Memorandum to the President of ICAI on some of the issues challenging the Profession

Respected Sir,

It is a matter of great pleasure for all of us that you are visiting our Faridabad Branch on 19th June, 2013. We are eagerly waiting for the day, for having a live interaction with you. Being unsure, whether Branch Chairman will permit us to give you this memorandum in person, we are sending this memorandum through e-mail. If Branch Chairman permitted us, we would also like to submit a copy of this memorandum in person to you and to the other CC members. 

Yourself being long associated with the various committees of ICAI, for a very long time; must be well aware about the problems and challenges, facing the profession. As Chairman of Committee for Member in Industry, you have great achievements and might be very well aware about the problems faced by the younger members, particularly in getting the employment. 

This memorandum conveys the feelings of members (from industry, from practice) across the country. We request you, and other Council members, to kindly have a thorough look, with positive and open mind, on the matters, discussed in this memorandum. 

PROBLEM OF INCREASING UMEMPLOYMENT/DECREASING PROFESSIONAL OPPORTUITIES FOR THE NEW MEMBERS

1. We, all are concerned, where; our CA education is heading to. General perception, in the market today is: ICAI seems to be manufacturing CAs and not making them - we don’t need them now. Since last 5 years; there has been an exorbitant increase in the number of students well known to all. This increase of students into this course is not because of ICAI’s popularity but the marketing skills of coaching institutions. At present 10 lac plus students are undergoing CA course, and at least 40 years are required to qualify for all the students as CAs.

Out of more than 80% of the students passing (with the generosity of ICAI) only 10 % of the candidates are absorbed at the campus interviews and the demand and supply gap is increasing day by day. 

We can imagine where the profession will stand in near future if this will continue. Alike closure of more than 250 MBA Institutes in India since 2010; soon students will also not ENTER in this course. 

Question arises after paying good amount of fee of Rs.42,000/-by a CA Student; why after qualification he is not being accepted in the “market.” 

Not that the present generation lacks in anything, they are far more intelligent, smart and well informed, but as students of CA course they seem to be lacking in applying these skills. After having discussion with the various members across the country, it emerged that: 

Ø Our curriculum and training regime is the main cause, and updating of course curriculum to satisfy the needs of students, employees and society is the need of the hour. 

Since at ICAI level; coaching facilities could not be developed across the country; hence some members started running Coaching Institutes parallel to the ICAI and students started giving more importance to such coaching. At the time of joining the course; the basic misconception in the candidates is to get immediate job after the qualification. Due to this; they focus more on “passing” than “practical training.”

Some of our respected, CC members, past and present, are also running coaching institutes and now even some past Presidents are also going to start “Class room coaching, with unique idea of in house articleship”. It means now CA Coaching is more “paying” than “auditing” without any “risk.” Apparently conflict of interest is there. 

Ø Efficacy of Training: The training period of articles is not being monitored at any level by ICAI. At present number of Article Clerks a member can have, depends upon his number of year’s practice, which needs a fresh look. If a member has 20 years plus practice, but his turnover does not come, even in the bracket of service tax, do you think he needs number of articles, for which he is entitled as per, present regulations. It is observed that in most of such cases, dummy atricleships are being provided, for consideration. 

Ø Examination system is like quality testing lab and our question papers have become predictable and the questions do not have enough spice, we mean have no practical contents. We don’t seem to test the knowledge (conceptual and application) of the student instead we seem to be testing the memory. The papers have become so predictable that coaching institutions are able to predict 60% of the questions. How they are able to do that is a million dollar question. These mass manufacturers seem to know our testing methods better than us.

After discussing with many members, we put forth the following suggestions to restore the credibility of this institution, to cater to the industry and profession with equal zeal.

SUGGESTION: FOCUS ON QUALITY AND NOT QUANTITY

Ø Make entry tough to CPT, like IIT and CAT, so that non serious candidates can be dissuaded from getting into course. (Otherwise at least 8 lacs frustrated students will emerge after 5-6 years in the system). After making CPT tough; passing percentage may be increased (due to quality of CPT; it is likely to be increased automatically). Although in CA Final at present, we see a score of 90 plus marks in Direct Tax and Indirect Tax Papers by some students as if they are master of masters!

