PROMINENT PERSONALITIES IN PAKISTAN WHO ARE ARECHARTERED ACCOUNTANTS

ISHAQ DAR OF PAKISTAN MUSLIM LEAGUE (NAWAZ) POLITICAL PARTY (Profile)

SALMAAN TASEER (LATE) FOUNDER OF KPMG TASEER HAADI AND CO. AND A VERY SUCCESSFUL BUSINESSMAN  (Profile)

MR. ABDUL AZIZ (PRESIDENT AND CEO AT UFONE SINCE DECEMBER 2007) Please click here

MR. MUHAMMAD NADEEM KHAN (CHIEF FINANCIAL OFFICER UFONE) Please click here

MR. MOQEEM UL HAQUE (GENERAL MANAGER CORPORATE STRATEGIC PLANNING & PMO AT UFONE) Please click here

WHY CHOOSE CHARTERED ACCOUNTANCY AS A CAREER?

Highly Rewarding

Chartered Accountancy is a highly rewarding field. Not only are our ambassadors earning the highest salaries in the market but also high level prestige and respect. Salaries of other professionals generally end where the salaries of Chartered Accountants start. Additionally as auditors you would be expected to offer a number of accounting and audit solutions, implement standards and practice business ethics that fuels your self-respect.

  Top Management

Unlike yesteryears when Chartered Accountants were considered as backroom clerks with their heads buried in the books of accounts; today our professionals are leading the market as front line managers. The incorporation of the technical and management skills in both our academic and training curriculum has brought Chartered Accountancy out from behind the stage to the front as CFOs, CEOs, Company Secretaries and Department Heads.

 Mobility

Chartered Accountancy is marking its own borders. You study here and practice your qualification in any country of the world. Currently 24% of our Chartered Accountants are setting examples of best professional practices in 35 countries of the world. Even switching organizations is frictionless so you may start in the public sector or business and later join any banks, financial institutions or trade.  

  Training

The true essence of the Chartered Accountancy qualification that sets us apart and adds value to our qualification is its well regulated training program; that allows a student to learn and implement his knowledge at the same time.        

 Equivalent to M.Com

The Higher Education Commission has accepted the Chartered Accountancy qualification as equivalent to the degree of Masters in Commerce. So all our candidates with dreams of studying further in specializations may do so on such basis.

 Rapid Growth

The field of Chartered Accountancy offers rapid growth to its professionals. With the increase in economic activity, the demand for Chartered Accountants is increasing in all market sectors may it be industry, trade, financial institutions or banks; even in sectors like education and social welfare our ambassadors are setting unique practices of integrity and professionalism.

 Business Qualification

Initially Chartered Accountants were believed to be experts with knowledge of only accountancy and audit but their scope in business has now been changed. The Institute has tailored its syllabus to incorporate a combination of technical and management skills, keeping in view the latest developments in the accounting profession worldwide. Thus our professionals are not just experts in the fields of Accounts and Audit but are also well-aware of the latest business practices in the fields of information technology, law, tax, marketing, human resource management etc.

 Most Economical Qualification

The Institute offers the lowest admission costs. Not only this, but during Chartered Accountancy students join training and are paid stipend that serves as a decent pocket money so that at the end of the day the student may incur his own expenses.

  Private Practice

So one fine morning it suddenly dawns upon you that being an employee is not your cup of tea. Well, your route is very simple! You can open your own practice and be your own boss!

THE MYTH OF IMPOSSIBILITY ABOUT CHARTERED ACCOUNTANCY

It is a very well established myth in Pakistan that choosing chartered accountancy as a career is foolish because it is too difficult to pass. I can assure you that it is nothing more than a fairy tale. CA is a very professional certification and needs hard work, smart and regular study to pass it but it is not some thing un-achievable.

It is also a fact some students badly get stuck in it. But those who are stuck are usually in the CA final stage and not during the intermediate. There are many reasons for that:

FIRST: Students hear so much from people around them about CA being very difficult that by the time they pass CA Inter, they consider it the achievement of a great milestone. This satisfaction coupled with some other factors makes the student very lazy and not interested in study.

