Of qualified competition in the chartered accountancy profession

Chartered accountancy remains one of the more sought after professions for Pakistani college students. This is despite the visible plight of CA students who are (or once were) unable to clear their modular exams for years, despite multiple attempts.
Surely, those at the helm of the Institute of Chartered Accountants of Pakistan - a self-regulating professional body that oversees all aspects of the CA profession in Pakistan - must have come across some of these anguished students who wonder how to read the minds of those imaginary examiners that just wouldn let them go.
Perception has only grown over the years that the ICAP manages its CA qualifications attraction by maintaining a strictly controlled supply of qualified CAs entering the profession. That means passing only a certain percentage of students appearing in each of the six study modules.
Now it seems that this strategy has been falling apart due to its inherent arbitrariness. There is a growing student uptake of accountancy programmes of other professional accountancy bodies. For instance, ACCAs average student registration per annum is said to be 9,000, which is more than twice the ICAPs average yearly student intake. That naturally affects ICAP revenues and job placements of its students.
Apparently, that trend motivated ICAP to issue a directive last July where it asked its members and chartered accountancy firms to refrain from training non-ICAP accountancy students. The Competition Commission of Pakistan took this issue up (presumably after complaints from affected students) and issued a show cause notice to the ICAP on September 17. What was known in the field was then out in the open.
CCPs January 10 order shows that soon after, the ACCA Pakistan became a party to the proceedings. This professional body maintained that the ICAPs July directive shut out their students from receiving mandatory professional training as some of the CA firms would be reluctant to train their students. Later, ICAP narrowed its directive in October to only ICAP-approved CA trainee firms.
The focus of the CCP proceedings was "provision of accountancy training services to the non-ICAP students." During the proceedings, ICAP asserted that theirs was a statutory body (under the Chartered Accountants Ordinance, 1961) and that it could legally regulate its "approved training organisations". It said that ACCA students could either register with ICAP or choose employers other than the ICAP-approved training organisations.
Terming this approach as anti-competitive, ACCA Pakistan maintained that their students were only left with no easy options - to register with ICAP or pursue alternate qualifications. It called for the global practice, where auditing firms recruit trainees belonging to different professional accounting qualifications, to be adopted in Pakistan as well. ACCA representatives claimed that the ICAPs July directive had taken down their student registrations by 55 percent.
CCP also approached the renowned, Institute of Chartered Accountants of England & Wales on the issue, whose take was almost indicting. "ICAPs directive appears to place protectionism above both the professional & national interests, and we would suggest that these are better served by strengthening the profession in Pakistan through maintaining an open environment to encourage continual investment & improvement."
The Commissions own stance was that the ICAP is "a regulatory body of a profession, the practice of which constitutes an economic activity", and treated it as an association of undertakings due to the composition of its general body.
Closing the proceedings on January 10, the CCP concluded that the ICAP directives were "an attempt to drive competitors out of market", and had violated Section 4 of the Competition Act. Slapping a 25 million rupee penalty on ICAP and restricting it from issuing similar directives in the future, the Commission allowed the accountancy firms to engage non-ICAP students as interns or trainees.
The matter may go into further litigation. But a rethink seems in order for the ICAP and its members. The professional body has a huge muscle in Pakistan, but has shunning competition ever been a recipe to thrive? While the role of practicing Chartered Accountants cannot be ignored, it is the smooth influx of qualified human resource into the profession that holds the key to ICAPs own future. The professions interests will be better served if the hiring firms have options from competing streams of talent.