By Chandra Jayaratne –
Arjuna Herath Esq.
Institute of Chartered Accountants of Sri Lanka,
30A, Malalasekera Mawatha,
“Gearing Up For the Times Ahead-The Need to Remain Relevant and Stay Ahead of Times”
I am writing this open letter to you, after months of watching in silence, the many professional bodies, chambers and others organizations with strategic core value commitments to its key stakeholders, failing to duly discharge their accountability with transparency and openly advocate for essential reforms and change, in line with expected best practices. This silence is mainly due to the prevailing external environment.
The current authoritarian governance environment is driven by a “carrot” and “stick” based “rewards” and “punishments” system and is exercised with a lack of transparency and with scant respect for compliance with expected best practices. Such an environment promotes a value system that has no regard to “fear” and “shame” to do wrong, and further restricts and sometimes compels not only public institutions and regulators, but also professional bodies, chambers and others organizations, to sacrifice hallowed principles and adherence to core value commitments.
I heartily cheered in silence your recent election to office and watched the many creative, innovative and sustainable value adding initiatives launched by the Institute under your leadership, especially in developing the quality of education contents; enhancing member professionalism and skills; member job market opportunity enriching initiatives; and member personality development programmes; as well as those initiatives targeting fellowship amongst members.
I was heartened reading the core theme of the Annual Report titled “Gearing Up For the Times Ahead-The Need to Remain Relevant and Stay Ahead of Times”.
My fervent wish is that the above theme will becomes a truly committed to and actively practiced strategy of the Institute under your leadership and will set a foundation in supporting the adherence to the core values of the Institute ( Integrity + wisdom + Innovation + service), and lead to realizing the Institute’s Objectives , especially in Upholding standards in public interest, generating leadership through ideas and influence and in delivering dynamic and proactive services to the stakeholders.
The pursuit of the three specific objectives highlighted above, whilst adhering to the core values of the Institute, will require your personal leadership commitment to be exercised, with care and courage to be different, in order to “gear up for the times ahead, remain relevant, stay ahead of times and serve the interests of all stakeholders”.
In the above regard, I believe you, the Council and the Executive Team will need to re-visit and recommit to addressing the following as priority challenges of the times we live in;
Expand Strategic Priories
The ten most important strategic priorities as set out in the Annual report must be expanded in scope to give a pride of place for “the voice profession “ linked advocacy and initiatives promoting the selected theme of “gear up for the times ahead, remain relevant, stay ahead of times and serve the interests of all stakeholders”. Where necessary in the interest of its key stakeholders, upholding the professional principles and the core value commitments the Institute must not fail to exercise its responsibility as the “the voice profession “.
Adherence to Accounting and Auditing Standards
The Institute must uphold at all times, actively promote and ensure, due full compliance with Accounting and Auditing Standards by all stakeholders.
Towards the above commitment, the Institute must promote and publicly advocate such compliance; commit to enhance public awareness of such standards and their societal value and professional benefits.
Where any member, the government, a person or organization, fails to comply with Accounting and Auditing standards or attempt to misrepresent or mislead the public in the interpretation of such standards, the Institute must take appropriate disciplinary action and publicly expose any such instances, malpractice or attempted deception. The Institute and its Committees must exercise independence and professionalism in the interpretation and arbitration on interpretations of Accounting and Auditing Standards. The response actions of the Institute in these instances must be exercised with professionalism, on a consistent and fair basis, with the required degree of transparency. The decision making in taking such action must be exercised without exception and must not take in to consideration of the power, status and authority of the violator, or beneficial rewards accruing or possible negative repercussions of such actions.
The undernoted recent experiences compel me to highlight the above priority;
- The blatant violations in strictly complying with the provisions of the standards and the failure to transparently expose and punish any such violators. Even where a public institution or a regulator is the violator the “the voice profession” must be articulated with independence.
- The recent explanatory public statement of a regulatory authority misinterpreting applicable accounting standards and attempting to deceive the public on a matter of significant public importance.
- The series of correspondence exchanged between the undersigned and the Institute, in attempting to get a clear ruling from the Institute on the interpretation of the relevant accounting standards applicable in the Valuation of Property, Plant & Equipment and other Assets with embedded payments linked to bribes, commissions and other facilitation payments, which are commonly classified as corrupt practices.
Embedding Codes of Ethics, Best Practice Commitments and Societal Values and Norms
There is a priority need to embed not only professional standards and related best practices in members and students, but in addition as a matter of priority, embed in them Professional Ethics, Best Practice Commitments and Societal Values and Norms they should uphold in practice and employment and in other engagements in Society.