SECOND: Article-ship is the beginning of professional life for a student. He hears so much about it being fascinating that reaching there seems to be the ultimate goal. They go on clients where they are treated as if they are completely qualified auditors. This makes them feel that they have reached final stage and further struggle is not required.

THREE: Students see many of their seniors, who leave the firm and successfully find  very good jobs just on the basis of their CA Inter and completed article-ship. This makes them feel relaxed that no problem if I am not able to complete it, still I will find a good job and earn a good living.

FOUR: They have to work like a full time employee and some time even have to spend over time to complete deadline jobs. Initially when they come to the firm as a fresh trainee, they are quite enthusiastic and want to show their full potential to their new co-workers. In doing so they neglect their studies.

FIVE: Once an individual starts a job and becomes professional, it is very difficult to make up ones mind for study. In such a situation one completely ignores study and gives all his attention to job.

SIX: Since a trainee is like an employee for the audit firm, the audit firm cares very little about their trainees completing their CA qualification. There is no practice of appreciating students to engage in their studies rather they do the opposite. Their attitude is more like that of the general employer and studies seems waste of time and their profits for them, so they emphasize more on work than studies. 

NOTE: THE ABOVE IS MY PERSONAL OPINION. PLEASE COMMENT IF YOU WANT TO SHARE ANY OTHER REASON.

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) FOUNDATION

International Accounting Standards Committee (IASC) was set up in 1973 through agreement between professional accountancy bodies (Professional Accountancy Body means boards that regulate profession of Chartered Accountancy in their respective countries like ICAP in Pakistan) of nine countries. The objective of IASC was to:

• Formulate quality International Accounting Standards (IASs) that would be observed internationally by  all countries
• Work generally for the improvement and harmonization of regulations, accounting standards,and procedures relating to the presentation of financial statements

Later on, the standard setting activities of IASC were delegated to IASC Board. Members of IASC Board were representatives from member countries of IASC.

In 2001, The IASC Board was replaced by a new body called INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB). IASB consists of Trustees who are of diverse geographical and functional background (meaning that they may not be full time accounting experts). The standard setting activities of the Board are carried out by members who are appointed based on their technical skill and background experience unlike IASC Board where members of the Board were representatives of the member countries of IASC.

Currently, the IASC that was set up in 1973 is called the IFRS Foundation and it comprises both the IASB and its Trustees. The objectives of IFRS Foundation as stated on its website are:

• To develop a single set of high quality, understandable, enforceable and globally accepted international financial reporting standards (IFRSs) through its standard-setting body, the IASB; 
• To promote the use and rigorous application of those standards; 
• To take account of the financial reporting needs of emerging economies and small and medium-sized entities (SMEs); and 
• To bring about convergence of national accounting standards and IFRSs to high quality solutions.

NOTE: International Accounting Standards (IASs) are guidelines for best practices in the accountancy profession. Now their name has been changed to International Financial Reporting Standards (IFRSs)

FURTHER SPECIALIZATION AND QUALIFICATION AFTER CA

The good news is that Chartered Accountancy of Pakistan, in its value and prestige out side Pakistan, is not like other fields of education (like medical and engineering) of Pakistan. Most of the Pakistani medical and engineering credentials, except a few, are not accepted abroad. This is not the case with ICAP. ICAP has affiliation with international bodies that try to harmonize and standardize accounting, financial reporting and auditing. Few of the affiliations are as follows: 

INTERNATIONAL FEDERATION OF ACCOUNTANTS (IFAC)

INTERNATIONAL AUDITING AND ASSURANCE STANDARDS BOARD

IFAC DEVELOPING NATIONS COMMITTEE

IFAC PROFESSIONAL ACCOUNTANTS IN BUSINESS COMMITTEE

INTERNATIONAL STANDARDS OF ACCOUNTING & REPORTING OF UNCTAD

BOARD OF CONFEDERATION OF ASIA AND PACIFIC ACCOUNTANTS

BOARD OF SOUTH ASIAN FEDERATION OF ACCOUNTANTS

ASIAN-OCEANIAN STANDARD-SETTERS GROUP

Affiliation with the above organization (that are successfully working towards a unified and standardized accountancy profession throughout the world) bears witness to wideness of the scope of CA of Pakistan.

