New Year Resolution 2009

I was reviewing my New Year resolution for the year 2008 and  taking stock of whether I have achieved of what I thought in 2008. My focus last year was on networking management accountants across the globe and also make them known in the industry.

With help, advise and efforts of active management accountants, we were able to achieve the following:

1. CMA India Portal: The CMA Portal was given the final shape with the efforts of CMA B V Prabhakar, RV, Ramesh Joshi, Devarajan, Ashutosh and many more. Today the portal has 770 members which includes members from other profession and business. The focus of the portal has been quality discussions and actions, particularly discussing business events in India and globe. The members who are active are likely to be known in the accounting fraternity. Readers will be benefitted from the discussions.
2. CMA India Portal on Linkedin: This was suggested by CMA Devarajan so that we would be able to connect to other professionals. A profile on linkedin is a passport for networking. and ideal substitute for a website. I would suggest you create your profile on linkedin and join CMA India Portal Linkedin. Today the membership is 29 and will definitely grow. This will ensure that you are always connected with us some way or other.
3. Management Accountant Blog: The blog moved on to it own domain http://www.managementaccountant.in and I have a personalised email id associated with the domain name. The alexa ranking today is 678,162. I will strive for ranking around 100,000 which is an indicator of how the blog is ranked in the search engine results. I will look forward to your support to use various social networking tools like digg, stumbleupon or yahoo buzz on the articles posted.

Being a member of ICWAI, I am proud to say ICWAI has achieved a lot in the last year. Some of them are

1. Number of seminars hosted by ICWAI has increased and this should bring our institute closer with the industry,  members and other stakeholders.
2. ICWAI website has been improved a lot. Few suggestions I have made are implemented. I would sending them suggestions on a regular basis.
3. ICWAI signs MOU with CIMA, UK: This is a good indicator of qualification going global. The MOU will definitely help to the members to work globally without being to explain everytime who they are. This agreement will serve to both strengthen the professional accounting links between two of the world’s leading economies and provide highly skilled professional accountants for the global labour market enabling both institutes to work together to enhance recognition of the profession and their professional bodies.

My New Year Resolution 2009

1. iPhone and look alikes: The reason iPhone/iPod is a marketing success is because it does what you want with the touch on its screen. It is user friendly, innovative and people like it because of positive experience using it. I would be focussing on articles that will bring you more closer to business.
2. Business and Social Networking: This resolution will continue. My efforts will be to connect all the management accountants with the business. The objective is the management accountants should be the first choice for the business.
3. New Technologies on the internet: It is said, one who controls the technology ,controls the world. Romans dominated the world because they built roads, British dominated because they built ships and Americans dominate the world as they have advanced technology on weapons. Management Accountant of today has to follow a similar route in  the workplace. This will include in depth knowledge on ERP solution, Business Processes, Office applications and usage of tools on the internet to gain knowledge and provide solutions to the business . E.g. Social networking sites Twitter, Facebook and linkedin were considered to be joke on the internet when they started. They are now  a disruptive technologies which are very popular. Join me on Twitter . Use add-on on your Firefox browser to keep in tune with the latest. I will be focussing on some of the technologies on the internet.

Just as last year, please post your comments and views.

Wish You and Your Family a Very Happy and Prosperous New Year 2009

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Are audited financial statements reliable

I am reading the article on the BBC website “Lehman Brothers Bank Collapse” dt 16-Sep-2008.

The company is an investment bank that specialises in big and complex deals and investments.

Despite this, Lehman’s collapse and the troubles of other financial institutions will probably be felt by millions of people around the world – at least indirectly.

Most of our banks and pension funds have dealings with Lehman, or with firms like hedge funds that traded extensively with Lehman.

Unwinding Lehman’s complex deals will take months if not years. During that time the global financial system will be snarled up. Many banks won’t know for sure how much they are exposed to Lehman, and will have difficulty freeing up the money in those deals.

This in turn is likely to intensify the credit crunch, with potentially dire consequences for businesses and consumers.

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The other article “Three deadly sins of portfolio credit risk management” published in June 2002.

Three deadly sins lie in wait to wreak havoc on a portfolio: a disproportionate percentage of the portfolio in the low pass categories; emphasis on higher-risk types of lending; and concentrations that build in the portfolio with a small group of borrowers. Some banks commit multiple sins–aggressively underwriting individual loans to borrowers in higher-risk types of lending and taking large positions in those loans. How does your bank fare? Is it time to pass out the pitchforks?

