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Dynamic Environment and Challenges to the Profession / Institute
Unrelenting Competitive Pressure(3.1)
The Changing nature of Competition
The Changing nature of Competition results in -
New Entrants in Traditional Markets
New Specialised Organisations
Consequences for the Profession
To win business, the Indian Chartered Accountants will need to provide value added services, which would help business become more competitive.
Industry specialisation and detailed understanding of clients' business will underpin the ability to add value.
Competitors will no longer be restricted to accounting firms. Members will compete in new market against other professional isciplines and accounting designation, where CAs will be a minority.
For traditional (quantifiable) services - CAs will compete on price, for on-traditional services - premium pricing will be possible.
Entry by new competitors will be facilitated by commoditisation of traditional accounting services.
Consequences for the Institute
The Institute's culture needs to broaden its focus from traditional services (e.g. Assurance).
The Institute will need to identify its core values and trends in a changing market.
It will need to re-appraise its relevance to CAs who compete against non-CAs Members firms which move into non-traditional areas
CAs in consultancy - The benefits of a professional alliance with this group should be considered
The strategies to progress specialisation will be required to add value to the C.A. designation.
The differentiated CA positioning will be based on core values and ethical framework and specialisation.
The Institute will need to recognise that it is a collection of individuals who are competing individually.
Cost Minimisation (3.1.2)
Consequences for the Profession
The profession will use a competitive price model which is value based.
The demands to quantify benefits and link fees to benefits will increase.
Consequences for the Institute
The Institute will be required to adopt best practices and costs control.
Outsourcing - Onshore, Overseas, Internal(3.1.3)
Consequences for the Profession
In the growing outsourcing sector, the new players may get fast entry into market by acquiring traditional accounting practices.
The Indian Chartered Accountants will compete with/against other professionals in the growing outsource market.
Outsourcing within firms (In sourcing - Internal centres of excellence) will increase.
Consequences for the Institute
The Institute will need to address the needs of a new/growing member segment, CAs who provide outsourced services.
Short Product Cycle (3.1.4 )
Consequences for the Profession
Greater investment in R & D will be required to produce a growing umber of new products and services.
The life cycle of the profession's products and services will be shortened.
The more sophisticated customer base will demand customised solutions and better deals.
Consequences for the Institute
The Institute's product development cycles, (Specially Education Products) will need to keep pace with new standards and changes in the market place.
Productivity (3.1.5)
Consequences for the Profession
The profession will be subject to new productivity measures, which will include responsible delivery time and value addition to business.
Consequences for the Institute
Faster, more responsive decision making will be required by the Institute of Chartered Accountants of India, on many issues referred to it by the members.
New Members (3.1.6)
Consequences for the Profession
The next generation of CAs will be less attracted to traditional accounting practice and will seek employment outside public practice in non-traditional, entrepreneurial, niche areas.
Consequences for the Institute
The Chartered Accountancy profession will need to be positioned as a pre-requisite for professional credibility.
The Institute will need to attract new Members to the Profession to:
 
Counter the aging of the Profession.
Ensure there are sufficient numbers of small public practice firm.
 
