Role of professionals in sustaining a business- b.v.raghunandan
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Transcript of Role of professionals in sustaining a business- b.v.raghunandan
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Role of Professionals in Sustaining a Business
-B.V.Raghunandan, SVS College, Bantwal
Institute of Chartered Accountants of India, Udupi Chapter
December 20, 2010
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A Professional
A person with a highest level of knowledge in a specialised area
Possessing a prescribed qualification as per law
Legal sanction due to his work affecting lives of hundreds and thousands of people
Professional Ethics A non-professional can not duplicate the work
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The Idea of a Professional
‘A true professional realises that being a professional is nothing short of a religion and that the capacity to serve is indeed a blessing in life’- Subroto Bagchi
-case of Mahadeva, the street dweller -case of I.U.Khan and R.K. Anand in Sanjeev
Nanda case -professionalism involves doing a dedicated
work without supervision
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Types of Professionals
‘I am the King’ Professional ‘Customer is the King’ Professional ‘Government is the King’ Professional ‘Society is the King’ Professional ‘Truth is the King’ Professional
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Business Sustainability Financial Reporting Accounting Professionals Individual Greed Institutionalising
Individual Greed Helping Professional
Managers Collusion with Promoters Ill advising the Promoters
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Double Entry System One of the Greatest
Discovery of Mankind Discovered by Luca Pacioli Inspiration for Newton’s
Third Law of Motion Only Comprehensive
System of Book-Keeping Stability, Flexibility and
Agility Compatible for
Computerised Accounting
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Accounting Principles Evolved by Practice Fixed Assets at Opening
Balance less Depreciation Current Assets at Closing
Values Accounting Conventions
and Concepts Simplicity and Stability in
the Long Run Accounting was a Passive
Function of Management
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Genesis of Vested Interest
Managerial Bonus as a Percentage of Profit Joint Stock Form of Organisation Listing of Shares on a Stock Exchange International Raising of Finance Meeting Shareholders’ Expectation Investment Analysts Quarterly Reporting Accounting became an Active Managerial
Function
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Manipulation of Figures
Accounting Professionals Auditing Creative Accounting Auditor-Management Nexus Need for Concealment of Manipulation Making Accounting Complex Making Annual Reports Voluminous Attractive Annual Reports
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Means of Scandals
Accounting Standards Auditor: Policeman-Thief-Forensic Expert Elaborate Reporting So- Called Transparency in Accounting Credit Rating Agencies Band-Wagon Mentality Cash Oriented Conscience Professional Managers
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Accounting Standards
Started at the Initiative of IOSCO Uniformity Defeated at the Inception Different Standards for Different Countries Complex in Nature Ever-Changing in Nature Too Many Standards Impossibility of Off Hand Preparation of
Annual Reports
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Auditor: Policeman-Thief-Forensic Expert
Not a Watch Dog any more Party to Sharing the Loot Guided the Companies in Manipulation of
Accounts Helped Accounting Bodies to Prepare
Accounting Standards Helped Clients in Violating Accounting
Standards Investigated Accounting Violations
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Elaborate Reporting
Voluminous Reports Expensive Reporting Led to Delisting of Shares Wasteful Expenditure in Creating a Hype Efforts to Cultivate Media Coming up with New Practices like Segment
Reporting, Related Party Disclosure Proliferation of Statements like Cash Flow
Statements and Fund Flow Statements
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Transparency in Accounting
Too Many Details Too Many Statements Impressive Accounting Photo Features of
Smiling Faces Expensive Reports Vital Information was
always Sensitive Technical Details and
Jargon
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Credit Rating Agencies Third Party Certification Part of Groupthink for a Fee Changed rating on
Generalities Lot of Vested Interest in
Rating A Ring of Bandits Increased the Financial
Cost of Operation Multiple and Varied Rates Shopping for Rating
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Band Wagon Mentality
Impressive Operations Conflict of Interest in
Financial Services Mutual Agreement Club No Investigative Effort
for the Unfurnished Facts
Sensational Media
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Cash Oriented Conscience
Slavery to Remuneration & Perquisites
Selfish and Self-Centered Attitude
No Protection to Whistle Blower
All Pervading Cowardice Unpracticing Values and
Hypocrisy
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Professional Managers Gypsies in Search of
Treasure Need to Exploit the
Organisation and Run Qualification and Empty
Work Experience and Not Quality
Highly Commercialised Culture
Expensive Services Responsible for
manipulation
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Agenda
Simplification Scrapping Accounting Standards Basic Annual Reports Fiduciary Responsibility of Credit Rating agencies Loyal Managers Random Selection of Auditors by Government Random Selection of Independent Directors by
Government
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THANK YOU