By Kazim Alam, The Express Tribune
KARACHI: While a recent notification issued by the Institute of Chartered Accountants of Pakistan (ICAP) barring member auditing firms from engaging trainees from other certifying bodies may have upset the country’s top anti-trust watchdog, most ICAP students seem happy about the decision that supposedly restricts competition in the auditing profession.
“I think it makes absolute sense for ICAP to first accommodate its own students in the institute’s member auditing firms,” said one chartered accountancy student, who is undergoing mandatory training at an accountancy firm. “Trainees belonging to ICAP at auditing firms are already in surplus,” he told The Express Tribune, on the sidelines of the CA Students Conference 2012 held on Thursday.
In connection with ICAP’s contentious directive issued on July 4, the Competition Commission of Pakistan (CCP) issued a show-cause notice to ICAP on September 17; asking the former’s representatives to appear within seven days in Islamabad to explain the rationale behind the notification.
Speaking to The Express Tribune, ICAP President Rashid Rehman Mir said ICAP would explain its position before the CCP on October 4, as the hearing scheduled for September 24 had been postponed.
“First of all, this is an internal matter. Secondly, the issue is already at a quasi-judicial forum. Therefore, given the sensitive nature of the issue, I cannot make any [elaborate] public statement right now,” Mir said.
According to the CCP, ICAP’s directive forecloses access to a large segment of the relevant market to students, and appears to be in violation of Section 4 of the Competition Act, 2010.
The implementation of the ICAP directive will keep students of the Association of Chartered Certified Accountants (ACCA), Institute of Chartered Accountants of England and Wales (ICAEW) and Chartered Institute of Management Accountants (CIMA) out of auditing firms that are members of ICAP.
Why restrict competition?
Students aiming to become chartered accountants are required to complete at least three years of practical training at an auditing firm. This is in contrast with other accounting bodies, such as the ACCA, which do not require their students to get practical experience in one particular field.
As a result, trainees belonging to different professional bodies work in various fields, such as tax consultancy, auditing, banking and other financial services, while ICAP students spend their mandatory training period at audit companies only.
Interestingly, industry sources say that salaries of fresh chartered accountants in the auditing field are lower than those in consultancy and financial services by a margin of 20% to 30%.
Does this mean that ICAP’s policy of restricting its students to auditing firms during their mandatory training period is actually keeping them away from more lucrative jobs? Moreover, will barring member auditing firms from engaging students of other professional bodies result in further concentration of ICAP students within the auditing profession?
“While it is true that salaries of chartered accountants are higher in non-auditing jobs, it is wrong to assume that ICAP’s policy limits the options of ICAP students,” said another ICAP student.
He says that working for an auditing firm gives a trainee a well-rounded exposure to all kinds of businesses. “Getting training at a bank will only introduce a student to the banking sector. But at an auditing firm, you can learn a thing or two about all sectors besides developing your expertise in one area,” he said.
In an interview with The Express Tribune in February, the ICAP president had claimed that roughly 20% of ICAP members have traditionally worked in auditing firms, and that figure was dropping because of ‘stringent regulations’ which discouraged fresh ICAP graduates from entering public practice.
Published in The Express Tribune, September 28, 2012.