A letter to Citizen Mukherjee

Dear Citizen Mukherjee:

My hearty congratulations on accepting to deliver the valedictory address at the RSS training camp.

You have gone beyond being a party-man to being a statesman; one who belongs to the entire country. A former president should be just that. My respect for you has only gone up. At Raisina Hills you brought dignity and grace to the office. You come as a bright contrast to pigmies who defame others while holding high office.

You must have already marshaled your thoughts on what to speak. Just in case you missed some, here are my two-bits. First up, do not feel aggrieved if someone says you are not an outstanding orator. Under the circumstances, it’s a big plus. You will not be overtaken by the moment and resort to bombast. You will go with a script. Most importantly, you will practice it so hard, that it will come out of the heart.

As a citizen of India who lived on both sides of the liberalization divide, who has seen the modernity of our country, and loves its secular fabric, I will like to see you speak on three issues. Not demonetization; not GST; not black money. These are blips on the radar. Talk about the radar itself.

Your audience loves acronyms. Give them one. VHP. No puns intended.

‘V’ for vision. Ask them to have a vision. Of an India that is beyond slogans. A country where each citizen has an overarching personal vision; a nation that celebrates a free media. Judges who nurture an independent judiciary; a political system that eschews hatred; a country that swears by probity and establishes a Lok-Pal. A population with employable and upgradeable skills; Tell them that if we fail to do all this, GDP growth notwithstanding we will hurtle towards a banana republic. There will be the naysayers, the whataboutery: ignore them.

‘H’ for hate. Ask them to eschew Hate campaigns. People can have different points of views and yet live together. That is the precise idea of secularism. You can be a Bengali or a Tamil, a Hindu or a Muslim, a BJP voter or a Congress voter, a CSK supporter or an MI fan: it doesn’t matter because in the end all of us are Indians. Ask them to judge issues with a perspective. A petrol price increase in a UPA regime when oil prices were going up is the same when it happens in the NDA regime. Tell them to wear the other guys’ shoes before commenting. Tell them to identify all those faceless, nameless, trolls who sit abroad, who have given up Indian citizenships, and pontificate on India and about how Indian should do this and do that.

Citizen Mukherjee, do talk to them of patriotism, which is so very different from nationalism or fundamentalism. Patriotism is love for the country. Nationalism is love for the country and hatred for others. Patriotism can never be, “my country, right or wrong.” Tell them what Hinduism is all about. Tell them as it to be told that down the years India’s greatest merit was its secular fabric. Din into them that what we need is growth and development, not crass communalism and hatred.

You should of course also tell them that you are not just addressing the millions of Indians outside that hall. Given the climate your talk, it will be nationally televised. It is your one great opportunity to show the world that you genuinely love India, and you can really rise beyond politics, beyond the current swim, and look ahead with sobriety.

It’s an opportunity not given to many. You have been given one. You have the stature and standing. Use it, Sir. It’s more than a convocation address.

 

 

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Prime Minister Modi on ICAI

Pulled it out of another blog of mine to place it here.

Translated by Anuradha Ramani and Shubashree Pinglay

(A bit edited, for space; a bit corrected for order.)

Namaste!

I am pleased to see all of you present here in such large numbers. All fellow Indians, who are watching me on TV, youngsters, my brothers and sisters, today is ICAI’s foundation day. My hearty congratulations! It is a pleasant coincidence that today is also the foundation day of GST – Good and Simple Tax. I feel privileged to be present amidst all of you on this historic day.

Youngsters, the Constitution of India entrusts chartered accountants with a sacred responsibility. To distinguish between good and bad, and to certify and audit; it’s a right, which only you have. Just like doctors think for the good health of the people in the society, similarly, the economic health of the country lies in your hands. A doctor doesn’t intentionally ask you to fall sick by giving wrong advice to increase his wealth. Instead, he tells you to stay healthy. Similarly, you have the responsibility to ensure that the society remains free from financial malpractices. You are a pillar of the economy.  You are the pillar of the financial system of the country.

CAS ARE RECOGNIZED WORLDWIDE

I am privileged to be here. Chartered Accountants are recognized worldwide for their understanding of finance. Your course is dynamic, and your exam is known for its difficulty and credibility. I am happy to inaugurate the new Chartered Accountancy course. I am sure, the new curriculum will further strengthen the future generations of professionals and we will be able to develop our human resource requirements as per global standards, and continuously improvise through innovation and software development for finance, based on needs. A new market awaits you.

