roles in Corporate strategy, performance measurement and decision making processes. CAs will become critical members of the management team focused on process, desired results and outcomes.
As working in education will accelerate change in faculty development, re-vitalise curriculum to meet the Vision, expand recruiting efforts, to focus on the profession of the future, expand methods of delivery including distance learning programmes, virtual class rooms and online courses.
CAs working in Government will influence regulations, standards and structure to enhance the interface among constituencies and the responsiveness to demands of economic realities and performance expectations.
As working in public practice will expand markets and services, focus on the ever-changing needs of their clients and public, as transactions and structures are increasingly more complex. To attract and retain quality staff, CAs will align their structures and culture, address capital and human resource needs, provide for lifestyle and cultural needs, and identify appropriate sources of training and education leading to enhanced competencies and solid skills.
Opportunities and Challenges(2.2)
Impact of Globalisation - Emerging Opportunities (2.2.1)
  Services to global organizations - Huge opportunities will be available for professionals with the specialised knowledge and skills sought by global organizations. These will include the areas of national and international taxation, finance and corporate law. Local knowledge will of course place Chartered Accountants in a strong position to supply services to global organizations entering the Indian market. However, the international arena will present even greater opportunities, not just to the large accounting firms and businesses, but to individual Chartered Accountants, small firms and businesses providing specialist services in functional areas, niche industries and geographic markets.
  Change management - There will be a high and on going demand for professional advice and related services to assist organizations in managing change at the ownership, structural and operational levels. Change management will become a major speciality in the business services market.
  New assurance and performance measurement services - Performance measurement incorporating non-financial criteria such as competitive performance, resource performance, process performance and environmental performance represents a new but complementary market for Chartered Accountants. Likewise, demands for risk-based measures of value and other new approaches in assurance present further opportunities.
  Stakeholder value creation - The Chartered Accountancy profession is well positioned to respond to the growing demands for improved measures of shareholder value and return on shareholder value.
  Strategic management - Professionals with high level strategic thinking and management skills will be even more highly marketable than is currently the case. More Chartered Accountants can specialize in these areas and rise to the top echelons of business.
  Finance - Increasingly complex global financial practices will present major opportunities to experts in financial administration, capital markets and international financial regulation.
  Information technology - For chartered Accountants, advancement in technology will close some markets but open others. For example, sophisticated software will enable new competitors from around the globe and minimally skilled in-house staff to perform traditional technical accounting tasks. Further, universal access to communications technology will render some intermediaries, including some professional advisers, obsolete. However, as business and government grapple to manage and regulate the complexities of global organizations' operations, electronic commerce and computer crime, new areas of opportunities for Chartered Accountants will emerge, including
 
The application of technology in new areas to achieve efficiencies nd add value to business
Data and systems assurance service
Electronic commerce - management and regulation of electronic ransactions
  Knowledge management - Knowledge management will become a professional discipline in its own right. Opportunities in this area will include the following
 
Information authentication, management, interpretation and evaluation
Management of proprietary, external and individual knowledge to add value to business
Continuous real time reporting
  Out-sourcing - Out sourcing is a growing area of opportunity for all Chartered Accountants. For those working in government, large private organizations and large firms, out-sourcing will present opportunities to reduce costs, extend service offerings and deliver new specialist services. For those operating individually or working in small business and firms the opportunities are to supply the out-sourced services either as stand alone service components or packaged as end to end services with other suppliers.
  General practice - In general practice, reduced opportunities in the traditional accounting markets such as audit and standard taxation services will be replaced by growing opportunities for relationship-based services. These will include
 