Prem Sikka in his article “The Auditors have failed” in Guardian explains how the top audit firms had given a clean chit to the companies whose survival today is doubtful. Moreover the audit firms have charged an atrocious amount of fees for performing the job. The directors also had fat cheques to take home.

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The question is

whether auditors should rely on management representation while commenting on true and fair view of the Balance Sheet ? Or do they have go further to investigate in the dealing to see whether they have any material impact on the financial statements ?

The reason for the fall of Lehman Brothers only became known when the bank collapsed. Who knows how many such caskets will opened to know the magnitude of damage. Should the auditors gone into the trail of the dealings to confirm the representations made by the management is correct !!!

Or to protect themselves from neglience, should the auditor insist on the management for an expert opinion in all aspect of the Balance Sheet. E.g.

• Bad Debts Provision – Assessment from the legal department of the company
• Brand value and goodwill – Expert opinion from valuerers
• Fixed Assets – Report of the surveryor
• so on and forth.

Just like how a jury relies on the experts opinions and finding on a case, should the auditor follow a similar trace. Top firms, I am sure, they should be following the convention. I don’t understand how does collapse of such magnitude is trigged every 4 years.

The other question that is raised frequently is the audit fees are exhorbitant. Big 4 firms audit more than 80% of the fortune 1000 companies in the world.

The question is will such auditors be impartial while auditing the companies ?

Regards,

Santosh Puthran

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1. Have Auditors failed us – Prem Sikka
   
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Read Full Post »

Are audited financial statements reliable

I am reading the article on the BBC website “Lehman Brothers Bank Collapse” dt 16-Sep-2008.

The company is an investment bank that specialises in big and complex deals and investments.

Despite this, Lehman’s collapse and the troubles of other financial institutions will probably be felt by millions of people around the world – at least indirectly.

Most of our banks and pension funds have dealings with Lehman, or with firms like hedge funds that traded extensively with Lehman.

Unwinding Lehman’s complex deals will take months if not years. During that time the global financial system will be snarled up. Many banks won’t know for sure how much they are exposed to Lehman, and will have difficulty freeing up the money in those deals.

This in turn is likely to intensify the credit crunch, with potentially dire consequences for businesses and consumers.

Acer Extensa 4220 101G08Mi Laptop PC

The other article “Three deadly sins of portfolio credit risk management” published in June 2002.

Three deadly sins lie in wait to wreak havoc on a portfolio: a disproportionate percentage of the portfolio in the low pass categories; emphasis on higher-risk types of lending; and concentrations that build in the portfolio with a small group of borrowers. Some banks commit multiple sins–aggressively underwriting individual loans to borrowers in higher-risk types of lending and taking large positions in those loans. How does your bank fare? Is it time to pass out the pitchforks?

Prem Sikka in his article “The Auditors have failed” in Guardian explains how the top audit firms had given a clean chit to the companies whose survival today is doubtful. Moreover the audit firms have charged an atrocious amount of fees for performing the job. The directors also had fat cheques to take home.

IT Deals for Students from Misco.co.uk – offers from just £5

The question is

whether auditors should rely on management representation while commenting on true and fair view of the Balance Sheet ? Or do they have go further to investigate in the dealing to see whether they have any material impact on the financial statements ?

The reason for the fall of Lehman Brothers only became known when the bank collapsed. Who knows how many such caskets will opened to know the magnitude of damage. Should the auditors gone into the trail of the dealings to confirm the representations made by the management is correct !!!

Or to protect themselves from neglience, should the auditor insist on the management for an expert opinion in all aspect of the Balance Sheet. E.g.

• Bad Debts Provision – Assessment from the legal department of the company
• Brand value and goodwill – Expert opinion from valuerers
• Fixed Assets – Report of the surveryor
• so on and forth.

Just like how a jury relies on the experts opinions and finding on a case, should the auditor follow a similar trace. Top firms, I am sure, they should be following the convention. I don’t understand how does collapse of such magnitude is trigged every 4 years.

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The other question that is raised frequently is the audit fees are exhorbitant. Big 4 firms audit more than 80% of the fortune 1000 companies in the world.

The question is will such auditors be impartial while auditing the companies ?

Regards,

Santosh Puthran

Do you like to be updated in Accountancy ?

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Subscribe in a reader

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You may also like to read

1. Have Auditors failed us – Prem Sikka
   
2. Does IT strategy of your company influence your career
3. The Audit Cartel – Prem Sikka in Guardian 06- June-08
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Accountable crises – Richard Aitken-Davies

The irresponsible bosses should face court. Others, we accountants included, must accept we’ve erred.

