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 28th, 2012.
COMMENTS (9)
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@JB: As far as the concern for a training contract goes, ICAEW students were offered training contracts of 4-5 years by the audit firms, while the actual training requirement being only 3 years. And still students signed contracts on these unfavorable terms. It is a pity to see local regulatory accountancy body and the audit firms manipulating students of foreign accountancy bodies. If such a step was to be taken there should have been an intimation, offering a 2 to 3 years of time interval for new students to stop entering the foreign accountancy studies, while the students all ready in the pipeline providing them time enough to complete their training requirements. This would give a chance for everyone to decide about what they want to do in the future in situation where local body are barring students indirectly to even pursue for a foreign qualificaiton.
It would have been much better if ICAP had decided to compete out other Professional Qualifications on "Merit" rather than "Censoring".
ICAP conducts Exams and Training even in KSA, but they do not have a single office and / or conduct exams in any city of Balochistan !
Does ICAP facilitate / help its members with job placements ? Its website needs to be professionally updated and to improve quality of its publications.
BTW, I really like the idea of ACCA Approved Employer Programme. ICAP needs to come up with some innovative and progressive ideas like that.
in the age of globalisation, tell me single country who makes rules like this. why do we resort to protection rather than competition? ICAP members are around 6-7k in pakistan resulting in huge number of finalists stuck at below manager level for years in middle east and elsewhere in the world. ACCA came in the scene and you can see 80% pakistanis serving in white collar accounting/auditing jobs in middleast and throughout the world are with ACCA background. why old guards sitting in ICAP dont make accountancy a profession and not a privilage club. agreed pakistani chartered accountants are very well qualified but in international market who cares?? for them any thing associated with pakistan comes with a certain mindset. time to change sir
Pakistan should have more CAs, CMA so that we cater ME. I will recommend CFA to ACCAs which is better for consultancy
How come future of thousands of students is their 'internal matter'. Secondly I am a ACCA finalist and i personally thinks students who want to have a career in audit or any related fields in Pakistan should have a know how of Pakistani Law/Tax regulations first.So one should think about that doing CA/CMA(Pak) even after ACCA is not a big deal. But this doesn't mean we are incompetent and should not be allowed to work. ICAP specifically ordering all the Audit firms to not hire anyone who is not a student/member of ICAP is unfair and bias. What if one day, HEC or any related authority issue a notice and say any student having a foreign degree will not be allowed to work in Pakistan, that's sound quite amusing. ICAP might be a regulating authority in Pakistan but we have a right to study what we want to do its our own choice. Similarly it should be on Audit firms who they want to hire. I don't know why in Pakistan there is only one way to solve any issue 'MY WAY OR THE HIGHWAY'.
This is the only way they can compete i.e. by limiting the entrants in market, because in free competition ICAP, its members and its students stand no chance. Good luck !!!
Problem with these foreign degrees is that any one can have these degrees, and ignoring the market demand there are thousands of pass outs specially of ACCA in Pakistan and then you can hire them even for free because of saturated market, this creates the problem for local professionals like CAs' & ACMAs', either these foreign qualifications must be asked to restrict their pass outs number with extended quality of subjects and also to set criteria for minimum salary they would be withdrawing after qualification or this restriction from ICAP should be continued and only the local professionals with better qualification should be entertained.
Every professional body would certaily favor it's members and students first and it should prefer but not in a way of restricting other bodies. This is not considered as a good corporate practise as it'll increase unemployment as well as bring stress among students and members.the point is this if this decision is not aginst the law then why CCP asked ICAP to show cause because this is not made on justifiable grounds. Even after implementation of the policy some audit firms(name cannot be disclosed) still hiring non ICAP members saying that if someone enquire us we will show these people are hired in Non-audit engagements like Tax,Consultancy. And if these kind of firms even Big four firms if they couldn't find Non-Icap student competitive enough question is why they used to recruit then in past? ICAP should give other kind of priviliges to its students and members they may impose some kind of conditions e.g(Affiliates,Qualified) to other bodies to get into the audit firms rather making some biased regulations.