Our scriptures debate four purposes of a soul, the universal principles of Dharma (righteousness, duty and moral order), Artha (wealth and prosperity), Kama (worldly desires) and Moksha (liberation). When we think of Rishis and Munis, we think about Dharma and Moksha. Similarly, you are on par with Artha (economic prosperity). It won’t be wrong if I call you the Rishis and Munis of the world of economic prosperity. Your guidance is in the economic and financial aspect is as important as the spiritual guidance given by Rishis and Munis. Every CA has the responsibility to show the right artha and guide the people.

BLACK MONEY

Your love is encouraging me to speak my heart out. There is no difference between your patriotism and mine. We both want our country to prosper. On the other hand, we cannot ignore certain ground realities. Our elders said that if there is a fire, and the family loses its wealth, the family could become prosperous again by holding on to their principles, even if their time is terrible. But, if a family member has the habit of stealing, that family can never become prosperous. When one member breaks the rules, the family is doomed. Similarly, any country can overcome problems like earthquakes, floods, etc. People have the strength to overcome. But, if the nation has thieves and looters, the country and the society can never prosper. Dreams shatter and development stalls. Only a few end up persistently working to stop such malpractice. Our government is continuously taking steps to stop these malpractices over the last three years. We made new laws, scrapped old ones, signed new treaties with several countries, and modified existing agreements.

You can see the effect of our probe on black money internationally. Swiss Bank’s new figures prove this fact. Growth in black money deposited by Indians in Swiss Banks has reached a record low. 30 years back, in 1987, Swiss banks revealed the amount of funds deposited by each country in Swiss Banks. This amount reduced by 45% since 2014. In 2013, the number had increased by 42%! Black money hoarders can anticipate a lot of trouble, as Swiss Banks will start sending real-time numbers very soon. I am sure none of you support such hoarders.

Let me tell you a secret. You can pass on this secret to them secretly. On the one hand, I am running Swacch Bharat Abhiyan to clean my country of filth. On the other, I am running a cleanliness drive to clean the financial mess in the economy. You all remember 8thNovember way too well. Demonetization was a big step towards reducing black money. I have heard that you all had to work harder than usual, harder than you ever worked in your entire career! Many CAs were on Diwali vacation and had to cancel their vacations to attend to this. Some CAs burnt their midnight oil. I don’t know what you did was right or wrong, for the country or for your client, but you worked for sure after you returned.

Friends, I would like to share a few things with you for the first time since the crackdown on black money. You understand the significance of this information. The government is continuously doing a lot of data mining on black money deposited including the source and transfer. So far, we haven’t questioned anyone. I told you earlier that you are no less patriotic than I am. But you see, more than three lakh registered companies are under scanner for their transactions. We got this information from the data mining done so far. We have a lot of mining still to be done. I don’t know what the numbers will add up to when we finish mining, and that is when we will make our mission clear. On one side, the government, media, the traders were keenly anticipating 30thJune. On the other hand, one-lakh companies were blacklisted by a single signature in the last 48 hours and taken off the Registrar of Companies.

Those who play politics cannot take such decisions. Only those who live for the country can make these decisions. Those who looted the poor must return the wealth to the poor. Besides this, the government has identified more than 37,000 shell companies who hide the black money, hawala money and do things behind the veil. Stringent action will be taken against these companies. Companies, which break the law, will be penalized and action will be made. I am aware that the step taken to cleanse black money out of the system is going to harm a lot of political parties.

My CA friends on your foundation day, I want to ask you a question. You have the strength to make things right after demonetization. But there must be someone who helped these companies. These thieve companies would have gone to some financial doctor. I am sure they wouldn’t have come to you, but they would have gone to someone who helped such people, guided them, and shielded them. They have to be recognized and sidelined. Isn’t it?

ONLY 38 LAC REPORT INCOME MORE THAN Rs. 10 LAC

Friends, I was told that there are more than 272,000 CAs and more than two lakh articled assistants. If we add up CAs, articled assistants and the government employees in finance, it would add up to more than eight lakh people in the field. The estimated number of engineers in India is two crore. This means the cream has crores of professionals. If we include the lavish mansions in big cities, their value is in crores. The number of Indians who traveled abroad is estimated to be 2.18 crore. But, the irony is that only 38 lakh people declared income of over Rs 10 lac last year! Can you believe this? Are there only 38 lakh people? This is the bitter truth. I think the salaried class pays most of the tax. This is the situation. Despite this kind of income declaration, it is evident that crores of vehicles are purchased every year, but the country’s treasury is not filled.

