Cost Audit Rights of ICMAP - Why ICAP is allowed?

[kamranACA]

Dear Ajnabi

It’s nice to find a new qualified member on the forum having vast understanding and exposure of various professional issues. This is what we need to promote and strengthen the forum as a best place and resource centre of information for upcoming students of accountancy.

Based upon a simple reading of your post I have drawn a picture that you did your CMA before getting your CA (from whatever institutes) done. I hope this picture would not be an illusion of my thought. Rest is known only to Allah.

You have attempted to present your case in a nice professional and informed manner. However, while going into details of what is being done at India or other places you simply forgot that the post which you were replying was written keeping in focus the ICMAP and not the other institutes. I agree that your main comments may not be Pakistan specific. However, if you have gone through the whole thread you might have seen my comments about CIMA as well which our all ICMAP brothers rejected altogether. {So, issue was not only with CAs, rather it lies some where else.} Yet, the blessing was to see you back on ICMAP and discussion on its merits and demerits in rest of the post. By the way some of the complaints like “budhay” chartered accounts etc are weird. I will explain you why it is weird.

It’s good to get inspiration and study various international models, yet the first step is to correct the basics and find out reasons which are creating obstacles for any one specifically. Rest assured I am not in favor of keeping any one out of the competition. However, I also hate to say that bala bala institutes member(s) created this situation for us using their position. It’s disgracing for a professional to say such words in my humble view. People are of course independent in their concepts.

Our brothers and elders who were and are ICMAP members are and were largely in public sector. You can check the figures that their number is greater than CAs in public sector and especially in the entities which can affect the governmental decisions. It has a reason; CAs rarely accept lesser routine pay-scales of public sector which one of our CMA brothers said are accepted by “their (CMA) members in the best interest of nation”. Exceptions can exist in every case and in recent past so many contract jobs were offered which carried good returns and were accepted by CAs for shorter tenures. Yet majority is of CMAs in public sector be it SECP (you have to see all the history), SBP, FBR, WAPDA, NSGPL, SSGC, State-Life, Railways, NLC or some other departments. How could have it happened that some “Budhay” CAs did not “permit” the majority of others that are largely in public sector to make out a valid case for their institute and members? Either such alleged “Budhays” were too concerned or too honest with their own co-members or inversely the members of the other institutes were totally unaware of the rights and needs of their institute and members. Kaisay ho gaya yeh sab?

It’s a strange question and a strange picture of the past. I hope you will try to find out what exactly has happened, what strengths were in place, what capabilities were developed, what resources were gathered, how efficiently practices were managed by the members of both of the institutes and how these practices emerged on the global scene when “others from international front” came in and evaluated the people and overwhelmingly offered their affiliations declaring the standards of practices fully conversant with their international level. So the need was to establish it locally, may be by idealizing some international model, and then asking the others that please come, check, evaluate and find out what strengths we have. A factual comparison will serve the purpose. Do you feel this all happened in a day or so? You will certainly be knowing that this might have also taken a significant amount of time as well. So, I hope your grouse with “Budhay CAs” will settle down slowly once you will listen the other side argument as well. After reading this very paragraph (which I know you are aware of at your own) would you also developing a feeling that some “Budhay chartered accountants” troubled the CMA brothers even in front of those international players? I believe your comments about those “Budhay CAs” have been developed without testing the exclamation that some CMAs oftenly make.

You have made out very logical points while pointing out ICMAP’s deficiencies on audit fronts. If you will go through the recent post of mine you will find some very real life issues which are in fact the problem areas and are not very much different from what you have evaluated. You identified following matters as major deficiencies in ICMAP members for getting into cost audit

- lack of practical training;

- lesser number of cost and management accountants firms;

- lesser number of professionals who have undergone the intensive practical training even at CA firms;

- they are quite new in the field of audit as compare to ICAP as far as the practice is concerned;

- audit of cost accounts has been introduced through Companies (Audit of Cost Accounts) Rules, 1998, promulgated on 24th July, 1998, making Cost Audit mandatory for only two industries in the initial stage;

- actual purpose of CMA “initially” was not to do Audit of either area; and

- others to be listed.

I hope you have gone through my recent post where I requested ICMAP brothers to concentrate on certain deficient areas if they wish to give a real competition in the market, instead of complaining against CAs who can of course perform much better than them for so many reasons. Reasons are identified and well know as Tariq Sohail said I have not pointed out any unknown factors. I hope I need not to again mention those reasons. Your above list indicates that you are well aware of those points as well.

