PRESIDENT

The
Kunal Banerjee
email : president@icwai.org
VICE PRESIDENT
Management
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email : vicepresident@icwai.org
CENTRAL COUNCIL MEMBERS
Accountant
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644 the management accountant, September, 2008

 Editorial
India 'Calling':its destination BPO
'Call centers' or more technically Business
Process Outsourcing (BPO) firms have
emerged as the new buzzword in corporate
corridors. Simplistically speaking, BPO is the
act of giving a third party the responsibility of
running what would otherwise be an internal
system or service. BPO is positively related
to the search for more efficient organizational
designs: cost reduction, productivity growth
and innovative capabilities. This is the reason
why it is considered a source for strategic
advantage. The functions or processes being
outsourced range from manufacturing to
customer service to software development and
much more. It is dependent on information
technology hence it is also referred to as
information technology enabled services.
While the world has awakened to the
potentialities of this low cost, geographically
fragmented business model as a major driver
of growth, India has been one of the major
beneficiaries of this relatively new way of
doing business. India has a commanding 63%
of the share of the offshore outsourcing
business by virtue of its substantial IT prowess,
vast pool of skilled and educated English
speaking workforce, cost advantage vis-à-vis
other developed nations, major developments
in technology and enabling regulatory
environment.
However, as with all new business ventures,
there are bound to be threats and opportunities.
As the outsourcing movement grows, there is
backlash since white-collar jobs are moving
away from the US-UK to India. This coupled
the management accountant, September, 2008
with the fact that countries like Philippines
and China are breathing down our neck in the
race to garner a greater share of the
outsourcing pie, imply that Indian BPO firms
have to continuously invest in technological
improvement that facilitate outsourcing,
enhance their service levels, strengthen their
operational risk systems, be better equipped
to deal with the volatile and unforeseen future,
and above all maintain their cost effectiveness,
which is the main driving force behind the
success of the sector. As it is, many fear that
as outsourcing moves up the value chain to
second and third generation deals from mere
contracting out of utility to process
enhancement and further to business
transformation, companies will be forced to
engage intensively in process enhancement
tools like Six Sigma to enhance productivity.
This will put pressure on the cost
competitiveness of Indian companies. This is
where the role of the cost accountants will be
paramount- to ensure sustainability of the cost
advantage while ensuring value creation.
Hence, continuing with our tradition of
publishing topical issues of interest for our
readers, we have attempted to include in this
edition, articles that deal with the success
story of the BPO phenomenon and the
business possibilities emerging from this
sector. This topic may throw open many new
issues and keep many debated issues
unresolved. It is in the interest of the readers
that they join this debate for mutual benefit
and understanding.
645
 l President’s Communique l

My dear Professional Colleagues,

Through this regular column I would like to raise issues which are of relevance
to the institute and the profession and I would be grateful to you if you could
send me any reactions that you may have after reading the communiqué.
I am sad to inform you that Shri N. K. Roy, Former President, a doyen of the
profession and the senior most member of the Institute (Membership No. 9)
passed away on July 29, 2008. May his soul rest in peace
Some of the action points mentioned earlier like Cost Accounting Standards,
launching of Accounting Technician course etc., are already under way and I
am happy to inform you that there is a great sense of participation and
achievement from the members. The work of the Expert Group is also progressing rapidly and many
valuable comments are being received from the industry and other professionals.
I have always been of the opinion that our profession has a very important role to play in the economy
and our members are all true professionals. The increasing recognition for our professionals in different
spheres of economic activity bears testimony to this fact. However, there is no denying the fact that there
is an urgent need for defining and building the ICWAI brand in an organized and effective manner and
percolating its message to every corner of the country as well as to the extent possible in the international
arena. This has always been my goal and I am seeking the counsel of my colleagues to help me to do this
strategically and in a manner which will be cost effective. This is no doubt a challenging task. We cannot
lose sight of the fact that the opportunities are immense and we need to put in our whole-hearted collective
efforts to attain our objective. In this glorious journey, I seek the support, wisdom and understanding of
all our members so that together we can make a solid progress to achieve further glories for the profession,
our members and students.
One direct impact of Brand building will be to "walk-the-talk" which means all our professionals should
try to be world class, value driven and they should be the force to drive value with the society and
economy.
I am glad to inform you that the ICWAI National Award for Excellence is scheduled to be held in
December 2008. Like earlier years, awards for different categories will be given away separately for the
Public Sector and Private Sector Companies categorized according to the size and nature of business. I
request all our membership fraternity to propagate this in their companies so that more companies
participate in the competition. Further details regarding the Excellence Award will be available on the
website as well as will be published in the next issue.
The Institute with the full involvement and active participation of a number of members and experts in the
field has already released the Exposure Draft of Cost Accounting Standard on Materials. Draft Cost
Accounting Standards on Employee Cost, Utilities, Administrative Overheads, Direct Costs, Packing
Material Cost and Repairs and Maintenance are ready and the Cost Accounting Standard Board is
deliberating on these drafts under the able leadership of Shri M. Gopalakrishnan, Chairman of CASB.
The Exposure Draft on these topics will be released shortly for comments.
As you are aware the Cost Accountants have been recognized in the VAT Act of most of the States for
conducting VAT audit. Strong representations have been made and vigorous follow-up is being made for