Any client or person pays tax only when the tax environment is positive, and he is motivated to pay. If he gets a hint that the person who is supposed to guide him asks him instead to hide the truth, he will never hesitate to follow the wrong path. Thus, identifying the wrong people and taking action against them is very important. You also need to take harsh steps.

WHAT ARE YOU DOING, ICAI?

In your profession, you train the human resource, you decide the curriculum, you conduct exams, and you make the rules and regulations as well as take action against defaulters. The Temple of the Constitution of India and 1.25 crore people of India have given you this right. Why is it that over the last 25 years, only 25 CAs have been investigated? I heard that more than 1,400 cases are pending and that each case takes years to close. Isn’t this a matter of concern for highly qualified professionals?

Thousands of youth sacrificed their lives and went to the gallows during our freedom struggle. Leaders went to jail. Professionals came forward in the freedom movement, most of them being barristers. They knew the provisions of the law against freedom fighters. Despite knowing the consequences, they came forward and fought. There are many names, and we can never forget them. Our nation is incomplete without remembering them.

Today, in 2017, our country is taking a new path. We have fulfilled the dream of ‘One Nation One Tax.’ Chartered Accountants play a vital role in the society. You need not play with your lives or go to jail like our freedom fighters did. This is now your country and the future of your children. The financial health of the country is now in your hands. You have the responsibility to ensure your clients are honest and maintain integrity in their accounting to end black money and corruption. Chartered Accountants are trusted ambassadors of the country’s financial system. You are the interface between the taxpayers, government, and companies.

CA SIGNATURE IS MORE VALUABLE THAN THE PMs

The Prime Minister’s sign doesn’t have as much value as much as a Chartered Accountant’s signature. Your signature is the proof of truth and trust. It doesn’t matter if the company is small or big. The government and the people believe your signature. Have you ever wondered what happens after you certify the companies Balance Sheets with your signature? It doesn’t stop there. A new cycle begins after you sign. I came here to show you the new cycle. You sign the balance sheets, and the government officials accept it. When you certify a company, a retired man believes the certification and invests his retirement savings in a Mutual Fund. A poor widow invests her savings in the share market. When a company is not given a proper audit report, the truth is concealed. But when the truth about the company is revealed, the company doesn’t suffer much. The life of the widow and the retiree are ruined, as they trusted your signature before investing their savings.

I request you all, please don’t shatter the faith of 1.25 crore Indians who believe your signature before making critical decisions. If you feel that the trust has already been broken, come forward and take a pledge on 1stJuly 2017, on your Foundation day, that you will work towards change. I invite you to tread the path of honesty and integrity. Understand the importance of your work and then decide your way. The society will be proud of you, and you will realize it.

Friends, the word ‘tax return’ may have several interpretations. In my personal opinion, the ,tax that is used for development of our country is called tax return. This plays a vital role in curbing inflation. Money is used for scholarships, new gas connections, providing health services, etc. for the poor. A poor man works even in sicknes so that his children don’t sleep hungry. The tax that you pay is used to fund the army who are striving day and night to protect our country. It is used to provide electricity to those villages that haven’t seen electricity since independence. What is greater privilege than serving the nation?  One signature can help the poor. The possibility is limitless. You have a huge responsibility and will play a critical role towards the development of our country. My inner voice tells me that 1stJuly 2017 will be a turning point in the history of the Institute of Chartered Accountants of India. Once you decide to choose the righteous path, no one will have the guts to evade tax. A person knows he can commit a crime only when he knows that there is someone to save his back.

GST IS A MEDIUM TO SERVE

Friends, GST is a medium to serve. Please talk to people. I heard that you are starting help desks to answer queries and guide people. I am happy. Make them aware of the law, and bring them into the path of honesty. CAs now have a new opportunity. I invite youngsters to join this opportunity. The government passed the Insolvency and Bankruptcy Code, and CAs will play a vital role in its implementation. Chartered Accountants can now make their career as Insolvency Practitioners, as a lot of companies will soon come to you!

