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S. Ramanujam

S. Ramanujam on where the Indian accountant falls short

THOSE supporting the recent calls to protect the interests of swadeshi CA firms, are attempting to deride foreign firms, especially the Big 4. They are asking the Government and others to keep off from multinational audit firms. Unfortunately, like all those steeped in the culture of a chaotic environment, what they seem to be saying is: "We are OK, you are not."

This situation can be likened to two people travelling on a road: One on a bicycle (Indian CA) and the other in a Mercedes and at a momentary loss, as one of the tyres of the car burst.

The swadeshi lobby should look at producing a car like the Mercedes, which remains technologically superior at all times and in all countries, rather than crib about the affluence of others.

The old order has changed. The false sense of sovereignty must be given up.

What assistance do Indian companies need to survive in a barrier-less world? Companies such as Infosys, Wipro and others listed on the Nasdaq require credible, accountable and knowledgeable accountants who speak the same language as their counterparts in other companies (belonging to diverse countries) listed therein.

It is this process which adds value to their shares, which the companies are willing to share with their shareholders and employees. It is this value which is used to fund charitable projects in India, by way of donations to universities, voluntary organisations, and so on.

This value addition to the numbers will not arise in case the audits are done by little known Indian firms with poor knowledge of global accounting standards and other concepts.

Foreign dignitaries, after their customary visit to the Taj Mahal, end up in Infosys and Wipro campuses. This fact is acknowledged even by the Prime Minister, Mr Atal Bihari Vajpayee.

The swadeshi lobby should introspect as to why the Malegams and the Iyers are embracing multinational CA firms: It is because of the merits of the systems followed by foreign CA firms.

In the early 1990s, one bureaucrat came out with a queer reasoning that since nobody reads the accounts, the stationery cost of limited companies can be conserved by creating `abridged accounts'.

The CA Institute's response was, "We agree and, hence, we also give you a format of abridged audit report."

Thus, the balance-sheet was cut to size. But for the initiative taken by companies such as Infosys, we would still be celebrating with abridged accounts.

In the Indian context, the question of `who will audit the auditor?' crops up many a time. In most of the countries, accounting standards are set not by professional bodies constituting the very same members, but by academics who take interest in the welfare of the community at large.

The appeals by the anti-MNC lobby sound pseudo patriotic. Here are a few:

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