646 the management accountant, September, 2008

 l President’s Communique l

inclusion of Cost Accountants to conduct VAT audit in the few states where it is not yet done. Shri B. M.
Sharma, Chairman of PD Committee has been taking a lead role in this endeavour and our Regional
Council Members of the respective regions as well as Chapters in the State capitals have also been
taking an active role in this matter.
SEBI has recently introduced internal audit of brokers. We are in the process of representing to SEBI for
considering Cost Accountants also for this purpose. We feel that Internal Audit per se requires evaluation
of various activities in order to enhance operational competence and performance comparison with
benchmarking. In this context our profession has a greater and important role in this field.
The Companies Bill is expected to be placed before the Parliament in the coming session. I believe that
this would introduce a number of far reaching changes in our profession and I would like suggestions
from the members as to the activities where the Institute can support in utilizing the opportunities that
arise.
I am happy to inform you that a new website for the Institute is getting launched shortly. Another positive
step taken by our IT Department is providing all Chapters and Regional Councils with new email ids in
the icwai.org domain. Similarly, all officers of the Institute have been provided with similar new email ids
to enable students and members to communicate with the respective officers directly. An important event
in the development of a proper administrative structure is technologically linking the Regional Councils
and the Head Quarters (HQ) and this project is significantly moving ahead under the leadership of Shri
A. S. Durga Prasad, Vice President and Shri S. R. Bhargave, Chairman of IT Committee.
The e-edition of The Management Accountant is now available in colour on the website and this has been
made possible by the team of officers in the Research & Journal Department under the leadership of Shri
A. N. Raman, Chairman of the Committee. The new look Management Accountant in print copy is also
going to be launched shortly.
This issue in your hand has features on the IT enabled services which has built up an economic miracle for
the country. The concerns and issues have been well presented in the articles and I am sure the members
will appreciate it.
I had the privilege of attending the Annual Seminar of Ranchi Chapter on 17th August 2008 at Ranchi
which was attended by over 300 participants. The Seminar was a grand success and I congratulate the
office bearers of Ranchi Chapter for conducting the seminar in a very professional manner with active
involvement of all the participants.
With best wishes,

Kunal Banerjee
President

the management accountant, September, 2008 647


BPO: Potential in the
Insurance Sector
The time difference between the Greenwich and India provides scope for the
India operations to work around the clock, 465 days. In the insurance industry,
high volume and low severity claims are the ones most apt to recognize savings
through BPO. This enables companies to better focus on the higher risk and
lower volume claoms. BPO can also reduce insurance back-office costs by 30%
to 50%. It also eliminates the need to invest heavily in the latest technology and
skills.
S.C. Das*
Introduction
T
he recent business trends have
generated more interest among
insurance carriers than business
process outsourcing. The combination
of unrelenting pressure on expenses,
vast improvements in networking and
communication technology, and
increased appreciation of highly flexible
business models has caused virtually
all insurance carriers to explore non-
traditional options for running their
businesses. Though the adoption of
BPO for core insurance services is
processing slowly, the market has
grown to almost US $ 3 billion by 2006.
Outsourcing offers a convincing
business model that insurance
companies can leverage in the constant
drive to attain customer satisfaction,
operational effectiveness, and market
advantage that will ultimately drive the
bottom line. In a highly competitive
market, where differences in policy
premiums are insignificant, the focus
must be on customer retention. Business
process outsourcing is growing within
the insurance industry, driven by
increasing comfort with vendors and the
need to reduce costs. In fact insurance
industry itself has born out of the need
to outsource ones risks.
Sr. Lecturer in Commerce, Faculty of
Commerce, Banaras Hindu University,
Varanasi
648
Cover Feature
The insurance sector is witnessing
a concerted move towards business
process outsourcing as a strategic
option. This industry is ideally suited
for outsourcing, given large transaction
volume, structured decision-making and
reliance on rule-set processes.
Outsourcing in this domain has shifted
along the complexity and maturity
spectrums from transaction processing
to true business transformation.
Corporate houses are progressively
acknowledging the potential benefits
from BPO in this segment and
identifying road maps for process re-
engineering that will contribute to
greater profitability. Outsourcing
strategies are being driven by the twin
objectives of cost rationalization and
quality enhancement.
Objectives of the Study
The main objectives of this paper
are as follows:
l To study the conceptual frame work
of outsourcing;
l To understand the emerging global
BPO and advantage India;
l To understand the transformation of
Insurance in India;
l To examine the potentiality of BPO
in the insurance sector; and
l To suggest the right insurance
outsourcing solution.
the management accountant, September, 2008
Data Base and Methodology
In view of aforesaid objectives, the
present study is based on secondary
data only. The study covers the pre and
post reforms period. The data for the
study have been taken from various web
sites and the several issues of reputed
journals namely “ The Management
Accountant”, “CRISIL Young Thought
Leader Series”, and “Yojana” were also
consulted. The newspapers, namely The
Economic Times and Financial Express
were also consulted for the completion
of data.
The study has been divided into
four parts as follows:
l Basics of Outsourcing: It deals
types, approaches and elements of
outsourcing. Further, potential
benefits of outsourcing and risk
associated with outsourcing also
been projected this segment.
l BPO Market: Several projections
by different agencies like as
Forrester, Gartner and Nasscom-
Mckinsey regarding global BPO and
BPO in India are incorporated in this
segment.
l Transformation of Insurance: There
has been a great transformation of
insurance sector globally and also
in India after passing IRDA-99 Act.
This segment deals the size of life
and non-life sector and challenges
before Indian insurance sector.
l BPO in the Insurance sector: This
segment tries to identify
complexities of outsourcing, status
of insurance BPO and India. Further
a comprehensive set of outsourcing
solutions in the insurance sector
has also been projected. Finally the
author has given concluding
remarks of the study.
Basics of Outsourcing
When an insurer (the customer)
pays a third party (the vendor) to
provide certain services essential to the
operations of the customer’s business,