CA should mean ‘Charter and Accuracy’; ‘Compliance and Authenticity.’ Friends, our country completes 75 years of independence in 2022. We have taken an oath of a new India in that year. You as an Institute, individual Chartered Accountants, and as Indians must take efforts and play your part in receiving the new India. Two years after this, ICAI celebrates 75 years. You should create your vision and take ICAI to new heights. Decide what you want to do to contribute to nation building. Can you not help in making our country black money and corruption free? Or will you prepare the accounts in a way to ensure that people pay less tax? Or will you say, I convinced my clients to pay tax and choose honesty? You decide!

You should keep a vision, and decide how many honest taxpayers will you create. You know the result of this effort. How will you, as a professional use technology? How will you cater to the demands of forensic accounting?

INDIAN FIRMS IN BIG 8

I have one more wish, which I know you have the potential to fulfill. I don’t see why you are lagging behind. You have the Big 4. We are nowhere in the Big 4 despite having the capability and intelligence. When the world is looking towards India, can you visualize changing the big 4 to big 8? A new set of big 4 emerging from the people of India, who are seated here right now? You should shine on the global platform with the same level of professionalism

In the end, I will give you the oldest and most respected Chanakya’s quote, which means that the time itself takes away the fruit of success. Arun Jaitley said that such an opportunity has never come earlier in the life of Hindustan. Similarly, such an opportunity has never arisen in your hands, but it has happened now, don’t let it slip away. I have come here to invite you to be a part of the growth of India.

I once again congratulate the institute, faculty, and CAs present here and thank everyone, including those who are watching us sitting in other parts of the country and globally. This 1 July 2017, let’s take a new path, a new direction, with new speed, new freshness and let’s come together and give the people of India a celebration of honesty. Thank you, friends!

 

 

 

 

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DYNAMICS OF THE NEW WORLD

V PATTABHI RAM

Based on a series of interviews

The world around us is transforming dramatically. Both the quality and the speed of change are frightening. Some call it the arrival of the 4th Industrial Revolution. I call it the arrival of the fifth wave.

Historically, the world went through four waves: Agriculture, Industry, Service, and Information. Currently, we are in the midst of a fifth wave: the wave of Artificial Intelligence and Innovation.

Let’s dip into history to understand what changed the world. The first was the steam engine. It changed how we traveled. Next came the computers. It changed how we computed.  Worse still, it underwent rapid metamorphosis. Once upon a time, the IBM’s supercomputer occupied an entire room. Today, people think, “Why to go to IBM when we can bring 1000 small laptops and see that the same functions are done.”

Automation will create more jobs

The fear many today have is the marauding influence of technology and the possibility that machines may replace men in many of the work. But as some point out, this is not a challenge but an opportunity. Remember cost reduction, as an idea is three centuries old. Robots can only replace jobs that do not require critical thinking.

I think automation will create more jobs than it would destroy. Take ATM. When ATMs first came, bankers went on strike, arguing that their jobs were at stake. ATMs have now increased, but no banker lost his job. In fact, we have more guys working in banks. Thanks to ATM banks have become more efficient and have reached unreached places. Today, if you talk to a banker, once the transaction is over, he will try to sell you a deposit or a mutual fund. His job has shifted from clerical work to more the demanding sales task, and he gets paid more. What will happen is that the roles are going to become more cognitively demanding.

With artificial intelligence, voluminous data, and massive computing power, we can build algorithm where this data keeps running, and the learning process can go 24*7, this machine will get smarter from the information it has learned. In 1981, Ray Kurzweil in his book ‘Age of spiritual thinking machines’ said that by 2050, you would be a sitting next to a person without realizing that it is a robot. He predicted a jacket that will tell you when you go out to carry an umbrella because ‘it is going to rain today, why don’t you take an umbrella.’

The arrival of micro-innovation

Amazon is an example of micro-innovation. Years ago, in the US, mail order business was a favorite. People saw the catalog, selected an item, ordered it on the phone, and paid by cheque. When the product arrived, if they didn’t like it they went to the post office to return.  Many returns happened as people found that how the product appeared in the catalog (in a small image) was different from how it finally looked. Then E-commerce arrived, and a man called Jeff Bezos turned up. Bezos realized that the Internet could replace mail order. He founded Amazon, and it changed the way we shop.

