CA Saurabh Dwivedi
Average salary of a fresher Chartered Accountant in India
- 2010: 6.50 lacs
- 2020: 6.50 lacs
Here's how it can be fixed
A Chartered Accountant gains almost all his skills during his articleship training. Three (now two) gruelling years of accounting, auditing, and filing tax returns. It is here where a student transforms from a carefree child to a prudent professional. ICAI's guidelines mandate that a student can undergo articleship training only in a Firm of Chartered Accountants. This is a win-win arrangement for both - the Firm & the Student. The Student gets 'hands on learning' and the Firm gets 'low cost staff'. During Articleship, a Student learns all the hands-on skills that enable him to become a Practicing Professional. At the end of these three years, a CA is well versed with Taxation Laws & Compliance Requirements, and can Audit whatever you throw in front of him.
But that's where the problem starts: Through articleship in a CA Firm, the Student learns whatever is required to run a CA Firm. He learns Audit & Return Filing - core products of a CA Firm. However, most freshly qualified Chartered Accountants don’t wish to join a CA Firm. Starting their own Independent Practice is only a distant dream. The first choice of most of the fresher CAs is to work in the Industry - mainly BFSI or Manufacturing. Those that join the BigFours, usually try for coveted roles in Management Consulting or Investment Banking. Those who fail to land Consulting or IB Jobs, settle for Tax Consulting or Stat Audits.
And that's what the problem really is. Chartered Accountants have been trained to be Compliance Warriors. And the Compliance Industry frankly just doesn’t pay as much as the Consulting or IB Industry. 'Finance' is only theoretically taught in the curriculum of Chartered Accountancy. Fresher CAs have no hands-on skills at Corporate Finance or Valuations or Credit Rating or Portfolio Management. They can't really read Annual Reports and build an Investment Thesis.
- How many CAs have built a real-life Discounted Cash Flow model? - How many CAs have read Annual Reports of Companies to build an Investment Thesis? - How many CAs have worked on an actual M&A Deal?
Thus, when applying for jobs in the Finance Industry, Chartered Accountants are considered absolute freshers because they don't really have any practical skills. They need to be trained & mentored for a year or two before they can start adding value. And this is why the Finance Industry is dominated by MBAs. IIM Grads get paid thrice as much as CAs because they have practical training on the things a CA only theoretically learns.
Secondly, English is another area of hindrance. The only training for English or Communication is provided during the 15 day OT / GMCS courses. There is no special emphasis on Verbal or Written Communication. No training whatsoever in Sales. Investment Banking is essentially a Sales Job. An I-Banker goes around Investors pitching them various financial products. And thus, Sales & Communication as a skill becomes of absolute importance when working in IB.
Thirdly, CAs are not problem solvers by nature. As CAs are trained in Auditing & Tax Compliance, they can work only within a well-defined framework of laws / rules & verify compliance to the said rules. In Management Consulting, there is no well-defined set of variables. A problem may prop up from anywhere and a Consultant needs to critically think & come-up with a solution to the same. Critical Thinking is a skill that can be learnt.
All of these factors
- No practical training in Finance / Consulting.
- Poor sales & communication skills.
- Lack of problem solving skills.
Play a role in a competitive job market.
My proposed solution: Allow students to undergo articleship training in any Company
- Whether Listed or Private
- Whether Banking or Manufacturing
- Whether Global or Regional.
Let the Student decide whether he wants to pursue Articleship in a CA Firm or a Company. Those students who are naturally inclined towards Practice will choose to work in a CA Firm. Others shall be free to work in any other industry of their choice.
Second proposed solution: Make two papers mandatory at all levels of the Chartered Accountancy curriculum
- English Communication & Sales.
- Critical Thinking / Logical & Analytical Reasoning.
I believe these two solutions will be immensely beneficial in raising the average package a fresher Chartered Accountant commands. The second order effect of these solutions - lack of availability of cheap labour to CA Firms - will prod them to raise the prices of their services - thus improving the economics of the Compliance Industry as well. Moreover, a huge chunk of students who fail to qualify as a CA - and work as Semi-Qualified Professionals - shall get better work opportunities as they too shall have hands-on skills & experience of working in an actual company. I humbly request the Hon'ble ICAI to give due consideration to these suggestions & work in favor of our beloved profession.
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