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Accounting profession and its development in Pakistan

  1. Hurdles in onion exports
  2. Debt servicing getting out of proportion
  3. Pakistan amends agreement with China
  4. Rescheduling of Pakistan's debt
  5. Foreign debts and role of economic managers
  6. Accounting profession and its development in Pakistan

Focus on cost management accounting

August 16 - 22, 1999

At the time of its independence on August 14, 1947, Pakistan inherited an agrarian economy with more than 80% of its population living in rural areas and earning its livelihood from agricultural sector. The industrial base was very narrow and basic industries were almost non-existent. The backwardness of economy also meant that accountancy was a relatively young profession in the country. It was only with economic development and expansion in industrial sector that the profession of accountancy acquired greater importance and ultimately its present status.

In South Asia, accountancy as a profession had its origin and early development during the British colonial era. For quite sometime after independence Pakistan continued with the same accounting practices, rules and regulations that were in vogue when the British authorities departed. Like most other laws, rules and regulations, the Government of Pakistan adopted the Auditors' Certificate Rules, 1932 for regulating the profession of accountancy in the country. These rules laid down the conditions concerning education and training that made a person eligible for registration as a professional accountant with the Ministry of Commerce, Government of Pakistan. Under these Rules, the accountancy profession in Pakistan included practising and non-practising Registered Accountants. The latter were employed on full-time basis in accounting, managerial or other positions in private organisations.

During the early years, the Registered Accountants were mainly involved in the work of auditing in compliance with various legislations such as Companies Act, 1913, different Civil and Criminal Codes and Auditors' Certificate Rules, 1932 (subsequently 1950) Section 144(1) of the Companies Act, 1913, as applicable then provided:

"No person shall be appointed or act as an auditor of any company other than a private company (not being the subsidiary company of a public company) unless he holds a certificate from the Central Government entitling him to act as an auditor of companies:

Providing that a firm whereof all the partners practising in Pakistan hold such certificates may be appointed by its firm name to be auditor of a company, and may act in its firm name."

Section 144(2) and (2A) of the Companies Act, 1913, empowered the Government to make rules relating to issuance of certificates to accountants who wanted to join the profession as Registered Accountants.

In the year 1950, the Government of Pakistan reframed the Auditors' Certificate Rules with necessary modifications to suit the prevalent needs of the profession. The Auditors' Certificate Rules, 1950 consisted of three parts:

Part I : Maintenance of and Enrolment on the Register.

Part II : Theoretical Training, Examination and Practical Training.

Part III : The Pakistan Council of Accountancy.

During the initial stages, there were serious problems concerning education and training of the professional accountants. The Pakistan Council of Accountancy that was set up under the Auditors' Certificate Rules, 1950 also failed to properly shoulder its responsibilities.

Soon after the independence, the Government of Pakistan placed much emphasis on industrialization to promote self-reliance in manufactured items and consumer goods. At the same time it concentrated its efforts on producing value-added products based on jute and cotton. This led to the importance of cost determination and cost control in industrial sector with a view to making Pakistani products more competitive in international markets. In 1951, Pakistan Institute of Industrial Accountants was established and incorporated under the Companies Act, 1913. In a brief issued by the Institute, the reasons for its establishment were stated:

"With the inception of Pakistan in1947 there followed a very rapid industrialization of the country. The paucity of properly qualified persons in the many specialized fields, including Cost Accountancy was, however, a serious block in the way of this expansion. In the field of Cost Accounting, there were only 4 fully qualified persons in the country at the time of partition.

In this background and in order to meet the country's requirement of properly trained Cost Accountants, the Pakistan Institute of Industrial Accountants was established in 1951 on the lines of the Institute of Cost and Works Accountants, London. It will be observed that the Institute is a non-profit-making body established solely for educational purposes."

