Role of Professionals in Sustaining a Business

-B.V.Raghunandan, SVS College, Bantwal

Institute of Chartered Accountants of India, Udupi Chapter

December 20, 2010

A Professional

A person with a highest level of knowledge in a specialised area

Possessing a prescribed qualification as per law

Legal sanction due to his work affecting lives of hundreds and thousands of people

Professional Ethics A non-professional can not duplicate the work

The Idea of a Professional

‘A true professional realises that being a professional is nothing short of a religion and that the capacity to serve is indeed a blessing in life’- Subroto Bagchi

-case of Mahadeva, the street dweller -case of I.U.Khan and R.K. Anand in Sanjeev

Nanda case -professionalism involves doing a dedicated

work without supervision

Types of Professionals

‘I am the King’ Professional ‘Customer is the King’ Professional ‘Government is the King’ Professional ‘Society is the King’ Professional ‘Truth is the King’ Professional

Business Sustainability Financial Reporting Accounting Professionals Individual Greed Institutionalising

Individual Greed Helping Professional

Managers Collusion with Promoters Ill advising the Promoters

Double Entry System One of the Greatest

Discovery of Mankind Discovered by Luca Pacioli Inspiration for Newton’s

Third Law of Motion Only Comprehensive

System of Book-Keeping Stability, Flexibility and

Agility Compatible for

Computerised Accounting

Accounting Principles Evolved by Practice Fixed Assets at Opening

Balance less Depreciation Current Assets at Closing

Values Accounting Conventions

and Concepts Simplicity and Stability in

the Long Run Accounting was a Passive

Function of Management

Genesis of Vested Interest

Managerial Bonus as a Percentage of Profit Joint Stock Form of Organisation Listing of Shares on a Stock Exchange International Raising of Finance Meeting Shareholders’ Expectation Investment Analysts Quarterly Reporting Accounting became an Active Managerial

Function

Manipulation of Figures

Accounting Professionals Auditing Creative Accounting Auditor-Management Nexus Need for Concealment of Manipulation Making Accounting Complex Making Annual Reports Voluminous Attractive Annual Reports

Means of Scandals

Accounting Standards Auditor: Policeman-Thief-Forensic Expert Elaborate Reporting So- Called Transparency in Accounting Credit Rating Agencies Band-Wagon Mentality Cash Oriented Conscience Professional Managers

Accounting Standards

Started at the Initiative of IOSCO Uniformity Defeated at the Inception Different Standards for Different Countries Complex in Nature Ever-Changing in Nature Too Many Standards Impossibility of Off Hand Preparation of

Annual Reports

Auditor: Policeman-Thief-Forensic Expert

Not a Watch Dog any more Party to Sharing the Loot Guided the Companies in Manipulation of

Accounts Helped Accounting Bodies to Prepare

Accounting Standards Helped Clients in Violating Accounting

Standards Investigated Accounting Violations

Elaborate Reporting

Voluminous Reports Expensive Reporting Led to Delisting of Shares Wasteful Expenditure in Creating a Hype Efforts to Cultivate Media Coming up with New Practices like Segment

Reporting, Related Party Disclosure Proliferation of Statements like Cash Flow

Statements and Fund Flow Statements

Transparency in Accounting

Too Many Details Too Many Statements Impressive Accounting Photo Features of

Smiling Faces Expensive Reports Vital Information was

always Sensitive Technical Details and

Jargon

Credit Rating Agencies Third Party Certification Part of Groupthink for a Fee Changed rating on

Generalities Lot of Vested Interest in

Rating A Ring of Bandits Increased the Financial

Cost of Operation Multiple and Varied Rates Shopping for Rating

Band Wagon Mentality

Impressive Operations Conflict of Interest in

Financial Services Mutual Agreement Club No Investigative Effort

for the Unfurnished Facts

Sensational Media

Cash Oriented Conscience

Slavery to Remuneration & Perquisites

Selfish and Self-Centered Attitude

No Protection to Whistle Blower

All Pervading Cowardice Unpracticing Values and

Hypocrisy

Professional Managers Gypsies in Search of

Treasure Need to Exploit the

Organisation and Run Qualification and Empty

Work Experience and Not Quality

Highly Commercialised Culture

Expensive Services Responsible for

manipulation

Agenda

Simplification Scrapping Accounting Standards Basic Annual Reports Fiduciary Responsibility of Credit Rating agencies Loyal Managers Random Selection of Auditors by Government Random Selection of Independent Directors by

Government

THANK YOU