Richard Aitken-Davies, President of ACCA writes in The Guardian

Remuneration and incentivisation packages for senior figures within the banking world have rocketed, but these rewards have become too closely linked to short-term, easy-to-manipulate financial metrics. The traders of derivatives want to have their “profits” recognised straight away in the employers’ accounts and, thus, in their annual bonuses. But bonuses need to be related far more closely to long-term financial performance and, importantly, to movements in cashflow, rather than profitability. Rewards should not be paid out until proceeds have been banked.

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The roles of the chairman and chief executive are ultimately ones of accountability – to shareholders, to customers, to staff and, whether they like it or not, to government, the taxpayer and society at large. But our increasingly well-defined principles of corporate governance have not prevented this crisis. We therefore need to open our thinking to alternative models and, in particular, to the role and effectiveness of independent non-executive directors.

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If directors ignored bad habits, if they accepted complacency after a prolonged bull market then they should be held accountable. If they have overseen failure, and allowed greed to flourish then they are accountable for this, too.

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Naivety has also played its part, with well-meaning people succumbing to the seductions of advanced risk management techniques at the expense of common sense. And perhaps we accountants haven’t said no enough, either.

Read Full Article on The Guardian

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Emerging role of Management Accountants in the New Economy

This is a guest post by Mr. V R Kedia B.com FICWA. He is a practising Cost & Management Accountant from Mumbai

Shape of the things to come

• Effect of LPG – Liberalisation, Privatisation, and Globalisation – Global competition, Fittest will survive, sub – optimal units have to die.

• Size, strong balance sheets and a history of achievements are no longer guarantees of continued success.

• Global competition – strategic alliance networks and massive engineering efforts place new demand on all professionals.

• Many of old hierarchies will be replaced by flat structures.

• Every organisation is undergoing a process of internal churning.

• Employees will be judged by their delivery of agreed output and level of services, not on spending 8 hours a day attending their place of work.

• Financial information will be considered as only one portion of the balanced scorecard of measures used in organisational decision making.

• Knowledge will replace physical and financial capital as an organisations primary resource.

• Knowledge and application of knowledge will create competitive advantage.

• People will have to be accustomed to work in permanent stage of emergency.

• More empowerment at the individual level.

• Adoption of team based organisation.

• Internet is rapidly transitioning businesses into real time.

Present role of Management Accountants – Conceptions & Misconceptions

• Cost and Management accounting system had often become of little importance to managers. Many regarded them as minor routine belonging to the accountants, used to evaluate stocks and prepare monthly results speedily.

• There are all the obvious things to do: Statutory and Financial accounting, Taxation compliance, Funding, Management reporting and so on. All of this tends to be in the background; it just has to happen in any event. Management Accountants have not yet progressed more towards bridging the gap between managers and accountants and they have yet to concern more with looking towards the future – at where business is going and what is going to happen.

• Very few conceptual modifications have been brought in, in the cost and management accounting in the last 40 years.

• Cost is too important to be left to the cost and management accountant.

Futuristic role of Management Accountants

• Most of us will be doing the job, which we have never learnt and quite different from what we have been doing so far

• The illiterate of the 21^st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.

• We have to undergo the process of “Learning, Un-learning and re-learning” more frequently.

• Industry will be requiring “learning” professional rather than “learned” professional.

• Future will be “knowledge era”. So obsolesce of knowledge will be very fast and more visible among accounting professionals.

• Management Accountant must re-orient its capabilities, otherwise he will be overtaken by other professionals.

• Management Accountant has to be futuristic instead of provider of historic or current information. He should ask “how better” and help management in decision-making level and for performance improvement.

• ‘Imagination is more important than knowledge’. – Albert Einstein.

• The responsibility of the management accountant is less on forecasting the future and more on contributing to its creation.

• Management Accountant will more often play the role of a catalyst / changing agent rather than an accountant.

• Management accountant will have to be more adaptable to be a versatile professional rather than an accounting specialist.

• Quality of “leadership” will be more in demand than that of a “manager” or an accountant.

• Out –cost ascertainment, product costing and cost control. In –cost management, activity-costing etc.

• Re-positioning of the management accountant – make it more relevant and useful to the organisation.

• Management accountant to change the “Accountant” from their name to information manager/Cost manager.

• Shift from “informational” role to an “influential” role.

• To develop alliance with- finance, MIS/IT, industrial engineering, corporate planning.

• To actively participate along with managers in decision making and strategy implementation.

• Change in mind-set from product profitability to customer profitability analysis.

