By V. Kanthaiya –

Long ago, perhaps not so long ago, and to be more precise, at a particular occasion between 1828- 1910, Leo Tolstoy said the following,

“What a misguided world where the rich, who live off the labour of the poor, consider themselves benefactors of the poor”.

Keeping those words of wisdom aside, let’s take the history of slavery in the USA. The southern states took the critical decision to secede from the union due to the issue over the expansion of slavery into the new western states. The slavery, at the present context is looked upon as a practice that is inhuman and savage . In the past, it was not. It should be noted that eleven states of USA went to war to hold their “right” for slavery, based on the justification that slavery gave the cheap labour to the cotton economies of these states.

In the present civilized world, slavery exists. It is not in the same format as the past where human beings would be chained and forced to do physical work. Now it is done through the labour contracts, where the powerful corporates use the low standard of living of the particular segment of the society to exploit them to make profits. Just think about this. Why the ‘garment companies’ put up their businesses in the developing countries like Sri Lanka & Bangladesh? Why not in USA and Europe? The profitability in labour/human resource intensive industry is decided by the cost of the labour/human resource. So for the profitability, of which that the corporates and the entrepreneurs are desperate, will do their maximum to find the cheap labour and locate their labour/human resource intensive business there. Well! That is acceptable to some certain extent, because this is done based on the market equilibrium of demand and supply of labour/human resource.

But certain educated Sri Lankan’s are brilliant enough to create a cheap human resource and make a big profit margin, exploiting the low cost of it. The price of the human resource is not decided based on the demand supply equilibrium of the market. Instead it is decided by some of the powerful elements in the society, deliberately to make profits, from the hard works of others. This is a modern slavery, which you can’t identify, because the slaves would be in office attire.

Let me dig into this. I have been an audit trainee for eighteen months, during 2009/10 period. My first allowance was Rs. 2,500 and I was being paid Rs. 5,500 when I left the firm to join a corporate company. The accountancy body, I was associated with didn’t compel me to join an audit firm. I joined voluntarily to gain some experience. The employment was challenging and was quite potent with technical experience. Once I found a better employment opportunity with a corporate company, using the experience I gained in the audit firm, I left it. The audit firm didn’t have any control over me.

The students of CA Sri Lanka are not that much fortunate. They need to sign a practical training agreement with the audit firm, for a period of three year, each year consisting of a minimum of 220 days, excluding any leaves & holidays[i]. As per the agreement the student should have a supervisor (A chartered Accountant from CA Sri Lanka), and the work done should be recorded on a daily basis and signed by the supervisor. This gives the firm and the supervisor a total control over the trainee. Other professional institutions, such as CIMA & ACCA too require practical experience. However they do not stress on the rigid rules like those imposed by the CA Sri Lanka. These institutions leave the internship of the students at their own discretion, and they test the practical knowledge and the competency of the students in various other ways, not through the ‘training record book’ which the CA Sri Lanka relies on.

One may feel quite strange why I make a big tamasha about a professional accountancy body’s practical training. This is because that this very ‘practical training’ of CA Sri Lanka is the sole factor the Sri Lanka audit & assurance industry is based on and it is the same ‘practical training’ used by some powerful, malicious and shrewd elements of the society to make money out of the hard work of the young.

The following are the factors which help the audit firms of Sri Lanka to exploit the ambitious student’s hard work to make money, while paying them a meager allowance.

• Once the ‘practical training agreement’ with the audit firm is signed, it would be extremely difficult/ completely impossible to leave the audit firm. This will give the audit firm a guaranteed cheap labour for at least three years[ii].

• The necessity of the training record book to be signed by supervising “member” would give complete advantage to the ‘member’ exploit the trainee. I have personally witnessed female trainees being asked to stay and work till late night, despite their concern about their transport and safety, just to meet the deadlines. The female trainees do not have any option other than to comply, since making a supervising member/ audit firm not happy can lead the refusal by the supervising member/audit firm to sign record book, or even cancel the training , including the period worked.

• The trainees are compelled to work from 8 a.m to late night, most of the days in a year. However CA Sri Lanka would only recognize minimum 7 hours to maximum 8 hours in the training record book. This means that whatever the additional hours worked will be of no use to the students.

• Despite the fact that CA Sri Lanka does not recognize the additional hours worked, the audit firms stress that the trainees should work late night to meet the deadlines. However the institute has neither formally requested the audit firms not to ask (in fact, compel) the trainees to stay late nights to meet the deadlines, nor recognize the additional hours worked into the training record book.

• CA Sri Lanka’s published allowance structure details out the minimum allowance structure to the students (which is available on the CA Sri Lanka website) presented along with this article. I leave it to the common sense of the readers to decide whether this is a reasonable pay scale for the value addition made by the audit trainees[iii].

