Fair value a paradigm shift

By Sunil Karunanayake

KPMG Partner Reyaz Mihular, keynote speaker at the SAFA (South Asian Federation of Accountants) International conference in Colombo last week maintained his firm stand on the need and readiness for the challenges faced from the shift to fair value, pushing the historic cost perspective into the back seat.

Mihular maintained his plea for the accounting profession to be alive to the situation and called for drastic reforms to the syllabus and training modules.

ICASL President Yohan Perera was emphatic on overcoming upcoming challenges and called upon the profession to be leaders and not followers. Perera briefly explained the ICASL initiatives such as the syllabi revisions, adoption of new Accounting standardsetc; He stressed the need and advantage for Chartered Accountants to equip themselves in areas such as valuation.
Dr Paul Pacter, Director International Accounting Standards Board stated that “Fair Value” has been with us for nearly three decades; however developing countries are likely to face issues due to limitations in Markets, valuation experience and standards. Dr Pacter quoted a series of existing International Accounting Standards (IAS) containing references to fair value concept.

T M Manoharan, past President of the Institute of Chartered Accountants India, assured that the accountancy profession need not worry and panic.

“Our profession is abundant with skills and potential and has faced such challenges successfully,” he said.

Manoharan added that if the 18th and 19th centuries belonged to Europe and the 20th to USA, the 21st is certainly the Asian Century. Professional Accountants from Asia have great potential to be key global players. Manoharan was confident that today finance professionals are in high demand in the globe above other professionals and urged the professional institutes to develop a complete product, A summary of Manoharan’s presentation on “Equipping the Accountants” is produced below:

Education/Practical experience
In the globalized scenario, the expectation of the society of the accounting profession is increasing manifold. During the pre-qualification stage, a strong foundation needs to be laid to facilitate grooming a student (trainee) with core competence over accounting, finance and related subjects.

The programme of professional education should provide potential professionals with a framework of professional values, ethics and attitudes for acting in an ethical manner that is in the best interest of the society and the profession.

The practical training framework should promote developing professional skills encompassing intellectuals, technical functional, interpersonal and communication and organizational and business management skills.

The student should be able to enhance ethics, knowledge and develop ethical sensitivity. Practical experience environment should infuse in a student a commitment for lifelong learning and culture of ethical behavior.

There is a need for establishing high quality assessment methods to evaluate the attainment of the capabilities and competences by the student.

The assessments need to be appropriate for the professional knowledge, skills and values, ethics and attitudes. Assessments need to be acceptable to the stakeholders and serve the public interest.

IT
Information Technology (IT) is all pervasive in business. In the present day globalised environment, E-commerce is assuming significance. Information Technologies affect how organizations are structured, managed and operated. Entities can no longer develop business strategy separate from IT Strategy, because IT is an enabler of business initiatives. Information Technologies are changing the nature and economics of accounting activity. Professional accountants often play important roles as managers, advisors and assurance providers in the adoption, deployment and use of various information technologies by organizations of all types and sizes thus requiring appropriate pre& post-qualification requirements in IT related and evaluative related services.

Soft Skills empowerment
Every accounting professional needs to be equipped with soft skills. Knowledge is power and when coupled with ability to communicate, it gives greater empowerment. As accounting professionals, we often need to convey our ideas; negotiate business deals; get things done by the team members; train and groom the next generation of professionals; represent clientele before statutory authorities and many times impress upon the nature, need and value of services rendered. Chartered accountants should not lose out by being considered as a product, rich in content but poorly packaged. When our fraternity can boast of comprehensive knowledge with specialization in core areas, why not embark on the easier exercise of adorning the intellect with skill sets?

Specialization/CPE
No professional accountant can master all areas of accountancy. Specialization within the profession is necessary to ensure that services can be provided with a sufficient depth of knowledge and expertise.

In view of the nature and magnitude of various stakeholders’ interest, enhanced or specific professional competence should be a necessary prerequisite for audit professional. Accounting bodies should design suitable post qualification courses to enable Members achieve enhanced knowledge to specialize.

CPE which is a post qualification requirement is inevitable to sustain capabilities and maintain competences of professionals. A mandatory prescription of CPE compliance by the members is a necessity and a effective measurement methodology in place for periodical evaluation.