Impact of Information Technology (IT) and Communications (3.2 )
Real time flow of Information (3.2.1 )
Consequences for the Profession
Significant resources will be required to develop the following technologies which will be sought by CAs:
Electronic Networking/artificial intelligence system to interpret, model and predict business trends.
The systems to deal with specific audit judgements (e.g. Stock Obsolescence, Stock Option Valuation).
Integrated system to direct and reconcile transactions between trading partners.
Low cost automated system will be sought to notify auditors of transactions to be examined.
Consequences for the Institute
The Institute will have two options:
To adopt a leading role (Invest in R & D, Education and Marketing).
To leave it to the market to train the Members, develop the system required and so on.
Greater Systems Reliability (3.2.2 )
Consequences for the Profession
The system reliability assurance and data assurance will be growth markets.
The Accounting profession will be subject to increasing price pressure.
Consequences for the Institute
The need to observe the market and provide support accordingly.
The need to come up with standards to address the same.
Greater access to Telecom Technology (3.2.3 )
Consequences for the Profession
There will be an increasing demand for:
Services that share the reliability and security of information from electronic sources (Web Trust).
End to end Certification of Transactions.
International standards will be required to cope with trans-national corporations and increased international business activities.
Consequences for the Institute
The Institute will need to define the role(s) in this area. The options will be:
To lead standards setting.
To assist small practitioners who lack R & D capability in developing new services.
To leave it to the market.
The Virtual Organisation (3.2.4 )
Consequences for the Profession
The following traditional accounting concepts will be challenged:
Performance and accountability - These will be more difficult to assess.
`A going concern' (The Virtual Organisation has no plan to be on going).
`An arms length transactions' (Transactions between members of Virtual Organisation do not fit this concept).
Consequences for the Institute
The Institute will first need to understand the professional requirements of the Virtual Organisation.
It can then promote its capacity to serve through the CA designation.
Virtual Organisation model will present the Institute of Chartered accountants of India with new ways of conducting its business (e.g. Delivery of Education Services).
New Work Practices (3.2.5)
Consequences for the Profession
Number of contractors and part-time workers will increase.
More flexible business models will be required.
More data will be stored electronically and with outside organisations raising issues of security and electronic evidence.
Consequences for the Institute
The outsourcing of traditional business administration function will provide new opportunities for the profession.
The growing of virtual firms will enable smaller firms to compete with larger firms.
Larger firms will become service centers for smaller firms.
Firms will outsource work to each other.
Greater Access to Information (3.2.6 )
Consequences for the Profession
The profession will need to develop system to cost effectively bring together financial and non-financial data.
The demand for data assurance services will increase, representing new source of revenues for Chartered Accountants.
The profession will need to develop direct relationships with information consumers.
The market will need to be educated about the value added information services, which CAs can provide.
CAs will be expected to quickly respond to the requirements of information users.
The CAs will need to counter the perception that auditing impedes or sterlises information from management and to re-position auditing as a value adding information service.
Consequences for the Institute
The Members will seek the Institute's assistance in promoting the value added information CAs can provide.
Rapid Change in Business Environment (3.2.7 )
Consequences for the Profession
The profession will need to become pro-active and agile to meet the rapidly changing needs of business.
CA will need immediate access to new standards (e.g. via electronic systems) - already available on ICAI website.
Industry specialisation will increase.
Partnering with other service providers will be necessary to deliver some of the services required by business.
CA's will need to address complex accounting issues, such as, those relating to off balance sheet arrangements, derivative instruments, etc.
Consequences for the Institute
CAs will have greater demands for training.
Members will need to be made aware of the changes in the business environment and/of the associated threats and opportunities facing the profession.
Members will need to be made aware of the opportunities and threats and different technological advancement will present different sectors of the profession.
The Institute will have the opportunity to position the profession as the leaders in business technology.
The Institute will have the opportunity to lead in the developments of new continuous auditing practices to address complex accounting situations.
Globalisation of Business (3.3)
Practices and Law: (3.3.1 )
Taxation Practices
Corporate Practices
Consequences for the Profession
Taxation professionals will require intra-national and international knowledge of taxation law.
New accounting practices will be required if the US concept of taxing income on a worldwide basis is adopted, subject to the application of double-taxation treaties.
Demand for accounting services in the areas of tax avoidance/evasion and tax havens will decrease.
Tax planning will focus on the narrowing opportunities of comparative tax advantage.
Knowledge of international corporate law and precedents will be required.
Consequences for the Institute
The Institute will be relied on for high-level technical advocacy and leadership with respect to taxation harmonisation and the harmonisation of practices in corporate law.
The Institute will need to support CAs and business via Education and Dissemination of the Information and advice.
The Institute of Chartered Accountants of India will need to develop international specialised networks in tax and Corporate Law.
Need for Uniformity of International Accounting Standards (3.3.2)
Consequences for the Profession
The profession will need to drive the adoption of one set of standards for private companies.
The knowledge of both International and Indian Accounting Standards will be required.
The profession will need to reach the level where there is no difference between internationally established and Indian standards, in view of the International move to adopt International Accounting Standards.
There may be an attempt by the Government to adopt and/or nationalise International Accounting Standards.
Consequences for the Institute
The Institute will need to take a pro-active role in international bodies and forums to progress harmonisation.