In Pakistan a complete CA (passing all exams and mandatory training) is taken equivalent to Master's degree in commerce.

Apart from affiliation with the above international organizations, ICAP has signed Memorandums of Understanding with :

INSTITUTE OF CHARTERED ACCOUNTANTS IN ENGLAND &WALES (ICAEW)

INSTITUTE OF CHARTERED ACCOUNTANTS OF AUSTRALIA (ICAA)

CANADIAN INSTITUTE OF CHARTERED ACCOUNTANTS (CICA)

ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS (ACCA)

A CA can easily get any of these certifications by passing few additional papers (like taxation, corporation laws etc. of that country). Passing of a little more papers is required for ACCA.

 

FINANCIAL ANALYSIS OF CA FOR FINANCIALLY WEAK STUDENTS

BUDGET

Chartered Accountancy is particularly charming for those students who are financially weak. Cost of study is not very high as compared to other fields. Further they are able to earn enough pocket money (stipend) during the course of their training that they become self sufficient. If they are living with their parents (some students live in hostels out of their home town) then the stipend can be saved to pay for the tuition fee of Module E and F, although some students are able to study for E & F themselves without requiring any tuition. Before the initiation of training, the total cost for CA Inter (Module A to D) is around Rs. 160,000 (One hundred and sixty thousand) over a period of 2 years (for 4 modules of 6 months each). Cost for CA Final is just Rs. 24,600 assuming that classes for Module E & F subjects are not attended and approach of self study is opted. The following points should be kept in mind for the costs:

1. Cost of CA Inter is calculated assuming that classes are attended for all subjects of Module A to D at a RAET. Attending classes is not held mandatory (by the Board - ICAP) and is purely at the discretion of students. Further classes for all subjects is not even necessary. There are certain subjects which students can study at home like:

 - Functional English (Module A),

 - Introduction to Economics (Module B),

 - Mercantile Law (Module B),

 - Tax (Module C),

 - Business Communication & Behavioral Studies - BCBS (Module C),

 - IT (Module D),

 - Company Law (Module D)

Once students start their CA education and attend classes at a RAET, they can identify students within their class with whom they can have a group or combine study arrangement at home for the above subjects. This, in my opinion, can easily help them pass these subjects without requiring any classes.

2. Once students start their training at an auditing firm, they can easily start teaching subjects from Module to A to D to other students to earn a sizeable amount. They can ask someone to finance them from Module A to D and then repay them through this tuition fee that they earn. This tuition can easily be managed and would not affect their training.

3. ICAP also has a Student Loan policy for needy students

4. The attached budget has been prepared keeping in view that classes would not be attended for Module E and F subjects. This in my opinion is quite feasible. The only subjects that require classes are Advanced Accounting and Financial Reporting (Module E) and Business Finance Decisions (Module F) but they too can be passed through self study. During the training students can easily be friend with senior students and seek their guidance on difficult issues in these subjects and pass them.

NOTE: THE ABOVE ARTICLE AND BUDGET HAS BEEN PREPARED AND PRODUCED FOR FINANCIALLY WEAK STUDENTS. OTHERWISE CLASSES FOR MODULE A TO D SHOULD NOT BE SKIPPED AS FAR AS POSSIBLE.