the customer is engaged in
“outsourcing.” In the financial services
sector, outsourcing includes insurance
companies paying the vendor to
perform various aspects of the back
office administrative processes, i.e.,
application receipt and processing,
underwriting (in according with
underwriting rules provided by the
customer), billing and collection and call
centers. Types of Outsourcing: There
are basically two broad categories of
outsourcing:
Information Technology Outsourcing
(ITO)
In an ITO customer’s service relate
to data center functions, such as
running mainframe computer hardware
and software, managing networks, or
hosting application systems. These
transactions frequently involve delicate
privacy and other regulatory issues.
Business Process Outsourcing (BPO)
In a BPO, the customer’s services
relate to particular business processes,
or administrative functions, such as
billing and collection, payroll or benefit
plan administration and claims
processing. In regulated industries,
such as insurance, the particular
business processes, such as processing
applications for insurance.
Approaches to Outsourcing: There
is no single approach to outsourcing.
In practice organizations use different
approaches and typically in a hybrid
fashion. The important issue is that the
approach is determined as part of a
carefully crafted strategy, rather than
one that occurred haphazardly. There
are primarily three approaches1 that are
used both effectively at different times
over the last decade and they are:
Big Bang Approach: Significant
portions of all activities are outsourced
at one time; reported often in the media
but less used in practice. The strength
of this approach is more interest from
suppliers due to potential revenue;
the management accountant, September, 2008
Cover Feature
Figure: 1 Key Elements of BPO
Knowledge Services
Elements of BPO
Customer Interaction
Services
Back Office Transaction
Source: Extracted from ‘Key Elements of BPO’, Link: http://outsoureking.com/BPO/
Elements-of-BPO.aspx
centralized program and lower
coordination costs; management more
strategically involved; enables
organization wide learning. The
weakness of this approach is greater
risk and impact; resource intensive;
more stakeholders; can attract public
attention; complex and requires
significant management; supplier may
not have all requisite skills.
Piecemeal Approach: Each activity
is outsourced independently over time
and a variety of suppliers are used;
most common approach, but often by
default rather than by design. The
strength of this approach is best
supplier and price obtained for each
activity over time; staggers risk of
disruptions; solves needs as they arise;
less complexity, manageable at lower
levels; can incorporate lessons into
future deals, if knowledge is shared. The
weakness of this approach is not
possible to generate overall value,
overtime; high coordination costs and
duplication effort; synergies difficult;
adversely between suppliers and
blaming at interface points; isolated
lessons; less able to attract among
major suppliers.
Incremental Approach: One or
more suppliers are selected for pilot
projects with planned escalation of
outsourcing; escalation occurs if
1
Gangadhar and Reddy, 2005, “Strategies
for Business Process Outsourcing in India”,
The Indian Journal of Commerce, vol. 58: p27
HR Services
Finance/Accounting
Services
IT/Software Operations
preceding outsourcing is successful.
The strength of this approach is to meet
the immediate needs through pilots;
staged approach and evolved
prototyping the organization and
supplier improve each addition;
supplier has incentive to prove it to
obtain more work; attracts interest from
suppliers due to potential revenue
stream. The weakness of this
approach is the larger frame; supplier
likely to continuously seek escalation
of outsourcing irrespective of
organization’s readiness; maintaining
momentum.
Key Elements of BPO: The
philosophy behind BPO is specific, do
what you do best and leave everything
else to business process outsourcers.
Companies are moving their non-core
business processes to outsource
providers. In insurance industry core
insurance services are specific
operational areas such as underwriting,
policyholder and agent services, and
claims (Figure: 1). Non-core services
include areas such as HR and benefits
administration, as well as enterprise
services like property management and
purchasing.
BPO in today’s world is seen as a
strategic management option rather
than just a way to cut costs. It helps
achieve the companies their business
objectives through operational
excellence and an edge in the market
place. Outsourcing gives the
combination of people, process and
649

technology to operate effectively in the
global market place without burdening
time and budget. This is the reason why
more and more companies are showing
interest in outsourcing their activities
to several off shore locations. It is
expected that US companies will
outsource $ 3B this year in business
outsourcing (Joe Needham, 2005). This
includes costs associated with
insurance claims handling,
transcription of personal files, and
credit card processing. The total
represents a 65% increase from the
previous year. India, China and the
Philippines are the leading countries
taking on the bulk of the growing work.
Potential Benefits of Outsourcing:
BPO has been found beneficial to the
business with the results of increased
customer satisfaction. More efficient
operations, access to global
capabilities, increased cash flow, and
faster time-to-market are also very
feasible outcomes of BPO. Outsourcing
can benefit a company in many ways,
including the following2 :
l Current Technologies: Stay current
with technology trends at lower
costs because of the vendor’s
ability to leverage scale;
l Scalability: maximize flexibility to
scale up or ramp down processing
capacity;
l Technology experience: Shift
managing technology to a firm
whose core competency is
technology;
l Variable Cost Structure: Convert a
company’s fixed costs to variable
costs based on the customer’s fee
structure;
l Labor Costs: Access lower labor
costs to the extent work can be done
offshore;
l Reducing Cost: In the claim area,
leakage is typically cut (avoiding
overpayment) by 50 percent to 75
percent. In the insurance industry,
high volume and low severity
650
Cover Feature
claims are the ones most apt to
recognize savings through BPO.
This enables companies to better
focus on the higher risk and lower
volume claims; and
l Back Office Costs: BPO can also
reduce insurance back-office costs
by 30 to 50 percent. It also eliminates
the need to invest heavily in the
latest processing technology and
skills. These two components are
often underutilized and quickly
become obsolete. This allows
switching from fixed to variable (i.e.,
per transaction) pricing, which
provides greater financial
predictability and the cost
transparency needed for accurate
pricing.
Risks of Outsourcing: Balanced
against the benefits are risks, such as:
l Low Accountability: Drastic links
on the outsourcing vendor’s
accountability for its breaches, (i.e.,
low limits of liability), which expose
the company to losses due to the
vendor’s failures;
l Vulnerability: Transferring control of
processing to an outsourcing
vendor means the company control
to dictate;
l Loss of Negotiating Leverage: A
company’s bargaining leverage
drops considerably when the
outsourcing vendor controls the
resources to process the business;
and
l Termination of the Relationship:
Bringing the processing back in-
house or transferring the processing
to another outsourcer at the end of
the relationship is full of
uncertainties.
BPO Market
Business process outsourcing and
IT outsourcing are the fastest growing
service lines in the financial services
2
“Outsourcing-Lord, Bissell and Brook”,
Link: http://www.lordbissell.com/practice
the management accountant, September, 2008
sector, according to research firm
Gartner3 . The most attention grabbing
headlines across the globe these days
seem to be dominated by massive
cooperative cutbacks, employee layoffs
and M&As. These stories frequently
report on corporate restructuring efforts
where outsourcing of functions figures
prominently. Whether it is Europe,
North America or Asia there seems to
be a growing trend towards
outsourcing4 . According to a latest
report by technology and market
research firm Forrester, the spending by
European firms on BPO services on such
as financial services, procurement and
customer core, is set to rise to euro 18.9
billion by 2011, from euro 11 billion in
2006, reflecting a five year compounded
annual growth rate of 11.5 percent5 .
Global Market Size: The sheer
magnitude of BPO opportunity is
tempting. The momentum for BPO
continues to grow as the factors that
force companies to focus on core
competences intensify. The global
BPO market as per the Gartner group
grew by 13% between 1999 and 2000.
Further Gartner predicts it to be
$234bn in 2005 and $310bn in 2008.
BPO sector is very upbeat, with the
Nasscom-Mckinsey report 2002,
scaling up the potential revenues
from the sector by 2008 to $ 24bn
from the $17bn it had projected in
its 2000 report.
BPO Industry in India: India’s BPO
industry has grown at phenomenal
rates in the past few years. BPO exports
grew from a mere $565 million in 1999-00
to $3.6 billion in 2003-04. Despite
3
“IT, BPOs the fastest growing within
financial services”, Business Journal, May
30, 2003. Link: http://www. bizjournals.
com/sanjose/stories.
4
Kumar Gireesh“ Global BPO-Advantage
India”, The Management Accountant, p448,
2004.
5
The Economic Times, 5th October 2006,
Bennet, Coleman & Co. Ltd. New Delhi.