Ø Provide good coaching facilities at all branches and ensure that students compulsorily attend classes of the institute. If class rooms coaching’s not practically possible, across the country, option of virtual classes, can be explored. Many private institutes are successfully running these virtual classes. ICAI is more capable and more resourceful, and can easily provide virtual classes. 

Conduct periodic tests for those attending the institute’s classes and allocate some marks for these exams. Allot some percentage marks for the internal assessments that are conducted during these classes. Reinforcement of theoretical education along with application based learning, including relevant multi –disciplinary cases as part of curriculum, particularly dealing with issues such as global market, blending information technology with financial decision making, is required.

The question papers should be packed with more practical questions rather than the regular predictable ones the papers are having today and compulsorily include 40% paper based on Case Studies.

Ø Orientation, IT training and GMCS needs complete overhaul and uniform training course module across the country, keeping in view the demand of the industry and practitioners. At present; “internal” political influence plays a vital role in selection of faculties. Board of studies, should conduct a survey and after having feed back of the students and members can revise the curriculum, maintain a panel of good faculties from top class practitioners and reputed B schools and appointment of faculties should not be at the discretion of the Branches/Regional councils.

There is a need that training given to articles be monitored by(a) introduction of e-Diary system(b) By conducting student’s surveys to assessee quality of articleship (c) giving industrial training by conducting visits in banks,industry,regulatory organizations for familiarization.

Ø System of giving grace marks be suspended till the improvement of the present economic scenario. 

Ø Emphasis on the subjects, for those members, who want to join industry for which some of the subjects in the final may be altered to give specialized training in finance, stock markets, treasury, general management and the like for the people opting for industry.

Ø Special training module for those students, who have completed their articleship in smaller towns, to give them proper exposure. Students who complete their articleship in bigger cities are more equipped than those who get training in smaller towns. For eligibility of number of Articles, of a member, number of years of practice should not be the sole criteria, it should also be linked with the amount of receipt of the member/firm(in which he is partner) 

Ø Increase in the stipend payable to the Articles. Even a matriculate peon today costs around Rs. 6,000.00 to Rs.8,000.00. ICAI should immediately revise the stipend payable to the articles, to boost their morale and for many to meet their needs of studies. This will also encourage quality work from articled clerks and discourage appointing more articled clerks where the employer does not have sufficient professional work.

Ø Free CPE seminars and conferences to youngsters for certain period of time; say 2 years, to better equip their knowledge. CPE fee is a big constraint for the youngsters, particularly those who are unemployed. This can be easily introduced without any effort. Data will be automatically generated actually how many CAs are unemployed. Seminars through webcast are a welcome step, but many members do not know how to use it. Some seminars should be conducted, how to take part in seminars, which are organized through web-casts. Even many members are unaware of such seminars. 

SUGGESTION FOR INCREASING PROFESSIONAL OPPORTUNITIES: 

Ø Do not just make rules, ensure strict compliance too: Strict compliance of the ceiling of Audits prescribed by ICAI: We have not heard, whether ever ICAI has devised any system to check whether the members of ICAI are doing audits, with in the prescribed limit of ICAI. 

CBDT data on e-filed tax audits is an eye opener for ICAI. This data revealed that 9500 members conducted Tax Audits in excess of the specified limit (of 45). Had there been any monitoring system in ICAI, this would not happen, and other members would have got work. ICAI should strictly enforce this audit limit and the erring members be barred from doing number of audits, which they have done, in excess of their eligibility, in the years to follow. 

CBDT data further revealed that 2700 members conducted audits having no COP. Strict disciplinary action is required on part of ICAI to stop recurrence of such things in future. 

