GOLDEN JUBILEE CELEBRATIONS OF ICMAP
Jul 24 - 30, 2000
At the time of independence, there were only seven cost accountants in Pakistan. Mr. Muhammad Shoaib, the then Finance Minister of Pakistan had the vision to forsee the need of an institution to provide education and training in the field of Cost & Management accounting, which was gaining wider application in the industrial sector of the developed world. Mr. Muhammad Shoaib founded Institute of Industrial Accountants in May, 1951 and also founded Institute of Cost & Works Accountants of India, as well, before independence of Pakistan.
The Institute, which started from the verandah of the residence of the founder President, is today proud to have infrastructure facilities unmatched by any other professional institute in Pakistan. It owns large custom-built, modern educational centers in Karachi, Lahore, Islamabad, Multan, Hyderabad, Larkana, Sukkur, Peshawar, Quetta, Faisalabad, Mir Pur (A.K.). The number of active registered students is over 25000. ICMAP has over 1600 Fellow and Associate members who hold senior positions in trade, commerce, industry and Government Organizations. A good of them are employed abroad.
The ICMAP is a member of International Federation of Accountants, International accounting Standards Committee and South Asian Federation of Accountants.
By the Grace of Al Mighty Allah, the above achievements have made ICMAP one of the largest professional Institute in Pakistan. which has been playing a proactive role in the development of accounting profession not only in Pakistan but also globally.
The Institute started its year long Golden Jubilee Celebrations, and organized the inaugural two day conference on "Adding Value to Business" recently in Karachi.
Federal Minister for Finance & Economic Affairs, Mr. Shaukat Aziz, was the Chief Guest in the inaugural day of conference said that the government would provide cheaper utilities to the people if the tax base was expanded as a result of the survey. "The government has to impose surcharge on utilities when it has no revenue from taxes". Speaking at the Golden Jubilee celebration function of the Institute of Cost and Management Accountants of Pakistan (ICMAP) at a local hotel, the federal minister said that the economic survey started by the Government in Pakistan has no precedence in the world. "The survey is not only directed against traders but its main objective is to document entire economy. The economic survey is a spectacular feast and it will raise head of every Pakistan with pride".
Elaborating on the progress made in the survey campaign, Mr. Shaukat said the distribution of over 30,000 forms had been achieved. The number of unregistered is two to three times more than the government had expected, he said. He said that the government was fully committed to broaden the tax net. "The survey teams will visit shops, houses and commercial establishments and the tempo of registration will gain momentum. Nobody will be spared and provincial governments will levy income tax on agriculture".
The Government revenue increased by 17 per cent in the current, whereas the target for revenue collection for the next year has been set at 24 per cent, the minister said adding that he is greatly encouraged with the result of the economic survey. It is a marathon which calls for continuous running till the objective is achieved, he added.
Turning to the role of accountants, Shaukat Aziz said that both the accounting bodies ICMAP and ICAP have a primary role to play so far as the development of the capital market is concerned. "The preparation of accurate and timely financial statements with the necessary disclosures and transparency is at the heart developing a fair stock market that results in proper price determination and that adequately protects investors".
He said that ICMAP members were the main architects for creating value consciousness to ensure cost competitive management decisions and to ensure appropriate pricing of products. This is absolutely essential if Pakistan's industry is to compete effectively in this era of increasing globalization, he added.
Dr. Ishrat Husain, Governor of the State Bank of Pakistan, was the key note speaker in the inaugural session of golden jubilee conference, said that the time has come to concentrate on the internal factor to improve the business environment and "we should graduate ourselves to deal with the external influences". He said the external influence would lead towards globalizing the economy and hence it must be handled carefully. He said the second factor which affects the economy and the business, was the technical know-how of our labour force. He said the standardization of labour was needed for the growth of business and for adding value to it. He emphasized the training programmes and refresher courses for the labour force. He said the third factor was upgradation of technology in the country and there was a need to learn from the neighbour India, which had succeeded in getting very good results in the field of Information Technology. He said "We can still get better result by adopting this technology" IT is a growing field and Pakistan can get a substantial amount of exports share through this technology. He stressed the need for better products designing, processing and engineering. He said today 52 types of jeans were available in the market while initially it was only blue jeans.