emerging constraints the industry is
expected to grow rapidly, given cost
pressures and demographic shortage’s
in developed countries and India’s
comparative advantage based on its
labor endowment and skill base. BPO
exports are projected to rise to $20
billion by 2007 and employment in this
sector is projected to rise from its
current level of around 3,00,000 to one
million by 20126 . India is likely to capture
56 percent share of offshore business
process outsourcing business by 2006
with the demand for BPO services
increasing at on annual growth rate of
50 percent 2004-06, according to a report
by rating agency ICRA. The size of the
Indian BPO market is likely to be around
$ 9-12 billion by 2006 and will employ
around 4,00,000 people (ICRA BPO
Industry Report, 2004).
Forrester Research predicts 3.3
million US jobs to move offshore by
2015. BPO revenue has grown by 60
percent in the year 2002-03 to touch USD
2.3 billion. This is stated by grow by
another 60 percent in the year 2003-04
as per Nasscom. As per Nasscom-
Mckinsey report the total opportunity
is at USD 148 billion and if India
captures 1/6 th of total then it will
translate to about 5,40,000 jobs by 2010
with revenue of USD 24.67 billion. If
above projections were correct then in
year 2010 BPO industry will directly
support the livelihood of about 1.0-1.5
6
“Spreading the Benefits of BPO growth”
Rupa Chandra, Financial Express, April
2005, Link: http://fecolmunists. express
india.com.
7
Krishnaveni, “Issues and Challenges of
Indian Insurance Industry”, The
Management Accountant, p936 December,
2005
8 assurbanking. The banking industry
Bansal Anand, “Insurance Sector: Is
Privatization on the Right Track”, The
Management Accountant, p933 December,
2005
9
Choudhury Nirmala, “General Insurance
Industry in India-Issues and Challenges”
Insurance Theory and Practice, p83, 2005.
the management accountant, September, 2008
Cover Feature
percent of India’s population. Another
0.5 percent of the population will be
supported by BPO. Thus at best 2
percent of India’s population will be
impacted by BPO. In sheer GDP terms
assuming India’s GDP to be about USD
billion by 2010, 4 percent of the GDP
will be contributed by BPO.
Transformation of Insurance
While the early 90s brought forth
liberalization on all major economic
fronts, the insurance was left
untouched. But before long, the
passage of IRDA bill in 1999 paved the
way for the liberalization of Indian
insurance sector. During the last three
decades global insurance penetration
as a percentage of the gross domestic
product has more than doubled from
around 3.5 per cent in 1970. The
insurance sector thus grown more
strongly then the overall economy. The
insurance premium in India accounted
for a mere 2 percent of GDP as against
the world average of 7.8 percent and G-
7 average of 9.2 percent during 90s. The
insurance premium as a percentage of
savings in India is 5.95 percent as
compared to 52.5 percent in UK. The
insurance has lot of potentiality, which
has to be tapped in general insurance.
Regular penetration is about .60 percent
of India’s GDP which is quite low and
also the developed countries7 . In the
developed countries it ranges between
2-8 percent but insurance schemes have
to be improved substantiality and this
improvement is to develop the various
insurance segments in India.
The entry of banks into insurance
industry and to some extent the entry
of insurer into banking has changed the
face of insurance industry. This has
come about due to bancassurance and
acts as a distributor for the insurance
products, in which case the original
insurer undertakes the risk. Further,
industry experts favor the entry of new
players. Perhaps, with this in mind, the
government of India has proposed to
increase the FDI limit in the insurance
sector to 49 percent. In budget 2004-05,
the government laid emphasis on
infrastructure and agriculture with the
need for huge investments in these
sectors, the insurance sector is
expected to play a pivotal role by
investing in projects with long
gestation period.
Life Insurance Market: A shift from
a public sector monopoly in the
insurance sector and entry of Indian
and foreign partners would definitely
usher competition in the sector. The
monopoly of LIC and public sector
general insurance companies has come
to an end. As per the figures available
with IRDA for the period ended August,
2005, the 13 private players have
grabbed nearly 24 percent market share
from LIC in terms of premium
underwritten as against 17.70 percent
in August, 20048 .
Non-Life Insurance Market:
According to data available with IRDA,
the market share of the new entrants
has climbed to nearly 26 percent in terms
of gross direct premium at the end of
August 2005 as against 18.7 in August
2004. It is surprising that India’s market
share of total premium is only 0.25
percent as against 46 percent of USA.
Per capita general insurance premium is
2.3 US Dollars as against 14.62 US
Dollars in the case of USA. General
insurance premium is only 0.5 percent
of GDP as against 8.62 percent in the
case of USA. This shows that there is a
tremendous scope of development of
Non-life insurance business in India.
The Indian general insurance market is
of about Rs. 13,000 crore, out of which
four PSU insurance companies and rest
by the private players, who started their
operation about couple of years back,
contribute Rs. 12,5909.
Challenges of Indian Insurance Sector:
The transition of the insurance industry
from a public monopoly to a competitive
environment now presents very
interesting challenges, both to the
651

