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The accounting professional institutes must revise their courses of studies and upgrade these to international levels

By Dr. KHAWAJA AMJAD SAEED
 Nov 05 - 11, 2001

WTOs regime is expanding. From goods the scope is being expanded to services sector now. Borderless trade and investments have been witnessed throughout the world. Now borderless services sector is in the offing. This paper focuses on the areas of accounting services — in particular relating to developing accounting professionals for public and private services. Accounting professional is taken to mean a person who is a member of a recognized accounting professional body (Financial and/or Cost & Management) set up under statutes.

Inflow of Foreign firms and professional accountants is likely to be moving from developed countries to developing countries. How should SAARC countries in general and India in particular identify the issues and later develop a strategic response to prepare for facing the future challenges?

This paper is an initial effort to help develop a three Cs strategic approach to address the major issues. Primary focus is on getting close to the International Education Guidelines (IEGs) released by International Federation of Accountants (IFAC). This will facilitate the beginning of the era of signing Mutual Recognition Agreements (MRAs).

WTO has set up Working Party on Professional Services (WPPS). Its mandate covers the following three components:

1. The recognition of qualification.
2. The disciplines relating to market access, and
3. The use of international standards.

MRAs are arrangements based on which members of WTO jointly agree to recognize the qualifications of professionals of similar institutes of one another. The recognition may be partial or full. The absence of MRAs can act as a barrier to international trade in accounting services. On the other hand, MRAs can facilitate the trade in accounting services by laying down the extent of recognition of the qualifications of one another and the requirements to fulfil for recognition by the relevant authorities of the party of the agreement. In May 1997, the WPPS established guidelines for recognition of foreign qualifications. The study of the above requires an independent treatment. However, this paper looks at getting close to meeting the requirements of IFAC to get closer to MRAs.

CONSTITUENTS OF THE PAPER

The paper gives a brief about WTO. It presents three Cs strategic approach namely, Competencies, Continuing Professional Education and Competitive forces to be given due recognition for facing future challenges. It concludes urging all stakeholders to use strategic approaches to be prepared for accepting the challenges with an assured confidence.

WTO

WTO was established on January 01, 1995 in Geneva, Switzerland. Currently its membership consists of 135 countries. It has a staff of 500 with a budget of 122 million Swiss Francs. Its Chief Executive holds the designation of Director General. Main strategic functions of WTO include the following:

1. Administering WTO trade agreements.
2. Forum for trade negotiation.
3. Handling trade disputes.
4. Monitoring national trade policies.
5. Technical assistance and training for developing countries.
6. Cooperation with other international organizations.

FIRST "C": COMPETENCIES

To ensure that proper persons join Accounting Profession, IEG 9 suggests broad guidelines for entry point and structure of pre-qualification education and experience of professional accountants. IEG 9 lists three elements of accounting education and experience e.g. knowledge, skills and professional values. The strategic goal is to produce competent professional accountants. Knowledge bejewelling must cover General Knowledge, Organizational and Business, Informational Technology and Accounting and Accounting related. Skills to be developed include intellectual, interpersonal and communication. Professional values must concentrate on professional ethics and values.

Earlier, entry requirements require pre-testing to enable students with appropriate aptitude to enter into the accounting profession.

Core knowledge in organizational & business areas such as economics, quantitative methods and statistics of business, organization behaviour, operations management, marketing and international business must be covered in the prescribed courses of studies. Core knowledge related to accounting and related areas must include in the prescribe courses of studies subjects such as financial accounting and reporting, management accounting, taxation, business and commercial law, auditing, finance and financial management and professional ethics.

Field experience is a pre-requisite for developing proper professionals.

IEG 11 deals with Information Technology (IT). IT is pervasive in the world of business and a firm grip on IT on the following aspects is considered essential for professional accountants :

1. General IT education requirements.
2. The accountants as user of IT.
3. The accountant as manager of Information systems.
4. The accountant as designer of business systems.
5. The accountant as evaluator of information systems.

Six appendices have been included with the above IEG dealing with general information technology education requirements, with the following components:

1. IT concepts for business systems.
2. Internal control in computer-based systems.
3. The professional accountant as a user of IT, as a manger of IS and as a designer.

SECOND "C" : CONTINUING PROFESSIONAL EDUCATION

Events are moving much faster than the pen that records these for cold print. The decade of 1980s was dominated by TQM; the decade of 1990s was known for Re-engineering; but the 21st century's early decade will be dominated by velocity. The speed with which knowledge is getting itself doubled is fantastic. Therefore there is an urgent need to stay updated and ornament oneself with new knowledge, new skills and enlightened attitudes.

IEG - No. 2 deals with continuing professional education (CPE). Main recommended steps to be taken are briefly stated now.

1. Member bodies should establish and operate or otherwise make available CPE programmes.
2. Mandatory CPE include a minimum of 30 hours per year or a minimum of 90 hours in every three-year period.
3. Structured learning should be pursued.
4. Monitoring should be institutionalized.
5. Notice should be taken for non-compliance of foregoing requirements

THIRD "C" : COMPETITIVE FORCES

Professor R. Michael E. Porter's five point model is suggested to be carefully examined to develop strategies to face the future challenges. This model is summarized below:

1. The threat of new competitors entering the industry.
2. The intensity of rivalry among existing competitors.
3. The threat of substitute products or services.
4. The bargaining power of buyers.
5. The bargaining power of sellers.

CONCLUDING REMARKS

All stakeholders, in particular accounting professional firms in practising business and professionals in service, are urged to see writing on the wall. They should follow the strategy of Mergers & Acquisitions (M & A) internally and negotiate Strategic Alliances externally with practising firms abroad to equip themselves to face the emerging challenges.

The accounting professional institutes must revise their courses of studies and upgrade these to international levels. The world of academics may initiate Doctoral Programs in the above area so that the internal and external environments are given due recognition. The competitive forces are properly identified and suggestions are developed to evolve ways and means to equip ourselves to accept the WTO's challenge in services sector relating to accounting services.

SELECTED BIBLIOGRAPHY

A: BOOKS

1. Wright, Peter, Kroll, Mark J., Parnell, John (1998), Strategic Management : Concepts and Cases, New Jersey : Prentice Hall.
2. Porter, Michael E., (1989) The Competitive Advantage of Nations, New York: The Free Press.

B: PUBLICATION OF INTERNATIONAL ACCREDITED BODY

1. IFAC 1999 Technical Pronouncements, New York: International Federation of Accountants, Sections : Education (pp 591-694) and Information Technology (pp 927-968).

C: ARTICLES

1. Eshai, Mujahid, ICAP and the Provisions of the WTO GATTS, "The Pakistan Accountant", March-April 2000, pp 5-20.
2. Haider, Sayed Aftab, World Trade Organisation: The Rhetoric and Reality, "The Pakistan Accountant", March-April 2000, pp 21-23.
3. Noordin, Shiraz, World Trade Organization: Trade Flow as Freely as Possible, "The Pakistan Accountant", March-April 2000, pp 325-29.

Former President, South Asia Federation of Accountants (1997), Association of Management Development Institutions of South Asia (AMDISA : 1993-96), Pro Vice-Chancellor & Founder Director, IBA, University of the Punjab, Lahore, and currently serving as Dean : Executive Programs, Punjab College of Business Administration, Lahore (Pakistan)