We need the presence of international accounting firms that can transfer necessary skill, technology and know-how. But we need to become an attractive market
Chartered accountancy is a challenging profession. Having big four firms in Nepal can help our chartered accountants to develop and excel. But big four firms are not coming to Nepal and the main reason why they have not established their foothold is that they are getting what they want from Nepal without physical presence. Major big four firms have a strong presence in Nepal as a permanent establishment and is taking a big chunk of consultancy services from government agencies.
These organizations are more interested in non-assurance services rather than the routine audit and compliance work where the fee is not equal even to the travelling cost of these international firms. Second, the clients the local firms have altogether will be a very small pie to these international firms. The annual royalty and targets they have proposed is more than the total revenue we have currently been earning.
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No doubt we need presence of international accounting firms that can transfer us necessary skill, technology and know-how. But we need to become an attractive market. We can achieve that by promoting consolidation of more firms and accounting firms with large number of partners. The statistics of Institute of Chartered Accountant of Nepal (ICAN) shows 466 chartered accounting firms while only few firms have partners with more than three. This is a main impediment to the growth of accounting firms and the quality of service delivery. If there can be big four firms with other firms having insignificant presence in a free economy like the US and other developed world, we need to think, do we need so many accounting firms in Nepal with no growth at all? We need more chartered accountants but not more chartered accountant firms. The increased size of any CA firm can help that firm develop specialized knowledge in specific areas with introduction of a lot of training and development of its staff. The strength of the firms can be developed through clear demarcation between membership and certificate of practice. The policy maker should promote new chartered accountants to become the members of old firms. That can be achieved through some policy incentive like article clerk numbers, requirement of number of partners for appointment of auditors from Office of Auditors General etc. Secondly, the persons working in accounting firms should be treated as members in practice rather than members in services. We need to think why we are not giving FCA designation to CA working in CA firms.
Some concessional benefits need to be introduced even in company act and company directive for members of accounting firms. Presently there is a three years rotation for audit of public companies and during consolidation of CA firms there is a high chance of losing the present client. The relief will facilitate consolidation/merger of CA firms which will ultimately be lucrative to big four firms to come to Nepal.
Association of Chartered Accountant of Nepal has not outlived its utility and should not be shut down. Institutions are established for the common goal and the common goal of Association of Chartered Accountants of Nepal is to work for the benefit of the accounting profession and its members. It was an elite club when the number base was few. Now the number of members in Association has reached 2,400 and around 800 members have joined the association during this period of two years. We now find three generations of chartered accountants working together coming from different class of the society. There are a lot of expectation gaps between different generations of chartered accountants. Those gaps can be fulfilled through the association which ICAN as a regulatory cannot fulfill.
We may have question on the activities and acts of the candidates and performance of the leaders of the association but institution should not be penalized. There are always ways for improvement. It’s high time to reduce the renewal charges and find sustainable source of revenue for the association through structured programs. Let the Association reach out to its members rather than members needing to reach out to the Association.
The author is the member of Institute of Chartered Accountant of Nepal and Association of Chartered Accountant of Nepal