new players and to the customer. The
insurance penetration as well as the size
of the average cover is well below
international averages, proving great
marketing opportunity for the insurance
companies. While LIC has done
commendable work, there is still a great
deal of scope for bringing in innovative
products and distribution channels to
tap this market. There is still a great deal
of scope fro bringing in innovative
products and distribution channels to
tap this market. There is one truth in
marketing and that is “Different
Consumers Approach Buying
Differently”. Insurance is bought
because of convenience, product
placement, and safety of funds, advice
and not the price.
Currently product-market relationship is
dominated by personalized selling
rendered by tied agents. Developing
sensible approaches not only for the
co-existence but flowing of multiple
channels for sagacious and pragmatic
propositions in product formulation,
market segmentation by single
distribution network will be an awesome
challenge for the insurance companies.
Also companies will have to transform
customer relationship management to
value based client relationship.
Insurance business is based on
averages and spreading of risks. So a
flexible pricing structure for sustaining
customer confidence and interest will
be a challenging task before Indian
insurers. The benchmark of success of
organization will be determined not only
by the rate of return but also by the
quality of corporate governance. So,
insurance company should focus on
pricing, distribution, risk management
and investment decision-making.
10
Joe Needham, “Is the Insurance Industry
Ripe for BPO” Link: http://www.
charterconsult.com
652
Cover Feature
l Insurance companies in India will
have to develop appropriate
channels to tap this huge market as
the core of insurance business
hinges on an efficient distribution.
l Direct marketing is one of the most
successful channels of distribution
in the developed economies. It is a
great way to reach a large
population. So, the product should
be sold through telemarketing or
direct mail.
l In the insurance business cost
control and ability to service large
number of customers are crucial
issues. So modern technology is to
be adopted to handle both the
services effectively.
l Today customers are well equipped
with information, so insurance
company should reposition
different products by changing
customer attitudes.
l The actuary should be required to
attend minimum number of seminars
called continuous professional
development courses financial
control of the organization.
l Distribution of existing insurance
products is the main cause of worry
for insurance companies in India.
BPO in the Insurance Industry
Ideal processes for BPO are ones
that can be standardized or automated10.
The financial services industry is
particularly suitable for BPO due to its
repetitive and transaction oriented
nature. Even in 2005, insurance
companies are still lagging behind most
industries in efficiently adopting the
BPO model. Processes being considered
ripe for outsourcing are tightly
controlled by corporate compliance or
statutory and regulatory factors in the
back office of many insurance
companies. Many times the size of
insurance BPO deal is indicative of the
challenges to put the outsourcing
the management accountant, September, 2008
relationship in place. A large deal may
involve the transfer of a number of back
office operations, multiple processing
locations, and various administrative
functions. It may also involve a variety
of differentiating services from
outsourcing provider overtime and deal
size alone may not always be a sufficient
indicator of the implementation
challenges.
For examples, health and medical
insurance companies are seeing high
transaction volume with low skill
requirements as prime targets for
outsourcing. An example of this could
include provider sign up verification of
benefits, or certification acceptance
roughly requires 23 key activities that a
follow a tightly controlled decision tree.
BPO provides who are well established
may see this as an opportunistic
approach to the industry. However,
company’s processes and strengths
may not always align with the
requirements for statutory compliance.
Therefore, it is imperative that
companies undergoing a BPO
understand what is being outsourced,
the different vendors involved, and how
they will interface with internal human
capital. The use of multiple vendors
requires a due diligence process for each
one.
Complexities of Outsourcing:
Insurance outsourcing contracts
present unique challenges not found in
other commercial transactions. For
example, outsourcing transactions must
adequately address:
l Change Control process:
Outsourcing contracts are typically
for long terms, i.e., 5-10 years, during
which the related technology will
change significantly. The
outsourcing contract needs to
recognize such changes and include
“change control” provisions to
address such changes.