• No more a scorer of the cricket match – but to be manager advisor to develop appropriate strategy to win the match.

• Management accountant needs to lead the effort in training managers to use accounting information along with balancing it with other key data sources.

• FOREX and Treasury function will be important profit centres.

Training needs

• “If you want to remain employed, you have to remain employable” – Jack Welch, CEO-GE.

• Dilemma for the management accountant will be to either change or cease to exist.

• Management accountant must learn fast, forget even faster and focus on winning.

• Management accountant requires very different skills from those that accountants needed to fill the narrow role that has been adopted by many finance professionals over the last three decades.

• Continuing Professional Education (CPE) programme be made compulsory by the institute for skill upgradation and aquiring the latest technology.

• Able to work well under pressure.

• Development of multi-disciplinary skill.

• Good communication skill – oral, written and presentation and a team player.

• Ability and drive to work against strict deadlines and targets.

• Ability to work with minimum supervision and a busy and dynamic work environment.

• Ability to prioritise multiple urgent tasks.

• Possessing good public relations skill.

• Adding a new skill to executive skill-set, every few years.

• To develop expertise in new ‘Green Field’ projects like-

• Infrastructure sector (Energy, Transport etc.)

• Information and Communication sector

• Service sector

• Agro based industries

Changes in tools and techniques

• Target costing v/s. Historical costing.

• Life cycle costing.

• Activity Based Costing (ABC) – ABM.

• Total Cost Management (TCM)

• Business Process Re-engineering (BPR)

• Benchmarking.

• Kaizen costing.

• EVA / CVA

• Total Quality Management / ISO.

• Cycle time reduction (time compression).

• Supply chain management (SCM).

• Just in time (JIT).

• Elimination of dysfunctional activities.

• Out sourcing and co-sourcing activities.

• Defect prevention v/s. fault rectification.

• Zero Based budgeting.

• Traditional budgeting v/s. New budgeting (comparative Table enclosed).

• Full year budget exercise v/s reactive rolling forecast (computer generated budgets are obsolete the minute they are printed).

• Dis-continuity of time cycle – month end and year end- and to invent information system to handle multiple time horizons simultaneously.

• Radical change in IT/MIS e.g.

• Integrated database that meet the total business requirements (like ERP Software).

• MIS that is accessible and easy to use by all staff.

• Rich supply of information in the form of a variety of report.

• MIS for decision-making.

‘It is never safe to look into the future with eyes of fear’. – E. H. Harriman.

‘My interest is in the future, because I am going to spend the rest of my life there.’ –

C. F. Kettering.

You can contact Mr V R Kedia on +9193241 80717 or email vrkedia@vsnl.com

Do you like to be updated in Accountancy ?

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Or

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You may also like to read

1. Management Accountant’s New Year Resolution 2009
2. Cultural Web – A big challenge 22-June-08
3. Activity Based Management – Dispelling the myths Part I – 13-June-08
4. 10 myths about ABC by SSRK 26-Nov-06
5. Transfer Pricing 29-Dec-06
6. Throughput Accounting 17-Dec-06
7. SSRK’s Knowledge Repository 03-Dec-06
8. Stakeholder Analysis 19-May-08
9. Resistance to Change 26-Apr-08
10. Strategy Development 05-Apr-08
11. Strategic Drift 12-Apr-08
12. How to Share Blog posts with friends 25-May-08
13. Management Accountant Blog Home

Read Full Post »

Emerging role of Management Accountants in the New Economy

This is a guest post by Mr. V R Kedia B.com FICWA. He is a practising Cost & Management Accountant from Mumbai

Shape of the things to come

• Effect of LPG – Liberalisation, Privatisation, and Globalisation – Global competition, Fittest will survive, sub – optimal units have to die.

• Size, strong balance sheets and a history of achievements are no longer guarantees of continued success.

• Global competition – strategic alliance networks and massive engineering efforts place new demand on all professionals.

• Many of old hierarchies will be replaced by flat structures.

• Every organisation is undergoing a process of internal churning.

• Employees will be judged by their delivery of agreed output and level of services, not on spending 8 hours a day attending their place of work.

• Financial information will be considered as only one portion of the balanced scorecard of measures used in organisational decision making.

• Knowledge will replace physical and financial capital as an organisations primary resource.

• Knowledge and application of knowledge will create competitive advantage.

• People will have to be accustomed to work in permanent stage of emergency.

• More empowerment at the individual level.

• Adoption of team based organisation.

• Internet is rapidly transitioning businesses into real time.