The most prominent example of unutilized infrastructure is Uber. That is what they did: the cars were standing, the drivers were waiting, and suddenly there came Uber. You will see a lot of economical housing coming in. E-mail, Internet, the phone, Skype, Facebook, Wikipedia, YouTube all of these are aiding businesses.

Today, people seek ‘experience’ in the workplace: a physical experience like food-court, fitness center, and indoor games. An aspirational experience such as “am I doing something intellectually stimulating,” “can I work from any place, at any time, seamlessly,” are driving forces.

The workforce is becoming ageless. People with no experience working with people whose experience is more than the age of freshman.

Be curious; ask insightful questions, communicate to influence, make sense of data; problem-solving not through knowledge but learning; be open to continuous learning and play in teams. We need people with analytical and solution finding skills. They must know to ask the right questions and identify the correct answers. Example: Nepal faced high infant mortality in its villages because there was no transportation to move newborns to city hospitals on time. Someone suggested having incubators as a solution. It didn’t solve the situation because the villages did not have electricity! Finally, a crack team identified that the problem lay in removing the baby from the womb. It reduced IMR by 70%. They knew not only to ask the right questions but figure out the correct answers as well.

Enter Artificial Intelligence

And before we know it, artificial intelligence is on us. Today when you upload a photo on Facebook, Facebook automatically tags to your friend. When we buy on Amazon, Amazon makes recommendations based on your buying pattern. That’s AI or IoT at work. The shift had taken just three years.

The historical shift has been from manufacturing (remember Tata Steel once ruled the roost) to distribution (HUL) to Technology (MS) to now any organization that is customer-centric.  When you have a customer who knows what he wants, and who wants it now, you have to digitize. Search engine democratized knowledge. AI is now democratizing the expertise that is available in the market.

In a fully automated factory, everything will happen on autopilot. You will only need one man and a dog. Their purpose is simple: the dog is there not to allow anybody inside the factory and the man is there to take care of the dog!

Amazon, although initially a bookstore in cyberspace, is now married to the cloud. Amazon Web Services offers reliable, scalable, and inexpensive cloud computing services with which it is rewriting the rules of the game. It has had made infrastructure services available as on-demand services where you pay for use as you do with your electricity.

The ‘everywhere office,’ the changing nature of the workforce, the composition of the workforce, and the importance of data are four essential patterns.

The everywhere office: Today, every location is an office. An employee worked from a hospital for six months because his wife was unwell. The Philippines has put a new rule in place that 5% of your workforce should be working from home.

The changing workforce: 75% of the workforce in the US would be millennial by 2025. In India, by the way, by 2020 or 2022 we will have these numbers achieved.

Today, people pride in saying, “I work with Google.” People are cagey about saying, “I am a freelancer.” Tomorrow is going to be different. Millennial do not want permanent jobs. Contract work is okay with them. They don’t want to be doctors or engineers; they have their choices are forceful in making it. They are not just interested in making a car; they are interested in how can I make an impact in the society. That feeling must be harnessed.

Cloud computing is an IT model for enabling access to shared pools of resources such as networks, servers, storage, applications. It allows users to store and process data on owned or third-party servers. Third-party clouds enable organizations to focus on their core businesses instead of expending resources on computer maintenance. You can get your applications up and run faster, with improved manageability and less support.

The power of the network

In the future, big companies will focus on profits and market; responsible companies will be socially conscious in what they do, and there will be smaller companies with high tech models that ensure maximum flexibility and minimum cost.

The power of network has become impressive with the advent of social media and organizations are investing in it. The access to information has changed. We talk about co-creating in teams. People have to be flexible and entrepreneurial.

The industry is pumping a lot of money into AI. We aren’t far away from machine intelligence overtaking human knowledge.  Today, computers are diagnosing better than doctors. Sometimes knowledge needs to be broad, and sometimes it needs to be profound to solve complex problems. Enter cognitive flexibility.  Cognitive flexibility is the ability to switch between thinking about two different concepts and to think about multiple ideas simultaneously. If you learned Java, you could not say, “I will work only in Java.” That’s lack of service orientation.

While how much we can automate depends on the industry, a thumb rule says that 60% of all occupations have 30% of tasks that can be automated.

 

 

 

 

 

 

 

 

 

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OF CAUVERY AND DIPAK MISHRA

V Pattabhi Ram

The unruly noise over the judiciary in the form of its increased politicization is not good for India.