Another important step was taken in 1952 when Pakistan Institute of Accountants was formed as an independent body to safeguard and promote the interests of the Cost Accountants and to apprise the Government of their views. Its membership was voluntary and restricted to Registered Accountants only. Pakistan Industrial Accountants and Pakistan Institute of Accountants filled the vacuum to some extent, yet much more was required to be done. In June 1959, the Government established a Department of Accountancy with Controller of Accountancy as its Chief Executive. Greater involvement of the Government was the need of the hour and, therefore, on the recommendation of the Council of Accountancy, the Government promulgated the Chartered Accountants Ordinance 1961. On July 1, 1961 the Institute of Chartered Accountant of Pakistan (ICAP) was established with the prime objective of regulating the profession of accounting in Pakistan. The Government was oblivious of the importance of cost accounting and in 1966 the Cost and Management Accountants Act, 1966, was passed which led to the establishment of the Institute of Cost and Management Accountants of Pakistan (ICMAP), as a successors to the former Pakistan Institute of Industrial Accountants. In view of the specific needs of the country, the two streams of accounting profession had taken shape. Subsequently amendments were made in the Acts establishing these Institutes whenever necessary.


The mission statement of the ICAP is as follow:

"To continue to promote high professional and ethical standards and to equip the members with the distinguished knowledge and training required to face the challenges of the 21st Century."

There are more than 2,300 members of the ICAP. The Institute is managed by a Council of Sixteen members who elect the office bearers including the President. There is Secretariat with a Secretary, Executive Director and Directors for Technical Services, Education and Training, Examinations and Professional Standards Compliance.


The mission statement of ICMAP is as follow:

"To promote efficiency and effectiveness by providing competent and high calibre professionals in the area of Management Accountancy."

Pertinent aspects about ICMAP are as under:


The Institute is administered by the National Council. It consists of twelve (12) members, eight (8) of whom are elected by the members and four (4) are nominated by the Government. The governing body is assisted by various statutory and non-statutory committees in discharging its responsibilities efficiently and effectively.


The main object of the Institute is to regulate the profession of Cost and Management Accounting. In this context, students who ultimately become members of the Institute are considered as the prime asset of the profession. It is a pre-occupation of the Institute to devote all its efforts and energies to develop the students as good professionals.

In this connection it is a policy of the Institute to continuously improve and upgrade the curricula keeping in view international trends and national requirements. The syllabus is usually revised after every 3 to 5 years. All kinds of innovations in course development that are taking place over the globe especially under IFAC are given due weight in developing the course outlines at the ICMAP.

To develop communication skills and leadership qualities in the students, the Institute has recently prescribed presentations in each subject as an integral part of the educational programme. Case study has also been introduced to make the students better prepared for their career. To give the student orientation to the professions in practice two years compulsory internship has been imposed.

To provide thorough and comprehensive education to the students the course has been divided into six parts. The first two parts constitute foundation stage and in the four higher parts the students are trained for professional skills and competencies.

The main objectives of the syllabus are:

a. To provide students with a structured frame-work of the course of study for preparing to qualify the examinations of the Institute.

b. To provide the Institute with an adequate basis upon which to train the students and to examine their bases, detailed and in-depth knowledge in the prescribed subjects of the course.

c. To provide the prospective members with a basis of professional applicable knowledge and skills for enabling them to practice as management accountants, financial advisors, auditors and management consultants under various business environments.

d. To enable the prospective members to have appropriate applicable knowledge and skills to effectively function as a member of top management team in business, trade and industry and ultimately rise to position of Chief Operating Executive.


The Cost and Management Accountants are engaged by all kinds of organizations in government, multinational, public and private sectors. While employing them, their qualification is considered equal to Chartered Accountancy. The Government of Pakistan has recognized the equivalence of CMAs and CAs vide its memo No. F. 5(4)-Estt.1/74, dated May 2, 1974. The members of the Institute are authorised to carry out the Cost Audit, Sales Tax Audit and also carrying out their jobs under various laws of the country. They are also authorised to sign the balance sheet and other financial statements under the prudential regulations passed by the State Bank of Pakistan.


The Institute brings out its official magazine entitled "Management Accountant" after every two months. It contains articles written by eminent scholars of national and international stature for the benefits of its members, students, business executives etc. A special section for students has also been created in the journal. It carries articles written by the students. News items of students' interest are also published in it.

The research department of the Institute publishes a newsletter under the name of Research Line. As a research oriented periodical it is quite popular among the members and students of the Institute.

        EDUCATION (C.P.E.)

