CA Radheshyam Sharma partner at RSRV and Associates has written a letter to ICAI and submitted Suggestions and Measures required for Survival and Growth of Small and Medium Practicing Chartered Accountants ‘SMPs’ affected and challenges being faced by entire CA fraternity especially these SMPs (Small & Medium Practitioners). Text of the letter submitted by him is as follows:-
The Hon’ble President,
The Institute of Chartered Accountants of India
ICAI Bhawan Indraprastha Marg
Post Box No. 7100 New Delhi – 110 002CAI, New Delhi.
Sub:-Suggestions and Measures required for Survival and Growth of Small and Medium Practicing Chartered Accountants ‘SMPs’ affected and challenges being faced by entire CA fraternity especially these SMPs (Small & Medium Practitioners).
We being deal with Small and medium enterprises and the undersigned has in-depth Knowledge and expertise in the areas of business Advisory to most of MSMEs and after experiencing from the world where superpower like America is facing serious Health and Financial Crisis where they estimate for a job loss of nearly 3 cores due to this Covid19 pandemic.
Though It does not require to tell you because all of you are much knowledgeable than us but being a small chartered Accountant and true Human being to express our views and suggestion by stating that a complete social and economic lockdown of India for 55 days including an extended period of 33 days up to 17th May 2020 would severely impact the supply side of the economy, that is, production and distribution of goods and services, except for the essential items that are exempt. Since cases of coronavirus are increasing day by day this period of 21days has been extended further 33 days and we do not know when it will end. Increased In an economy already reeling under a demand depression, rising unemployment, and lowering of industrial output and profits, all of which happening together for several quarters now, a supply-side constraint would deliver a big blow, jeopardizing growth prospects and social and economic wellbeing of a large number of people. What could be the magnitude of the impact of a complete social and economic shutdown may not be easy to estimate, but it is likely to be far from the financial crisis of 2009 because India’s already-slowing economy weakened to at least an eight-year low this quarter and will slow even more sharply in the next six months due to the global coronavirus pandemic, more severe than either the 2016 demonetization or the 2017 GST rollout and it could register the lowest growth in the post-reform period in 2020-21 despite strong monetary and fiscal stimulus measures being taken by the government but since we have deficit Budget Policy where a lot of funds are being allocated for survival lower class of public.
All the Government whether at the state or center show as complete pictures with ample promises but in reality India has been in a race for the past two and a half centuries but unfortunately it has been a race to the bottom. What is more unfortunate is that India is winning this race. To put things in perspective, we need to go back to the 1760s when the Mughal empire was at its zenith. Amongst the seven major economies of the world that could be considered a peer group, there were only two countries, Britain and France, that were ahead of India and though we may say that we are fifth largest Economy in the world, in reality, we are not doing well and since EUROPE and USA have badly affected due to corona Virus spread in these countries accordingly it can be said that we may be ahead of few countries but we do not believe in winning races due to weakness of other participants but we must do it with own strength amongst strong participants and we must consider that our economics Condition is also not so good and we must learn two things from picure “BHAG MILKHA BHAG” we must break our records and do not look behind accordingly we should not compare the unfavorable condition of other countries and we must focus on our capabilities and present position.
As all of you are knowing much better than me that the global economy has entered a recession as a consequence of the coronavirus pandemic. There are lockdowns across the world, hitting economies hard. The International Monetary Fund (IMF) has said this recession will be worse than the one in 2009, caused by the global financial crisis. With its low dependence on exports and the advantage of moving early on social distancing, the Indian economy may do better than some other developing countries but the same is not possible unless otherwise SMEs are given priorities and they exist to take the advantage of the global recession.
When MSMEs are struggling in their survivals for which maximum effects will be on Chartered accounting dealing with them i.e Small and Medium Practitioners (SMPs) and since last 2 months we experienced that no one is talking about these SMPs even most of the large organization are also started talking about stimulus package but Institute has money to contribute in PM Care funds without taking care of its member. We are proud on all our members and Students who had contributed in this corpus funds result of which our institute could able to use this corpus for a noble cause and made us part of nation-building but we are in deep pain and sense of agony by knowing the facts from various practicing CAs that, day by day the situation of the Coronavirus pandemic is taking serious shape and this is making the economic condition of the small and medium practicing CAs more critical day by day.