India is today suffering from a severely fractured polity. It is not good for the country. People, not just politicians, have stopped taking stands by facts. Leanings, affiliations, and ‘name-calling’ is the new normal. On Twitter, multiple anonymous handles spew venom.

India is a nation of diversity. Diversity in the form of religion: Hinduism, Christianity, and Islam. In my growing up years, I never saw adults fight based on who practiced which religion. In fact, many of us hardly knew which religion and what caste our friends practiced. Today, fights are par on course, and they are not just in Hyderabad, “Where two major religious groups have clashed,” as Doordarshan would once say (!).

Diversity in the form of political leanings: Congress, BJP or the Left. Here, altercations are raised to a new level. In my growing up years, I did see people adda over politics with decibels pitched high. Today, with the anonymity that social media gives, the noise has reached stratospheric levels. The electronic media, which preys on people’s baser instincts like the vernacular media once did, organizes debates that no one can hear. The noise is high on the Richter scale. In my growing-up years, I never saw adults raise their voice in public platforms. Some of the worthies who have left India to seek greener dollars abroad and given up their Indian passports, are educating us about patriotism!

Every observation, every comment, is taken to a new pitch. A simple statement by Dr. Singh saying that Mr. Modi, who had accused him of silence, should now speak on the rape cases, lead to a sharp, acerbic, and personal retort by Ravi Shankar Prasad. The less said about men like Dr. Sambit Patra and Dr. G V L N Rao, the better. Little wonder, we have the likes of Mani Shankar Iyer, vitriolic and nastily pungent in such an environment. By these standards, the prime minister was gentle when he castigated Renuka Chowdhry in parliament.

There is no sense of reconciliation and moving forward. While I do agree that the Loya case calls for investigation given the kind of questions that Caravan magazine has raised, we need to accept the judgment of the courts and move forward. You may have reservations about bench-fixing (and judges are no holy saints), but you need to respect the institution. I do agree that judgments are bizarre. While one court awards double life sentence and then allows the convict to be on bail, a higher court completely exonerates that person.

Remember, if India has managed to survive as a functioning democracy it is because we have maintained the delicate balance between parliament and judiciary. Seeking impeachment of the chief justice of India who has only a few months to go does not behoove well for us.

While the Congress is apparently at fault, the BJP is no saint. Quite often Arun Jaitley and Ravi Shankar Prasad have taken potshots at the judiciary, maybe because during their lawyer days the courts rapped their knuckles. Not filling up the bench strength, lingering for long over appointments, etc. do not go well. This government has not even appointed the Lok Ayukta. Today every institution has been politicized, and everyone is to be blamed for this, myself included.

We need urgent judicial reforms where the judiciary is entirely independent. People who do not implement the legal order like the Cauvery board should go behind bars. The courts have to work a double shift. The period for setting calve claim should be only one year on the outside. There should be no more than three hearing and only adjournment on either side. Unless issues involve a matter of law, the High Court should be the highest court of appeal.

In our desire to lionize a man and demonize another in a country where politicians are by definition unclean, let us not degrade India in the comity of nations.

 

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THE CHANGING FACE OF AUDIT

V Pattabhi Ram

Four ‘drivers of change’ and three ‘major shifts’ would have severe ramifications across occupations, including CA.

The first driver of change is Globalization. The world today is far more borderless than ever before. It has compressed both time and space. In the years ahead this is going to get accentuated, and the world will shrink in size, time and distance.

You will see an umbrella body into which all the public accounting institutes of the world will be a member and any member of an institution holding a membership in the Global Umbrella will be eligible to audit any firm anywhere in the world. While this will open up global professional opportunities enhance worldwide quality; it could knock the bottom out of our profession if the accountants don’t stay updated.

The second driver is Society. In our generation, we have seen a shift from a joint-family to a nuclear family. In the coming years, you will see a splurge of broken families. Both the husband and the wife, keen on their respective careers, will place job ahead of family. It could be entirely possible for one of them to work in one part of the country or one part of the world and the other to work in another part of the country or another part of the world and possibly meet only over the weekends.

The result: children are likely to grow up on the lap of the grandparents. This trend will spawn a generation of young boys and girls, growing outside the periphery of the immediate family, who would swear by I-Me-My-Mine. The self would come first ahead of the firm. You will see excessive job-hopping at every level, including at the senior-most level. To retain the talent, you will have to meet their aspirations head on. Those of you who plan to be running the organizations of tomorrow will have to keep this in mind.