To keep the members abreast with the emerging developments in the profession, the Institute regularly organises functions like Seminars, Symposia, Workshops, Conferences etc. Eminent scholars of national and international repute are invited to make presentations in these events. Usually latest topics like Balanced Score-Card, Target Costing, Life Cycle Costing, Activity Based Costing, Activity Based Management etc. are subjected to discussions and deliberations in them. The Institute normally organises two to three conferences in a year.

Minimum C.P.E. Credit Hours to completed by the members during a calendar year are as under:


Particulars Hours

a. Practising Members 15

b. Non-Practising Members 10

c. Members residing abroad 05


It is mandatory requirement for admission of a newly qualified student to be a member that he must have at least ten credit hours to his credit.


The Institute has its head office located at Karachi. It has four more campuses at Karachi, Lahore, Islamabad and Multan. It performs its various functions through its secretariat comprising the following officers.

Executive Director

Director Examination

Director Admin. & Finance

Director Education

Director Research

Director Computer

Deputy Director Co-ordination

Director Northern Zone (Lahore)

Regional Director (Islamabad)


Students who qualify all the examinations of the Institute, complete requisite experience and earn at least 10 C.P.E. hours etc. are admitted as members of the Institute. There are at present two types of membership i.e. Associate and Fellow Members. A person is admitted as an Associate Member on completion of final examination of the Institute and on having three years experience in a reputable organisation in business and industry sectors. Fellowship of the Institute is granted to Associate members when they have five years experience in managerial capacity to their credit.

The membership of the Institute has more than doubled during the last ten years. The members are engaged in professional practice and are employed in various organisations. About 100 members are in practice while others are employed as directors, managers and accountants in public, private, multinational and Government sectors. A few of the members reached the higher echelons of the organisation they were in. Mr. Riyaz H. Bokhari, FCMA retired as Auditor General at Pakistan, Mian Mumtaz Abdullah had been the Chairman Corporate Law Authority (CLA), Prof. Dr. Khawaja Amjad Saeed rose to the position Pro Vice-Chancellor in the University of the Punjab, Lahore. A good number of ICMAP members are working as CEOs in various local and multinational organisations.

The Institute is a founder member of following International Accounting Bodies.

International Federation of Accountants (IFAC)

International Accountancy Standard Committee (IASC)

Confederation of Asian and Pacific Accountants (CAPA)

South Asian Federation of Accountants (SAFA)

Two of institute's Presidents had been elected President SAFA in the past. The Director Northern Zone of the Institute served as the Executive Secretary of the SAFA during 1997. The sitting President of the Institute is at present a member of Governing Body of IFAC as a representative of both the Institute of Cost and Management Accountants of Pakistan (ICMAP) and the Institute of Chartered Accountants of Pakistan (ICAP).


The Institute extends assistance, through providing inputs, for framing of various laws, rules and regulations to the Securities Exchange Commission of Pakistan as and when required. In the context of Cost Audit, it has been playing pivotal role in the development of Cost Records Orders of various industries. These records will ultimately form the basis of Cost Audit. Uptill now Cost Records Orders have been prepared for Vegetable Ghee, Cement, Sugar, Chemical and Fertilizer Industries. Those for thermal power and other industries are in the pipeline. ICMAP is the major contributor in this context.


As a living organisation ICMAP is alert and alive to the changes taking place in the professional environment over the globe. It is quick to make adjustments in its outlook and curriculum development and thus keeping the profession relevant in the emerging scenarios. Now when Cost Audit has been imposed in Pakistan and CMAs are authorised to carry it out when desired, ICMAP has employed a Cost Audit Advisor to help the practising members in resolving their problems and to satisfy their queries. ICMAP firmly believes in professional ethics. Its Ethics Committee is ever vigilant and keeps the members' behaviour under active surveillance so that ethical rules and regulation are complied with letter and spirit.

The objective is to provide high quality services to the employers and clients of management accountants. Under the continuos improvement programme which is the policy of Institute, upgradation of the profession is always on the anvil to keep it relevant in the changing business and economic scenarios.

President, Institute of Cost and Management Accountants of Pakistan.

The author is grateful to Mr. Tariq Saeed, ACMA for his logistical support in developing this paper.