The coronavirus pandemic keeps raising the stakes of what a global health emergency looks like. The crisis and the measures that governments across the world undertake to contain it will keep taking a heavy toll on the economy. Unfortunately, the negative consequences deeply impact Indian SMEs, when their income significantly reduces or disappears altogether, smaller businesses lack the financial reserves to continue paying fixed costs such as employee salaries and office rents will impact their survival. Governments must step in to help small businesses but due to the political structure of India government may not able to help them completely result of which these SMEs are at the verge of closure result of most SMPs Chartered Accountants because nearly 75 percent Chartered Accountants are providing the services to smaller and medium enterprises. they will not in a position to get the recommended Fees from these type of clients and as we know more than 50 percent professional revenues are shared by only 5 percent large firms of chartered accountants affecting the growth of SMPs and without support from our institution this gap is getting enlarged by year on year basis. We suggest few measures to support these SMPs as these Smps found themselves in a forced trapped condition and they may not be in a position to sustain a long term due to very low earnings during next two years and they are not in a position to close down and do something else to sustain at this unusual eventuality and due to global recession our migrant members also will be looking job or professional Opportunity in India itself as they have a shuttle for better prospectus but now they are losing their job and getting shifted back in India.
We had experienced that on account of forced Social Status Qua and by believing that CA is a top Most Degree and based on promises that Indian Economy is the fastest growing economy in the world most of these SMPs have increased their outgo in form of day to day domestic expenses daily necessities, social and family Responsibility along with fixed liabilities of various EMIs and over and above the sizable amount of committed liabilities of the office overheads and investment in Insurance, investment in Equities through Mutual Funds or Direct Investment where valuation has eroded more than 60 to 75 percent result of which they are facing a cash crunch.
The expert analyst across the country such as MHA, AIIMS and WHO believes that this coronavirus pandemic will take at least further 6 months or more time to come under control and as per their views September quarter will be Peak period for spread of Coronavirus accordingly impact of this Covid 19 on CA SMPs will continue for at least 2 years accordingly normal conditions cannot be expected even by the end of the year 2021
Presently as per the ICAI statistics and as heard from the speeches of our past presidents in various webinars, almost 75% plus practicing members are SMPs which nearly count 90,000 to 1,00,000 or even more CAs across India. Based on data available most of these SMPs having Gross Receipts below 20 Lakhs per annum approximately and due to some unavoidable reasons these SMPs are not able to increase their earnings beyond this limit despite having extraordinary knowledge and managerial/ Technical skills
Since we as SMPs are the part of the glorified profession of CA and on account of Forced Social status in the society can neither beg nor borrow and as stated above we don’t have immediate professional opportunities to capture additional earning result of which they may face liquidity crisis because of the entire client base viz. Individuals, proprietors, Partnership, or SMEs to whom they serve are also badly affected and not in a position to pay them their outstanding fees or fees for present work that is to be done. Due to very high investment in technology and as this unprecedented situation was not anticipated by anyone of us accordingly we as SMPs could not automate our offices and therefore are not in a position to work from home and earn the revenue. Even those few who updated themselves have no such source or such a cliental like the big corporates to whom they would provide services to earn.
We are continuously sending several suggestions for the survival and growth of SMPs on regular basis but we are sorry to state that till now we have not received a single reply to it. It proves that our Office Bearers either most knowledgeable and they do not any suggestion or they are avoiding us. we agree that we are very small firms so why you as dignified personalities should give any weightage on our suggestion but we will continue to send these suggestions till you justify that we are incapable to make a suggestion or our views and suggestion are not in the interest of SMPs. Today corona has taught a lesson that there is no upper or lower class of society that we must accept and implement in our life. We had received several messages to contribute of CAs in COVID Funds and then send photographs thereof the undersigned is doing lots off socio-economic activities but never given any picture either in papers or anywhere else because we believe that we are not helping others but taking the opportunity to serve them in their growth
The policy of our Institute is in favor of Large Firm as the professional opportunities are unequally distributed among the practicing CAs, wherein 80% of opportunities and revenue is being shared by 20% practicing CAs and a mere 20% opportunities and revenue is left for balance 80% SMPs in the country and these SMPs are earning less than 10 lacs per annum. This is quite an injustice to all SMPs and the ICAI as regulators of the profession may also not justify such a scenario and few CA Firm are paying salaries Fresher CAs staring from 30000 to 50000 and in the commercial organization it may be between 50k to 1 Lac per month nut due to this pandemic there will job cut for Cain industry who may try to start practice which will result into clashes between existing SMPs and New starters
We are sorry to state that most of the council members are either part of large Firms or supported by these large Firms however during election time everyone is talking about change and for development of SMPs we get several rosy pictures towards opportunities but in real term, it does happen. Our institutes are conducting various courses, Seminars without creating an opportunity to use these courses.
