March 03, 2013

MARRY AN ACCOUNTANT
Submitted To
Mr. K. Thyagrajan

Submitted By:Chintan Bhandari (111218)

First of all, I would like to admit something. Being a Chartered Accountant, I have always been in love with the field of accounting and taxation. Hence, I chose this topic for the individual assignment.

Accountancy as a discipline has become a mainstay of the corporate world. It is no doubt the universal language of business. It has become the mainstay of the corporate bandwagon and no other discipline has the power to impact the corporate world in the said manner.

This assignment is sufficient proof as to why I chose Management Consulting as an elective. I would like to thank Prof. K. Thyagrajan for giving us the push to explore the various dimensions of finance and how it can be used in the consulting profession.

In todays rapidly-changing market conditions, company success depends on the ability to gain and retain business advantages. Ensuring high competitiveness and achieving strategic goals require constant improvements in business processes, organizational structure, accounting systems, and information technologies - in other words, the whole management system! The main branches of accounting within commercial and industrial organisations are nancial accounting, management accounting, treasury management, nancial management and corporate nance.

Following are the various types of accounting consulting firms that exist in the world: 1) Full-Service Accounting Firms

Full-service accounting firms provide a wide variety of services. Ernst & Young (E&Y) is one of the Big-4 accounting firms, referring to one of the four largest U.S. accounting firms, that provides multiple services. Such accounting firms provide tax, audit, risk management, business development and executive coaching services. There are many firms, both large and small, that operate multiple departments. All of the large multinational firms operate in this manner. Many of the larger domestic firms offer a variety of services as well. These firms tend to do better in a recession due to the diversified group of services that they provide and the broad sector of clients that they service.

Such firms have built their niche by initially emphasizing on accounting as a way of business and then moved on to other aspects of finance, as mentioned above. This change has happened slowly and steadily, but these firms have capitalized on their strengths as an accounting firm and gradually diversified. Although such firms have variety, but they tend to become very commercial in their approach and tend to lose the substance of a true accounting firm, which is that of a being true and fair.

2) Tax Firms Tax firms provide tax services only. These kinds of firms usually choose to specialize in one niche market. Tax firms can be sub-categorized into firms that offer individual tax services, business tax consulting, and high net-worth tax consulting. Many tax firms even have a division that works within the tax-specific areas of estate planning. Specialty tax firms provide high net-worth tax consulting services to wealthy individuals. Firms choose to specialize in central, state, sales and use, franchise, securitization, property and many other areas of tax compliance. The market is as diverse as it is competitive.

Tax advice is one of the services most in demand nowadays due to frequent and extensive changes to legislation and high financial risks. This segment of accounting consulting firms have intrigued me the most, primarily due to the fact that this field which affects the common man and a big corporate equally. It is also fascinating because of the fact that tax policies gets changed very frequently and people have to use their business acumen in order to give proper advise to their clients.

This is also a space where the creativity of an accounting professional can be tested as regards to how he can use the loopholes in the law in order to gain his client. It requires depth in understanding of the law as well as clarity of thought and application.

3) Audit Firms Audit firms all do primarily one thing: they audit company financial statements and issue opinions on those audits. However, audit firms could be broken down into subcategories such as governmental audit, nonprofit audit, SEBI audit and private equity audit firms. Then there are specialty audit firms that perform pension audits. Audits are conducted in many different areas, including: financial, operational, information technology and compliance issues. The latter audits are conducted by Chartered Accountants (CA) firms that provide external audit services. Most private and all public companies have annual audits. Private equity firms commission audits on their companies to ensure that they are being managed properly. Public firms are required to undergo a public audit once per year. This audit is published with the Securities and Exchange Board of India. This process is meant to protect the investment community from fraudulent companies.

It was in this field where I started my professional life. It seems very uninteresting but this space helped me a lot to build my basics about how inconsequential things mean a lot in building up your basics of the profession.

A lot of the professionals in this field are reluctant of the job that they get here due to the monotonous work being doled out to them. But this space will gain importance due to the various laws, rules and regulations which are being implemented by the authorities which makes it all the more essential for the corporates to follow them.

4) Risk Management Firms: Internal Controls Internal controls and risk management firms offer internal audit services and consulting to ensure that a company has a system of checks and balances in place in relation to its accounting infrastructure. They also offer business evaluation and risk management services.

Such services have become a thing of the future because of the volatility and the uncertainty of the business environment and the various types of risks that a firm or a company is exposed to. These services generally are performed by an internal auditor, but nowadays, companies have started giving such assignments to independent accounting firms. They provide a much comprehensive view of the various risk areas as compared to the internal auditor because they specialize in such areas.

Most if these firms are solicited when a corporate wants to find feasibility of a new project or due to the expansion to be taken place in a current project.

5) Outsourced Accounting Firms Outsourced accounting service firms act as a company's accounting department. They provide the accounting service, and in some cases the contractors, that complete all of the accounting work either at their location or at the client's site. The accountant or accountants remain employees of the accounting firm but complete the accounting for the client. These firms may offer services that include: full-cycle accounting service, Chief Financial Officer (CFO) services or simple business development services. The CFO service is a high level executive product that allows the firm to oversee the work completed by the company's in-house accounting staff.