Source: Megapixel

Present role of Management Accountants – Conceptions & Misconceptions

• Cost and Management accounting system had often become of little importance to managers. Many regarded them as minor routine belonging to the accountants, used to evaluate stocks and prepare monthly results speedily.

• There are all the obvious things to do: Statutory and Financial accounting, Taxation compliance, Funding, Management reporting and so on. All of this tends to be in the background; it just has to happen in any event. Management Accountants have not yet progressed more towards bridging the gap between managers and accountants and they have yet to concern more with looking towards the future – at where business is going and what is going to happen.

• Very few conceptual modifications have been brought in, in the cost and management accounting in the last 40 years.

• Cost is too important to be left to the cost and management accountant.

Futuristic role of Management Accountants

• Most of us will be doing the job, which we have never learnt and quite different from what we have been doing so far

• The illiterate of the 21^st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.

• We have to undergo the process of “Learning, Un-learning and re-learning” more frequently.

• Industry will be requiring “learning” professional rather than “learned” professional.

• Future will be “knowledge era”. So obsolesce of knowledge will be very fast and more visible among accounting professionals.

• Management Accountant must re-orient its capabilities, otherwise he will be overtaken by other professionals.

• Management Accountant has to be futuristic instead of provider of historic or current information. He should ask “how better” and help management in decision-making level and for performance improvement.

• ‘Imagination is more important than knowledge’. – Albert Einstein.

• The responsibility of the management accountant is less on forecasting the future and more on contributing to its creation.

• Management Accountant will more often play the role of a catalyst / changing agent rather than an accountant.

• Management accountant will have to be more adaptable to be a versatile professional rather than an accounting specialist.

• Quality of “leadership” will be more in demand than that of a “manager” or an accountant.

• Out –cost ascertainment, product costing and cost control. In –cost management, activity-costing etc.

• Re-positioning of the management accountant – make it more relevant and useful to the organisation.

• Management accountant to change the “Accountant” from their name to information manager/Cost manager.

• Shift from “informational” role to an “influential” role.

• To develop alliance with- finance, MIS/IT, industrial engineering, corporate planning.

• To actively participate along with managers in decision making and strategy implementation.

• Change in mind-set from product profitability to customer profitability analysis.

• No more a scorer of the cricket match – but to be manager advisor to develop appropriate strategy to win the match.

• Management accountant needs to lead the effort in training managers to use accounting information along with balancing it with other key data sources.

• FOREX and Treasury function will be important profit centres.

Training needs

• “If you want to remain employed, you have to remain employable” – Jack Welch, CEO-GE.

• Dilemma for the management accountant will be to either change or cease to exist.

• Management accountant must learn fast, forget even faster and focus on winning.

• Management accountant requires very different skills from those that accountants needed to fill the narrow role that has been adopted by many finance professionals over the last three decades.

• Continuing Professional Education (CPE) programme be made compulsory by the institute for skill upgradation and aquiring the latest technology.

• Able to work well under pressure.

• Development of multi-disciplinary skill.

• Good communication skill – oral, written and presentation and a team player.

• Ability and drive to work against strict deadlines and targets.

• Ability to work with minimum supervision and a busy and dynamic work environment.

• Ability to prioritise multiple urgent tasks.

• Possessing good public relations skill.

• Adding a new skill to executive skill-set, every few years.

• To develop expertise in new ‘Green Field’ projects like-

• Infrastructure sector (Energy, Transport etc.)

• Information and Communication sector

• Service sector

• Agro based industries

Source: National Geographic

Changes in tools and techniques

• Target costing v/s. Historical costing.

• Life cycle costing.

• Activity Based Costing (ABC) – ABM.

• Total Cost Management (TCM)

• Business Process Re-engineering (BPR)

• Benchmarking.

• Kaizen costing.

• EVA / CVA

• Total Quality Management / ISO.

• Cycle time reduction (time compression).

• Supply chain management (SCM).

• Just in time (JIT).

• Elimination of dysfunctional activities.

• Out sourcing and co-sourcing activities.

• Defect prevention v/s. fault rectification.

• Zero Based budgeting.

• Traditional budgeting v/s. New budgeting (comparative Table enclosed).

• Full year budget exercise v/s reactive rolling forecast (computer generated budgets are obsolete the minute they are printed).

• Dis-continuity of time cycle – month end and year end- and to invent information system to handle multiple time horizons simultaneously.

• Radical change in IT/MIS e.g.

• Integrated database that meet the total business requirements (like ERP Software).

• MIS that is accessible and easy to use by all staff.

