The Institute of chartered accountants of India is a body set up by an act of parliament. As on August 2014, there are more than 235000 chartered accountants in practice/jobs. What was intended as an accountancy body has now grown into an all-round professional institute. The ICAI has grown into a giant institute. One visit to the ICAI new building in Mumbai makes you feel the progress it has done.
It’s a well proven fact that nothing is perfect. The arrow of time keeps marching forward. Things which were perfect at one point of time need to blend with change and adapt with the nature of time. The same is applicable to the ICAI’ Chartered Accountancy course as well. The ICAI is planning to introduce new curriculum from 2016 onwards and details of the new curriculum have not been made public yet. One knows the fact very well (and which can be proven quite nicely by posts some posts on this website) that not all CAs find it very easy to get jobs.
ON the one hand, there is competition between CAs and on the other hand CMAs and MBA qualified students are finding and fighting it out with the CAs. Since the government runs on the principal of equity, it offers every deserving person, a chance. Rank holders of every reputed course won’t find any difficulty in finding good job opportunities.
So the question that arises here is what’s the shortcoming? Where is the change needed?
Since the chartered accountancy is a professional and academic course, whatever is the change, the change has to be in terms of ‘STUDIES ‘only. Therefore if there is a change that needs to be done, that has to be done in the CA syllabus only. Therefore I am trying to articulate some changes that are needed in the CA syllabus.
One need not question the genius of people who design CA syllabus. CA syllabus is already one of the finest but there is nothing that ‘does not need any change’. Whatever I am writing might even have been already planned by the ICAI. But as a concerned person, I thought it better to express my opinion here.
This article shall not mean much to those who hate studies and who hate studying something additional but related. IN fact, they themselves are the reason for what their present condition is. Since many plan their career to become a Chartered accountant only, whatever they learn in 3 years of CA course is the final thing that they learn. Therefore it is important that every word of the CA course they learn should be perfect.
The world has changed a lot. What was once a profession which catered only to book keeping has now grown by leaps and bounds? Data mining, Project Management, Data analysis, SAP consulting, Investment banking etc. are the latest buzzwords which the present CA course is not in tandem with. So what are the changes that are needed? So should not the syllabus of ICAI also reflect the same?
Need of a full 100 Marks Statistics / Quantitative aptitude / Financial Statistics paper at the intermediate level and final level.
Statistics, probability and game theory are the gifts of natural sciences to social sciences and accountancy. Without them social sciences will only remain lifeless postulates. Probability is the lynchpin on which the superstructure of many of the financial theories rest. Therefore ignoring statistics, quantitative science in the accountancy course will be a big mistake by any institute.
Every accountancy and finance course in science has a full 100 marks statistics subject in its study. The present CA course has some element of statistics in it but it is not fully equipped to make the present CA students an expert in statistics. Mathematics is such a vast vast realm that once you dip into it, there is hardly any way to find your way back.
If you see the job openings related to data mining, data scientists etc. in web giants like Facebook etc., they do not require flowery qualifications like aca & disa (which many people label with their name as if it is a phd) but give a simple qualification….. B.s in science or mathematics. When it comes to mathematics, it’s the statistical expertise that they want.
As per the model curriculum of UGC for MBA, statistics is generally taught as a common subject in the first year of the program. If one observes it impartially (rather than how it is taught) it’s quite an interesting subject. Statistics has been recognized as a pre requisite in all the major branches of Mathematics (since accounting involves number crunching it is assumed as a distant cousin of mathematics).
Therefore what the icai can do is that , they can introduce a full 100 marks paper at the intermediate level which will comprise of introductory (yet difficult) statistics and which can mainly comprise of Game theory, probability (Bayesian probability and binomial ones), queuing theory , decision theory, Markov chains and basic simulation techniques. This can be sprinkled further with some parts of operations management. One might argue that game theory is taught in ca course in one form or the other. However game theory is a very deep concept and therefore needs further tutoring.
