Following is the full text of the speech of the Minister, delivered on the occasion:
Guest of Honour Mr. R.S. Sharma, CMD, ONGC, Mr. Chandra Wadhwa, President, ICWAI, Mr. Edward K F Chow, Chairman of China infrastructure Group and Chairman of PAIB of IFAC; Mr. Indrajith Fernando, President of Institute of Chartered Accountant of Sri Lanka; Mr. Mumtazudin Ahmed, President ICMA, Bangladesh, Mr. Sher Aghan Malik, President ICMA, Pakistan, Mr. Laxman Watawala, President SCMA, Sri Lanka, Mr. A.N. Raman, Chairman of the Global Submit, Mr. Kunal Banerjee, Vice President, ICWAI distinguished invitees, past presidents, awardees and delegates and representatives from the media, ladies & gentlemen, warm greetings to all of you.
I am happy that an event such as this Global Summit is being held to consider the future of the role being played by the Management Accountant. I am told that this Summit, which will discuss issues relating to Repositioning the Management Accountant has brought together Cost and Management Accounting bodies from many places in the world. I extend a special warm welcome to the representatives from China, Bangladesh, Pakistan, Sri Lanka, Canada, United Kingdom, Oman and Dubai who have joined us here today.
Friends, the increasing globalization of economic activity has placed a new challenge before business entities. More than ever before, enterprises have to be competitive in the international arena. This places new demands on the entrepreneurs and business managers in terms of innovation and strategy. Equally there is the imperative of basing their thinking on realistic assumptions. They must have a clear understanding of costs involved in carrying out their chosen business and the manner in which their costs compare with those incurred by their competitors. In this context, management accounting assumes an important role because not only must the financial affairs of the business be properly accounted for, areas must also be identified for management intervention to reduce costs. Management accountants, in fact have a dual relationship in an enterprise. They have to be strategic partners and providers of decision based financial information in an enterprise. They are responsible to the business management team while having reporting relationships and responsibilities to the corporation's finance division. One widely held view is that financial accounting is, in fact, a stepping stone to management accounting. In context of value creation, management accountants help drive the success of the business while strict financial accounting could be seen as more of a compliance and historical endeavor. Management Accountants, therefore, have a role as "value-creators" amongst the accountants. In discharging this role, they have to be forward looking and take decisions that will affect the future of the organization, rather than confine themselves to historical recording and compliance aspects of the profession.
It is imperative that the professionals seeking to provide management accounting services continuously upgrade their knowledge and expertise, in tune with the new advances in the discipline. Many new ideas have emerged in this context, in keeping with the changing times. Management Accountants are no longer associated only with traditional recording of costs and reporting, but provide valuable insights into other areas of accounting. New roles are emerging for the management accountants in strategic, performance and risk management in an enterprise. There is a need to understand the constraints under which the enterprise functions. The discipline of management accounting can make important contribution to fulfill this need. Management accountants also need to help an enterprise develop competitive intelligence, since businesses cannot grow without a clear insight of competitors strengths and weakness. I urge all the professionals engaged in this discipline to constantly re-equip themselves to keep pace with the developments all over the world. They are to ensure that needs of their clients are met with requisite skill set, knowledge and experience to provide the highest levels of service.
In the meantime, the Ministry of Corporate Affairs has supported and articulated a comprehensive reform of corporate laws in India. The regulation of professionals has been revamped by review and amendment of the statutes governing chartered accountants, Cost and works accountants and company secretaries in India. The objective is to provide self regulation but at the same time responsibility and accountability through effective disciplinary mechanism. A major e-Governance program has been implemented under the name MCA-21. This enables provision of all registry services for statutory filing and viewing of documents online on round the clock basis. These include e-initiatives in the form of MCA-21 to reduce the physical interface of the corporate world with the regulators and to go paperless. Recently the Parliament has passed Competition (Amendment) Act, 2007 as a result the stage is set for full Operationalization of the Competition Commission of India. Further, a Bill to provide for Limited Liability Partnerships has been introduced in the Parliament and we hope that it would be enacted soon. Accounting standards have been notified and we hope to introduce a Bill that would enable comprehensive revision of Companies Act in the coming budget session of the Parliament. We are also working on development of a regulatory framework for regulation of valuation professionals. However, reform is a continuing activity. It is our objective to facilitate change through reform of the relevant statutory and institutional framework. Our philosophy in UPA Govt. is to provide more freedom to corporate and professionals under a self-regulatory regime with minimum interference from the Government.
I understand that many distinguished and learned experts and scholars are participating in this Summit. I am confident that this Summit will enable cross fertilization of thought from various countries relating to the emerging competencies of a Management Accountant. The new challenges have been posed by the emerging importance of services sector, knowledge and technology based activity and e-commerce. For developing countries, there is also a need to address the special problems faced by Small and Medium Enterprises (SMEs) and the need to sustain SMEs through a Management Accounting framework and to help them face competition by bigger players. I understand that the Summit also proposes to discuss the interface between Management Accounting and the NGO Sector. All these and many other issues need to be carefully discussed so that a clear perspective can be developed on the task for future development of this discipline.
The importance of this profession was recognized long ago by the great Philosopher Chankya, also known as Kautilya. As mentioned in Arthshastra about 2000 years ago, a proper measurement of economic performance is absolutely essential for efficient allocation of resources, which is considered as an important source of economic development.
I once again take this opportunity to congratulate Shri Chandra Wadhwa, President ICWAI, and the entire Council of ICWAI for conceiving the idea and executing it with professional zeal and enthusiasm. I welcome all the distinguished participants and wish the Summit all the success.
Thank you and Jai Hind
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