Over the years the ICAI
has quite literally liberalized the passing out percentage to such an extent
that today more than 30% students pass out every six months as qualified
chartered accountants! It is good that so many CA’s are passing out, but, I
repeat but – is the Institute ensuring that each freshly qualified CA is
competent and based on that competency does it ensure that the fresh CA gets
gainful employment?? I am a relatively small practicing CA, and I get almost
600 mails a month for article-ship and for jobs for freshly qualified CA’s.
Where has this sudden flood of applications come from? Is the ICAI following a
sane education policy? Does the industry have the capability to absorb so many
CA’s? or are we devaluing the profession by just pushing in numbers without
taking care of quality? I do not deny that there will be brilliant students –
but at the same time we are also stuck with mediocre students who proudly
prefix their name with ‘CA’! Today a CA can be hired for as little as Rs. 20000
per month and still one finds that CA’s are jobless! This is a much as a
graduate gets in a call center! Should the ICAI not have a re-look at its
policy of passing students?
No job, alternative –
practice?
With CA’s flooding the
market and not getting a job, the alternative is to start a practice – which is
easier said than done as the cost of setting up a new practice in metros is
very steep with property prices and rentals beyond the reach of most freshly
qualified CA’s budgets.
I have been in practice
for the last 24 years and the challenges faced in practice are phenomenal –
especially if you want to follow the straight and narrow path. The clients do
not like an increase in fees, traditional practice is getting redundant and
does not have value - in fact it is losing monetary value! The new economy is
throwing more challenges and unless the smaller firms consolidate and innovate
they too will become redundant, with the big CA firms in a much better position
to corner all the glory work with economies of scale and contacts at high
levels. Let me run you through some traditional practice models and its revenue
stream showing which will show that fees have stagnated while costs have gone
through the roof.
1.
Return filing
The
return filing fees in 1990 was Rs.1500 and even now we cannot charge more than
Rs.2000. The purchasing power of Rs 1500-2000 was far greater in 1990 whereas
in 2013 it does not pay for a dinner for a family of four at a decent
restaurant. The same is true for VAT.
2.
Assessment hearing
The
assessment proceedings have greatly reduced. In any case the same pattern. It
was great value to charge Rs.2000 per hour in 1990 and we cannot increase the
same by inflation rate. If Rs.2000 of 1990 has become Rs.20000 in value in 2013
we cannot charge 20000 per hour. Even if charge the client laughs to our face!
3.
Audit Fees / Certification Fees
Similar
pattern for audit fees and certification fees: - with much greater risk and
responsibility thrown onto the auditors, the clients are loathe to increase
fees. With so many CA’s flooding the market we are developing a rubber stamp
culture where CA shopping is done to see who certifies at a lower rate –
something like the Notary’s who run after you outside every court for getting
the job done through them!
Costs
Unfortunately
CA’s have not remained immune to inflation unlike the clients’ propensity to
pay appropriate and fair fees! Subscribing to knowledge based web-sites,
purchase of books have all kept pace with inflation and sometimes have outrun
inflation thereby disproportionately increasing operating costs. The articled
clerks demand nothing less than Rs. 5000 per month, some of them protesting
deduction of profession tax, which is a legal obligation on the payer! Cost of
communication, power, systems, everything has gone up – but the fees remain
fixed to 1990 levels!
I
find that a lot of CAs who were doing very well in terms of monetary value in
1990 to 2000 are not making much money in 2013. Today a good fresher CA
gets a CTC of Rs.4-6 lacs (these are among the lucky few) and a CA with 20
years experience in practice is not far off from that figure – this leaves quite
a bitter taste in the mouth.
Innovate
and Evolve
We
therefore must evolve. One of the methods of evolution is that we need to
find ways and means of working together and increasing revenue. We pool
together the resources and the knowledge base. Some of us must develop
resources and some of us can develop knowledge base. We can then take up larger
assignments in the corporate sector. We have to attune ourselves to the
changing economy and business structure. We get together like minded
professionals and evolve a working relationship which can sustain in long run.
We need to develop a bigger brand as well.
Conclusion
If
one seriously wants to pursue a career as a CA, one will have to assess the
focus area of specialisation, whether one wants to go into industry or
practice, etc. Unless the ICAI changes its role and becomes more of a quality
educator rather than an institute which is flooding the market with ‘qualified’
CA’s who do not find jobs, it would be better to look at other career options.
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