He said he was not satisfied with the quality of approach by the Pakistanis and advised that they must go for better quality production. He said foreign buyers have shut off their windows for Pakistani products as "we are producing only second grade products". He said corporate governance was another factor in developing a better business environment in the country. Unless we reduce the cost of input through professional management, we will not be able compete in the world market". "Finally customer is the key element of the business who are not treated as they need to be treated". The governor said there was an attitude problem in the markets and the salesmen did not show their skills in persuading the customers to buy their products. "Our markets are not business friendly and customer oriented", concluded the governor.
Mr. D. M. Qureshi, Adviser, Treasury, Islamic Development Bank, Jeddah, Saudi Arabia, in his technical paper on "Development of Financial Markets for Economic Revival" pointed out that financial markets in the world have reached a consensus to concentrate on three pillars to safeguard the health of financial system, both at the domestic and international levels. He identified these three pillars as: good health of financial institutions, functioning of markets and the establishment of a sound infrastructure including legal and judicial processess, payment and settlement systems and accounting standards. Good practice in each of these three pillars are posted by three sets of incentive systems, namely: internal governance, supervision and market discipline. Defining on the strength of imparted to three pillars by good practices in given financial markets, financial markets are able to face effectively or otherwise the adverse consequences of financial instabilities caused by short-term volatilities, medium term misalignments and the contagion - effect of crises. Referring to current state of Pakistan's financial market, Mr. Qureshi expressed the view that the financial market in Pakistan is highly unbalanced, financially weak, extremely volatile and lacks depth to effectively perform the role of revival of the national economy. Excessive borrowings by the government owing to narrow tax base and heavy expenditure for debt servicing, defence, development and civil administration, has crowded-out the availability of market sources of funds for investment the private sector. The banking system of Pakistan in he said, is highly under-capitalized, below investment-grade and suffers from poor profitability by international standards. Moreover the absence of an active bond market in Pakistan causes unbridled volatility and has no safety value for flight-to-safety for investors whenever the equity market experiences turbulence.
Mr. Imtiaz Alam Hanfi, Former Governor State Bank of Pakistan, presided first technical session, said that, with notable expectations of multi-national companies, corporate governance is sub-standard and transparency of information is much below the international standards of disclosure.
Mr. Javed Iqbal, Chairman and Managing Director, Philips Electrical Industries of Pakistan in his second technical paper titled "Role of Management Accountants in Economic Development" recalled the history of accounting and observed that from l5th century when accounting was first discovered, until the arrival of the industrial, the accountants function has not changed much. However with the advent of Industrial Revolution, the concept of management accounting appeared as management needed reports on prices, costs, budgets inventories etc. With the dawn of the 20th century, crises national and cross continent business started flourishing and a number of large multinational organizations started expanding themselves throughout the world. The world has moved fast towards globalisation through export oriented businesses and movement of goods from country to country. Multinational companies continue to invest and manufacturing facilities in countries/ regions where they foresee competitive advantages. Mr. Javed Iqbal pointed out that the part played by the Management Accountant can be identified in all facets of economic activity in various roles. He emphasized that as the basic objective of management accounting is to serve management by providing information for decision making, the management accountant would always form part of the cross functional decision making teams: be it a trading concern, a manufacturing company, a financial institution or a government. In this way the management accountant has vital role to perform in the entire management function of planning, controlling, organising, communicating and motivating.
Concluding his paper Mr. Khalid Mirza, Chairman Securities and Exchange Commission of Pakistan, expressed the view that management accountants can play a greater role in order to achieve revitalization of economic activities as per objectives set by the government, through participation in financial and managerial reengineering of operationally sick units and finally through guiding the government in the rationalizing tariff and Tax Structure regime in order to attain optional benefits. This would go a long way in putting the country's economic house in order.