Pro-active advice and specially tailored services built from detailed knowledge and understanding of the client's business and industry. In effect, general practice will essentially be a specialty.
Assessing companies' identification of risks and the control systems designed to respond to those risks.
Working closely with internal auditors to test compliance with control systems.
Extending the range of assurance services to current users of annual statements (for example, by taking a more active role in fraud detection, giving opinions on long-term shareholder value and non-financial performance measures).
Increasing the relevance of audited financial statements to a broader range of stakeholders.
Using audit skills to offer assurance in new sectors such as environmental information, tendering procedures and quality control.
Increasing the timeliness, and therefore relevance, of auditing by giving opinions on reporting systems producing financial information for the markets on a monthly or quarterly basis.
Developing databases from which auditors can extract, and give their opinion on, the specific financial and commercial information requested by users.
Developing new assurance reports on pensions to meet the needs of an aging population - for example, reporting on whether the systems used by investment managers are adequate to protect a pension fund's investments.
Providing the new assurance reports that may also be needed in the public sector and by quasi-governmental agencies such as municipalities and cooperatives.
New Rural / Welfare schemes taken up by Government, Public Expenditure through Government Departments monitoring of special functions on behalf of various, Government/other authorities and agricultural operations are some of the new areas which will come under the purview of our profession.
Offering sophisticated audit services to other parts of the Globe as the barriers to cross-border services are dismantled.
Developing ad hoc assurance reports for (and perhaps even irectly to) third parties such as banks and credit agencies - particularly in respect of smaller businesses There may even be a need for assurance on specific items, such as stock & receivables, rather than on the financial statements as a whole.
Internal audit, however, is one area where the number of ccountants could increase. Although limited in terms of overall employment potential, we believe internal audit will become much more important within large organizations. Internal auditors will, in effect, become risk and control consultants working on the development and enhancement of new systems, products and processes. They will also be involved in due diligence work, which will be seen as providing a credible starting point for a successful career in business.
  Financial Reporting
  The internationalization of business and the harmonization of reporting standards will increase the pressure to raise the quality of financial information and be fully consistent across national boundaries.
  At the same time, management and financial accounts are likely to converge with non-financial performance measures, as companies and stakeholders demand greater value from the financial reporting process. Although, the analytical and interpretative functions (including benchmarking) are likely to remain the preserve of skilled professionals, those professionals will not necessarily be accountants.
  Small companies, on the other hand, are likely to see a significant simplification in their statutory reporting requirements.
  This simplification, coupled with increasing competition and new technology, will reduce the amount of financial reporting support, which small companies need from Chartered Accountants. But this effect may be partially offset by demands from banks and other third parties for customized financial reports.
  The drive for greater accountability and efficiency will open up new financial reporting and auditing opportunities in the public sector.
  Tax Compliance
  We believe that tax compliance services have some (limited) scope for expansion. But we also believe that tax compliance will be an unattractive area for many practitioners - except possibly as a semi-detached adjunct to the main practice of those able to exploit technology to handle high volumes profitably.
  Self-assessment and the broadening of the groups of taxpayers having to complete tax returns will mean more people will be looking for help.
  But work in this sector will be increasingly driven by technology and will need only a relatively small number of trained tax staff in supervisory roles. Margins will be low because of the competition from ex-income tax staff, tax shops and unqualified advisers made possible by the low barriers to entry.
  Annual compliance work will, of course, continue to be a platform from which accountants can sell other advisory services. But even here we may well see other competitors moving 'up market' into advisory roles.
  Tax advice and planning
 
Advising on cross - border tax issues.
Developing new tax-efficient products for the financial services sector.
Forensic work generated as a result of increased Income Tax Department audit and investigation activity.
Supporting companies with their VAT, Customs and Excise duties planning and helping them to design effective procedures for routine compliance work.
Advising high net worth individuals, families and trusts on how to manage their income tax, wealth tax and capital gains tax exposures. Longer life expectancy, early retirement and the expansion of the middle classes will make this a particularly attractive target market.
Niche opportunities for those offering specialist advisory services without the overheads of the international firms.
The prospects for senior tax specialists and managers in industry look very good. Larger companies are increasingly recognizing the enormous contributions that tax planning can make to strategic planning and shareholder value. As a result, the profile and workload of tax departments in industry will inevitably grow.
But there will also be pressure on tax departments to use their resources more efficiently. Part of their response to these pressures will be to look at outsourcing non-core functions, for example, personal tax planning for internationally mobile staff.
Outsourcing tax compliance work will also become a popular corporate strategy - mainly because of the cost savings which professional firms and others can make using IT applications that are common to all clients and supported by in- house training facilities.
  Some of the new demands on tax specialists in industry will include:
 