At the CA final, an advanced statistics paper of full 100 marks (either in form of a new subject or by replacing any of the present subjects) can be introduced. Since its advanced statistics, the contents have to be quite rigorous. Some elements of statistics are present in CPT paper / Strategic financial Management paper, but advanced statistics is an altogether different concept. Some of the elements of this advanced statistics paper can be (might sound like medicine names to those unfamiliar) as follows. These elements belong to pure statistics (and not applied statistics) and therefore can be taught in non-mathematical programs also
Advanced Markov chains (stochastic and single decrement chains), Financial modeling, stochastic and time series processes, bootstrap variation, Risk modeling, Black Scholes advanced pricing model (a small part of which is taught in sfm,), Non parametric and flexible time series , Value at risk , credit risk management etc
Above is just a brief outline of what the advanced statistics topic can contain. Some elements of the above are already being taught in cma papers.
A pure theory course except law cannot have full implications unless it is tested against the quantitative methods and reasoning. Therefore a CA student can immensely benefit by inclusion of a pure statistics paper at the intermediate and final paper. If students fear giving mathematical based paper, this subject might be made optional, but once students realize its potential, there will be hardly any person who won’t want studying this.
For a person who is strong on mathematics, he can even pursue the Masters in Quantitative finance / masters in quantitative economics, an advanced course available at some universities (available in Pune University from 2014 onwards).
Sorry to those who hate math. There is no other way around.
IF CPT can have economics, then why does IPCC and CA final do not have Advanced Economics paper? There can even be two economics paper instead of one.
During our academic life in school and college, we are expected to learn each subject from basic to advance level. However this is limited to only Accounting in CA course. CPT has an economics paper in it but there is hardly any economics paper at the intermediate and final level. Some might reply on this that ‘’ economics to arts ka subject hai ‘’. Yeah, its taught in arts stream in India, but the quantitative part of it is so deep that very few pass it out. The quantitative part of economics is known as econometrics and when combined with finance it is called as ‘financial econometrics’, ‘quantitative economics’ etc.
Here is a specimen of how advanced economics can become…
The above pictures are just for illustration. An economics paper at intermediate level can be partly theory and partly quantitative. In theoretical parts, advanced introduction to Indian economy, various sectors of the economy (sectorwise), rbi credit policy etc along with a brief roundabout of five year plan can be taught. In the quantitative part , various models of economic growth etc can be taught. Some of the basic elements of econometrics can form a third sub part.
At the final part, a full dedicated 100 marks economics paper can deal with full quantitative techniques. There are as many as 30 full-fledged branches of economics and we do not have to learn all of them. However certain parts of labor economics, behavioral economics are connected with the Commerce stream and therefore can be inculcated into the CA course.
Why should we learn economics if we are CAs? This is where CAs lag. There is much to learn from outside world. If arts students can handle econometrics (although not at advanced levels) , why cannot CAs. This will help you in bettering your financial thinking.
For eg – A chartered accountant can easily describe the entire IT act, but has he learned the basis and reasoning behind why xyz type of tax is implemented in xyz country….. this is where economics aids us. Therefore two economics papers are a must for CA course.
Is Strategic Management and Business Communication really needed? Some subjects to replace them.
Strategic management (Sm of itsm in ipcc) and business communication are needless subjects in ipcc. Neither does strategic management have any real world implication (being only theory which is nothing but common sense) and nor does the business communication paper emphasize on actual practical business communication writing (formal letters, conversations etc). They are just like moral science paper. Since the CA curriculum is a professional and not a school course , anything needless should be weeded out. Therefore I am of the view, that these papers should go away and make way for Statistics and economics outlined above.
The needlessness of these subjects becomes even more visible due to the fact that once a student passes CA, he hardly does any other course (true for 80 % students). Therefore they should not be taught pure theory papers (unless it is law, ethics or audit because they have business implication).
Since itt, orientation and GMCS are enough, why is business communication needed? I cannot understand this.
Therefore a right rebalance of curriculum towards quantitative aspects will benefit the chartered accountants. There are also some changes needed in the training structure etc , but they are unlikely to happen given the present structure of icai. Let us hope for the best !