As the name suggests, these services are given to a third- party who specializes in such function. This helps the client company to concentrate on its core competency and requires the vendor to complete the accounting related work as regards the client. This service is gaining importance due to the increasing amount of competition amongst the various businesses which has led to them outsourcing such activities.

This service is also gaining in importance due to the amount of manpower which it saves of the client which helps in cost and time savings and helps in increasing the efficiency of the client in its core processes. On the flip side, accounting being such an important part of the corporate structure, client is reluctant to give such assignments to third part vendors as it can lead to leak of valuable information and also due to the fact that most of the businesses in India are family owned, where owners are reluctant to delegate authority to subordinates, let alone outsiders.

6) Bookkeeping Firms Bookkeeping firms operate in every city, small town and rural settings. However, bookkeeping firms serve a very important sector of our business community, the small business owner. They provide everything from monthly write-up bookkeeping to tax compliance services. Small businesses do not always have the resources to hire an in-house accountant or accounting staff. The bookkeeping firm acts as the accounting department for the small business owner. This keeps the business organized and financially responsible. These services are one of the most basic services provided in the field of accountancy. Following is the list of the top 10 consulting firms in India which mainly provide accounting as a part of their bouquet of services; a) Jiya & Associates b) Ernst & Young c) Chatrath Capital Services Private Ltd. d) MK Tyagi & Co. e) Singh Agarwal & Associates f) Agarwal Kamal Kumar & Associates g) S C Bhagat & Company h) Paul & Martin Consulting Group i) Innosolv Consultancy Services Private Ltd. j) Prudent Polyconsultants Private Ltd.

NEW DEVELOPMENTS IN THE FIELD OF ACCOUNTING AS A PART OF CONSULTING

CLOUD ACCOUNTING: Cloud Accounting is one of the numerous business models of the SAAS (software as a service) vendors. The idea is to move all the hassles of the in-house accounting functions to a third party that specializes in delivering such services. The client securely transfers raw data to the cloud vendor who then processes the data in order to produce the desired output as per the contractual agreement.

It is somewhat similar to the concept of Outsources Accounting Firms, but this uses software to actual deliver the service. Following are the benefits of deploying Cloud Accounting; a) Improves performance by channelizing scarce resources into productive activities b) Savings in cost due to updating traditional accounting software, cost of training staff members and salaries of accounting departments that are maintained in house c) The motivation of the staff increases as they can totally depend on the financial data in order to make speedy decisions. d) Cloud Accounting is scalable, flexible and robust. This helps in controlling overall costs e) It can be accessed remotely to make business decisions on the go

f) It helps in complying with the latest regulations, as the providers of this online service need to keep themselves abreast of the new developments in the legal and the regulatory landscape. g) It is environment friendly as it reduces pollution and paper work required for this activity.

Caveat of Implementing Cloud Accounting: The major issue with cloud computing, in general, is that of security. It means dealing with confidentiality, integrity and availability of the accounting information assets. It becomes the responsibility of the clients to ensure that these 3 elements are moved to the cloud.

FORENSIC ACCOUNTING: Forensic accounting has come into limelight due to rapid increase in financial frauds and white-collar crimes. But, it is a largely untrodden area in India. The integration of accounting, auditing and investigative skills creates the speciality known as forensic accounting. The opportunities for the forensic accountants are growing fast; they are being engaged in public practice and are being employed by insurance companies, banks, police forces, government agencies, etc.

Forensic accounting is the speciality practice area of accounting that describes engagements, which result from actual or anticipated disputes or litigation. . The forensic engagement is distinguished by engagement objective, emphasis on gathering evidence, and the application of a variety of techniques often custom-developed to the requirements of the specific engagement.

All of the larger accounting firms, as well as, many medium-sized and boutique firms have specialist forensic accounting departments. Within these groups, there may be further sub-specialisations: some forensic accountants may, for example, just specialise in insurance claims, personal injury claims, fraud detection, construction, or royalty audits. These services are in great demand and rendered at a premium in current context of flourishing business and rising instances of frauds and litigations.

Forensic accountants, in fact, utilise an understanding of business information and financial reporting systems, accounting and auditing standards and procedures, evidence gathering and investigative techniques, and litigation processes and procedure to perform their work. Forensic accountants are also increasingly playing more proactive risk reduction roles by designing and performing extended procedures as part of the statutory audit, acting as advisors to audit committees, and assisting in investment analyst research.

The opportunities for the forensic accountants are growing at a rapid speed. The collapse of the Enron Corporation, the Satyam scam, insider trading incidents, etc. all

of have raised serious concerns of the authenticity of business dealing in the corporate world, giving rise to the need of forensic accountants.

The services of the forensic accountants are in great demand in the following areas;

a) Detection of fraud committed by employees b) Criminal investigation c) Settlement for outgoing partner d) Cases relating to professional negligence e) Arbitration Service f) Settlement of insurance claims g) Dispute settlement

Indeed, there is a future in forensic accounting as a separate niche consulting.

Hence, we can see that accounting as a profession has developed a long way since its formative years and has become the bread and butter for a lot of professionals. It has also evolved as a part of consulting during the years with a lot of activities coming under its domain.

Future success of accountancy as a part of consultancy depends on how the public perceives the ability of CAs. New efforts in consulting, specialisation and understanding global business practices and strategies are considered crucial and these would help in shaping the future of the profession.