"Credit Rating and the Role of Management Accountants" was the subject of third technical paper presented by Mr. Jamal Abbas Zaidi, Executive Vice President, DCR-VIS, credit rating company, defined credit rating an as an objective, professional and independent opinion regarding the credit quality of a debt instrument and ability of an entity to meet its unsecured obligations. It indicated the likelihood of timely payment of principal and profit on debt that has been issued or is it to be offered. The point to be noted is that Rating is not a recommendation to buy or sell a security but can be used as a factor in investment decision. He further explained that Rating should not be compared or confused with audit. Audit presents a snapshot of the state of affairs at a particular point of time and compliance with regulations but doesn't examine the ability of an organization to meet its financial obligations. On the other hand, Rating is a continuous process through surveillance and gives a well-considered opinion on the probability and ability of an organization to meet its financial obligations. The opinion of credit rating agencies regarding the credit quality of issues and ability of entities are expressed in a comprehensive yet simple manner that facilitate its use by investors, depositors and creditors.
"Regarding the role the management accountants can play in the furtherance of credit rating culture in the country, the session chairman, International Monetary Fund's Pakistan representative, Mr. Ahsan Mansur, visualized two different roles for management accountants vis-a-vis credit rating. Firstly the role for those management accountants who are occupying the positions of CEO or CFO is to make themselves aware of the credit rating process and use it as a tool for creating alternate sources, reducing the cost of funding and bringing about competitive advantages to their companies enterprise. They should interact with the credit rating company to make the best use of the analysis and the peer group companies comparisons to overcome the weaknesses of their organizations. Secondly, the management accountants can also play a role as credit rating analysts as they already have a solid base in financial, cost and business risk. In this context Mr. Mansur cautioned that rating is a specialized field and therefore, acquiring knowledge of its mechanism and philosophy is essential.
"Role of Management Accountants in Services Sector" was the subject of the fourth technical paper presented by, Mr. Sher Afgan Malik, Managing Director, Pakistan International Airlines, started his paper by stating, an economic spectrum has three constitutes, namely, agriculture, industry and services sector. Management accountants have, wherever they were employed rendered excellent services in all the three sectors. The services sector, he pointed out has four components namely, Technological, Social, Physical and Financial. Glorious contributions have been made in institutions where management accountants were associated in employment.
In his paper Mr. Afgan identified a number of objectives of management accountants in rendering useful service sector. These objectives include providing information for decision making and planning and proactively participating as part of the management team, assisting management in directing and controlling operational activities measuring the performance of activities of managers and other employees within the organization and assessing the organization's competitive position and working with other managers to ensure the organization's long run competitiveness in its industry.
The last session chairman, Mr. Lal Nanayakkara, President South Asian Federation of Accountants, came all the way from Sri Lanka to attend this conference, in his concluding comments, observed that the 21st century has come up with great challenges. New management tools are in currency. Management accountants are equipping themselves with these tools and are rendering excellent services in eliminating waste, increasing productivity and beefing up the bottom line. He said the future augurs well for the dynamic role of management accountants. They are by virtue of the training, professional studies and well developed acumen well poised to serve the society.
Interior Minister Lt. General (R) Moinuddin Haider HI (M) was the Chief Guest in next day's valedictory session, said that the present government is sincerely working to root out corruption and bring an order to the society. Addressing at the concluding session of the Golden Jubilee Conference of Institute of Cost and Management Accountants of Pakistan (ICMAP) on "Adding Value to Business" the Interior Minister pointed out that corruption was the root cause of deterioration of all the institutions. "We are trying to root out corruption from the society", he said, adding that this nation that corruption was the way to get work done was being eliminated from the society.
He asked the professional accountants and auditors to fight against corruption, adding that the professional could play an important role in rooting out corruption. He appreciated the efforts of ICMAP in playing a major role in the developing of institutions. He said professional education was very important and underlined the need to bring changes in syllabus according to the requirements. He said the government was working on plans for devolution of powers at grass root level. He assured the ICMAP for his full support.
Those who also spoke on the occasion included Mr. M. H. Asif, President, ICMAP, Mr. M. Ashraf Bawany, Vice President, ICMAP, Mr. Badruddin Fakhri, H. Secretary, ICMAP, Mr. M. Rafi, H. Treasurer, ICMAP and Prof. Dr. Khawaja Amjad Saeed, Chairman Golden Jubilee Committee.
To commemorate half a century of services of the Institute in the field of professional education Government of Pakistan has launched postal stamps worth Rs. 2/- and Rs. 15/- on the occasion of Golden Jubilee celebrations.