By Kirit S. Sanghvi, Chartered Accountant
Article
“How much money you need to make a charity of Rs.100 ?” This
is the question asked of a group of people. The answer may vary depending upon
the nature of the group. For example, a group of people aspiring for admission
to a management course may ask a counter question : How much is the financial
requirement of the donor to meet his normal needs ? Will he be left, after he
had made the charity, with sufficient funds to meet his requirements ? A group
of financial experts, or aspiring experts, will ask about the time when the
charity is to be made, for a charity of Rs.100 to be made now has a different
time value of money from a charity to be made a year hence. They will think that
if the charity is to be made a year hence, then the donor needs roughly Rs.91
today if the rate of discount is 10%.
Do you find anything strange in these answers ? Yes, what you
find strange is that no group is able to see the question straight. Each
believes it is a complex question, and each, while trying to answer it, adds its
own bit of complexity to the question. The management group wants to look at the
question from the management angle, and the financial experts bring in the time
value of money. Nobody seems to think that to make a charity of Rs.100 all that
you need is Rs.100. The question does not require hypothesizing anything.
Why can’t we think straight ? Because we have lost simplicity
in our thinking. We have started believing that anything that is simple is too
true to be accepted, and anything that is good has to be complex, or anything
that is complex has to be good. We equate complexity with beauty and simplism
with being simpleton.
Let us look around and see how much complexity we are
surrounded with. You see an advertisement on TV in which a monkey snatches an
undergarment from a clothesline and makes a peculiar noise. He wears it, jumps
and finally leaves the garment hanging on the tree. I have often tried to figure
out what is the advertisement all about. Does it promote sale of garments or is
it an advertisement made by an animal protection group ? It is too complex. May
be the creator of the advertisement thinks that anything that is complex is
beautiful. Let us take one more example. Newspapers recently reported a
statement made by a legal expert in the context of a crime where the convicts
were handed over death punishment, which read, “The act was diabolic of the
superlative degree in conception and cruel in execution and does not fall within
any comprehension of the basic humanness which indicates the mindset which
cannot be said to be amenable for any reformation.” It was too complex. All that
the statement meant was that a heinous crime was committed and the culprits were
beyond the scope of reformation. People usually go gaga over complex things and
associate complexity with intelligence, whereas, the fact of the matter is that
more often than not complexity reflects ignorance and lack of grip of the person
over the subject. What is really difficult is to make things simple. Only one
who is truly well versed in a subject can present the subject in a manner that
is simple and intelligible to a layman.
In all these complex cases you are as perplexed as others.
Others do not speak up. You too fear that if you admitted that you did not
understand, you would be regarded as a moron. You keep mum.
Jack Trout, a management consultant, has written a book
titled ‘The Power of Simplicity’1.
He advocates simplicity in every field by showing how simple things succeed in
life and how much more effective they can be. While giving a few more examples
of so-called experts who make things complex, he says that when an expert on
environment may say that he is doing environmental scanning what he really may
be meaning is that he is looking out of the window.
Why can’t we be simple ? There are psychological reasons.
Basically it is our fear that keeps us from admitting what we believe. Jack
Trout lists the following fears :
1. Fear of failure
2. Fear of self defence
3. Fear of trusting others
4. Fear of thinking
5. Fear of speaking
6. Fear of being alone
According to Jack Trout complexity can be attributed to the
fear of thinking. He believes that we fear thinking and therefore look to others
for solutions. Thus, we end up accepting solutions offered by others and that
too only if the solutions are complex.
Why are we discussing the topic of simplicity and
complexity ? Because it concerns us finally as chartered accountants. Let us
take a few more examples of complexity around us in our own profession. The
first one that comes to my mind is the provisions of S. 80HHC of the Income-tax
Act, 1961 (the I.T. Act). The provisions, as they were, were already complex and
as though this complexity were not enough, we, the taxpayer and, I must state
with due respect, the judiciary, made them more complex. Then there are the
provisions relating to Fringe Benefit Tax. Here also, as though the Government
thought that the provisions were not complex enough that the CBDT issued the
Circular which hardly anybody can claim to have fully understood. Then there are
a number of accounting standards (AS) full of complexities. AS-15 relating to
Employees’ Cost, AS-30 relating to Financial Investments and AS-31 relating to
Financial Instruments, to name a few, are some such complex standards.
Professionals in private admit that few of them have been able to fully grasp
these standards. This is not to suggest that there are no chartered accountants
who have not grasped the standards; there are. But these chartered accountants
have used their valuable energy on something that is not as valuable, at least
to the society, as it ostensibly appears.
Another reason why we have developed complex-ity around us is that we harbour a false notion that if we are complex in our expression we look more professional. However, we have paid a heavy price by being or trying to appear professional.
If we do not wake up in time, we may observe most complex rules, regulations and ASs in breach and will secretly hold them in contempt. Once we hold ASs in contempt and ostensibly present accounts hardly intelligible to the public, we will be removed from the public also, and may eventually lose their esteem. We perhaps created complexity to tell the world that our job is difficult, and thereby, to earn esteem. But that very thing which was devised to earn us esteem will destroy the little esteem the public holds us in. I am reminded of a dialogue between two doctors in Bernard Shaw’s play “Doctor’s Dilemma”, which though is uttered in the context of the doctor’s profession may as well apply to us. The dialogue runs like this:
Ridgeon: “We’re not a profession: we’re a conspiracy.”
Sir Patrick: “All professions are conspiracies against the laity.”
I recommend all to read Jack Trout’s book – “The Power of Simplicity” and to contribute to make life simpler and better.
