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The 21st Century Paradigm: The New Age Accountant

Rajesh Jain
(Published in 'The Chartered Accountant', May 2000)

On January 1,1999, the Euro was born. On January 1,2000 it was Y2K. When people spoke of the new millennium, I used to wonder why there was so much noise for a unit of measurement of time. Apart from the man-made issue of Y2K, mother nature definitely did not treat that day any differently. Did a differ-ent sun rise on that day and change the way we live or work?

When the map for the Indian states were redrawn, some villages of Punjab touching the border of Himachal Pradesh were transferred to that state. A farmer from those villages was worried that, henceforth, he would have to live in the hostile cold weather of Himachal Pradesh. I used to compare the noise about the new millennium with the apprehension of that farmer.

But the persistent talk ignited in me a need to under-stand the nature of the future to come. Today, I am not sure whether there was a new sun, but I am sure that the coming is going to be dramatically different.

Where do we go from here? What future awaits us? How are we going to be affected by the ever-changing environment in which we operate? These are some of the questions confronting us. The questions may be disturbing, but they must be attended to. Can we have answers at all? Asking the right questions is important in itself.


THE IMPLICATION FOR AUDITORS

As we are auditors, retrospection is a natural trait. Perhaps, this is the first attribute and image that has to undergo a change. We must play a more proactive role in dealing with our clients; and as an institution, in devel-oping a framework suitable for the future needs of the members in particular and of society in general.

Some people, who are advocates of the status quo, argue that the traditional methods of auditing and the traditional role of the auditor are the best. They cry foul when members are required to venture into green-field areas. They talk of falling moral values. They talk of the glorious past. Nothing wrong with that. But they club it with a doomsday prophecy of the nearing death of the profession, underestimating its resilience, dynamism and strength. They resist change, forgetting that change we must-if not by choice, then by force.

As regards falling moral values, I believe that we are only a shadow of the society that we live and work in.

And thankfully, we are standing at a crucial moment when society has become Sensitive to these issues.

Issues like corporate governance are getting the attention they deserve. With appropriate provisions to discipline and guide stakeholders and constituents of society, the possibility of scams and manipulations has decreased. This is not to suggest that we are moving towards a society devoid of corruption. The magnitude of frauds may be more devastating with the misuse of technology.

However, my optimism emanates from the prevail-ing awareness and concern for these issues coupled with the growing discomfort and restlessness of the masses. My confidence is boosted by the active role being played by the judiciary, financial institutions, banks, chambers, etc. Most of all, my faith is reiterated by the vectors of change - technology, globalisation and competition.

If we wish to exploit technology to our advantage, we must make our systems transparent. If we wish to sur-vive and grow in the face of global competition, we must play the game the way the world plays it. Those in the profession must match global standards. Samuel John-son once said that the conscience is very well-bred and soon ceases to speak to those who will not listen to it.

Do we have a flowery path ahead? If we believe so, it is wishful thinking. No, it is fantasy. It is change of incomparable magnitude that we are dealing with. It will be chaos all along. But when written in Chinese, the word crisis has two characters-one represents danger, another opportunity. Our reaction to the challenges will be compatible with our perception-for some this will be a disaster, for others an opportunity.


WHY IS THE PARADIGM SHIETING?

We have dealt with changes in the past too. No dramatization was necessary. They were changes requiring vertical extension of the depth of the then prevalent skills. What qualifies the current changes as lateral shift or paradigm shift necessitating a totally new set of skills? Mainly, three factors: the Internet, the World Trade Organisation (WTO), and the emergence of regional trading arrangements like the European Union.

The Internet has ushered in anew era of connectiv-ity and communication, destroying the barriers of time and space. It has moved the world of business from physical to virtual. It has made paper money redundant and increased the importance of plastic money and digi-tal transfers. The computer has signaled the end of trans-action audit, but created new opportunities for process and security audit. The Internet has solved many old problems. It has created new ones.

Call it international competition, globalization, lib-eralization or intellectual property rights, the WTO is the body to regulate them. Gone are the days when we could bask in the shelter of protection. One can look at it is an open war where gain for one will mean loss for another or one could avail the opportunity and enlarge one's horizon by forming joint ventures and alliances. One could continue with the inefficient monopoly and protest all global competition chanting Swadeshi, but in the process, surely die a certain and sudden death in the not-so-far future, or, one could upgrade and be strong enough to beat the competition. It is not simply a ques-tion of choice. It is about trying-sometimes succeed-ing, sometimes failing, but at least giving one's best without succumbing helplessly. It is also about raising the bar, always being one up over one's previous performance. Competitive strength and the desire to excel are the vehi-cles which can carry one through in the open economy.

In this context, one more factor, which is vital for professionals, is the issue of intellectual property rights. We will see more of patenting of ideas as exemplified by the Duckback-Lewis formula adopted in cricket. Economic Value Added is a trademark of Stern, Stewart & Co. We Indians, who value physical assets only, shall have problems here. We will either end up paying royalty or end up infringing patent rights. The WTO will ensure compliance. But this will encourage innovation and cre-ativity too. We must watch out for the marketability and originality of our ideas and patent them. Awareness of the proprietary value of our own creativity is necessary. After all, eyes do not see what the mind doesn't know.


TOOLS AND TECHNIQUES

Few years back when one got burnt, the affected part was never exposed to water. Today, this is the first thing to do. What was right yesterday has become wrong today. Why? Because of new findings. One can persist with older meth-ods. It is but natural to follow the experience of the past. Experience is vital, but it causes prejudice and bias. This is why the younger generation is more comfortable with newer methods and techniques. Does it sound like tough times for older professionals? And should youngsters take their success for granted? Definitely not. After all, youth-fulness is a state of mind. What is needed is continuous learning, preceded by unlearning. This is the panacea for dealing with change. And is it not one of the most impor-tant attributes of a professional?

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