Shri Sunil Goyal, President SAFA
Mr. Ajith Nivard Cabraal
Shri. T.N. Manoharan, President, ICAI.
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Distinguished delegates, ladies and gentlemen.
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I am happy to be here this morning at this prestigious international Conference organized by the South-Asian Federation of Accountants (SAFA), the Apex body of accounting professionals in the SAARC region. I commend the ICAI for playing a lead role within SAFA and bringing this conference to India.
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At the outset, let me extend a very warm welcome to the delegates from Pakistan, Sri Lanka, Bangladesh and Nepal who are attending this conference besides the delegates from India.
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I commend the organizers for having chosen the theme “Accounting Profession in the South-Asian Regions—Values and Perspective”. In a rapidly globalizing world where business is conducted beyond boundaries and several trans-national corporations conduct their business transactions, across cyber space, this theme is not only contemporary, but of, immediate relevance.
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Most of you are in the higher echelons of the corporate world and are required to discharge onerous responsibilities as Chief Executive Officers. Chief Financial Officer, Financial Analysts and certifying Authorities.
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The values and perspectives that drive, your organizations, will depend substantially, on the values, that you as individuals uphold, in your work—a day-life as accountants, auditors and finance professionals.
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I am sure many distinguished speakers will be addressing you, during the course of the day, on diverse subject, including accounting standards, risk assessment, risk management, networking, using information, communication and technology tools, to upgrade accounting and auditing practices and so on. This is best left to the specialist.
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As a Minister of the Government, however, I would like to speak to you on two aspects of modern day industry and business-the political economy of development and on the need for good governance.
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Let me begin with the development challenges that fact all of us whether in government of in the private sector. Doubtless, India is today the largest and the fastest growing free market democracies. Last year, for instance, we recorded a growth of over 8 per cent. The macro-economic fundamentals in the economy, are robust with foreign exchange reserves of close to US $ 140 billion, a booming capital market with the stock market index well above the 10,000 mark, Foreign Direct Investment of over US $ 8 billion and export growth in excess of 20 percent. Clearly, India is on a secular and stable growth path.
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With the exception, perhaps, of the years immediately following India’s independence, never before has there been as much optimism about the Indian economy as in the last decade.
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We must, however, ensure that the recent growth spurt is sustainable, that the growth is shared among India’s different regions and different people and in particular that the vast population dependent on agriculture and in the rural sector of the economy benefits from economic reform.
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In a country like India, where even today, a vast mass of the population, close to 260 million people are still below the poverty line, we cannot and should not take a balance-sheet approach to development. The stock market is neither an indicator of development nor indeed of the performance of the economy.
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At the heart of the development process, is the goal of improving the quality of life of all people. Therefore, the challenge that all of us need to address together is the challenge of ‘inclusive development’ - by which the vast mass of the poor and the deprived have access to education, healthcare and economic opportunities.
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Our development process must reach out to large sections of our people with due emphasis on the agriculture sector. To be meaningful to the people of India, we must address the problems of agriculture, on which more than 60 percent of the population depends. If we fail to do this, we will be in danger of leaving the poor behind. This is true for the SAARC region as a whole.
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In this context, as professionals in the field of finance, all of you have an important role to play. You must recognize that all reforms are aimed at good corporate governance and this by definition calls for corporate social responsibility.
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As finance professionals you occupy a unique space that traverses all sectors of the economy – public and private, small, medium and large enterprise, the self-employed and the non-governmental sector and virtually every field of economic activity.
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In more ways that one, in terms of articulating and enforcing the principles of fiduciary responsibility as well as introducing and effectively implementing good ethical practices in business and industry, you can influence corporate governance in significant measure.
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In the first lessons on accounting we are taught that as an accountant and an auditor your role is that of a watchdog and not that of a bloodhound. The function of an auditor is not always understood. Typically, it is seen as a function to uncover financial irregularity. While this no doubt is one of the functions of accounting and auditing. It must be remembered that your role primarily is to establish credible, simple, transparent systems of fiscal responsibility in all spheres of economic activity.
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The corporate world has a reasonably satisfactory financial management and accountability system built on detailed, input-based controls. A well established though young regulatory framework in India helps authorize and oversee the financial and capital markets.
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Despite this, the rapid changes that have occurred in the ways of doing business, the growing trans-national movement of capital and resources, the sharp growth in the number of small investors as well as cross border trade and business in the ‘virtual’ markets enabled by information technology have resulted in much higher risks of system failure on the one hand and opaque and sometimes unethical practices in the discharge of fiduciary responsibility.
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The recent conviction to six years imprisonment of the Chief Financial Officer of ENRON is a grim reminder that corporate fraud occurs even amongst globally renowned companies. There is an urgent need to ensure that all corporate bodies and individuals discharge fiduciary responsibility. The absence of systems that promote and reinforce best practices can in the long run jeopardize growth and development.
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I am sure this conference will discuss these important issues and help the delegates in the discharge of their fiduciary responsibilities in an ethical manner to meet the best standards of integrity in their chosen field of activity am happy to inaugurate this conference and wish you all success.
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Thank you all.
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