Thursday, 26 February 2015

Practise or Service? Ultimate speech for Chartered Accountants by a Chartered Accountant

The below is the speech of past president of Institute of Chartered Accountant of India, Late Shri P Brahmaya, which was delivered to the members of South India Regional Council at Madras on 25.02.1976.
The speech was regarding considerations to be made while deciding which path to take, Practise or Job? by a newly qualified Chartered Accountant. The contents of the speech are still relevant today!!

Problem of new entrants-Practice or Service:
A person who qualifies, as a Chartered accountant has to take a
decision, a difficult one at that, whether he would be best suited for
practice or employment. The factors that weigh in his decision
making include aptitude, financial stability etc.
We are reproducing here the speech of our revered past President
of The Institute of Chartered Accountants of India, Late Shri. P.
Brahmaya, a doyen among members of our profession delivered
to the members of the Southern India Regional Council at Madras
on 25th February 1976. The newly qualified Chartered Accountants
will be immensely benefited in their decision making whether to
enter practice or to take employment.

“Before we start reciting the general guidelines, we must consider
the personality and the state of mind of the new entrant. What,
then, are they? He has become an Associate after having spent
the preceding three or four years of his life in a fairly strenuous
manner in doing his articles and passing exams. He is quite
young-say 24 or 25 years of age and somewhat doctrinaire in his
outlook on life. He has his own ideas and ideals for a fruitful career
but is inexperienced and does not have clear-cut views about his
future nor could he be expected to have them. His vacillation and
worry get hold of him. He is conscious of the fact that he has been
depending on his parents for years and years for his upbringing.
He must, therefore, do something right here and now to support
himself. He is anxious to acquire a new status for himself and also
bring some financial relief to his parents. This obsession leads to
an in-built tension in his mind.
I hope I have given a faithful portrayal of the picture of a new
The new entrant should be able to take an objective view of the
comparative prospects of practice and industry. But, how should
he proceed in his quest for the right answer? It is at this point of
time he may follow the guidelines that I would be suggesting
shortly, for his consideration.
As I have indicated above, the choice of practice or industry is a
highly personal one. There is no uniform formula for solving this
problem. Let us take for example the respective behaviors of one
entrant with a strong financial backing and another without it. To
start with, they would both consider their respective future careers
from totally different angles. The former is a bit cocky in his
outlook and prepared to take a chance in life, while the latter is
understandably timid and uncertain and anxious to start earning
something forthwith to stand by his family. That is why one should
not be tempted to lay down a hard and fast rule on this subject to
the new entrants whose backgrounds are diverse.
At best we can only take stock of the general considerations one
should bear in mind before coming to the crucial decision.
Now let us start our enquiry by taking the question of practice. The
new entrant will have to ask himself several questions in this
connection and his final decision would depend on the
assessment of the totality of the answers he would get to his self –
The first question is : “Do I have the temperament to withstand the
rigours of a highly competitive profession” ?
You know, gentlemen, in our profession, as in all other
professions, there is what is called ‘a waiting period’, which
consumes the financial resources of new practitioners with
uncertain results and creates a state of animated suspension. This
could be most agonizing to the new entrant, as every one of the
old practitioners could recall to his mind, faithfully, his own
traumatic experience in the early stages of his practice. Most of us
could reel out incidents from our early careers, which used to
make our daily lives at times thoroughly miserable and cause us
pangs of regret for having set up practice. To the lucky ones such
occasional painful experiences may turn out to be merely passing
clouds on an otherwise bright day, while to the unlucky ones a
permanent feature of their professional careers. It is, therefore, to
be borne in mind that a practitioner’s daily life would not be an
even flow of milk and honey but a mixture of the bright and the
gloomy side of a competitive life. It follows that one should have a
stable temperament, not to be elated at success today and cowed
down by failure tomorrow. A practitioner must be endowed with
evenness of temperament and uniformity of behaviour. I would not
like him to allow his mind to be shuttling always between optimism
and pessimism. It will not do him any good in decision making. He
would do well to realize that there cannot be an unbroken
sunshine every day in his career. As in his private life there are
bound to be both appointments and disappointments in his public
life too. He must have the capacity to take the rough and the
smooth with a smiling face.