• Rich supply of information in the form of a variety of report.

• MIS for decision-making.

‘It is never safe to look into the future with eyes of fear’. – E. H. Harriman.

‘My interest is in the future, because I am going to spend the rest of my life there.’ –

C. F. Kettering.

You can contact Mr V R Kedia on +9193241 80717 or email vrkedia@vsnl.com

Do you like to be updated in Accountancy ?

Subscribe to Management Accountant by Email
Or
Subscribe in a reader

Visit MA Stores ? You will find something you are looking for ….

Management Accountant Store, US – Powered by Amazon
Management Accountant Store, UK Stores – Powered by Amazon, UK
Digital Store, US

You may also like to read

1. Cultural Web – A big challenge 22-June-08
2. Activity Based Management – Dispelling the myths Part I – 13-June-08
3. Activity Based Management – How to collect info 10-June-08
4. 10 myths about ABC by SSRK 26-Nov-06
5. Transfer Pricing 29-Dec-06
6. Throughput Accounting 17-Dec-06
7. SSRK’s Knowledge Repository 03-Dec-06
8. Stakeholder Analysis 19-May-08
9. Resistance to Change 26-Apr-08
10. Strategy Development 05-Apr-08
11. Strategic Drift 12-Apr-08
12. How to Share Blog posts with friends 25-May-08
13. Management Accountant Blog Home

Read Full Post »

Profession versus Professionalism

I was trying to analyze the definition of words Profession, Professional Body and Professionalism on www.reference.com. (These words are interchangeable used when the Accountants discuss among themselves.)

Profession:

A profession is an occupation, vocation or career where specialized knowledge of a subject, field, or science is applied. It is usually applied to occupations that involve prolonged academic training and a formal qualification. It is axiomatic that “professional activity involves systematic knowledge and proficiency.” Professions are usually regulated by professional bodies that may set examinations of competence, act as a licensing authority for practitioners, and enforce adherence to an ethical code of practice.

Professional Body:

A professional body or professional organization, also known as a professional association or professional society, is an organization, usually non-profit, that exists to further a particular profession, to protect both the public interest and the interests of professionals. The balance between these two may be a matter of opinion. On the one hand, professional bodies may act to protect the public by maintaining and enforcing standards of training and ethics in their profession. On the other hand, they may also act like a cartel or a labor union (trade union) for the members of the profession, though this description is commonly rejected by the body concerned.

Many professional bodies perform professional certification to indicate a person possesses qualifications in the subject area, and sometimes membership in a professional body is synonymous with certification, but not always. Sometimes membership in a professional body is required for one to be legally able to practice the profession; see licensure.

Professionalism

Oxford Dictionary: the competence or skill expected of a professional.

Graham Ward in IFAC website: Professionalism, is about individual modes of behaviour that command respect and build trust. It is about excellence in service as measured by recognised standards.It is about delivering services or working to standards that meet the needs of and are expected by our clients.

Such behaviours are indeed a necessary part of belonging to a profession but almost any trade could be described as professional in these terms!

As any of us here knows, what separates the professionalism of members of a professional body from the behaviours of other types of so-named professionals, is the requirement to continually reinforce and demonstrate our professionalism, not merely assert it through a one-off qualification. And it is our membership of a professional body – one which embodies the distinguishing features I have defined – that confers on us the obligation to abide by professional standards and regulation.

It is therefore no longer enough for professions to say to the public ‘you must trust me’, today we must earn that trust and demonstrate: clearly, openly and often, why that trust should be given.

Of the above three words, I had to search a lot on the word “Professionalism” to find a true meaning to suit accountancy profession. Members of accountancy profession will be normally be expected to take actions that contribute to the public interest.

The Principle of Professional Conduct on AICPA, US website summarizes Professionalism in a precise manner.

Section 51: These Principles of the Code of Professional Conduct of the American Institute of Certified Public Accountants express the profession’s recognition of its responsibilities to the public, to clients, and to colleagues. They guide members in the performance of their professional responsibilities and express the basic tenets of ethical and professional conduct. The Principles call for an unswerving commitment to honorable behavior, even at the sacrifice of personal advantage.

Section 52: In carrying out their responsibilities as professionals, members should
exercise sensitive professional and moral judgments in all their activities.

Section 53: Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism.

Section 54: To maintain and broaden public confidence, members should perform
all professional responsibilities with the highest sense of integrity.

Section 55: A member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services.

Section 56: A member should observe the profession’s technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member’s ability.

Section 57: A member in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided.