Becoming more accountable for bottom-line results i.e. tax as a percentage of pre-tax profits.
Developing much closer ties with the finance function in planning and executing tax strategies.
Developing international financial products.
Campaigning against Finance Bill provisions, which are not in the company's interest.
Integrating tax planning into long-term strategic planning and setting benchmarks for judging success.
Advising on the organization and accountability of tax staff.
Responding to uncertainties caused by the changing judicial approach to the interpretation of statute law.
Managing the outsourcing of direct and indirect tax compliance work.
  Corporate finance
  Insolvency and corporate recovery
 
Facing troubled times, many a corporate require restructuring and corporate recovery process, which involves more of partners time and less of juniors time.
Firms that can operate across borders have the resources to develop industry specialisms, and can exploit technology to trace assets and automate procedures, will have a major competitive advantage.
  Management consultancy
  Consultancy and advisory services will continue to grow in importance, expanding from traditional financial and business planning into wider issues of business effectiveness and on to leading edge areas such as re-engineering and corporate transformation. At least, some of the major firms will challenge the strategic consultancy organisations.
  At the same time niche opportunities will open up for smaller operators. And the business advice traditionally offered by practicing accountants would be an increasingly important value-added service although it will not necessarily be badged as consultancy.
  The overall growth in this sector will continue to create demand for the financial management and business appraisal skills in individual accountants. In the larger consultancies, at least, they will increasingly find themselves working in multi-disciplinary assignment teams, alongside post-experience specialists from other disciplines (such as marketing, supply chains, information systems and economics), and those with industry-specific knowledge.
  Development of new services (2.2.2)
  A brief summary of each services is as follows
  Electronic Commerce - The growth of electronic commerce is inhibited by lack of confidence in systems. We see a series of potential projects - business to consumer (B2C), business to business (B2B), Internet service providers and other services. Our service will be to develop capability to assess whether system and tools used in electronic commerce meet the defined criteria for data integrity, security and privacy and reliability. The first step will be aimed at business to consumer segment.
  Risk assessment - Entities are subject to greater risk and more radical changes in fortune than ever before. Managers and Investors are concerned about whether entities have identified the full scope of this risk and evaluate whether adequate precautions are taken to mitigate these risk. Our service is to ensure entities' identification of business risk is comprehensive and evaluate whether the entity has an appropriate system in place to effectively manage this risk.
  Performance measurement - Investors and Managers' demand more comprehensive information base than just financial statements. They need a balanced scorecard. The service evaluates whether an entity's performance measurement system contains relevant and reliable measures for assessing the extent to which the entity's goals and objectives are achieved and how this performance compares to its competitors.
  Systems quality - Information technology plays a vital role in supporting the activities of both profit oriented and non-profit organizations. The growth and change that has come about as a result of these trends have important implications. IT changes have created many new opportunities for CAs in areas such as information development, information system design, information systems management and control and system evaluation.
  These services will provide assurance on various aspects of quality of information system and will include branding of services for the benefit of CAs. Assurance on systems quality is also an essential step to provide continued assurance on information.
  Intellectual capital - This service will measure the intellectual capital by reference to agreed upon criteria for measurement and then provide for assurance on the measurement.
  Continuous assurance -Investor and managers demand a more timely base information than just audited financial statements. These services will recognize that the time between the event and acting upon the information has become more compressed and therefore there is a need to provide guidance to practitioners to provide assurance on an entity's continuously disclosed information, viz. quarterly reporting etc.
Impact of Globalisation - Challenges (2.2.3)
  New opportunities for the profession will pose challenges to both individual Chartered Accountants and the Institute of Chartered Accountants in India. The challenge for the profession as a whole, and for the different stakeholder groups within the profession, is to adopt a structure and mindset that can rapidly adapt to the changes in the profession and business community. A core skill will be change management with willingness to abandon the old and move toward the new.
  CABS - CABs is the acronym for Chartered Accountants who work in the business community. However this group also includes Chartered Accountants who work in government and academic organizations. Approximately 40% of total profession represents this segment.
Firms: Existing Structure (2.2.3)
 