• Despite the meager allowance, the audit firms do not pay any overtime payments, as the employment agreement with the audit firm would include “For a fixed monthly allowance” clause.

• CA Sri Lanka even determines the number days for the study leave, in a very manner facilitating the best interest of the audit firms. As per the training agreement, the trainees cannot take any additional extended leaves without informing the institute. The gives more comfort to the employer, not the trainees.

Consider myself as a layman, someone who does not understand the complicated terminology of the law, but who decides what is wrong and what is right based on the common sense. I want to ask a few questions to the ‘torch bearers of accounting and auditing profession in Sri Lanka’;

You are so much concerned about the related party transactions while auditing your clients, saying that people with common interest would not transact in fair value. I completely accept your point. How are you viewing the partners of the audit firms holding powerful positions in CA Sri Lanka which decide the allowance structure & the rules of training?, Can’t this be called ‘significant influence’? The council members of the institute for the years 2014/15 mostly comprise the audit firm partners. The president- Mr. Arjuna Herath, vice president-Mr.Lansantha Wickramasinge, immediate past president – Mr.Sujeewa Rajapaksha, council members – Mr.Sanajaya Bandara, Mr.T.Dharamaraj,Mr.Manil Jayasinghe, Mr.Channa Manoharan,Mr.Jagath Perera, Mr.Tishan Subasinghe, all these gentlemen are the partners of big audit firms[iv]. How can one say that the allowance structure determined by the CA Sri Lanka would be ‘fair’, comparing the value addition made by the trainees to find the adequate audit evidence to conclude that the books of accounts are free from material misstatements?

Once I asked an audit firm partner why the trainees are paid so low, despite the fact they are the people who enable the partner to form the audit opinion. He simply said that what matters of an organization’s financial statements is that whether it is certified or not. No matter how accurate and true the financial statements are, it will not be accepted unless a chartered accountant certifies it. So it is the chartered accountant who is the key value adding resource of the business. Well, in that case, who enables the chartered accountant to form the audit opinion about the financial statements?, can he/she blindly certify a financial statement of a company without auditing based on the proper audit procedures? It is the trainees who dig into the every transaction of the organization and give the comfort to the chartered accountant to certify the financial statements. The trainees do the real value addition, it is not the partner. In fact the partner would spend only a few hours, (in many cases, only a few minutes) on a client. Now tell me, do the trainees deserve to be paid such meager allowances which the CA Sri Lanka believes to be ‘right’?

I don’t even see that the audit firms are making losses, and the audit firm partners are washing dishes to make a side income to run their family. It is the arrogant, malicious, and vane attitude of the audit firms that the audit trainees are nothing but their own slaves who should undergo this hardship, just for these ‘mudhalalis’ make money. Its a well known fact the CA Sri Lanka is run by the big audit firm ‘mudhalalis’ and it’s an accounting body with a hidden motto of “For the audit firm mudhalalis, by the audit firm mudhalalis”.

Based this, I humbly request CA Sri Lanka to take the following steps;

• To immediately review the allowance structure of the audit trainees, considering the value addition they make to the business, while setting the minimum allowance.

• To consider changing the number of days to number of hours worked for the training period, considering the fact most of the audit trainees work from morning 8 a.m to late nights to meet the dead lines.

• To formally request the audit firms to pay the overtime payment to the audit trainees for the additional hours they work, and not to include the ‘fixed monthly allowance’ clause in the employment contract.

• To request the audit firms to disclose to the public how much they are spending for the training and development of audit trainees, apart from the “on the job training”.

• To make sure that the audit firms do not make undue advantage of the rigidity of the practical training agreement, which is highly in favour of the audit firms.

• To formally request the audit firms to provide safety to the female audit trainees who stay late night at the client’s office to meet the deadlines.

• To be review based on which fact that CA Sri Lanka claims to be ethical and socially responsible while it is used as a tool by the audit firm ‘mudhalalis’ to make money under the shadow of the compulsory practical training requirement imposed by the institute.

I conclude my complaint to the public & CA Sri Lanka with the following words told by Leo Tolstoy;

“Neither prisons nor will police diminish the number of criminals. They will only be diminished by a change in the moral standard of society.”

[i] https://www.casrilanka.com/casl/index.php?option=com_content&view=article&id=69&Itemid=80&lang=en

[ii] FAQ, What will happen if I interrupt my training period – https://www.casrilanka.com/casl/index.php?option=com_content&view=article&id=69&Itemid=80&lang=en#faq

[iii] https://www.casrilanka.com/casl/images/stories/content/student/practical_training/allowance_structure_for_ca_trainees_2015.pdf

[iv]Profiles of council members – https://www.casrilanka.com/casl/images/stories/other_pdf/profiles_of_council_members.pdf