SCOPE OF CA IN PAKISTAN

Scope of Chartered Accountancy (CA) is very wide not only in Pakistan but abroad as well. In Pakistan, Chartered Accountants are protected by law. The Companies Ordinance 1984, governing corporate entities in Pakistan, makes it mandatory that the public listed companies should get their annual financial reports audited and that too only by a Chartered Accountant (CA). Although there are other accountancy certifications in Pakistan as well like:

LOCAL CERTIFICATIONS:

ACCOUNTANT TITLE	PROFESSIONAL BODY
Cost and Management Accountants of Pakistan(CMAP)	Institute of Cost and Management Accountants of Pakistan (ICMAP)
Public Finance Accountants (PFA)	Pakistan Institute of Public Finance Accountants (PIPFA)

INTERNATIONAL CERTIFICATIONS:

ACCOUNTANT TITLE	PROFESSIONAL BODY
Chartered Certified Accountants (CCA)	Association of Chartered Certified Accountants (ACCA)
Chartered Management Accountants (CMA)	Chartered Institute of Management Accountants (CIMA)
Chartered Accountants (CA)	Institute of Chartered Accounts in England and Wales (ICAEW)

But the scope of above certifications is limited in Pakistan as the law allows only Chartered Accountants of ICAP to conduct financial audits of public entities. This legal protection coupled with vibrant role played by ICAP and its strict education and professional development policies have contributed to the success of ICAP's Chartered Accountants in Pakistan.

Scope of CA is not limited to Pakistan. CAs can add other international certifications to their portfolio like CCA,CMA, ICAEW's CA etc. For these certifications a CA has to pass few additional subjects like local tax laws etc. This way a CA can widen his scope from national to international boundaries.

WHAT IS CHARTERED ACCOUNTANCY

Chartered Accountancy is one of those fields that have evolved significantly over a period of short time and changed its scope from just accountancy to a lot more so as to offer jobs to individuals in diverse field like auditing, business advisory, managerial posts, key finance positions, risk managers, tax consultants, company secretaries etc. The field offers a lot of career opportunities and chances for further growth in other related fields.

It is highly probable that most of the company secretaries, CFOs, CEOs, managers, corporate tax consultants, company directors, internal auditors and bankers holding high positions that you see around you are Chartered Accountants. All external auditors (AUDITORS are individuals who inspect the annual or semi annual financial reports issued by companies, NGOs, etc. and certify to the correctness of information presented in them) are, by provision of law, Chartered Accountants in Pakistan. Auditors of government entities of Pakistan are not necessarily CAs. They are individuals who pass the competitive exams necessary for posting in a government institute and may just have a B.Com background. Government auditors work under the instructions of Auditor General of Pakistan (AGP) and Accountant General Pakistan Revenues (AGPR).

“THE WORLD IS WITHIN YOUR REACH, BECOME A CHARTERED ACCOUNTANT AND SPREAD YOUR WINGS”

This is the message of Institute of Chartered Accountants of Pakistan (ICAP) for potential students who would like to pursue a career in Chartered Accountancy (CA). I must agree that there is very much truth in it.

ACCOUNTANCY

Accountancy has evolved to be a field that is concerned with accumulating, classifying and then presenting financial information of an entity so as to communicate the financial and economic position of the entity to the owners and other interested third parties. Accountancy developed a concept of double entry around 15th century. This concept says that every transaction related to the entity has two effects, a debit and a credit (Equity = Assets - Liabilities TO KEEP THE BALANCE, THE TRANSACTION WOULD AFFECT BOTH SIDES OF THE EQUATION). In accountancy things are classified into different accounts like:

ACCOUNT HEAD	DESCRIPTION
Cash and bank balance	Showing total balance of cash and bank
Prepayments	Rent paid in advance, advance payment made to a supplier etc.
Property, plant & equipment	All tangible & intangible long term assets
Trade debts	Amount given as loan to other entities
Inventory	Stock of trading goods like cigarettes and other raw materials for a Tobacco company
Trade payables	Amount payable to suppliers for material purchased on credit
Income tax payable	Tax payable to income tax authorities

These are only few accounts mentioned for beginner's understanding.  Now lets take a very simple example in order to understand how double entry system works. Let's assume that a tobacco company which manufactures cigarettes purchases raw tobacco (amounting to Rs. 1,000,000) for production of cigarettes. The company may do so by paying cash or through a credit arrangement with the supplier. Double entry would be as follows in each situation:

SITUATION 1: WHEN COMPANY PAYS CASH FOR THE INVENTORY

DOUBLE EFFECT	ACCOUNT HEAD	AMOUNT
Debit	Inventory (Raw material)	1,000,000
Credit	Cash	1,000,000

SITUATION 2: WHEN COMPANY BUYS THE INVENTORY ON CREDIT

DOUBLE EFFECT	ACCOUNT HEAD	AMOUNT
Debit	Inventory (Raw material)	1,000,000
Credit	Trade payable	1,000,000

This double entry does not imbalance the accounting equation:

SITUATION 1:

Equity = (Assets + 1,000,000 - 1,000,000) - Liabilities

( Assets [Inventory] increase by 1million and assets [cash] decrease by 1million: thus null effect on equation)

SITUATION 2:

Equity = (Assets + 1,000,000) - (Liabilities + 1,000,000)

( Assets [Inventory] increase by 1million and liabilities [trade payables] also increase by 1million: thus null effect on equation)

Record of all transactions is kept in the above manner and then at the year, half year or month end statements showing the financial position of the entity are prepared to show the position and progress of the entity.

The above double entry is just the basics ( like ABC of accountancy) and real work of accountants of today is much more sophisticated, professional and academic in nature like management at a high level, strategic decision making, critical analysis of situations facing the entity, advisory on legal and tax issues, designing code of ethics and governance and taking key decisions for their implementation etc.

AUDIT

A corporate entity, in today's environment, is owned by many individuals (Just to give a hint a company may be owned by 5,000 people or more than that). This means that all the individuals, who partially own the company or will partially own it in the future by buying its shares in the stock market, are affected by the financial report given by the company (The financial report would show the position and progress of the company at the year end and during the year). In such a situation where owners are in thousands and are not skilled people (they may just be layman investors in the company) management of the company is handled by different people than the owners. There is lack of trust between management (preparing the financial reports) and owners or interested outside parties (that would invest or give loans to company after looking at the financial position presented in the financial report). This lack of trust is due to the fact that management cannot be trusted to have fairly presented the financial position (the report shows their progress and they would want to show it brilliant even it is not that good - technically speaking there is a conflict of interest). In order to cover this trust deficit a third party is invited to certify that the financial reports are free from any material misstatements that would materially affect the business (for owners) or affect the decision of outside users taken on the basis of the said report. This third party is called auditor and the process of certifying is called audit. Financial auditors for listed entities (listed on stock exchange) must be Chartered Accountants in Pakistan, as necessitated by law in Pakistan.

As mentioned earlier, scope of chartered accountancy is much beyond just audit and accountancy today and ICAP is justified in saying that:

“THE WORLD IS WITHIN YOUR REACH, BECOME A CHARTERED ACCOUNTANT AND SPREAD YOUR WINGS”

STIPEND

Stipend is the nominal amount paid to audit trainees during the course of their training period. Stipend is set by the professional body governing Chartered Accountancy in Pakistan called Institute of Chartered Accountants of Pakistan (ICAP). One of the many factors affecting rate of stipend is Minimum Wage rate in Pakistan. Rate of stipend differ depending on the time period during the training. It is as follows:

SIXTY FIVE HUNDRED Rs. 6,500:

From the start of the training period till the passing of Module E.

TEN THOUSAND Rs. 10,000:

After the Module E or F is passed. Students who pass any 3 subjects of Module E are eligible for attempting Module F as well. If such students pass complete Module F while failing one subject of E then still they will be eligible for Rs. 10,000 stipend.

TWENTY FIVE THOUSAND Rs. 25,000:

On qualifying (passing all modules from A to F)

Note: This will apply to students who have qualified within their training period. This stipend will continue to apply till the completion of training contract.

