Simple efforts to keep accountants ‘simple’

With the advent of new information technology and its
interface with business requirements, the role of a traditional accountant has
changed drastically. From Bahikhatas to software packages like Tally and now
from Tally to enterprise resource planning through Oracle, SAP, Hyperian, etc.
accounting has taken an entirely different shape taking care of the needs of
business in the fast-changing economy. There is paradigm shift in the roles,
responsibilities and perception for an accountant in an organisation. This is a
free economy and factors like geographical spread of a business, different
regulatory bodies to govern the business, rapid penetration of technology into
the business systems, expectation of management to have online information to
take timely and strategic decisions, etc. are now governing businesses more than
any other factors. An accountant is not an exception to this change mechanism.
Intense business and organisational pressure coupled with expected deliverables
have led all accountants to rethink and reshape their footing in the
organisation.

This is the period of transition and with globalisation of
economy, efforts to corner the functions such as accounting are wholeheartedly
attempted in the name of business opportunities, through mere compliance and
rework activities. This is the time where an accountant is wandering round the
corners of an organisation to keep his values alive and to keep pace with the
new-edge technology. With this kind of rapid changes in business places, a
traditional accountant is bound to become a rare species nowadays in India. This
situation would arise, unless accountants, organisation, professionals bodies as
well as the Government take a relook at the current practices. Everyone attempts
cost and productivity optimisation, but no one in the organisation talks about
the necessity of good book keeping that gives data integrity.

What should be done to keep accountants and accounting as
simple as possible from an accountant’s perspective ? Yes, a traditional
accountant always starts his daily organisation life with debit/credit and ends
the day with debit/credit. There are no innovative activities in his work
methods, other than accounts reconciliations, accounts scrutiny, etc. or some
reporting for cost controls. Here is an attempt to give some thoughts and raise
issues on measures required to enhance the role of an accountant from an
accountant’s perspective.

(1) National holiday :

For the last several years, accounting people of this nation
could never enjoy the national holiday on 2nd October, birthday of the father of
the nation Mahatma Gandhi. On this holiday, when all Government and other
companies enjoy holiday, accounts people in India work to complete half-yearly
accounts of organisations. They are helpless due to their commitments and
desired deliverables to their organisation. In fact they are even entitled to
overtime, allowance and they do not get a compensatory off in lieu of this
holiday. It is said that creativity starts in empty minds, therefore it is
desirable to give relief, so that all accounting people can enjoy the birthday
of the Father of Nation by one or other means.

(2) No more decimals :

Majority of companies (and especially banking companies)
raises its invoices/debit notes and other business instruments in fraction of
rupees. While accounting these debit notes/invoices in books of accounts,
accounting people have to give extra precaution on the decimal part of the
invoices. In case they commit mistakes to account for these debit notes/invoices
to the exact amount, these lead to reconciliation/payment problems. This is
leading all accounting people of this country to wear untimely spectacles. This
sometime delays the marriages of female accountants wearing spectacles.
Adjustments of these instruments in books require checking of calculations on
calculator. Rounding off of the business instruments will save the manual
efforts to use at least two keys on calculator. So it is desirable to provide
for compulsory rounding off of all business instruments in all business
transactions to save man-hours.

(3) Even and not odds :

Indians are habituated for the even and not odd ! Last year
budget imposed 1% higher education cess, thereby demanding imposition/deduction
of 3% cess on all tax liabilities of the organisation. In majority cases 3%
amount of cess never tends to be rounded of. So accounting people have genuine
reasons to urge the Government to hike cess from 3% to 4%. This will give
accounting minds of the nation bit relaxation in calculation of the cess and its
adjustments in books of accounts.

(4) Chart  of accounts:

The Excise Department generally asks companies to furnish information about Service Tax and Education Cess on Service Tax paid/charged during the period (Of course this period may go up to years). After all, it is their statutory privilege. However, this privilege of Excise Dept. creates embarrassing situation for accounts people. Finding out the amount of Service Tax and cess paid / charged with the amount of taxable services received/rendered is not an easy task. After all, accountants have to exactly round off the amount of Service Tax and cess levy / paid with taxable services rendered/received by the company. So, going one step forward, it would be prudent for all if the amount of cess is clubbed in the tax structure itself. Instead of charging cess in different heads it can be charged in one head only. This will reduce chart of accounts of all companies and all accounting people will have to reconcile lesser numbers of general  ledgers accounts.

Our corporate laws provide for quarterly board and audit committee meetings. Every quarter, accounting people of this nation have to prepare complete set of books of accounts by late sitting in office. Four times in a year, they have to take care of statutoryr audit team and directors. After all they have to arrange for their pleasant stay, good food, sight-seeing and valuable gifts. They have to be online on E-mails, cell phones, etc. for easy accessibility. If the Government reduces the mandatory requirement of audited books of accounts from 4 to 2, this will be of great saving to the valuable national resources. Most of all, this will give accountants an opportunity to go home in time and to share moments of life with their family and others. So by reducing the, number, the Government will be contributing to their family peace and country’s social development as well.

Indian tax laws provide for issuance of Tax Deducted at Source (TDS) certificates within 30 days of deduction of tax. Similarly, C forms for the quarter are to be issued by the end of the next quarter. Earlier accountants were accustomed to issue yearly TDS certificates and C forms. Change in time frame has led all accountants to be followed up rigorously by their vendors. Issuing transaction-based TDS forms and quarterly C forms are adding to the manpower cost and paper cost to their company. Mere small mistake in issuing these two certificates leads all accountants being followed up by E-mails( post cards, faxes, and calls not only in office but a home as well. After all, issue of TDS forms, C forms demands a lot of reconciliations, clarifications, communications and resources. So if the Government provides for issuing annual TDS certificates and C forms, this will help all accountants. Of course, this will assist in role change of an accountant from ‘Accountant’ to an ‘Environmentalist.’

The amount qualifying for FBT under Tax laws in case of conference fee is nil, while any amount spent to attend the conference like travel expenses are subject to FBT. Whenever company officials travel to attend seminars, accountants have to account for the conference fee and expenses incurred to attend the conference separately to reduce the FBT burden of company. This gives accountants additional pain to put two accounting entries after searchin complete set of expenditure sheet. In view of tills, if the Government brings the conference fee within the ambit of FBT, this will consolidate existing requirement of two separate accounting entries into one.

One may laugh on reading the above small efforts, but this is reality that needs to be accepted. In words of Ernest Oimnet, “Ideas are the roots of creation”. These are the ideas of an accountant. Yes, the minority voice of industry to which no one pays attention. This is the right time to raise the issues on a fronts. This is the start of the ringing of the beir. Business giants like Enron, World Com, Tyco International have collapsed due to non-confidence in the financial reporting system. Maintenance of data integrity in the different information technology environment will be the greatest challenge for an organisation in coming years. This is the time for both, the government and the business, to keep things simple. If business does not care for these things, business will suffer not today but surely tomorrow. Data integrity can only be achieved by letting accounts people be a bit relaxed. Allow accountants to spare some time for their thought process, so that they can devote time to create? better understanding of their roles to achieve organisational objectives and goals. The above small efforts on the government front will give accountants an opportunity to synergise accounting with organisational strategy and structure. After all, “For the experienced to survive, reality must be considered,” says, Charles B. Richardson. Simple but important, the above steps will help all accountants at large to keep them ‘Simple’.