We next go to item no. 2 of his self-questioning. “Do I want to build
up a good audit work with particular reference to the Corporate
Sector, or tax practice of both?” You know, gentlemen, gathering
audit work, particularly in the corporate sector, is a back breaking
experience. Audits come in rather slowly. Therefore, one must
judge his success or failure over a period. Also, don’t forget that
your real troubles begin only when you start getting work. You
must have a good organization to service audits. Corporate Sector
audits need collective efforts. You are one of the many in your
organization needed to put through an audit unlike a tax
engagement which you may handle practically the whole thing
yourself. It is, therefore, essential that you must build up an
efficient and vigilant staff, partly in advance of work and partly
simultaneously with it, which would mean your spending quite a
good bit of money with dividends not guaranteed. You may also
remember in this connection that certifying accounts would entail
permanent responsibility. Even after say twenty years you may be
pulled up on the credibility of statements you had signed in good
faith in the past and in case your report to the shareholders
transpires to be inadequate or incorrect, or both, your whole future
may be threatened and attacked for mistakes you had unwittingly
committed years and years ago. Let me assure you I am not trying
to scare you away from attempting to develop a first class audit
office. Far from it, I am only suggesting that you may aspire for this
type of work with your eyes wide open. You also know that you
must maintain a fairly costly office and have a durable records
filing arrangement. In the Corporate Sector there is no statute of
limitation under the civil law to operate in your favor. It is, however,
a matter of some consolation that our Institute should have
abridged our period of responsibility to a period of eight years or
so but this has nothing to do with the timeless responsibility under
the civil law. To repeat the question: if you have a fancy to develop
audit work, with an emphasis on corporate sector practice, are you
in a position to build up the necessary infrastructure of your
organization? This is part of question No. 2 of your introduction.
If you want to set up practice with an accent on tax work and not
bother yourself with company audits, having regard to the
complexities of the Companies Act, by all means, do so. But bear
in mind the problems of an average tax practitioner. He cannot
expect big assignments to start with. He has to prove his mettle
before he may hope to be entrusted with them. So for a few years
to come, he has to be content with what is called medium and
small ‘representation work’. Under this arrangement he does not
do any audit work as ordinarily understood. He gathers information
from the accounts produced before him for additions to and
subtractions from the disclosed income, in order to arrive at the
adjusted income tax. He assumes very little responsibility when he
appears before the Tax Officer for the finalization of his client’s tax
liability. It is my personal opinion that this type of work does not
very much enhance the respect and prestige of the Chartered
Accountant. His personality may also possibly get stunted in
course of time. Moreover, the Income-Tax Practitioner who is not
subjected to our Code of Conduct is a formidable rival. I must
make it clear that I am not belittling this type of practice. Far from
it, all that I am suggesting is that you must take into account the
type of professional personality you would be building over the
years and you would have to be content with a second class tax
practice. It is not suggested that there is no money in this. There
can be plenty of it to the lucky few. However, if you are inclined to
specialize in tax work at the lower strata, you would have to stay
put in that position for several years.
Question No. 3, Which is really a continuation of question No. 2, is
“Would I be content with this type of practice for years and years in
case I am not able to reach the higher strata of tax practice?
“Make up your mind positively about this and develop a sense of
contentment. Don’t ruminate in later years over the limited results
you may have achieved in your profession.
For a practitioner, the ideal type of practice is a combination of
audit and tax work. In case you decide to set up practice, you aim
at this desirable composition of work. You can acquire a later
broader knowledge and experience in your work. Do not be scared
away by the size and complexities of the Companies Act. After all,
the other auditors who are handling a large number of Company
audits are just as human and fallible as you are. Once upon a time
they were what you are today and if our profession is a dynamic
organism, as I believe it is, you are destined to be in due course
what they are today. I have abundant faith and confidence in your
future. As you are all aware, success in life is the reward for
honesty of purpose and consecrated hard work. It must be
understood that that it is not the monopoly of a particular
generation of human beings, in the instant case, the existing
practitioners. In this view of your future, start your practice with
audits of private limited companies and proceed step by step. In
course of time you will have lost all terrors of the octopus, to wit,
the Companies Act. I want to make a suggestion here, which is
somewhat sensitive in nature. In the certainty that you would not
mistake me for doing so, I would like to be quite frank about it. I
sometimes come across young practitioners, who are
overconfident of handling even the most complex problems
themselves, when their professional stature does not warrant it.
They are too presumptuous to consult their colleagues in the
profession on their problems. This can lead to very undesirable
situations. It would be expedient on their part to consult a senior
as juniors do in the legal and medical professions They have
everything to gain thereby and nothing to lose. I for my part would
love to consult others when I do not know the solution to a
problem myself. There is nothing wrong in it. On the other hand, I
owe that much of duty to my client as part of the service I am
expected to give him.