The Institute will need to develop Accounting Standards for already identified and new avenues. (i.e. fast development of Accounting Standards parallel to IAS as well as new Accounting Standards as per the Indian market where global players are active).
Maintaining Standards of Education (3.3.3 )
Consequences for the Profession
Our students will compete with candidates from overseas.
Other curriculum of finance discipline may move away from entering our profession.
Consequences for the Institute
Recognition and reciprocity of the CA designation internationally will be essential
Strategic alliances will facilitate the global recognition of the CA designation.
The Institute will need to review the need and feasibility of providing offshore training.
The Institute will need to ensure that these international training programmes need reciprocal standards.
Global Market will provide Resources to both Accounting and Competitors Entities(3.3.4 )
Consequences for the Profession
Access to Shareholders capital will lead to different ownership structures of Accounting Firms resulting in the separation of compliance and non-compliance work.
Liability will be global: firms will be unable to rely on regional protection.
Consequences for the Institute
The Institute rules would be required to frame its response to new developments in this regard.
WTO Regime: Increasing Involvement of WTO in Internal Country Affairs. (3.3.5)
Consequences for the Profession
The profession will have the opportunity to lead the way in dropping barriers to trade in services.
There will be increased competition matched by increased opportunities.
The opportunities in under developed nations will increase.
Consequences for the Institute
The Institute will need to remain actively involved in WTO negotiations.
The Members will seek assistance from the Institute on global compliance issues.
Movement towards Global Manufacturing Alternatives and Opportunities (3.3.6 )
Consequences for the Profession
Internationally recognised qualification will be required.
Professionals will be required to live and work away from home.
Communication and control functions will rely heavily on Information and Tele communications technology.
The global product paradigm will drive the need for industry specialists within the profession.
Access to professional services will be required throughout global enterprises.
Consequences for the Institute
The CAs qualification will need to be internationally recognised and reciprocally accepted.
The Institute will be presented with opportunity to hold and assist business and the Members down the globalisation path.
The Institute of Chartered Accountants of India may be called to address human resources issues affecting Members working for global enterprises.
Movements towards a Universal Currency Measurement (3.3.7)
Consequences for the Institute
The Institute will have the opportunity to adopt a leadership role in preparing business and the community for these changes.
Role of E- Commerce/Internet (3.3.8)
Consequences for the Profession
The profession will be able to market itself worldwide.
Small to medium firms will be able to use technology to expand their markets and compete globally (e.g. Via the creation of a Virtual Firm).
Consequences for the Institute
The Institute will need to assume advocacy role in advising Government and Boards in blending Technology with business.
Focus on Value (3.4 )
Increasing and Changing Accountability (3.4.1)
Consequences for the Profession
The measurement based on historical performance will continue to become increasingly irrelevant.
The profession will need to develop the thinking and methodology for the measurement of value to reflect growth and intangibles.
Consequences for the Institute
The Institute has the opportunity to lead the introduction of performance reporting via education and dissemination of information.
The Institute will need to incorporate advanced corporate finance in the professional training undertaken of CAs.
International Measurements (3.4.2)
Consequences for the Profession
The profession will need to advance the harmonisation of accounting standards to recognise the increasing globalisation of business.
To compete for global capital in the global market, Indian CAs will need to adopt international best practices.
Consequences for the Institute
The Members will look to the Institute to lead in the adoption of international best practices.
Pressure to Enhance Shareholder Value (3.4.3 )
Consequences for the Profession
Competition from non-accounting firms to provide advice on shareholder value will increase.
The Profession will need to promote shareholder value (e.g. scenario planning, options etc.) as a core Chartered Accountants competency.
Consequences for the Institute
The Institute will need to enhance the support of the Members' role in shareholder value by:
Researching the needs of business and members.
Developing appropriate education programmes.
Positioning the profession as the premier supplier of new assurance and non-traditional value measurement services.
Knowledge Value (3.4.4 )
Consequences for the Profession
  The CAs will require a detailed understanding of their clients' business and industry in order to add value to the business' knowledge capital.
Consequences for the Institute
The Institute has the opportunity to take a leading role in recognising knowledge value and developing standards for valuing intellectual capital.
The Institute will have the opportunity to help Government determine the legal framework in which new knowledge based industries will operate.
The Future Business Professional
Consequences for the Profession
The role of Chartered Accountants will be changed from the past historical focus to a more pro-active role.
Finance professionals, strategic thinkers and `value adders' will succeed.
In recognition of the changing nature of the competition, professionals must move towards risk management and corporate Governance.
Consequences for the Institute
The Institute will need to address the changing educational requirements of Members particularly in following areas:
Corporate finance.
Capital and Financial Markets.
Strategic Planning.
Assurance Vs New Performance Measures
Consequences for the Profession
CAs will be expected to provide value added audit services that incorporate performance based measurement (Financial and non-financial)
Consequences for the Institute
The Institute will need to define its role in this area and the options available are:
To adopt a leading role (Invest in R & D, Education and Marketing)
To leave it to the market to train Members.
Financial and Non-Financial Measures
Consequences for the Profession
The profession will need to appraise its opportunities in providing professional assurance on non-financial matters.
Consequences for the Institute
The Institute will need to develop standards for new assurance services.
Rapid standard setting will be required; this should be undertaken jointly with the other international bodies.
The Institute will need to appraise the benefits of creating standards prior to the profession's entrance into a new market or of creating standards based on Members' experience in the market.
Legal and Independence Matters
 
