Let Accounting Firms Place Ads: Icsi

In a letter to the department of company affairs (DCA), the institute has argued that with the entry of the Big Six Ernst & Young, Arthur Andersen, Deloitte & Touche, KPMG Peat Marwick, Cooper & Lybrand and Price Waterhouse the government should provide a level playing-field to Indian accounting professionals.

The American MNCs are permitted to solicit new business through a wide variety of promotional aids like circulation of bio data, brochures, one-to-one meetings, telephonic conversations and media advertisements.

The only check imposed on these advertisements is that they should subscribe to the code of ethics of the profession which is enforceable by the professional organisations.

 

However, the gamut of Indian professionals, including chartered accountants, company secretaries, auditors, lawyers and doctors, are debarred from advertising their trade in any manner. This includes even advertising in the Yellow Pages of a telephone directory.

But many professionals now violate this law since the old logic the reputation of the neighborhood lawyer, doctor or chartered accountant is known to the people at large and there is no need to advertise in the interest of informed choice by the clients no longer holds true.

The American code for advertising for professionals is based on a US Supreme Court judgment (John R Bates and Van O Steen versus State Bar of Arizona), which states that advertisements by lawyers, so long as they are not false, deceptive or misleading, cannot be restrained.

Before arriving at the conclusion that advertising was desirable on account of transparency and in the interest of clients, the US court considered arguments on the following counts:

Advertising undermining the dignity of the profession,

The inherently misleading nature of attorney advertising which would arise on account of the variety in content and quality of legal services on offer,

The adverse effect on the administration of justice,

The undesirable economic effects of advertising,

The adverse effect of advertising on the quality of services, and

The difficulties in enforcing a model code.

External competition apart, ICSI has also pointed out that with more and more professionals swelling its ranks (the membership is now about 1,000), advertising is in the interest of the new entrants.

New entrants cannot possibly garner business unless they are permitted to advertise their professional skills, the institute has argued.

To ward off criticism that advertising by company secretaries will lead to unprofessional behaviour by its members, ICSI has sought permission for limited advertisement, with regulations to ensure that the advertisements are not misleading, false, deceptive or offensive.

ICSIs idea, if accepted, will open the floodgates for the demand of a similar code of conduct by other Indian professionals like chartered accountants and auditors.

The Institute of Company Secretaries has mooted that these changes should be effected as part of amendments to the Company Secretaries Act, which is under review.