Capacity Building Measures for Practioneers Practical Insights for - PowerPoint PPT Presentation

Committee for Capacity Building of Members in Practice Capacity Building Measures for Practioneers Practical Insights for Practice Management and Development - CA Nilesh Vikamsey November 08, 2019 1

Setting the Context ➢ Current Position of CA Practice ➢ Practice Management – Statistics ➢ Practice Vs. Industry ➢ Challenges in Practices ➢ Practice Management Strategies ➢ Ingredients to Successful Practices ➢ Growth Strategies ➢ Practice & Technology CA Nilesh Vikamsey 2

Current Position of CA Practice ➢ Risk has gone up substantially ➢ Several scams have surfaced where CAs are found involved or presumed to be involved ➢ Increased expectations of Regulators / Stakeholders / Society ➢ NFRA is set up ➢ Stiff penalties / regulatory action against CAs ➢ E-governance in approximately all government administration ➢ Increasing impact of technology ➢ Constant amendments in Companies Act, Ind AS, GST, Bankruptcy code, Valuations ➢ Constant changes in practice due to introduction of Rotation of Auditors, UDIN, Valuation rules, Technology etc. ➢ General Practice vs Specialisation CA Nilesh Vikamsey 3

Practice Management Statistics ➢ Firm Mix No. of partners Firms Year Proprietorship Partnerships Total 2019 52,374 22,783 75,157 2 11,935 2018 49,392 21,831 71,223 3-10 10,525 2017 45,956 20,960 66,916 11-20 278 2016 43,080 18,870 62,950 21-50 38 2015 41,808 18,749 60,557 More than 50 7 2014 40,768 17,649 58,417 2013 38,263 16,072 54,335 2012 `35,127 14,556 49,683 2011 33,093 13,853 46,946 2010 32,235 13,536 45,771 2009 31,871 13,179 45,050 Stagnancy 2008 32,001 13,209 45,210 2007 32,165 13,439 45,604 2006 31,950 13,753 45,703 4 CA Nilesh Vikamsey

Practice Management Statistics ➢ Member Mix - Total 3% 45% 52% Full time COP No COP Part time COP CA Nilesh Vikamsey 5

Practice Management Statistics ➢ Growth in Practicing Units Proprietary Firms 55000 52374 49392 50000 45956 45000 43080 41808 40768 40000 38263 35127 35000 33093 32165 32235 32001 31950 31871 30000 25000 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Proprietary Firms CA Nilesh Vikamsey 6

Practice Management Statistics ➢ Growth in Practicing Units Partnership Firms 25000 22783 21831 20960 19870 20000 18749 17649 16072 14556 15000 13853 13753 13536 13439 13209 13179 10000 5000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Partnership Firms CA Nilesh Vikamsey 7

Practice Management Statistics ➢ Growth in Practicing Units All Firms 80000 75157 71223 70000 66916 62950 60557 58417 60000 54335 49683 50000 46946 45703 45771 45604 45210 45050 40000 30000 20000 10000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 All Firms CA Nilesh Vikamsey 8

Practice Management Statistics ➢ Trend of changing member preference As at Total Average % Average % in Years No. of Members No. of Members Members in Practice Industry added to Practice added to Industry March 31, 83,789 60% 40% 1994-1998 8,885 6,443 1998 March 31, 1,10,256 57% 43% 1999-2003 12,980 13,487 2003 March 31, 1,45,481 47% 53% 2004-2008 5,677 29,548 2008 March 31, 2,16,459 44% 56% 2009- 2013 25,407 45,571 2013 March 31, 282,193 44% 56% 2014-2018 30,287 35,447 2018 January 2,85,565 44% 56% 2019 4,855 (1,483) 01, 2019 CA Nilesh Vikamsey 9

Practice Management Statistics ➢ Statistics for Income Tax as on March 31, 2019 Tax Payer status PAN Number Count of Returned Count of Tax Payers Difference Filed (A) (B) (C) (A-B) Individual / HUF 43,54,68,489 6,07,11,199 8,16,32,691 37,47,57,290 Partnership Firm 44,32,922 13,18,828 14,25,375 31,14,094 Company 17,41,192 8,47,860 8,86,889 8,93,332 AOP / BOI 12,84,300 183270 2,67,107 11,01,030 Trust 847,834 2,44,624 2,84,578 6,03,210 AJP / LA / Govt. 19,42,646 12,805 24,847 19,29,841 Total 44,57,17,383 6,73,57,829 8,45,21,487 38,23,98,797 (Source: Income Tax time series data FY 2000-01 to 2018-19, www.incometaxindia.gov.in) CA Nilesh Vikamsey 10

