ICAB-ICMAB standoff: An onlooker`s view

The Finance Act-2014 has allowed Cost and Management Accountants (CMAs), besides the Chartered Accountants (CA), to audit individuals' financial status. A new subsection, 35 (3A), has been added to the Income Tax Ordinance 1984 making  it  mandatory  for  every taxpayer, not being a company, to submit audited financial statements with return, if  his gross sales  or receipts from business or  profession  exceeds Tk  50 million (5.0 crore). CMAs have been allowed to share a slice of the pie that is the audit fee. Auditing has hitherto been the exclusive area of the CAs. Sharing this function with CMAs has led to the exchange of acrimonious words between those in the two noble professions under the leadership of the Institute of Chartered Accountants of Bangladesh (ICAB) and the Institute of Cost and Management Accountants (ICMAB).
First of all, it should be remembered that the domain of companies is still the exclusive area of the CAs. Both the professions have very important roles to play in the economy, particularly in the present context, when corporate organisations are virtually the life blood of the national economy. There is no denying the fact that there is a very distinct divide between the function and roles played by those in the two professions. When the edifice of a corporation is laid, the CMAs step in along with other concerned professionals. Cost accounting is related with the cost of a particular product, process, job or division of any organisation. Cost accounting provides the management with data that can be used in planning. It is frequently used to analyse manufacturing cost and is also used as an aid in controlling distribution and administrative cost. The final account is the end product of the activities of the management, including CMAs. So there is no reason to think that CMAs will totally feel uncomfortable with the audit job. The most dangerous thing is the CAs enjoy unfettered freedom in discharging their duty. Others are to treat their function as sacrosanct and the CAs are sanctimonious. They should remember that they have a glorious tradition but simultaneously tainted history.
The USA suffered a corporation deluge which was no less macabre than the 9/11Twin-Tower disaster. The energy company Enron, the seventh largest public limited company of the world, was buried under the debris of an account scandal. The Worldcom and other companies met the same fate. A joke was in vogue at that time. Osama bin-Laden said that if he could know that an auditor could create a more havoc than an arms attack, he would have chosen to be an auditor. Anderson, one of the five audit giants of the globe, played a villain in this corporate disaster. Another joke: A CEO asks an auditor what the 2+2 makes. The auditor bluntly asks to know what he wants. All these are not intended to undermine the great role played by CAs in auditing the final account of a company. Transparency and disclosure, the vital mantras of the corporate world, cannot be ensured unless audited by the CAs. That is why the new law has deliberately kept the companies outside the provision of the audit by CMAs.
What is not desirable is the monopoly of the organisation of CAs. There should be other bodies where obviously the CAs will dominate because of their expertise and knowledge. Immediately after the catastrophe of the corporate sector the US government  established  a separate  accounts  body known as Public Company Accounting  Oversight  Board obviously  with a view to properly auditing the accounts of the publicly-traded companies. This was in addition to the existing accounts organisation of the CAs. From then on, the concept of independent    director had been gaining ground. It has engulfed the whole corporate world, because this is a pragmatic decision to protect the interest of the small and minority share-holders. Human decisions are subject to follies and either the existing rules need to be amended or new one has to be introduced. Once it was loudly told that an exuberant salary package would ensure the honesty and integrity of the chief executives. Recently, it has been proved that this concept is not inextricable. Earlier in Bangladesh on the advice of some donor agencies very highly-salaried executives were appointed in the state-owned banks, which are public limited companies in the nomenclature only but fully owned by the government. These people could not bring about any substantial change in the scenario of banks' administration. As legacies these banks have inherited corruption and inefficiency. There was simply the waste of money paid to the then CEOs.
The long and short of the story is that both CAs and CMAs will have to accept the change. In the eighties of  the last century US President Reagan and British  Prime Minister Thatcher  very  forcefully  expressed the view  that the government  had nothing  to do with  the business, rather by doing so the government would just create a hindrance to the  economic growth of a country. Hence the size of the government should be minimal and the government should interfere as less as possible. But, during the last global economic depression (2007-2008), it was the government, which had to rescue the corporate world from sinking. Billions had to be spent from the public exchequer. At one stage probably the US government became the biggest share owner in the corporate sector. That did not mean the end of the free market economy nor the doom of the private entrepreneurship. Innovative ideas in the industrial and business sector are as salutary as those in the other sector of knowledge. What is important is that changes of thought are to be accepted.
In India, certain new sections have been incorporated in the latest edition of the Companies Act 2013. With regard to audit and accounts, laws such as consolidated financial statement, mandatory if a company has one or more subsidiaries, constitution of a national Financial Reporting Authority, auditor not to render certain securities etc are worth mentionable.
In Bangladesh the draft Financial Reporting Act has been in the process of enactment by the parliament for almost half a decade. With the future implementation of the Act a Financial Reporting Council is likely to work. It has been known that the ICAB has vehemently opposed it. There should be an end to the holier-than-thou attitude.
To help the country's economy make a great stride we need the services of all concerned. Both CAs and CMAs have certain roles to play. They should reach an understanding through mutual discussion.
rezaulparvaz@live.com