  Small and Sole Firms - This includes Chartered Accountants working in public practice, in sole practice or in the smaller firms. To date, most of these firms have operated exclusively in local markets.
  Medium sized firms - This includes the so called 'second tier firms' and range from smaller to midsize category. Some of these firms operate both nationally and internationally.
  Large Firms -The large firms, operate nationally as well as internationally.
  While there is no uniform criteria to categorise the firms in small, medium and large size, the profile of CA firms in India comprise 31,144 proprietory firms, firms with 2-3 partners is 9265, 4-7 partners is 1682, 8-10 partners is 196, 11-13 partners is 27, 14-17 partners is 9 and 18-20 partners is 16.
  The Institute of Chartered Accountants of India - The final stakeholder group is the Institute, the regulatory body.
Challenges for CABs employed in Business and Management (2.2.4)
  Challenges
  Many challenges are 'generic' in nature - they will apply to more than one member segment Career changes mean that there is and will continue to be a lot of movement between segments by individual members.
  This membership segmentation may cease to have utility in the future. Indeed, as discussed further in this report, other segmentation approaches (area of specialization, global versus non-global business focus) are likely
  The challenges reported in this section apply to CABs working as business manager, either in financial roles or in general management roles.
  Change management - To assist the employer organization in adopting a culture that embraces change and ensure that the resources required to manage change are available.
  Global service - To ensure that enterprises access the best global services while maintaining appropriate ethical and professional standards. Thus CABs need to understand and manage:
 
The key issues driving the business
National and international issues
Globalization of taxation and corporate Law
  Critical strategic management - To develop strategic thinking and management skills. To understand all the key business drivers (not just the financial drivers) and so be in a position to provide valuable input to business.
  Finance administration - To reposition finance and financial administration as a forward looking strategic management function, while maintaining the probity and certainty of historical reporting.
  Non-financial measures - To develop systems to measure the performance of organization on other than financial criteria (e.g. competitive performance, resource performance, process performance, environmental and other traditionally ignored criteria).
 

Stakeholder expectations - To recognize and understand the perspective of the various stakeholders in the enterprise (e.g. shareholders, staff, unions, governments and the community at large) and to actively ensure a balance in meeting conflicting expectations.

 

Competencies

 

To acquire the necessary IT and forward looking strategic management skills to ensure that appropriate standards of service are provided to the enterprise.
To be in a position through a proper knowledge base, to demand and direct the services new telecommunications and information technology will enable.

 

Professional standards - To ensure professional standards are maintained despite cost pressures on service deliverers.

Challenges to CABs as Individual(2.2.5)

 

Change management - To adopt a culture that embraces change and to commit the resources required to manage change (on-going training, specialization).

 

Chartered Accountant qualification - To maintain the relevance and value of the Chartered Accountant qualification given the following changes in the business environment.

 

The trend for businesses to seek guidance from among a wide range of advisers on:

 

Stakeholder value creation
Strategic direction
Risk management
Knowledge management

 

The increasing range of global and cost effective service offering made available by:

 

New entrants/competitors
Specialists
IT based business applications

 

Competencies - To acquire and maintain a high level knowledge and skill base given the following trends in the market place:

 

Demand for extensive corporate knowledge
Demand for strategic planning skills and a pro-active approach to management
The increasing global activities of business
The diminishing traditional accounting and auditing roles
The expectation of high level technology skills
The opportunity to lead the process of information management and evaluation

Challenges for Small and Sole Firms(2.2.6)

 

Change management-To adopt a culture that embraces change and to commit the resources required to manage change (at the ownership, structural and operational levels).

 

Traditional accounting services - For small practices to address the static growth in their traditional markets by specializing, collaborating and growing.

 

Competition - To compete effectively against the increasing and cost driven competition by non-accounting firms in traditional markets.

 

Information technology

 

To resource and develop the IT knowledge and applications essential for practice development.
To utilize IT to overcome some of the structural problems facing small firms

 

On-going professional development - To overcome the difficulties in maintaining the increasing knowledge and developing new relevant skills.

 

Succession Planning - To create and realize the practice's goodwill and so ensure that financially acceptable retirement options will be available.

 

Retain Client Base - To grow with clients, match their needs and so retain a growing client base.