Considering this situation we suggest a few measures to support these SMPs. by submitting a few thoughts/suggestions, and appeal for your kind consideration, and timely implementation thereof
1. As all of you know that new Accounting and Financial Regulator has been established by Government of India known as NAFRA hence we have to accept that now Role of ICAI should not just be a Regulator of the Profession but also to be as a Facilitator to its practicing members and more particularly to act as a Fair Distributor of the Professional opportunities amongst its practicing members Including global professional opportunities through our portal.
2. Our Institute must represent to GOI that all the professional Opportunities for Chartered Accountants must be done online based on their profile along with a personal online interview of partner or proprietor.
3. Waive all Fees including seminars and Membership with Study Circles for one year for members having taxable income up to 5 lacs Per Annum which can be met by enhanced fees from Members having Taxable Income above 25 lacs.And also provide concession to the extent of fifty percent Subsidised fees for all courses conducted by ICAI for all SMPs having income below 10 lacs based on their self-declaration because It is seen that the cost of various post-qualification courses is very high and even years after acquiring these additional qualifications, members get hardly any professional opportunities in that filed. Despite having various opportunities in different fields just because the SMPs do not have the reach/ connect or reference the SMPs fails to get
4. Create a mentors Platform for all senior chartered accountants above 60 years of age who can guide new chartered Accountants in practice and based on their rating the only scale of firms must be reviewed. These mentors must be given an opportunity as peer reviewers as well as online speakers for webcasts or webinars. This will create additional opportunities for stalwarts.
5. Since the new members and SMPs are not in a position to have their own fully-equipped offices due to huge cost of commercial premises, I would like to suggest that the Institute should create its well-equipped Business Centres in its owned infrastructures across the country and make it available at a reasonable cost to its members to run their profession even these business centre can be taken on rent by our institute
6. Reduction in the limit for Engagement of Articled Assistants entitlementby Members in Practice to 5 from the present limit of 10 and employee of any ca firm should be eligible only up to 50 percent of the limit for partners of Firm jointly result of which SMPs will get Article;es and Maximum Stipend also must be fixed up to Rs 5000 only. More strict action should be taken for Dummy article ship if found. Transfer from SMPs must be allowed only after representation from Principal.
7. We must tie up with Tally or other software to provide additional tally to CA Members at a very special price this will help SMPs to provide tally for employees working from home and the same manner we can tie-up jio to provide additional data for working from home and the ICAI should do strategic tie-ups with major techno firms for providing various scalable suitable software’s (Office Management Software’s, Audit Tools, Various Audit Documents Formats and Templates, etc.) at a concessional price. Even these necessary software and practice tools can be preloaded in customized Laptops and are readily provided to each new practicing member from the very beginning by providing user id and password.
8. Chartered Accountant must be covered under MSMEs Act 2006 and Priority must be given for the recovery of professional fees by all SMPs and suggest the law to sign the audit report only upon payment previous year fees and support must be provided to Members on requestand to avoid large outstanding fees of SMPs from their clients which is a normal scenario across the country, these e-platforms can be on Pre-paid Model as per the ICAI Recommended Scale of Fees and impanelled SMPs can take benefit of these opportunities subject to certain capping for its fair distribution.
