ICAN should attract more students to the accounting profession”
Kamlesh S. Vikamsey, President of Confederation of Asia and Pacific Accountants (CAPA) was in Kathmandu early May 2008 to attend the 15th Board meeting of CAPA, 67th SAFA Assembly and CAPA-ICAN Joint International Conference on the theme ‘Integrating Nepalese Profession with the Outside World.’ Excerpts from an interview:
From the perspective of globalisation, what is the role of the accounting profession in various economic activities? Are there any specific country examples that can be taken as best practices?
The accountants are the core or fundamental of any economic development, be it in government, be it in the public sector or be it in the private sector. Accounting is everywhere; therefore the role of the accountant is everywhere. You asked for an example of what the accountant’s profession has done, and I can quote the example of what the Institute of Chartered Accountants India has done. One thing that it has done is to partner with the government. In fact, today the government of India consults the Institute of Chartered Accountants India in each and every project in which accounting or finance is involved. Another very important functions of the accounting profession is that it incorporates corporatization. The companies listed in the stock exchange have to give credible financial information and to give credibility to the information, the role of the accountant is quite crucial.
In the context of globalization, where each of the developing countries are putting in an enormous effort to encourage foreign as well as domestic investment, what role can the accounting profession play?
Globalization is the order of the day, and you can’t remain an isolated economy. In attracting foreign direct investments, the accountants play a very crucial role. If there’s a good financial reporting in the country, you attract more capital. So the role of the accountants is quite fundamental in globalization.
What are the outcomes of this CAPA Executive Committee meeting?
We held the CAPA meeting yesterday, and there were certain issues of governance which we are trying to address. There are twelve board members from different countries, including Australia, Japan, Korea, China, India, Pakistan, Sri Lanka, Bangladesh and New Zealand. In such meetings we first of all exchange ideas among ourselves as to what’s happening within our respective jurisdictions. Thereafter we talk about projects. We have taken up certain projects, and some of the very important ones are related to environmental accounting and CSR. Today the weather change is so paramount and businesses have to start looking at it. So we discussed the reported effects of corporatization on the environment and how to certify it.
What specific benefits can Nepal and ICAN expect from this meeting and what responsibilities should Nepal take in view of the activities of IFAC and its regional bodies like CAPA and SAFA?
ICAN is one of the very important bodies and it’s a very young body. It was formed about ten years back and it’s growing from strength to strength. One of the very important functions of the accounting body is related with the quality of the financial reporting. So that is where they need to improve their capabilities within the ICAN to ensure quality of financial reporting. Apart from that, other very important functions are education, to attract more talent into the profession, more and more students into the profession. As the economy grows, you need more and more qualified accountants and ICAN should of course work also for disciplining the members.
Nepal should be in full implementation of all compliance requirements of WTO and IFRS by 2011. What steps should be taken to ensure a smooth transition?
WTO and IFRS implementation will require a lot of capacity building within the institute, within the membership and within the firms because the accounting system will change as a whole. Therefore, to accept and adopt a new standard will require a lot of education within not only the profession but within the industry as well. The role of ICAN would be to educate the industry as well as the professionals.
ICAN was established in 1997 by an Act of Parliament and so far has around 400 CAs, 7000 RAS and CA students at various levels are around 3700. How do you suggest ICAN improve, with respect to responsibilities assigned to it by the statute for promoting, developing, and regulating the human capital in the accounting sector of the country?
I feel the number of 400 CAs is very small. So ICAN should attract more students to accounting profession. So what needs to be done is to go to schools and colleges, talk to the students and the parents, and tell them what the accounting profession is and how it is good for them in terms of career prospects. Often the parents and the students are ignorant as to what the chartered accountant course is. I think that should be the most primary responsibility of ICAN, apart from a core education and continuing professional education for the members.
ICAN is also poised to take the leadership role of SAFA as its Vice-president in 2009 and its President in 2010. Similarly, Nepal is also seeking to enhance its participatory role in world bodies such as IFAC and wider regional bodies like CAPA. What steps should ICAN take to enhance its prominence in these bodies?
The most important thing to do is to participate in the activities of those bodies to understand what those bodies are doing. I am aware that Nepal is participating very, very actively in the activities of CAPA as well as SAFA. So they are familiar with what are the issues of these bodies. Therefore, I am sure that they will do a good job when they become the Vice-president in 2009.
Nepal’s two bigger and closer neighbours, India and China are having year after year GDP growth rates above 8% compared to Nepal’s dismal growth rate of around 4%. What steps should Nepal take to achieve comparable growth rates? What role should the accounting profession play in that?