l Regulated Activities: When the
vendor’s services relate to areas
which are regulated, such as settling
claims, sending non-renewal
notices, responding to consumer
complaints, bureau reporting
deadlines and notices of adverse
underwriting decisions, the
outsourcing contract needs to
address the vendor’s responsibility
to perform such tasks as required
by applicable regulations.
l Limited Remedies: Practically all
vendors’ first drafts include very
restrictive limitations on their
liability if they breach their
obligations. These limitations
include caps on damages,
exclusions of consequential
damages, limited indemnification
rights for the benefit of the customer,
and broad indemnification
provisions protecting the vendor.
These limits expose the customer to
significant losses caused by failures
of the vendor, and the customer
having limited or no recourse
against the vendor, creating a moral
hazard. Understanding these limited
remedies and their practical impact
can be difficult. Negotiating
remedies which provide practical
and meaningful protections for the
outsourcing customer is often one
of the most controversial and
difficult elements of the outsourcing
contract.
l Intellectual Property Rights: There
are numerous IPR issues arising
from typical outsourcing contracts.
The intellectual property used in
such transactions includes the
materials the vendor uses to perform
the services, such as its pre-existing
know-how and the know-how
developed specifically for the
customer. Customers typically
share their know-how (some of
which the customer does not want
the management accountant, September, 2008
Cover Feature
shared with its competitors) and will
assist the vendor in customizing the
vendor’s business. Who owns, and
more importantly, who has the
continuing right to use such know-
how can be controversial issues,
especially after the relationship
ends.
l Information Technology:
Outsourcing vendors claim an
ability to perform the services more
efficiently and cheaper than the
customer can, because the vendor
has better technology and has a
higher leverage rate (several
customers share in the cost of
maintaining the latest technology
and therefore enjoy economics of
scale that each customer alone
would not attain). There may be
adverse effects of this and they
need to be understood and
addressed.
l E-Business Issues: Outsourcing
transactions involving electronic
signatures and other uses of the
Internet for receiving and sending
documents require a thorough
understanding of how the insurance
laws apply to these methods.
Further, there may be required
disclosures and other record
retention obligations needed if
documents will be received or
delivered exclusively through
electronic means.
l Soft Landings: Vendors typically do
not address, or do so casually, what
happens when the relationship
ends and how the customer
reconstitutes its operations,
transitions to another outsourcing
vendor or simply winds down the
operation. Failing to adequately
address this is in the contract can
result in the customer’s remedy of
termination for breach being an
inadequate remedy.
l Back office Complexity: Additional
variables that impact the complexity
of an outsourcing effort are those
factors that influence, directly of
indirectly, the organization’s
readiness to plan and conduct a
particular outsourcing project.
While BPO may seem
straightforward, problems exist
when organizations are not properly
evaluated before transition. A point
of recommendation is that primary
companies should perform the due
diligence on their own organizations
and not allow the outsourcer to do
the primary analysis. This will
provide a position of leverage
during contract negotiations.
l BPO Project Complexity: Besides
the statutory and regulatory
compliance mentioned above a wide
variety of factors may contribute “
to raising the complexity of an
outsourcing project”. A critical step
is to stress test a process that will
be used from inception to
implementation (measuring
seasonal volumes, staff utilization,
aggregate demand) this will allow
the process owner to mitigate and
understand complexity as soon as
inherently possible.
Insurance BPOs and India: The
insurance sectors are in the process of
outsourcing business opportunities.
Insurance companies with large
volumes and repetitive transactions
around the world are working towards
lowering the cost and upgrading the
service quality to their customers and
business partners. Working towards an
effective cost control management, the
insurance companies are on the look out
for outsourcing the service agencies for
the purpose. All the related activities
such as new business prospects, policy
administration, claims management and
customer service are carried out by the
BPOs.
653

The insurance sector is no
exception to BPOs. According to a
market intelligence report by Nasscom
on the scope of BPO, after the
successful experience of insurance
majors such as GE Capital, Royal and
Sun Alliance, Phonix and Conseco Exl
Services, most other leading insurance
companies are evaluating off-shoring
opportunities in India 11 . Norwivh
Union, the UK insurance company
already has BPOs set up in New Delhi
and Bangalore or processing general
insurance claims. Aviva operates in
India with 1200 employees. The time
difference between the Greenwich and
India provides scope for the India
operations to work round the clock, 365
days. Aviva has 450 centers for
servicing the British customers. 2000
employees are engaged in back office
functions and for handling British
insurance claims. Claims BPO, an
offshore division of the US based
company Greensnow Inc. is functioning
with 400 people in Nashik focusing on
medical and dental insurance claims of
the US customers. Tela Sourcing LLC
has set up a back office in Pune for its
health insurance products with a view
to reduce costs. The new companies, a
joint venture of Adaptis Inc. and DIndia
healthcare service aims at cost effective
and value added claim-processing
services to the US customers. The
highly skilled, well-educated, low cost
labor along with the advanced
technology and infrastructure provide
a real-time link between the HQ at
Baltimore, US and Pune in India.
Insurance Outsourcing Solution:
Because of the task-oriented
environment in many of the insurance
processes, previously mentioned,
outsourcing projects should
incorporate project tasks to develop
11
Transformation of Insurance in India,
Editorial Team, The Chartered
Accountant, June 2004, p1344
654
Cover Feature
this information. Depending on the
status, maturity, and sometimes, the
simple existence of these factors, the
effort can be positively or negatively
influenced. A list of essential activities
is listed below (Joe Needham, 2005):
l Process Map: The organization
should map and document their
current processes and service
levels. This usually takes the most
time but is essential and a necessary
requirement to ensure compliance
and cost realization as part of the
business requirement definition
function.
l Organizational Readiness: The
ability of the organization to adapt
the proposed BPO and process
changes will drive implementation
time and user community acceptance.
l Political Landscape: The
characteristics of the organizational
such as cultural and political norms
will help determine if the project is
successful. An area that is perceived
as volatile may require additional
dedication support time.
l Process Metrics: The organization
should measure the current and
proposed operation. The
development of reasonable service
level performances will allow the
business unit owner to set realistic
expectations for service levels.
l Outsourcing Experience: Previous
utilization of outsourcing by
companies will drive their
embracement of the results. All
organizations should have a
financial baseline for analyzing
outsourcing opportunities; and
ensure that it takes into account
current and proposed demand.
l Business Priority: The priority is
placed on relationship initiative in
relation to other efforts that will drive
the required commitment and
resources needed to be successful.
the management accountant, September, 2008
BPO risks are associated with the
design and management of the overall
BPO project. The purpose of analyzing
risks is to identify obstacles to the
success of the project and assess the
magnitude of each of these risks. Special
focus should be placed on managing
the most critical risks as they are
eliminated or at least reduced during a
time of change. Further if a business
unit does not have a solid
understanding of its current
performance levels and the key metrics
involved, it will be difficult to define
meaningful service level agreements
with outsourcing providers. Similarly, if
the business processes are not well
documented, it will be difficult to define
their business requirements to potential
outsourcers. Perceived insurance
processes that will be impacted by BPO
based on cost of labor and skill set
required to perform the function are
indicated in Table 1.
Conclusion
Managing the BPO change is the
necessary glue needed to build a sup-
portive climate and organizational sys-
tem necessary to implement a success-
ful transformation. Within BPO, change
management incorporates the critical
disciplines of communication and train-
ing, which affects behavior, skills de-
velopment, cultural and organizational
transformation. These attributes are in-
herent with all insurance outsourcing
transactions can range from simple to
more complex. The need for insurance
executives to fully understand the fi-
nancial and organization implications as
it relates to their insured’s, agents and
customer service representatives, will
be paramount to the success of the
outsourcing endeavor. All BPO engage-
ments require informed, involved and
committed leadership. It’s critical that
leadership remains visible and the in-
ception of the outsourcing idea to its
implementation and subsequent man-
agement.
 Cover Feature