9. We Must help these SMPs by relaxing in condition for an audit of PSUs and listed companies Presently it is seen that only 30% SMPs get assignments of Statutory Bank Branch Audits and mostly 3 branches are allotted to each firm. Instead of that let at least one Statutory Bank Branch Audit be allotted to all SMPs. Even the same applies to the Central Statutory Audits also. All the banks should be instructed to do so, for a fair distribution and best outcome of the audit. As per my knowledge even at this time also the ICAI software for bank branch audit allotment has not been adopted by banks. This shows the value of our institute in the eyes of other regulators. Audit and assurance services for Listed Companies, insurance companies must be reserved for SMPs subject to their capabilities. 50 percent of concurrent Audit also should be reserved for SMPs
10. We can represent our government for reconsidering the decision for enhancement of Turnover limit prescribed for GST Audit and the same should be kept only 2 crores and Revenue Audit by CAG also should be allowed for SMP and also create more audit under Income Law appointed by Department
11. New Professional courses as resolution Professional must be adopted for Pre NPA resolution and this should be made mandatory to appoint RP before the declaration of NPA by banks or Financial Institutions.
12. We must represent to Government for Low Rate of Interest and Interest Subvention for all practice icing ca fees having a gross income of 25 lacs Per partner and ca be entitled to get Get Finance under MUDRA or CGTME Scheme.
13. Represent to the government for Interest waiver and deferment of EMI for 6 months for all SMPs Working Capital Term loan for 5 years for purchases of hardware and software must be allowed at SMPs at lowest Rate of Interest.for this we cam represent to Government.
14. Sharing of assignment by large and mid-sized firm amongst these SMPs must be encouraged because even at this juncture theBig and Mid-size CA firms which are flooded with professional opportunities; therefore these firms can or should be instructed to opt for outsourcing the various jobs to the SMPs after retaining their share so that these SMPs would get work for survival because today though all CAs are at home, the SMPs are struggling for work and desperate with the serious thoughts of survival, whereas Big and Mid-size firms are serving their big corporate clients by working from home and can generate revenue. In such cases, the institute can act as a facilitator and through talking to Ministry/Industrial Associations/Big Corporate clients these small/big professional opportunities can be distributed among the SMPs so that they can get some earnings for their survival.
15. All certification work can be reserved for SMPs and large Firm with gross receipts of 2 crores and Above should not be allowed to undertake certification work and Institute should represent the government that all the banks must take solvency certificate and ratio analysis directly from CA other than auditor of the firm where recommended fees should be paid directly by the bank.
16. As regards the students, the entire study material, last 10 years exam papers and guideline/suggested answers, RTPs can be provided on LAPTOPS/PALMTOPS and same can be updated by a student through the ICAI website as and when changes take place and ICAI online classes must be encouraged by upgrading this platform making it par with Top classes with good results.
17. In the last one and a half months, we have seen that there is bombarding of Webinars without providing CPE hours secondly as every member has attended many webinars but can just claim only 10 unstructured CPE hrs. This needs to be revised and in the new digital and technological era structured CPE hours need to be allotted to webinars also and these webinars have to be held at no extra cost as there are hardly any expenses incurred by the ICAI.
18. We Income based on self-declaration 50 percent
We appreciate that Until now the ICAI has undertaken various measures for the betterment of its members, but there are further many more aspects for which detailed analysis needs to be done and suitable positive implementations should be processed at the earliest accordingly we humbly request to all torch office to kindly take note of my above points and I expect an immediate action under your leadership.
These are my views and our motto is to uplift our brothers and colleagues by safeguarding their interest and since we are providing the advisory services to various MSMEs and we are also part of SMPs, we have made this suggestion after analysis of ground realities of Indian economy affecting SMPs.
In case you disagree with my suggestion you are welcome to correct us and we also request you to have open webinars on measures for SMPs for their survival
“TAKE CARE OF YOURSELF AND STAY SAFE!”
For RSRV and Associates
Chartered Accountants (FRN 115691W)
CA RADHESHYAM SHARMA (Partner)
M. No. 049286.
Office address :
301 Apollo Arcade R K Singh Marg
Andheri East Mumbai 400069
Tel 42117900(30 Lines)
Email [email protected]
Mobile Number : 9322661576/9321222881
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