India will soon have professional degree-granting colleges for accountants along the lines of IITs and IIMs. The Modi government is bringing an amendment to the Chartered Accountants Act in order to end the monopoly of regulatory bodies like ICAI, ICWAI, and ICSI. The Bill — to amend the Chartered Accountants Act 1949, the Cost and Work Accountant Act 1959, and the Companies Secretary Act 1980 — was introduced by MoS (Corporate Affairs) Rao Inderjit Singh.
This bill will give the government greater control over the regulation of these professions and open up the sector which has been tightly controlled by private lobbies so far. So far, three institutes – Institute of Chartered Accountants of India (ICAI), Institute of Cost and Works Accountants of India (ICWAI) and Institute of Company Secretaries of India (ICSI) – manage and lead accounting professions in India.
“One institute – ICAI – has a monopoly over the auditing, assurance, attestation and certification functions. Now, if these functions are opened up to the ICWAI and ICSI, it could result in healthy competition. It would complement the overall growth of the finance and accounting profession,” said a senior accounting professional.
“Nurturing the other two institutes for these activities is also building competition. Given that these new institutes will be along the lines of IITs and IIMs, which are basically Centres of Excellence (CoEs), it will surely take a lot of time for these institutes to offer the same quality, attain the size and provide competition. So, rather than open a new institute, which is a long-term affair, it would be better to nurture the other two institutes,” he added.
India has very few accounting firms of repute. The accounting sector in India is dominated by the Big Four (Deloitte, PricewaterhouseCoopers (PwC), KPMG, and Ernst & Young)- all of which are United Kingdom based companies.
Given the kind of corporate fraud the country has witnessed in the last decade, one can argue that the accounting sector dominated by MNCs has failed the country. The accounts of almost all of the companies that failed in the last decade were approved by auditing firms and they found their balance sheets healthy.
The accounts enjoy great power without much responsibility as they are not held responsible if the banks or the people lose money by investing in a company.
With the new bill, the accounting profession will witness the entry of fresh talent from non-metro cities and villages. So far, the accounting profession has been dominated by graduates from metropolitan cities because the students in villages do not even have a fair idea of how to enter the accounting profession. Now a national level entrance exam will be held for entry into the Indian Institute of Accounting, just like the ones for IIT, IIM, and AIIMS.
Passouts from class 12th will sit for exams and enter the accounting profession without going through the complex and punishing process of articleship and training which is accessible only to people with right connections or good financial background.
Moreover, the perpetual shortage of accountants in the country will also be solved because the demand and supply will be decided by the market, not by somebody managed by a few private individuals. With the opening of the Indian Institute of Accounting (IIA), India may have an accounting firm of repute very soon just like the ones we have in the Information Technology sector.