Table 1: Insurance Outsourcing Solutions

Agency New Business Customer In-force Termination

service Administration
• Licensing and • Pre-screen & • Queries • Premium • Claims
contracting capture • Changes management exam. and
• • adjudicati
Correspondence Underwriting • Complaints • Error reporting on
• Renewals • Underwriting • Quotes • Balancing • Maturities
• Termination support •
• Return mail and • Delivery • Loans Surrender
s
Address change • Requirements • Withdrawals • Exchange
• Commissions & Follow- • Dividends
• Special ups • Title address
Compensation • Policy change
• Abandoned issuance
• Certificate
Properties • Fund
reissue
• Debt Application
Management • Refunds & • Quotes &
NTO reinstatements
• Assignments
• Correspondence

Source: EXL Service, “ Outsourcing Banking and Financial Processes”, http://www.exlservice.com/

Financial institutions need to have
a shift of paradigm to view capability
outsourcing as an effective mode of op-
erations in order to succeed. The tradi-
tional and vertical organizational struc-
ture must be replaced with dynamic new
business models and partnerships for
optimal business performance. Out-
standing products or ideas will have to
higher probability of reaching the mar-
ket rapidly when executive time is freed
up to focus on value creation. In this
type of new relationships, the clients
and services providers agree on long-
term business goals in a more flexible
and adaptable framework. The new per-
formance indicators are value creation,
speed-to-value and optimization of
value with success related rewards.
References
l Ansari, H., “Milestone-Insurance and
growth: Insuring India’s Growth”: In-
surance Industry in India- A Survey,
The Financial Express, Mumbai, (No-
vember 13-14, 2004).
l Palande, P.S., Shah, R.S., and Lunawan,
M.L., Insurance in India: Changing
Policies and Emerging Opportunities,
Response Books, New Delhi, 2003.
l Poddar, A.N., Indian Insurance Indus-
try-Transition and Prospects, In D.C.
Srivastava and Shaashank Srivastava
(Eds.), New Century Publications, New
Delhi, 2001.
l Singh, Anuroop, “The New
Insurance_Myth and Reality”, Cited in:
Thomas, M.G., Asia Insurance, Post
Mumbai, New Media Services, 2000.
l Tripathy N.P., Insurance Theory and
Practice”, Prentice Hall of India, New
Delhi, 2005.
l J. Brain Heywood, “The Outsourcing
Dilemma: The Search for Competitive-
ness”, Pearson Education Limited,
2001.
l Simon Sijbrands, Giles Williams and
Chris Hoyle, “Beyond transaction pro-
cessing: Is Outsourcing right for the fi-
nancial services industry?” KPMG’s
Frontiers in Finance, April 2003.
l Verma rahul, “BPO: Potential in the Fi-
nancial Sector”, CRISIL Young Thought
Leader Series, 2003.
l The Management accountant, Decem-
ber 2005.
l The Chartered Accountant, June 2004.
l The Insurance Times, December 2005.
l The Economic Times, New Delhi.
l Ramani Balakrishna,”BPO in Insurance
Sector: Pains and Prescription”, Link:
http://www.wipro.com/whitepapers/
services/bpm/bpo_insurance.htm.
l “IT, BPOs the fastest growing within
financial services”, Business Journal,
May 30, 2003, Link: http://www.
bizjournals.com/sanjose/stories/2003/
05/26/daily44.html.
l
“BPO Industry in India-A Report”,
Link: http://www.bpoindia.org/research/
bpo-in-India.html.
l “Business Process Outsourcing, EXL
Service, BPO India”, Link: http://
www.exlservice.com/.
l “The Hindu Business Line: BPO, ITES
Growth put at $24b by 2008”Link:
http://www.bionet.com/2003/09/28/
stories2003092801340100.htm.
l “Lord Bissell and Brook llp”, Link:
http://www.lordbissell.com/practice.
l Chanda Rupa,“Spreading the Benefits
of BPO Growth”, Link: http://
fecolumnists.expressindia.com.
l “Non-voice BPO in the Insurance Sec-
tor-India”, Link: http://www. research
and markets.com/reports/348940.
l “Key Elements of BPO”, Link: http://
outsourceking.com/BPO/Elements-of-
BPO.aspx.q