It is best that the Institute launch a special programme towards above, encompassing both members and students, and for this purpose it can draw on the services of respected members of the profession and societal leaders with required capability and integrity.
Welfare of Members with Disadvantages and Disabilities
I understand that there are several members of the Institute resident in Sri Lanka with severely impaired disadvantages and disabilities, both financial and physical. If this hypothesis be established, our collective continuing in silence as an Institute and a body of members with capacity to extend a helping hand to the needy and continuing to ignore their welfare and needs of this segment of our membership is totally unacceptable by the Institutes Core Commitments.
There may thus be a need for the Institute and the members together, to launch a joint initiative to expand the Members Benevolent Fund to carry out a detailed review of the impairments, disadvantages and disabilities faced by any group/ segment of members. Following an appropriate risk assessment and assessment of strategic options, the Institute with the support of the members, must launch a scheme /fund to meet identified needs of the impaired groups and alleviate at least to some extent their disadvantages.
Student Enrolment Framework and Capacity of the Institute to Deliver their Dreams and Expectations
There is a common belief that the dreams and expectations created by the Institute and some stakeholders, in attracting new students to the Institute, are beyond the collective capability of the Institute and new entrants to deliver effectively.
It is therefore essential that you and the Council, as a priority imperative, re-examine the present framework and objectives of new student enrolments and also independently assess the capability of the Institute to effectively deliver the aspirations and expectations of the student body. If there are any barriers and challenges in such “delivery of the promise”, change management initiatives must be implemented with commitment and as an urgent priority. Such risk mitigation strategies must address and prevent the commonly referred “Kaduwa” action based exclusions, if any, and other challenges faced by the students, as these may generate in the longer term negative PR damaging the Brand Value of the Institute.
The financial highlights of the year show a 13% growth in the number of students with an associated income growth of 34%. The income derived by the Institute from Students is substantial at Rs 451 million and represents nearly 69% of the total income of the Institute.
It is commonly believed the drop out ratio of students in some segments is significant and further that some categories of students enrolled yield less than 5% in completion rates at the end of final examinations. If this be so, are these segments of students investing in dreams that have no fair chance of realization? Should the student enrolment policy and the entry requirements and knowledge and capability delivery processes offered by the Institute and its education support partners be re-examined?
It is important for the Council to assess whether the student expansion is driven by external pressure, competitive reasons, and whether the Institute is enrolling a large number of new students, based on the underlying net cash flow and bottom line benefits accruing Institute? The Institute must further assess whether these highly profitable to the Institute new entrants have a reasonable chance of qualifying at the end of an acceptable learning period? At the same time it is essential to assess whether the dreams, aspirations and expectations in the minds of new entrants can be reasonably be delivered by the Institute? It is also essential to assess whether the collective capability of the Institute and the students can produce professionals with competence, knowledge, skills, attitudes and values required by future employers and practices and to engage in supporting national development goals?
Benchmarking the Profession and Professionals
If not already carried out, it may be useful to engage competent consultants to carry out a study to benchmark the Institute, its professional members in employment and practice, the students, and the respective capabilities these three groups, their long term key performance/outcome measurements and stakeholder satisfactions capabilities in the longer term.
Such a study is essential in the current external environment as set out at the beginning of this letter and in the context of the level of disbelief and skepticism in the independence, integrity, capability (Knowledge, skills, attitudes and values) and above all the unrelenting professionalism required in upholding accounting and auditing standards, codes of ethics and best practice guidelines of the Institute and its members , as publicly articulated in the media and in public communication by critics of the Accountancy profession.
A study of the above type will be essential in the Institute’s aim at “Gearing Up For the Times Ahead-The Need to Remain Relevant and Stay Ahead of Times”.
In conclusion, I sincerely trust that you will appreciate that this letter and its public release are driven by my belief that you have the integrity, proven professionalism and the leadership capability to lead with courage and commitment the change management initiatives essential in the due realization of the Institute’s aim at “Gearing Up For the Times Ahead-The Need to Remain Relevant and Stay Ahead of Times”.
With Warm Regards,
4th May 2014
cc. Aruna Alwis Esq. Secretary, Chief Executive Officer, Institute of Chartered Accountants of Sri Lanka,
– For placement before the Council with the concurrence of the President
– Editors of Financial /Business Media for Sharing with Stakeholders