I would like to comment on your remarks regarding syllabus and exam results as well. I requested you to throw some light on the grounds (certainly Pakistan specific) on which you named certain papers of ICMAP with the remarks that “These four subjects of ICMAP cover as much as double the topics being taught in ICAP”. I wish you have made these remarks without going into detail of the curriculum. Why you did not feel (as a third party) that ICMAP might have a need to restructure its syllabus contents and approach, if required. Do you think repetition and breaking down same things in four books serve some better purpose? If not required to do so in your opinion, have you really went through each component of such so-called four subjects? Have you checked how papers are structured and have you compared the contents with ICAP syllabus as well as papers? Let me find some time, I will come back to you with clear results as this post and time consumed both are on higher side.

You made me laugh while analyzing the results of ICMAP with CAs. Both institutes have publicly declared 50% as passing marks. Let me tell you with fullest affirmation that the ICAP results are always as per this marking. (I feel ICMAP will also be following the declared criteria being a professional institute). I am not telling this without exact knowledge that ICAP never sets aside this criterion. In any given examination the result will be dependent upon the facts like which students are taking it and how good the given student mix polished itself to face the test of knowledge. This mix can always vary from attempt to attempt. Without checking how many students appeared in exams, how much efficient they were and how were the papers structured and such other factors, we cannot comment on any result simply on the basis of rough or prejudiced assumptions. For so many reasons I cannot believe that any result is designed for market based or other reasons at least by ICAP and to some ones surprise this has been proved this time as well for which there is no reason but a better performance. I hope you will understand it.

I acknowledge that your comments that CMAs are the only option for Cost audit were not Pakistan specific since these cannot be at all.

I discussed with you basic two ingredients of making out a quality professional. You have admitted that the second ingredient is mostly missing in CMAs (Pak). Let me know please that how a CMA can learn auditing without training? Is it possible? I wonder if it is a small issue as your post reflects that it is the “only issue”. Even if we believe that curriculum is not an issue, the biggest factor and one major pillar of the building on which quality of a professional stands is gravely missing from the required attributes. Training does not only let the learner know how to apply any theoretically learnt technique. Rather, it is fundamental to develop the understanding about the costing systems, methodologies, SOPs, documentation, controls, design and flows in variety of industrial or services sectors and organization. Without undergoing a comprehensive training programme and claiming to be a best Cost Auditor is nothing but like throwing out of a layman from the aero-plane with a parachute from the height of 10 kilometers. I wonder if any syllabus book will tell how to learn verifying, preparing, designing or analyzing the costing records of Textiles, Sugar, Oil and Ghee, Cement, Power (on whatever fuel it is) or any other sector where costing is a prime function. I am not discussing the petty issues. Without learning it practically renders no difference between a professional qualification and an academic qualification. Had it been not important, you could have produced doctors, surgeons, engineers, pilots, atomic and other scientists, chartered accountants and cost and management accountants etc. Since you cannot do so without this, it have the vital importance. So, dear it is not “training only”; rather it is the one most important attribute that makes out a quality specialist. If this is missing, so much is missing and the result of discussion is obvious.

Now summing up the whole discussion, let me again tell you that I have no issues with CMAs and would love to see them in competition since such competition always contributes in development of better ideas, services and approaches. After all they are our brothers. (I myself at some point of time in life was also considering getting into CMA as my career building qualification.) Yet, I am very much certain on why CMAs (Pak specific) are lacking audit and professional exposure and I believe you have also rightly pointed out the grey areas as well. They need to concentrate more on professional side that is even important than the academic and syllabus issues for making a place in the market. This is what market drives.

If they don’t have good firms having required strengths, number of qualified and support staff, logistical facilities; and if they don’t have practical training arrangements through which they can learn how to apply theoretical knowledge, standardized audit procedures and documentation, internal and external quality assurance system and ability to serve the needs of clients (not for the reason that they are not efficient, rather they are not geared to do it and they don’t have resources to do it) and so forth and so on, then they must have to do the needful. This is in their own best interest. There is no “Budha” CA hindering in doing this all. I hope you will appreciate this fact.

I hope no CMA will take this post as irrelevant or biased or allergic. This is what they need and this is what where a focus is required.

I, however, request that don’t transfer your burden to the shoulders of others merely by alleging weird things. This we should not do. Constructive discussion and sharing of ideas should be appreciated.

At the end, I thank you for introducing yourself and would request you to keep posting on the forum. People like you can guide better to the students for the common well-being and to encourage sharing of the knowledge and exposure.

Regards,


KAMRAN.