Practice Management Statistics ➢ Statistics for GST as on November 04, 2019 11.26crore 97,040 crore 1.23 crore 35.36 crore ~698 crore No. of Average Registered Tax Total Return Total Invoice Payment Monthly Payer Filed upload Transaction collection (Source: GST Portal) ➢ Statistics for Tax collection (Rs. in crore) Financial Year Corporate Tax Personal Other Total Total Total Tax Income Tax Direct Tax Direct Tax Indirect Tax Collections 2018-19 6,63,571 4,73,121 993 11,37,685 9,39,018 20,76,703 2017-18 5,71,202 4,19,998 11541 10,02,741 9,15,256 19,18,210 2016-17 4,84,924 3,49,503 15286 8,49,713 8,61,515 17,11,228 2015-16 4,53,228 2,87,637 1079 7,41,945 7,11,885 14,54,180 2014-15 4,28,925 2,65,772 1095 6,95,792 5,43,215 12,39,007 (Source: Income Tax) CA Nilesh Vikamsey 11

Current Position of CA Practice How do you manage both, physical and How much time do you devote to study to electronic, documents gain knowledge and stay updated We have a Document Management software and everything is well 6.3% 9.9% 14.3% managed 27.1% We don't have Management software, More than 6 hours a week but all documents are well managed 26.5% 3-6 hours a week I know where to find the files, and will 1-3 hours a week 31.8% also arrange them when I get time Don't get enough time to study 57.3% 26.7% It’s the responsibility of my staff, and I can't say anything about it How much competition do you face from In the CA Profession, what is the level of other CA Firms remuneration vis-a-vis the work done 5.8% 7.8% No competition. Every firm has its Excellent remuneration the own value profession could get 26.5% 28.0% A healthy competitive environment Good remuneration 27.2% Competition only in procuring work from tenders Not remunerative due to competition, client's inability to 15.6% Extreme level of competition pay, etc. 59.1% 30.0% Can't say CA Nilesh Vikamsey 12

Current Position of CA Practice In terms of revenue, how much growth do you How do you rate your client's satisfaction expect in your firm in coming years 2.4% 8.6% 5.5% 6.3% 12.5% Our clients are fully satisfied 0-10% Our clients are satisfied, and we are constantly trying to improve 10-20% We are trying our best, but many clients More than 20% 44.3% go unsatisfied 37.6% Can't say May decline 82.7% CA Nilesh Vikamsey 13

Current Position of CA Practice Main problems and issues you face in your office 60.00% 52.85% 49.19% 49.19% 47.97% 50.00% 43.09% 40.00% 30.00% 20.00% 16.26% 15.85% 10.57% 10.00% 0.00% Low Level of Fees Finding New Clients Fees Realisation Free Advice Staff/ Articles crunch Data Maintenance and Managing and Delegating Others Security Work CA Nilesh Vikamsey 14

Current Position of CA Practice Is your firm equipped with a Continuity Plan/ Succession Plan to succeed the senior partners 10.3% 27.8% Yes, we have a Succession Plan We don't need a Succession Plan We have never thought about it 48.0% 13.9% Don't know CA Nilesh Vikamsey 15

Practice Vs. Industry Future growth in practice Relative is uncertain and Advantages dependent on potential, opportunity and knowledge Future growth is relatively certain Irregular income in initial stages Regular income Initial capital outflow Long gestation and No capital investment transition period Promotions are based on yearly reviews Relative Disadvantages CA Nilesh Vikamsey 16

Practice Vs. Industry Independence subject to Relative ones position in the Advantages industry Leadership and Departmentalization independence limits ones exposure to various areas Multifaceted knowledge of subjects Knowledge is limited to the areas which one is Continuous knowledge responsible for gain Interaction is with the Wider interaction leads same set of people in the to networking and office personality development Relative Disadvantages Flexibility CA Nilesh Vikamsey 17

Practice Scenario – Large Accounting Firms One Stop Shop Global Presence Business Development Strategy Infrastructure & Facilities Human Resources Meeting and Reviews Billing and Strong Client Portfolio CA Nilesh Vikamsey 18

Traditional Areas Compliance Company Audit Adivsory Tax Audit Appellate Co-op Society Audit Internal Audit Specialized Audit Audit Taxation Others Compliance ROC Compliance Appellate Annual Returns TDS 15CA / 15CB International Tax Transfer Pricing CA Nilesh Vikamsey 19

Emerging Areas Forensic/ Fraud Digital Forensic Valuation / Data Analysis Investigation Inbound and Bankruptcy Outbound Blockchain services Risk Assessment Investment Cyber Security & Management Advisor Business IFC, systems, AI/ RPA Support process development Services CA Nilesh Vikamsey 20

Challenges in Practice CA Nilesh Vikamsey Technological Technological Technological Technological 21