Consequences for the Profession
  The Profession will need to seek liability limitations and consider independence issues if moving into new areas.
Consequences for the Institute
The Members will be expecting a high level of advocacy from the Institute with respect to the legal and independence issues that will be faced by the profession.
The Institute of Chartered Accountants of India should use its best endeavors to ensure that Indian legal structures remain competitive.
The Media
Consequences for the Institute
Evaluation of the quality of information available through the Media will be required.
Changing Business and Organisational Structures
Emergence of Financial Service Conglomerates
Consequences for the Profession
Integration of some functions (management, administration and corporate finance) will test the independence of accounting advice.
The market for financial planning advice will grow.
The Number of large competitors per market will reduce.
CAs in the banking and insurance sectors may be expected to cross-market products.
Consequences for the Institute
The Institute will need to address Members' need at both the individual level and by area of specialisation.
The Institute would be required to address specific needs of different categories of firms - large, medium and small.
Changing commercial pressures will test the Institute of Chartered Accountants of India's standards regarding independence.

3.5.2 Competition beyond the Profession
Consequences for the Profession
The Chartered Accountants will form alliances with specialist niche market firms.
Consequences for the Institute
The Institute will need to demonstrate relevance to firms employing non chartered accountant advisers ( In Addition to CAs)
Technological Access to Skill Sets(3.5.3)
Consequences for the Profession
Global competition/Global alliances will present opportunities for some sectors of the profession and threats to others.
Consequences for the Institute
The Institute's relevance to its increasingly mobile membership will be questioned - a network of memberships with other bodies will be required.
Small firms will require assistance in realising opportunities in the global business environment.
The Institute will need to counter the threats among post graduate Members to market their technical qualification rather than their CA qualification.
Specialisations(3.5.4)
Consequences for the Profession
  The CAs will have the opportunities to compete against and/or to form alliances with specialist organisations.
  Specialisation will replace the service vs. public practice Membership dichotomy.
Consequences for the Institute
To maintain relevance, the Institute's Member services will need to reflect the increasing and diverse specialisation among the Membership.
(Notwithstanding the above point) Members will expect the Institute to view them as individuals
Promotion of Chartered Accountants designation will need to emphasize both the traditional Chartered Accountants strengths/core values and the CA specialisations.
Decline of the Intermediary(3.5.5)
Consequences for the Profession
CAs will need to develop new skills (or attain these via alliances) to meet demands for full service deliveries
Consequences for the Institute
The Institute will need to promote the full range of services CAs offer.
Virtual Corporations( 3.5.6)
Consequences for the Market Place
New linkages between business partners will be possible.
The life span of Virtual Organisations will be short.
The location of corporate Head Offices and Branches will become increasingly irrelevant.
Demand for Commercial Business District (CBD) Property will decline.
Technology businesses will proliferate.
Consequences for the Profession
The cost structure will need constant review to ensure the profession remains competitive.
New Business Management Methods(5.5.7)
Consequences for the Profession
New Management skill will be needed to run knowledge based organisations.
Consequences for the Institute
The Institute's Education Programme will need to include training in new Management techniques.
Ownership and Control of Accounting Firms(3.5.8)
Consequences for the Profession
CAs in large firms will need to demonstrate continued independence despite ownership changes.
The profession will need to be aware of availability of different forms of finance.
Consequences for the Institute
The Institute will need to promote the full range of services that Chartered Accountants offer.
The Institute will need to determine its role regarding new ownership issues.
Members will seek training on capital market issues.
The Institute will have the opportunity to market the independence of Chartered Accountants as a key differentiator.
Out Sourcing and Contracting(3.5.9)
Consequences for the Profession
Process and skill sets will replace organisational structures based on function.
CAs will work in the virtual market place rather than big organisations.
Consequences for the Institute
The Institute will need to define its role with respect to outsourcing and the impact of outsourcing on the independence of CAs.
Demand for New Knowledge and Skills(3.6 )
Information Management Skills(3.6.1 )
Consequences for the Profession
CAs will source and present specialist information.
Reporting by CAs will be expected to synthesise and interpret information from multiple sources.
CAs will need to partner with experts in communications.
New Reporting standards will be needed.
Consequences for the Institute
The Institute will need to operate as a knowledge based organisation by adopting the appropriate structures and delivery mechanisms for its educational and other products.
3.6.2 The Knowledge Based World
Consequences for the Profession
Firms will need sophisticated IT and tele communications systems.
New opportunities and threats will emerge as new competitors with large capital reserves enter the market . One of the consequences could be pressure on CAs to sell financial services.
The professionals will be able to assist business in transforming information to knowledge to create competitive advantage.
Firms will be able to develop expert systems based on traditional knowledge.
Consequences for the Institute
Information and Communications technology will become a core competency of the profession.
The Institute will need to review the rules regarding ownership of Member's firm.
The Role of the Volunteer (3.6.3)
Consequences for the Profession
CAs will spend increasingly more time on further study and will have less time to volunteer for Institute roles.
Mentorship and supervised training roles will be limited due to lack of volunteer resources.
Consequences for the Institute
Increased operating costs (Specially Educational Training or Education Cost) will increase the Institute's demand for volunteer inputs.
Possible diminution "loyalty" to the designation will negatively impact on the Institute's ability to attract the volunteer.
The Institute will need to identify appropriate incentives to maintain volunteer input.
Qualifications(3.6.4)
Consequences for the Profession
International recognition of Chartered Accountant designation will need to be extended so that CAs can successfully compete in all major markets.
Existing Membership reciprocity agreements will need to be maintained and extended.
Consequences for the Institute
The Institute will need to be more flexible with respect to pre-requisite qualifications for entering into its professional programme.
Education programmes will need to deliver two types of knowledge - Industry specific and generalist.
To ensure a quality premium for Indian graduates, the Institute will need to:
 