I would like to see your comments and views on this topic. Please feel free to comment on the blog post.

Regards,

Santosh Puthran

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1. Ethics on ACCA website 11-Feb-2008
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3. 100 Most Influential People in Business Ethics 18-Feb-08
4. Professional Body 28-April-07
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Profession versus Professionalism

I was trying to analyze  the definition of words Profession, Professional Body and Professionalism on www.reference.com.  (These words are interchangeable used when the Accountants discuss among themselves.)

Profession:

A profession is an occupation, vocation or career where specialized knowledge of a subject, field, or science is applied. It is usually applied to occupations that involve prolonged academic training and a formal qualification. It is axiomatic that "professional activity involves systematic knowledge and proficiency." Professions are usually regulated by professional bodies that may set examinations of competence, act as a licensing authority for practitioners, and enforce adherence to an ethical code of practice.

Professional Body:

A professional body or professional organization, also known as a professional association or professional society, is an organization, usually non-profit, that exists to further a particular profession, to protect both the public interest and the interests of professionals. The balance between these two may be a matter of opinion. On the one hand, professional bodies may act to protect the public by maintaining and enforcing standards of training and ethics in their profession. On the other hand, they may also act like a cartel or a labor union (trade union) for the members of the profession, though this description is commonly rejected by the body concerned.

Many professional bodies perform professional certification to indicate a person possesses qualifications in the subject area, and sometimes membership in a professional body is synonymous with certification, but not always. Sometimes membership in a professional body is required for one to be legally able to practice the profession; see licensure.

Professionalism

Oxford Dictionary: the competence or skill expected of a professional.

Graham Ward in IFAC website: Professionalism,  is about individual modes of behaviour that command respect and build trust. It is about excellence in service as measured by recognised standards.It is about delivering services or working to standards that meet the needs of and are expected by our clients.

Such behaviours are indeed a necessary part of belonging to a profession but almost any trade could be described as professional in these terms!

As any of us here knows, what separates the professionalism of members of a professional body from the behaviours of other types of so-named professionals, is the requirement to continually reinforce and demonstrate our professionalism, not merely assert it through a one-off qualification. And it is our membership of a professional body – one which embodies the distinguishing features I have defined – that confers on us the obligation to abide by professional standards and regulation.

It is therefore no longer enough for professions to say to the public ‘you must trust me’, today we must earn that trust and demonstrate: clearly, openly and often, why that trust should be given.

 

Source: Formula One Cars

 

Of the above three words, I had to search a lot on the word "Professionalism" to find a true meaning to suit  accountancy profession. Members of accountancy profession will be normally be expected to take actions that contribute to the public interest.

The Principle of Professional Conduct on AICPA, US website  summarizes Professionalism in a precise manner.

Section 51: These Principles of the Code of Professional Conduct of the American Institute of Certified Public Accountants express the profession’s recognition of its responsibilities to the public, to clients, and to colleagues. They guide members in the performance of their professional responsibilities and express the basic tenets of ethical and professional conduct. The Principles call for an unswerving commitment to honorable behavior, even at the sacrifice of personal advantage.

Section 52: In carrying out their responsibilities as professionals, members should
exercise sensitive professional and moral judgments in all their activities.

Section 53: Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism.

Section 54: To maintain and broaden public confidence, members should perform
all professional responsibilities with the highest sense of integrity.

Section 55: A member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services.

Section 56: A member should observe the profession’s technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member’s ability.

Section 57: A member in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided.

I would like to see your comments and views on this topic. Please feel free to comment on the blog post.

Regards,

 

Santosh Puthran

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1. Ethics on ACCA website 11-Feb-2008
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3. ICWAI Code of Ethics
4. 100 Most Influential People in Business Ethics 18-Feb-08
5. Professional Body 28-April-07
6. Accountancy Profession in India 22-May-08
7. Membership of Accounting Body – Value Proposition 20-Mar-08
8. The Audit Cartel – Prem Sikka in Guardian 06- June-08
9. How to Share Blog posts with friends 25-May-08
10. Management Accountant Blog Home

Source: British Superbike Practice

 

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ICAN, ACCA (UK) sign MOU to promote accountancy in Nigeria

In apparent bid to further promote the accountancy profession in Nigeria, The Institute of Chartered Accountants of Nigeria, ICAN, and the Association of Chartered Certified Accountants, ACCA, of the United Kingdom have signed a Memorandum of Understanding on mutual cooperation.

The memorandum is a befitting sequel to the landmark agreement reached in February this year. The two bodies had agreed last February when the Global President of ACCA, Mrs. Gillian Ball visited Nigeria.