 

Staffing - To compete against the benefits offered by large firms ( on-going training, career opportunities etc.) in the market for high quality staff.

Challenges for Medium Sized Firms(2.2.7)

 

Change management - To adopt a culture that embraces change and to commit the resources required to manage change (at the ownership, structural and operational levels).

 

Specialization - To obtain competitive advantage via specialization at an industry level, in a functional area or in a niche market.

 

Marketing approaches

 

To customize or tailor solutions.
To develop a detailed understanding of clients' business and industry.

 

Resources

 

To ensure access to capital is available for IT and infrastructure.
To acquire and retain the human resources needed to develop new products and services.

 

Overseas markets - To develop the strong international links required to compete internationally and to operate as part of a consortium locally.

 

Large firms - To recognize the increasing threats and opportunities that will occur as large firms become global service providers.

 

Marketing partnerships

 

To form profession-wide and/or international co operatives to fund he development and marketing of new services.
To maximize brand equity via the formation of multi-disciplinary business alliances.

Challenges for Large Firms(2.2.8)

 

Change management - To adopt a culture that embraces change and to commit the resources required to manage change (at the ownership, structural and operational levels).

 

Risk management - To manage the liability and risk inherent in entering new markets and providing new services.

 

R & D - To fund or undertake research and development for new products and services.

 

Ownership & Control - To continue to meet professional standards and adhere to legislative requirements (e.g. attestation) under new market conditions such as changed ownership/control of firms and entry into new markets.

 

Globalization - To enter into new markets as stakeholders, to operate globally across legislative boundaries and to reconcile different national regulatory issues.

 

Human Resources - To create a common culture that integrates the different cultural intellectual frameworks within the global organization.

 

Technology - To resource adequately the development and management of technology needed to benefit clients, staff and firm.

 

Competitive advantage - To meet the increasing expectation of clients including the expectation for added value in the services provided.

Challenges for the Institute(2.2.9)

 

Change management - To adopt a culture that embraces change and to commit the resources required to manage change (at the structural and operational levels).

 

Education - To ensure the educational processes of the Institute:

 

Attract candidates from diverse cultural and academic professional ackgrounds
Emphasize finance and capital markets and telecommunications nd IT
Support specialization
Incorporate general management education and the creation of hareholder value
Reflect best practice status in sourcing educational products
Continue to incorporate core accounting skills
Enable reciprocal membership with other leading accounting nstitutions
Enable participation globally
Use the most appropriate delivery technology
Achieve the goals of 21st Century

 

Specialization - To promote and support specialization throughout members' careers. Organizational change - To initiate a process of organizational change with priority given to :

 

Becoming a pro-active knowledge-based institution
Adopting a more flexible, innovative and responsive organizational culture
Improving efficiency and service delivery
Monitoring the needs of disparate membership groups and addressing the needs of individuals members
Developing strategic alliances with other Indian accounting bodies
Working more closely and effectively with other Indian professional organizations.

 

Ownership - To develop guidelines on the ownership of firms, access to capital and distribution of profits that balance contemporary commercial needs and professional standards and to allow multi-disciplinary practices.

 

Globalisation - To lead the process of globalization of business and the profession by:

 

  Working with government on the international harmonization of taxation and corporate laws and standards
  Developing associations with professional and associated organizations Internationally
  Fostering networking of members

 

Chartered Accountant positioning - To secure member loyalty and improve the market recognition of Chartered Accountants by:

 

Promoting the core values of Chartered Accountants (especially about independence and ethical standards)
Promoting the blend of technical and business skills possessed by Chartered Accountants
Promoting Chartered Accountants' skills in new services and performance measurement
Promoting specialization

 

Leadership - To provide leadership in the development of

 

New services (e.g. assurance services) to be offered by members
New performance measurers (e.g. measures linking financial and non financial information)
New standards for new service
  Relationships with other professional and business associations

 

Advocacy - To demonstrate a leading advocacy role with national and international governments and regulators on all issues affecting the profession, including legal liability, competition and the development of new services.

 

Volunteer resources - To ensure sufficient volunteer resources will be available to support Institute activities.

 

 

 

 

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