Identify what is based on practice and influence University curriculum.
Interface with Government and Business.
Place pressure on Government to lift education standards.
If Universities fail to respond to educational challenges, the Institute will have, further opportunities in the Education Market.
New agreements will be sought with other international associations so that CAs can operate in all major global markets.
Changing Demand for Performance Measures(3.6.5)
Consequences for the Profession
Training programmes on few forms of non-financial measurement system will be required.
Standards for reporting and auditing will change.
Need to create an interface between financially trained and non-financially trained professional.
The professional will be subject to the conflicting requirements of business, and specialisation and multi skilling.
Consequences for the Institute
The Institute will have the opportunity to help define the future roles of CFO (e.g. Risk, Treasury, Performance) and to ensure that CAs competencies enable Members to succeed in such roles.
The Institute will have the opportunity to create a learning environment that integrates financial and non-financial performance models.
Education programmes will need to accommodate training on non-financial measurement.
Continuing Professional Education (CPE)(3.6.6)
Consequences for the Profession
CAs will seek Continuing Professional Education relating to their areas of specialisation and assist them in adding value to business.
Members in small practices will need to broaden their technology skills.
Consequences for the Institute
The Chartered Accountant designation will need to reflect the attainment and retention of specialised skills.
The Institute will need to appraise:
 
Its role as Continuing Professional Education providers Vs Broker.
Alternative strategies to ensure the competitiveness of its continuing Professional Education (Privatisation alliances, outsourcing etc.)
Globalisation of Business Community (3.6.7)
Consequences for the Profession
CAs will require detailed knowledge of international accounting and tax systems.
Globalisation and liberalisation will impact on accounting firms in the same manner as business.
The profession will be segmented into two groups - Those who are involved internationally and those who are not.
Consequences for the Institute
The Institute will operate with the challenge of meeting the needs of disparate Membership group.
Unless the Institute addresses the globalisation issues, it will remain relevant only to those Members who operate locally.
Globalisation of Chartered Accountant programme will be essential for Members who provide services to transnational clients/employees.
Changing Attitudes to Work/Family Issue and Changing Work Environment( 3.7 )
Demand for Knowledge based Workers(3.7.1)
Consequences for the Profession
Challenges to Indian CA will include:
 
Management of Information Technology.
Change Management
Workplace diversity
Education needs
Episodic career patterns
CAs will need generalist and specialist knowledge.
Consequences for the Institute
The Institute will need to define its role vis-à-vis multi disciplinary firms.
The Institute will need to promote the professionalism and quality of CAs designation.
3.7.2 Career in Intra (Cross Function) and Inter Organisational Success
Consequences for the Institute
The Institute has the opportunity to develop strategic alliances to facilitate Members' career progress and thus, to maintain Member loyalty.
Reduced Importance of Spatio - Temporal Factor(3.7.3)
Work patterns set by Global Information flows
Work Located where skills and Technology are
Consequences for the Profession
Advances in Technology will lead to:
 
Commoditisation of traditional products.
Emergence of new competitors in traditional markets.
Consequences for the Institute
The Institute will need to address leadership and training issues regarding:
 
Membership diversity.
Impact of change on the profession.
Demands for flexibility in provision of services to Members.
The Development of new services (e.g. Assurance).
Ethical Challenges to the Profession.

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