NOTE:  STIPEND IS ONLY PAID TO STUDENT WHEN THEY ARE REGISTERED WITH ICAP FOR ARTICLE-SHIP. STIPEND IS NOT PAID DURING INTERNSHIP. THOSE STUDENTS WHO ARE NOT ABLE TO PASS ALL SUBJECTS FROM MODULE A TO D MAY BE INDUCTED BY AUDIT FIRM BUT WILL NOT BE REGISTERED WITH ICAP FOR COMMENCEMENT OF TRAINING PERIOD RATHER RETAINED BY THE FIRM AS AN INTERNEE. USUALLY FIRMS PAY A "FURTHER NOMINALIZED" AMOUNT OF RS. 1,000 PER MONTH TO INTERNEES.

CHARTERED ACCOUNTANCY (CA) IN PAKISTAN

Chartered Accountancy (CA) is one of the most lucrative and prestigious jobs in Pakistan. Students who are financially tied up within a strict budget can find it very helpful and supporting. Education cost is not very high. Currently it is based on a six modular system. In CA, "module" is alternative word for "semester" usually used in universities. The six modules are not of equal length. The first four modules are required to be full time studied at a recognized CA institution (called RAET "Registered Accounting Education Tutors" in CA terminology) or you can prepare them at home. Previously it was mandatory for students to attend classes for these first four modules but now this condition has been relaxed and students can now prepare for the exams while sitting at home. For the purpose of ease for potential students the CA education can be divided into two parts:

  

1. CA INTER:

After a student has passed the first 4 modules he is called a CA INTER. Each of these modules takes 6 months. So CA Inter takes 2 years for completion. A student can attempt two modules at the same time as well but they should be consecutive modules like A and B, B and C, C and D. Module A and C, B and D cannot be attempted at the same time because they are not consecutive modules. So the two years duration can be shortened as outlined in the following plans:

PLAN 1 (taking 2 years):

MODULE A - time period for completion is 6 months

MODULE B - time period for completion is 6 months

MODULE C - time period for completion is 6 months

MODULE D - time period for completion is 6 months

PLAN 2 (taking 1.5 years):

MODULE A & B - time period for completion is 6 months

MODULE C - time period for completion is 6 months

MODULE D - time period for completion is 6 months

PLAN 3 (taking 1 year):

MODULE A & B - time period for completion is 6 months

MODULE C & D - time period for completion is 6 months

ANALYSIS:

MOST OPTIMAL PLAN IS PLAN 2

Of all the above three plans PLAN 2 is the most suitable for committed and hard working students. Although I myself could not do that due lack of guidance back then when I started CA. In CA students call the PLAN 2 and PLAN 3 as FAST TRACK and PLAN 1 as NORMAL. PLAN 3 is not advisable as it is more tough and contains difficult and core subjects at Module C and D level thus increasing chances of failure. PLAN 1 is advisable for students who do not want to take risk and are not sure whether they would be able to work really hard for 2 modules at a time.

CA FINAL:

The last two modules E & F constitute CA FINAL. The total duration of CA Final can be 3 or 3.5 years.

3 years:       When both Module E & F are passed in first attempt

3.5 years:    When student fail any one or more subjects of Module E & F in first attempt

The duration of training for those students who are ACCA Qualified is only 3 years independent of the above scenarios.

Only when module A to D is completely passed then students can start their training with an auditing firm. Although usually auditing firms induct students for training even when all their subject are not passed but such training would not be considered for 3 or 3.5 years training and it would just be taken as Internship and not as Article-ship (Article-ship is the word that CA students use for the 3 or 3.5 years registered and recognized training period). Students would be paid the STIPEND when ARTICLE-SHIP is started and not during internship.

Students join a recognized (with ICAP) auditing firm for their training. Induction in auditing firm is usually through written test and interview (In the more professional firms there may a 2nd interview as well) Written tests may not be required in small firms.

SUMMARY

So the total time taken for completion of CA Qualification can be any of the following:

5.5 years:     PLAN 1 and 3.5 years article-ship

5 years:        PLAN 2 and 3.5 years article-ship

4.5 years:     PLAN 3 and 3.5 years article-ship

5 years:        PLAN 1 and 3 years article-ship

4.5 years:     PLAN 2 and 3 years article-ship

4 years:        PLAN 3 and 3 years article-ship