Death Of A Profession

Then a few days back, yet another close friend sent an SOS from New Delhi: he was coming to Mumbai. While he was in town, could I suggest some places he could check out for job openings? That got me thinking. It wasnt the first time that friends, who had reached the crossroads of their career had leaned on me for advice. But what was intriguing was that both my friends were accountants: one was a chartered accountant and the other a cost accountant, both very bright and intelligent.

On the face of it, it seemed surprising. For someone who had done a years stint with a CA firm while in college in Calcutta, I was sure of one thing: if there was a career that promised dollops of security, it was an accountants job. Routine, predictable, monotonous, and even boring were just some of the ways to describe the profession. Those days, as a young turk, it looked just that kind of thing to run away from. And I did.

Now here was I playing counsellor to two buddies, who were desperate to run away from all that I had casually jettisoned one afternoon 10 years back. Was it too late to for them to change? From my vantage point observatory, I could see what perhaps they couldnt, much too close as they were to the action.

As things change more and more, the more they remain the same. That aptly describes the accountancy profession in India, frozen and fossilised in the depths of time. But actually the rot set in not so long ago.

Bitten by the competitive bug both from within the country and from outside, a great many Indian firms have today been forced to look at their cost structures and become more proactive in the way they manage costs. For many Indian firms, it is easy to see that survival will depend upon their ability to develop sophisticated cost management systems that create intense pressure across the value chain to reduce costs.

A couple of years back, Robin Cooper, a professor of management and director at the Peter F Drucker Centre at Claremont, California had predicted in a brilliant paper, The changing practice of management accounting, that the growing importance of cost management would significantly cha-nge the practice of management accounting. The challenge for such accountants lay in choosing their future role. Those that did not have the right skill set would either have to develop expertise to allow them to transfer to functional areas of the firm or risk themselves at a career dead-end.

Would you describe Cooper as clairvoyant? Even so, I dont think management accountants in India have seen the writing on the wall yet. As cost management systems become more critical to a firms survival, two trends emerge, said Cooper. First, new forms of cost management are required and, second, more individuals are actually involved in the cost management process. But management accountants would be wrong to assume all this would lead to a simultaneous increase in the imp-ortance of their role in their firm.

There was a time when an average-sized Indian company would have as many as 400-plus accountants working for them. Today, the renewed focus on value addition is finally putting a stop to such blatant empire building. So the days of bloated internal audit dep-artments are numbered, as firms increasingly realise that outsourcing of various finance functions work just as well and cost substantially less. Besides, technology advances now allow information to be transferred at the blink of an eye.

More importantly, for sophisticated cost management systems like activity-based costing and total cost management to be effective, it is imperative that everyone in the organisation from the CEO down to the operating managers view these as cost management rather than accounting tools. On its part, the accounting or finance departments must relinquish ownership of these systems to the users. In other words, they have to transform themselves from doers to facilitators. Or, as cost management guru, Robert Kaplan once said, management accountants must move away from being score-keepers of the past and become the designers of the organisations critical management information system.

But will the management accountancy profession be able to give up its obsession with recording a firms past? In the US, where a similar decentralisation of the management accounting profession took place to support cost management programmes, the management accounting function has been decreased by more than 50 per cent in major US firms like AT&T, GM, HP and Motorola. In Japanese firms, the downsizing has been even more severe.

If the management accountancy profession has to survive these turbulent times, a lot will depend on how certifying institutes like the Institute of Chartered Accountants and Cost Accountants address the emerging challenges. They must reduce the number of accountants they certify or reposition the course by reducing the dependence on financial accounting and bring in a more sharper cost management and management accounting focus.

The first stirrings are being felt. In an editorial published in the February issue of The Chartered Accountant, the Institute of Chartered Accountants of India finally admitted that the accountancy profession was at the cross-roads. It could no longer function in a comfortable cocoon, sheltered from competitive pressures. As a profession, we must respond to the emerging challenges.

The question is: Do they know how?