Dear members,
With the POTUS (President of the United States) in LOTUS Land as the Chief Guest for the first time at the Nation’s 66th Republic Day celebrations, there couldn’t have been a louder endorsement of India’s growing global importance. It was indeed a step closer in bringing the world’s largest and oldest democracies together. Let’s hope this defining partnership in the 21st Century will lead to greater good, not only for the two Nations, but also for the World at large.
At our first Republic Day in 1950, the architects of our Constitution gave us the longest written and best possible framework that has kept India moving forward as a Nation, even though, there have been 99 amendments so far and the 100th amendment is in the offing. It may be noted that the Constitutional Amendment Bill for the GST is listed as the 122nd Amendment Bill as several previous bills have lapsed.
Regrettably, the awareness about provisions of our Constitution amongst masses remains inadequate, especially about the rights and the duties of Citizens. Besides the customary grand parade on the Republic Day, it is important for the Government to organise programmes to enhance awareness about our Constitution. The BCAS did publish a concise book titled “Fundamental Rights and Duties of Indian Citizens” under Citizens’ Education Series a few years ago aimed at informing citizens about their fundamental rights and duties under the Indian Constitution, as also how to enforce them, say, by filing a petition under Public Interest Litigation process or invoking provisions of Right to Information Act, as expedient, from time to time. India can grow into a developed nation only when its population is transformed into Citizens.
At the recently held ET Global Business Summit, the Hon’ble Prime Minister Narendra Modi upped the ante and invoked the dream of transforming India’s economy from $ 2 trillion to $ 20 trillion. This vision is indeed courageous, ambitious and inspiring. Its pursuit will indeed transform the whole of India. Several international experts at this summit have endorsed the Prime Minister’s vision. The Nobel-prize winning economist Paul Krugman hailed India as a country of the future. Noted scholar Nassim Nicholas Taleb, a distinguished professor of risk engineering at New York University and University of Oxford, remarked, `Democracy makes India more robust than China’.
Nassim Taleb, who has also authored thought provoking and much acclaimed books – Black Swan and Anti- Fragile, makes interesting points that one cannot forecast anything or everything and that forecasting has killed more businesses than anything else. The massive decline in oil prices of over 50% in a very short span of six months, sinking to its lowest levels in over five years, could not have been foreseen by anyone. Such an enormous crash is considered the black swan event of 2014. The falling oil prices are a bonanza to a developing country such as India that relies heavily on oil imports. However, the low prices appear to suggest that the world has not been able to recover fully from the economic crisis, and the global growth could remain a challenge. In an increasingly interdependent world, this does not bode well for any country including India.
The black swan event such as the one above, does raise questions about various financial decision-making and valuation models we frequently use where the shortcomings of underlying assumptions are largely overlooked. Taleb emphasises the need to be antifragile where the cost of error is small and benefits are big. With growing uncertainties, the accountants too will need to continue to evolve in their tools and techniques to overcome Black Swan challenges for their clients and for themselves.
As per recent statistics, there are approx. 60,500 firms registered with the ICAI. Out of this, nearly 97% firms are small or medium sized practices (SMPs) with almost 70% being proprietary concerns and the balance 27% with up to five partners. As such, the CA profession in India is largely dominated by SMPs and is highly fragmented. Only 244 firms have more than 10 partners. The largest firm has 29 partners.
In contrast, a 2014 survey of accounting firms in the UK shows at least 12 firms where the number of the partners exceeds 100. The number of partners at the largest firm is over 1,000. Interestingly, there are only 6,962 registered audit firms as at 31st December 2013 despite there being over 3,27,000 members of various accounting bodies in the UK and Ireland.
What will be the impact of various changes in various fields such as technology, economy and regulatory environment on our profession? Would rotation of auditors and other restrictions under the Companies Act, 2013 prove to be a Black Swan event for our profession? The rate of change coming from so many different directions must lead us to the conclusion that the future will be nothing like the past. Apparently, time seems to be running out for the mom-and-pop firms. In order to survive and thrive, the Chartered Accountants, especially those running SMPs, will need to adapt quickly and collaborate, and that will require the Chartered Accountants to hone their management skills substantially.
At a lecture meeting held recently, our member Milind Kothari discussed in detail the winds of change the CA profession is facing and shared his experience in successfully strategizing for growth. This vital area of practice management, often overlooked as the SMPs get caught in day to day grind, has been a theme of the annual Power Summits that the Information Technology and 4i Committee has been holding for last several years. I am glad the BCAS is playing an active role and has been a catalyst for meaningful collaboration amongst a large number of firms and members.
A pioneer in collaborative learning, the Residential Refresher Conference (RRC) remains the flagship event of the BCAS and continues its gallant march towards the Golden Jubilee. At the recently concluded 48th RRC at Udaipur, the participants acclaimed the high standard of the technical papers and the faculties. With nearly half of the participants from outside Mumbai and from across India, even the RRC provided an excellent opportunity for pan-India networking.
With barely few weeks left for the presentation of the Union Budget by the Finance Minister, the expectations are running high as this will be the first full-fledged budget of the new Government headed by the Hon’ble Prime Minister Shri Narendra Modi.
The BCAS too is preparing for the annual lecture meeting to be addressed for the record 27th year by respected Mr. S. E. Dastur, Senior Advocate. This meeting will be held on 4th March as usual at Dadar in Central Mumbai and will coincide with the release of our Budget Publication. Team BCAS once again looks forward to receiving your overwhelming support as in the past.