Nepal should realize that capital is in shortage in developing countries. India has shown the way. There the technology has changed, revolutionizing everything. The growth engine of the Indian economy is the information technology. Secondly, the rules and regulations and laws need to be changed to attract foreign direct investment. If you don’t have capital coming into the country, you need to create facilities within the country so that people can manufacture goods and improve the service industry. And the role of ICAN would be to educate the government in terms of these changes.
It’s one adopt new standards, it’s another implement”
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Russell A. Guthrie, Director, Quality Assurance and Member Body Relations of International Federation of Accountants (IFAC) was in Nepal early May 2008 when CAPA and ICAN hosted a joint international conference on ‘Integrating Nepalese Profession with the Outside World.’ Excerpts from an interview:
How is the development so far in the process of ICAN’s membership in IFAC?
ICAN is currently an associate, which is sort of the first stage of membership with IFAC. They have now submitted an application to move from associate to full membership, and the application is currently being reviewed by the IFAC staff and a group within IFAC called the Compliance Advisory Panel, which is a group of senior members of the profession who oversee IFAC membership type decisions. One of the reasons I came to Nepal was to spend some time with ICAN to look at their application and talk in a little more detail about the work that they’re doing on accounting and auditing standards and quality assurance.
What are the conditions required to become an IFAC member?
There are, of course, a number of specific requirements, but there are some general things we look at. One is the history of the institute, its operating capacity; just to make sure that it has strong human resources, strong governance arrangements, and very importantly, that it has the support of the government and a good working relationship with the government.
What are the benefits to the country and the association from becoming an IFAC member?
When you achieve IFAC full membership, I think it really represents a very tangible sign that the institute has reached a certain level of maturity and that it has made a lot of progress with respect to converging to international standards, making sure that their education requirements and the examination process to become an accountant are considered to be at international standards. So it really represents a bit of a milestone that the institute has achieved world-class status.
What are the findings from the due diligence study on ICAN so far?
So far it seems that things are at a pretty high standard. A couple of the areas that I’m going to look at in particular are the process to adopt international standards, both international financial reporting standards and international standards on auditing. I’ll also be encouraging the government and profession to get to a point where they can adopt the international standards without any modifications or deletions or changes. It’s very, very important that the outside world knows with complete transparency that the standards being used in Nepal are the international standards, without any differences. The other area that is particularly important is also the enforcement side, how the institute looks at the quality of the work of its members, and should there be a complaint or an ethical breach, what are its processes to investigate that and to take disciplinary action if necessary.
What is the role of the accounting profession in various economic activities from a globalization perspective?
In general, we believe that the accounting profession plays a fundamental role in the growth of an economy. And that’s because high-quality financial information is necessary for business leaders, investors, lenders and governments to make good decisions. So you need high-quality accountants to produce that information and you need auditors who can verify that information. Building that strong profession and the infrastructure that goes around it contributes a lot to transparency, to reduce corruption, so that money goes where it’s intended, and all of that, we believe, contributes to economic growth.
Nepal should be in full implementation of all the compliance requirements of WTO and IFRS by 2011. What steps should be taken to ensure a smooth transition?
One important step is to make sure that the standard-setting process is fully resourced and capable of adopting all of the standards by 2011. That means you have to move fairly quickly and then be in a position to keep up, because unfortunately, the international standards change. So it’s not a one-time effort to make sure there’s enough infrastructure to do that, and I think that’s probably the most important thing in terms of these next three years. But it’s one thing to adopt new standards, it’s another to implement. This means a lot of training for auditors and accountants and for businesses as well. It also involves making sure that the education system, the universities and so forth, also are teaching that curriculum so that when the new professionals are created, they’re immediately ready to join and have full knowledge of IFRS and know how to apply them in practice.
The financial report filings in Nepal are of the area of interest of various regulatory bodies like Securities Board, Company Registrar’s Office, Department of Inland Revenue, the Central Bank and ICAN. What do you suggest for the coordination between these bodies so as to make these financial statements more transparent, unambiguous, simple and easily understood by ordinary readers?
First these stakeholders should have very good working relationships and that they can approach each other in the spirit of cooperation. Whether it’s an informal mechanism for them to regularly meet and talk or whether there’s a formal steering committee formed with these groups, the most important thing is to have a good, open dialogue and agreement on the concrete steps that need to be taken.
Finally, any good words of advice for the young aspirants considering the accounting profession?
When we look into the indicators of most economies we see that there is a huge demand for accounting professionals. So I think that the message to people considering accountancy or studying accountancy is to stick with it because I think you’ll find that you can create a very good career for yourself in this. With globalization and the move to international standards, this will be a profession that is going to be globally mobile. It means that you might be able to work anywhere in the world because we’re all going to be speaking the same accounting language and auditing language. So I think it represents a fantastic opportunity for a young person.