Ø Representation to Ministry of Finance and RBI for maintaining panel for all type of Bank Audits ranging from Revenue, Concurrent, Inspection and Statutory Audits. Use of print and electronic media to convey message to the public, of the consequences of increasing the bank branch audit limit by Ministry of Finance. Recently after exposure of involvement of many banks in money laundering there was good opportunity to put pressure on the Government for restoring the earlier limit for Bank Branch Audit. 

Ø Check on dummy COP, through appropriate mechanism. At present many members are in full time service, in the garb of retainership. They are doing all the functions which an employee does and at the same time doing attestation work also. They are doing audit work on very cheap rates, jus to earn some extra income, over and above what they are getting from service. Even some of these members are in full time business and have lent their name to another CA firm, to increase its strength for CAG and Bank Audit empanelment. Such member’s are eating the share of our youngsters and many SME firms. A declaration along with copy of 26AS may be obtained, with COP fee each year. This declaration shall keep in check such members, because they will have the fear of facing disciplinary action for false declaration. Form 26AS will give exact nature of earnings by a member, i.e. composition of earnings through practice ,job or reatinership.As per CBDT data on e-filed Tax Audit Reports 736 members holding part time COP conducted tax audits.

Ø One firm, at least one concurrent audit. At present many firms have 4-5 to concurrent audits, whereas some firms have none. Possibilities should be explored that each SME should get one concurrent Audit. 

Ø Tendering system: Some mechanism should be devised, to maintain the prestige of ICAI, while quoting for any tender by any member of the Recently there were news of quoting Rs. 174/- per gram Panchayat for Panchayat Audit for Hoogly and another CA quoted Rs. 224/- for another, from your own home state. A suitable guidance note in this regard may be issued, containing the guidelines, for the members, to be followed before giving quotation and participating in any tendering process. Violation of this guidance note, be viewed as professional misconduct. 

Ø For doing audit of various branches, regional councils of the ICAI or for any other audit work of the ICAI, preference may be given to these SME firms, rather than big firms and that too on joint audit system. In that way number of SME firms will get the work.

2. Second main concern is despite conducting good number of CPE Study Meetings; such meetings have GROSSLY FAILED to update the knowledge of members to the DESIRED LEVEL. Excellency was expected from such meetings; but in majority of the cases; there are resulting into TIME KILLING. The “faulty system” of conducting such meetings is responsible for this. Same is the “position” of various conferences and seminars. In the absence of strict action on part of ICAI, this whole process is loosing its relevance. Good time is wasted on garlanding, speeches. Dais looks like a political party dais, in complete violation of CPE guidelines. Attendances are never checked for proxies. Every year the date of attending minimum CPE hours is extended for political reasons. Whether any action has been taken against any member for not fulfilling the condition of minimum CPE Hours.? 

SUGGESTION:

Ø We suggest more and more WORKSHOPS should be conducted, which will surely result into professional excellence. This would be very helpful to fresh CAs who could not have exposure in various professional fields during their articleship training. 

Ø Most of the POU’s , most of the time, organize programs for members in practice. Emphasis should also be on the programs concerning the members in industry. A CPE portal may be started, where the members/students who for some reason could not attend seminars, can view the recordings of important seminars, addressed by best faculties on the subject. 

Ø Re-visiting of CPE guidelines and make necessary amendments, keeping in view the current scenario. Ensure strict compliance of CPE guidelines by all the Branches and POU’s. 

In the end there was a great ACTION PLAN 2012-13, when you were Vice-President, published in ICAI Journal March, 2012 issue page 1310-14. We are hopeful under your able leadership CC, will be working in the direction, for achieving that action plan. We request you to kindly, share the progress and status of the various initiatives of that action plan, particularly on the following: 

(a) A Survey was to be conducted to know the requirement of students, industry, government and other regulators. 

(b) REAL LIFE CASE STUDIES were to be introduced in the EXAMINATION QUESTION PAPERS.

(c) Student surveys were to be undertaken to assess the quality of articleship training.

(d) E-mail, material and/or sms were to be sent to the students to popularize Industrial Training.

Thanking you, cc: All CC members of ICAI

Yours truly,

Sd/-

(CA. DEEP KUMAR JAIN)