The fourth consideration is : “Have I the capacity to start a good
office in a nice premises, furnish it well, stock it with a good library
when I set up practice and wait for the results?”
I have already touched upon this aspect in another form. There is
certain amount of inevitable repetition of ideas in what I am going
to say. There is nothing like a well maintained office to attract
clients, apart from giving quality service. It may cost you a lot of
money to do that but if you want to create a good environment,
which is bound to be liked by your clients, you must invest money
in your office equipment, library, establishment etc. you cannot get
away from it. You would do well to remember that a prospective
client has his own ways of making a silent study of your
organization and forming his own impressions. See that these
impressions would be favorable to you. Otherwise, you would
never get his work.
About staff requirements, I would place one aspect of it before you
for your consideration. I would do it in the form of a question.
Should you appoint your staff ahead of getting work with an
element of speculation involved in it or wait for work and appoint
the staff after getting it ? The first alternative may be costly
because of the idle time involved in it but in the long run it would
create an excellent and rewarding impression on your prospective
clients. The second alternative is in my opinion prejudicial and
even detrimental to the formative period of a practitioner.
However, please bear in mind these two opposite considerations
for what they are worth.
Now about the last part of the question, namely, the waiting period
and the financial implications thereof. Every practitioner has to
face the waiting period. It is tantalizing, it could even be
excruciating, driving the new entrant to despair and despondency.
Whatever it is, it is always safe for him to overestimate the deficit
he will have to meet from his resources during this formative and
trying period. He must be prepared to go through this phase of
tears, if I may put it somewhat drastically that way. By way of
parenthesis, I may add that it will do us good to suffer for some
time because moderate suffering is the best educator in life. Then
only we understand with sympathy the problems of the
unsuccessful practitioners, if any. If you believe in this philosophy,
then you would be able to withstand the stress and strains of
costly inactivity in the early stages. However, you cannot dispense
with providing yourself with ample funds and equipment before
you start navigating the uncharted seas.
Before I take up the prospects in industry for consideration, I
would like to summarise the salient points to be borne in mind in
connection with setting up practice:
1. It is essentially an individual problem to be considered in
the totality of circumstances forming the new entrant’s
2. He would would do well to do some introspection with the
following guidelines:
a) Do I have the necessary temperament to face the
problems of a self-employed person with courage
and confidence?
b) Do I want to build up audit work with particular
reference to Corporate Sector audit, tax practice or a
combination of both? Since each type of practice
requires certain concomitants of a complex nature,
would I be in a position to provide them to myself?
c) Have I the necessary financial resources for initial
investment and for maintaining myself during the
early idle period? Even after expending my material
resources, no doubt compulsively, I may not be an
assured success. In such a catastrophic contingency,
would I be on the roads or would I still have some
capacity to switch over to other spheres of activity?
I submit, that in case you are considering setting up
practice, you must ponder over these issues deliberately
and satisfy yourselves that you have prudently considered
all the relevant aspects before coming to the right decision.
I would now take up the postulates for industry. It is a
matter for gratification that industry holds out good
prospects now-a-days to Chartered Accountants. But don’t
forget: it takes from you more than what it gives you back.
It certainly pays you a handsome salary and gives you
security to a reasonable extent, subject to service rules.
But it extracts from you a versatile expertise. There was a
time when an accountant was synonymous with books
keeper. But this synonymity has now become archaic and
outmoded. The accountant of today has become a pivot of
the Finance and Accounts Department of Industry. He may
also be described as the heart of the anatomy of this
Department. His duties extract every ounce of mental
energy from him. The Directors of a Company look to him
as the arbiter of the several complex problems that arise
from day to day. Before a newly qualified accountant
considers joining industry, he must make himself fully
conversant with the problems that he would beset with. I
am not suggesting for a moment that right from the first day
of his joining industry, he would have to carry this load on
his shoulders. It does not work out in that precipitous
manner. As thing, happen, he joins as an assistant
accountant on a four figure salary and, if all goes well, the
mantle of Chief Accountant would fall on him in due
course. But if he is conversant with the duties of the Chief
Accountant even at the outset, he will have sufficient time
and opportunity to pick up experience before he reaches
the exalted designation.