This led to first ICAN and ACCA bilateral meeting, which took place at the ICAN secretariat on Wednesday, February 6, 2008. The ACCA team, led by Ms Ball and the ICAN team led by Prince Ade Babington-Ashaye, both agreed the terms of reference of the Bilateral Committee as well as resolved to collaborate on a number of areas to develop the Accountancy profession.

A statement issued at the end of the MOU signing stated, “ In recognition of the value of promoting mutual co-operation for the advancement of the accountancy profession and the public interest, both ICAN and ACCA, thus agreed to enter into the MOU, which was made towards the end of May, 2008.

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The MOU provides for the establishment of mutual cooperation between these two Institutions, both members of the International Federation of Accountants, IFAC; and also agrees that the Bilateral Committee, which was actually established in Istanbul, Turkey on November 14, 2006, shall continue to meet twice a year as resolved at the inaugural meeting held in Lagos, Nigeria, during the ACCA Global President’s visit to ICAN.

By the terms of the MOU, both ICAN and ACCA have agreed to collaborate in further developing and promoting the Accountancy Profession; identify ways in which they can work together to support their respective members in Nigeria and UK; strengthen regular communication links between both bodies; determine a road-map towards achieving a long-term mutually beneficial partnership between them; as well as review and, where appropriate, work together to address common issues in the national, regional and international Accountancy Profession.”

“Other areas of cooperation covered by the MOU include: Sharing information on financial and non-financial reporting issues, particularly in the implementation of International Financial Reporting Standards (IFRSs) and sustainability reporting, and joint research into technical accounting and related topics.

Source: Vanguard

Cheers,

Santosh Puthran

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ICAN, ACCA (UK) sign MOU to promote accountancy in Nigeria

In apparent bid to further promote the accountancy profession in Nigeria, The Institute of Chartered Accountants of Nigeria, ICAN, and the Association of Chartered Certified Accountants, ACCA, of the United Kingdom have signed a Memorandum of Understanding on mutual cooperation.

The memorandum is a befitting sequel to the landmark agreement reached in February this year. The two bodies had agreed last February when the Global President of ACCA, Mrs. Gillian Ball visited Nigeria.

This led to first ICAN and ACCA bilateral meeting, which took place at the ICAN secretariat on Wednesday, February 6, 2008. The ACCA team, led by Ms Ball and the ICAN team led by Prince Ade Babington-Ashaye, both agreed the terms of reference of the Bilateral Committee as well as resolved to collaborate on a number of areas to develop the Accountancy profession.

A statement issued at the end of the MOU signing stated, “ In recognition of the value of promoting mutual co-operation for the advancement of the accountancy profession and the public interest, both ICAN and ACCA, thus agreed to enter into the MOU, which was made towards the end of May, 2008.

Amazon.co.uk Widgets

The MOU provides for the establishment of mutual cooperation between these two Institutions, both members of the International Federation of Accountants, IFAC; and also agrees that the Bilateral Committee, which was actually established in Istanbul, Turkey on November 14, 2006, shall continue to meet twice a year as resolved at the inaugural meeting held in Lagos, Nigeria, during the ACCA Global President’s visit to ICAN.

By the terms of the MOU, both ICAN and ACCA have agreed to collaborate in further developing and promoting the Accountancy Profession; identify ways in which they can work together to support their respective members in Nigeria and UK; strengthen regular communication links between both bodies; determine a road-map towards achieving a long-term mutually beneficial partnership between them; as well as review and, where appropriate, work together to address common issues in the national, regional and international Accountancy Profession.”

“Other areas of cooperation covered by the MOU include: Sharing information on financial and non-financial reporting issues, particularly in the implementation of International Financial Reporting Standards (IFRSs) and sustainability reporting, and joint research into technical accounting and related topics.

Source: Vanguard

Cheers,

Santosh Puthran

Do you like to be updated in Accountancy ?

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You may also like to read

1. ACCA appoints new CEO 30-May-08
2. Membership of Accounting Body 20-Mar-08
3. Protecting the term “Accountant” – 15-Mar-08
   
4. ICAEW, UK Advertising campaign 17-May-08
5. Do President or CEO of Accounting Bodies Blog 23-May-08
6. The word “Chartered” – a hot debate in India 05-Dec-06
7. ICWAI applies for name change – ICAI’s ostrich approach to name change 06-July-07
8. How to Share Blog posts with friends 25-May-08
   
9. Home

Subscribe to RSS Feeds and be up-to-date

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