The third driver is Technology. The Internet has been the most significant 10X change of our time. Technology will continue to lead the drive of our profession in the coming years. With the cloud becoming ubiquitous, gadgets becoming smaller and savvier, audits will be taken over by technology entirely. With the population expected to touch 9 billion by 2015, about 6 billion and counting are going to be sitting on the Internet.

Audits will happen from remote locations with the client seated many miles away. Frauds will increasingly turn white-collar; the new fraudster would be the boy-next-door, well-dressed, well-articulated and well-educated. The challenge will lie in auditing processes rather than outcomes. Most companies will have mandatory forensic audits.  Audits will be on real-time, rather than on post-mortem basis. Examinations of books of certain types of organization will cease and in some will be far more intense.

Of course, while technology will put many things in auto-motion, it will neither kill the accountant nor the auditor. Instead, accountants and auditors with a knowledge and understanding of technology will kill accountants and auditors who don’t have a knowledge and understanding of technology.

The fourth driver is Demography.The remarkable advancements in modern medicine mean that people are going to live longer. Greater health consciousness implies that people are going to live fitter. People are growing to work well into their 70s. 70 will be the new 50. Retirement at 58 will not be the norm. The workforce, therefore, will have people spawning different generations: the twenties, the thirties, the 40-50s, the 60 plus and the 70 plus.

If you plan to run accounting firms in the 2030s, give the challenge will lie in ensuring that these different generations cohesively work. There will have to be a lot of give-and-take.

THE THREE BIG SHIFTS

Three mega shifts will drive professions in general and audit profession in particular. They are Intelligence, Societal and Emotional.

SHIFT 1: INTELLIGENCE QUOTIENT

A man’s Intelligence Quotient will still matter in the profession. We will see a change from broad generalists to quick-fire continuum specialist. In the world of the Internet, the Mr. Brains will be competing with Wikipedia. Today, if you are the CEO of a company or the Country Partner of an accounting firm, you don’t have to have an in-depth understanding of any specific function. I think that will change. In the years ahead, to make the cut, you need to be a specialist in a chosen area. If you specialize in those competencies that people value, it would be great. Alas, that alone won’t do. These competencies could fast lose value; once that happens, you need to specialize in another area.

It would be the age of the continuum specialist. One area (say GST) could be an essential competency for a few years. If you specialize in it, that’s good for you. But with time, as it becomes commonplace, something else will become the wave. It could be Integrated Reporting. At that point, you will have to jump on the new bandwagon.

You need to know why some competencies are more valuable than others. Some areas become valuable because they are rare or they are plain fashionable. While it is good to specialize in what the flavor of the day is, it would be better to go with where your heart is. It is possible that what you choose to specialize may not be the hot thing, but if you want to make a mark, you need to follow your passion.

SHIFT 2: SOCIAL QUOTIENT

As technology spreads its tentacles, as we increasingly become a fragmented society, as an entire generation grows up outside the broad spectrum of a social family, we would look a lonely society increasingly. Even as you specialize in a chosen field and even as you tread a lonely furrow, it would be necessary to build bridges. Like I said, 6 billion people are soon going to be sitting on the Internet, connected to the rest of the world 24×7. Yes, to survive you will have to connect to the world and be a networked individual. You may or may not have met the other person, but you will do business through and with him. The social media is just the start of a new dawn.

Work will increasingly get done through and with people whom you will never get to meet in flesh and blood. They will do an assignment for you and then move on to crack similar jobs for others.

SHIFT 3: EMOTIONAL QUOTIENT

The I-Me-My-Mine society does not ipso facto mean that people will be chasing monetary rewards. Even as people will be working into the 70s, many would want to retire in the 40s to pursue passions that are dear to them. Also when they work, conspicuous consumption may not be what will drive them. It could and would be job satisfaction. People will opt for lower emoluments in so far as they can get satisfaction and enrichment in their work profile. If you are someone who would be running a profession in the 2030s beware: you cannot get and retain people purely through what you offer as money; you also need to provide enrichment in work experience.

Tomorrow’s generation will look beyond money; it will look at fame, at fortune, at speed, at learning, and at a value system. You need to pack them all in your firm if you want to run one that belongs to the 2030s.

 

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