With this general background we shall take up industry as
an alternative career. A little while ago we laid down certain
postulates for practice. We shall now consider their
counter-parts for industry. We shall start with a different
aspect of introspection. You know in industry you will be
one of the many in your department. Very likely you will
start at the lowest rung of the highly paid executives. This
implies that you will be expected to take orders from your
superior officers on certain vital matters. You will, this, be a
junior in a team of executives. Many a time you will be
directed to do things in manner not always to your liking or
at times even obnoxious to you. But you must pocket your
personal beliefs and convictions and learn to obey your
superior officers without any unseemly behaviour on your
part. Is your sense of organizational discipline such that it
enables you to forget your ideas and obey the dictates of
your superior Officers? Or temperamentally would you
nurse the grievance of your views being ignored always,
feel pretty cut up and miserable about it and become a
chronic conscientious objector or, to put it in the colloquial
language, a fighting cock ? If you become a victim to this
condition, then you would go on changing places and in
due course become a rolling stone with its proverbial
limitation. I have known a few cases of able accountants
who never learn the art of playing the second fiddle for a
while, and in course of time, became bad failures in life.
So the first question you have to ask yourself: “Have I the
temperament to fit into a team of workers and take orders
from my superiors with alacrity before I reach the pinnacle
when I would be giving orders to others?” This is an
important and weightly question you have to ask yourself.
After all, you should go to your employer every morning
with pleasure, give your honest best to him for the day and
come back home with job satisfaction and pleasant
memories of the day’s association and collective
performance. You should not go there to inflict your
unwanted views on others and make yourself a perpetual
nuisance to your employer, thereby bargaining for the
discharge notice.
The next question you have to ask yourself is whether you
possess the requisite knowledge and experience to occupy
the post that is assigned to you. Please remember that the
scope and content of the knowledge that are expected of
you have become somewhat sprawling in volume. Thus,
today you are expected to know something of industrial
finance, accounts, Companies Act. Income-tax Act, Sales
Tax, Labour legislation and God only knows what other
subjects are there in store for you. You would, therefore,
realize that the knowledge expected of you has an aura of
versatility about it.
You would have to ask yourself whether you are competent
to join industry at a given moment. If objectively you feel
you do not have the requisite knowledge and experience,
then don’t take the risk of doing the right thing at the wrong
time. Join a good firm of practicing Chartered Accountants,
work with them for a year or two on salary basis, acquire
varied disciplines, inspire confidence in your principals and
then join industry under their sponsorship. This is the
safest course for you to adopt. Don’t take the risk of joining
industry when you are not quite ready for it.
The next consideration is your adaptability to any
environment. The mention of this point may sound
somewhat banal and trivial to you. But, as I look at it, it is
more crucial than what some of you may think of it. Quite
frankly, my anxiety is this. We have yet to get over our tribal
instincts and affinities in spite of what we proclaim to the
contrary in the Press and on the platform. We continue to be
victims of communalism, casteism, regional ingoism, and
other aberrations of mind and outlook. ‘Sons of the soil’
theory is the latest addition to our prejudices. While so, are
you sure you have the catholicity of mind not to become a
victim yourself to these prejudices and predilections? Can
you manage to work in an environment saturated with these
extra-territorial considerations, as it were, and yet develop
your faculties to their fullest extent? You must be sure that
you have the capacity to make out the best of a bad
The final consideration is a comparative study of the
financial prospects. Theoretically speaking, as a
practitioner the sky is the limit to you for practice. Or you
may draw blank. Other things remaining the same, it
depends on your luck also. On the contra side, in industry
you are assured of a decent salary and perquisites to start
with. You would, of course, be gradually receiving your
increments. So far so good. No doubt there is some
security to your career in industry which is not available to
you in the profession.
The postulates for an industrial career are summarised
below :
1. Before you decide to join industry for a good career,
ask yourself whether you have the aptitude for it.
2. For this evening’s talk, I have used the work ‘aptitude’
in an all embracing sense. Thus, your capacity to
become a perfect teammate even at the lowest level,
your versatile knowledge and experience and your
capacity to attune yourself to any kind of
environment; all these attributes are collectively
included in the aptitude. You ask yourself whether
you satisfy all these criteria.
3. Lastly, you have your own assessment of the
financial prospects in Practice and Industry. Which
would be more potentially remunerative to you,
bearing in mind also the limited quantum of security
available to you in Industry?
I believe that if you consider the future of your career on
these lines objectively, dispassionately and with integrity,
you will get the right answer in most cases. You will have
no regrets now or later for your decision.
Friends, for want of time I have not gone into full details of
certain aspects but I think I have placed all the important
points before you for a profitable debate.

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