the management accountant, September, 2008 655


Blooming and Glowing
BPO
In this article, the author has explained the basis of outsourcing, its various
types and the benefits that accure from this method.
Dr. T. Ramesh*
B
usiness world is undergoing
changes rapidly. In this race,
various business have practices
came into being and one among them is
to shorten the process cycle. This can
be done by computerisation or
efficiency should be improved. A new
concept called ‘outsourcing’ concept
has arisen. That is cross-border trade
through electronic commerce, in which
services flow from the territory of one
member into the territory of another
member crossing national frontiers
through the use of electronic commerce.
In IT parlance, it is commonly known as
BPO. Outsourcing has long been
practiced in areas such as
manufacturing where the jobs involve
low level skills or specialized skills.
Business Process Outsourcing
(BPO) occurs when an enterprise turns
over the management and optimization
of its business function, such aspay roll,
accounts payable, purchasing or retail
sale to a third party that performs such
functions according to a set of
predecided norms and standards (and
often in predetermined formats).
Though these functions may depend
on Information Technology (IT), they
are separate functions from core IT
operations like data center activities or
network management.
The skills required to manage
business processes is different from
what is needed for managing
technology. A BPO vendor pays
stronger attention to employee
transitioning and strategy for the people
of the original company it is replacing.
*Lecturer in Commerce, P.G. Centre, Lal
Bahadur College, Warangal-506 007 (AP).
656
Cover Feature
It involves a clear change-management
strategy. It enables companies to further
emphasize on their core competencies.
BPO Scenario in India :
BPO (Business Process Outsourcing)
has been the latest mantra in India
today. As the current sources of
revenue face slower growth, software
companies are trying new ways to
increase their revenue. BPO is top on
their list today. IT services companies
are making a quick entry into the BPO
space on the strength of their existing
set of clients.
The philosophy behind BPO is
specific, do what one does best and
leave enerything else to business
process outsourcers. Companies are
moving their non-core business
processes to outsource providers. BPO
saves precious management time and
resources and allow focus while
building upon core competencies. The
list of functions being outsourced is
getting longer day by day such as order
entry, billing and collection, human
resources administration, cash and
investment management, tax
compliance, internal audit, pay roll...etc.
Outsourcing is also economical, for
instance if a bank shifts work of a 1000
people from US to India it can save
about $18 million a year due to lower
costs in India. According to Mckinsey,
giant US pharma firms can reduce the
cost of developing a new drug, currently
estimated at between $600 million and
$900 million by as much as $200 million
if development work is outsourced to
India.
India has one of the largest pool of
low-cost English speaking scientific
the management accountant, September, 2008
and technical talent. This makes India
one of the obvious choice to outsource.
Dell, Sun Microsystems, LG, Ford, GE,
Oracle all have announced plans to scale
up their operations in India. Others like
American Express, IBM and British
Airways are leveraging the cost
advantage India has to offer while
setting up call centres. Several foreign
airlines and banks have too set up
business process operations in India.
Agencies like Leo Burnett, WPP,
OMD have outsourced part of the
publicity and promotion work. Lowe
India works for Unilever in the Indonesia
and Singapore markets. New York based
law and Kenneth that farms work across
its 16 offices. The strategy
development is done in the UK, the
creative idea development in India,
integrated solutions are worked out in
Brazil and so on, New York based
Banerjee and Partners (B&P) is another
such agency which sends its creative
brief to the Mumbai Office and handles
the creative development, execution
and production works.
Indian revenues from BPO are
estimated to have grown 107 per cent
and this particular area employs 35,000
people in the year ending March 31,
2002. The cost saving is estimated in
the range of 10% to 15%. But there are
long term benefits and advantages as
companies outsource to streamline
processes, save time or leverage the
strengths of third party specialists. The
resultant benefit in terms of bigger
market share and future profits can far
outweigh the immediate savings.
Many European and US companies
have realized that they should focus on
their main business and outsource their
Human Resource Department, accounting
departments etc. and it is here exactly
India fits in. Today US corporations
have embraced BPO wholeheartedly.
Managed Care Companies, which is
more popularly known as Healthcare
payers are increasingly outsourcing
business processes due to changing
and challenging business environment
companies.

and technological and legislative
changes. There is a good opportunity
for Indian BPO vendors in this space.
BPO vendors will need to have good
domain knowledge, process know-how
and competence with technological
solutions to cater to these Manage Care
companies.
Stages of Development in BPO :
For the last five decades BPO has
been undergoing many changes.
Outsourcing is not new, it has been
a popular management tool for decade.
One can safely say outsourcing has
evolved as shown below :
l 1960’s–time–sharing.
l 1970’s–parts of IT Operations
l 1980’s–entire IT operations
l 1990’s–alliances/tie-ups
l 2000’s–IT-enabled services.
In the initial stages it has outgrown
its label. The term BPO is greatly
misunderstood by both potential
employees and the media. For instance
a shoe manufacturer may get all the
components of his shoes made outside
and assemble it in his firm. So he is infact
doing an outsourcing business but he
won’t say, “will you do business
process outsourcing for me?”. Rather
he would like to say that he has gone
for a contract or may say “will you
supply the shoe parts for me?” Recently
this term ‘Business Process
Outsourcing’ emerged as a result of
increased offshore business. The India
ITES-BPO industry emerged as one of
the key investment markets in the
country and the industry progress into
the third phase of Industry evolution
by greater degree of depth,
specialization and competition. The
market also experienced maturity and
consolidation due to numerous merges
and acquisitions which took place
within the sector. In traditional functions
as financial services, manufacturing, IT
and ITES, there is a rapid growth in
outsourcing. Today, MNCs continue to
invest in captive BPO units across
supplier countries to reduce risk and
improve quality control.
the management accountant, September, 2008
Cover Feature
Integrative Processes : Exhibit-I
Today we can see not only business Firm
process outsourcing but also
knowledge process outsourcing and BPO
legal process outsourcing.
Offshoring Near shoring
Business Process Outsourcing :
The concept was first given by Perot The above Exhibit-II shows the
when he founded Electronic Data place of the firm in going for outsourcing
Systems (EDS) in 1962. EDS would tell business. This shows that there is a lot
a prospective client: “You are familiar of growth and demand for outsourcing
with designing, manufacturing and business. Earlier, Convergys were in the
selling furniture, but we’re familiar with second place in outsourcing but now it
managing information technology you is first to go for sourcing.
need, and you pay us monthly for the
India’s BPO Industry is booming-
service with a minimum commitment of
in2005, India garnered more than half
two to ten years”. Thus it started by
the global $6-billion offshored BPO-but
transfering an organisation’s non-core
to maintain its leadership it will have to
and core business process to an outside
find more young people who are
provider to achieve cost reductions and
proficient in English and other European
at the same time improving the quality
languages and who are willing to work
of service. When outsourcing takes
graveyard shifts for low wages. India’s
place across borders, it is termed as
BPO Companies are trying to overcome
offshore outsourcing. Modern
margin pressures by bundling IT
telecommuni-cations and Internet
services with BPO and by acquiring
technologies allow outsourcing to
companies abroad. And that should
another country with lower costs.
accentuate the churn in BPO respect
Advantages of BPO : rankings next year.
Owing to its advantages such as (1) If we look at the revenue growth.
performance of non-core activities of an The export revenues of the ITES-BPO
organisation can be improved by hiring Sector, has increased by around forty
the professional organisation which percent to reach $7.1 billion in 2005-
has taken up this activity itself as its 2006. The offshore IT and BPO
core activity. (2) Time management made professionals in the US and Europe
easy. (3). It can cater the multifarious have also been major contributors to
activities, different skills can be the large foreign exchange inflows
broughtin which make the organisation coming to India. India now accounts for
fat and unmanageable. Big organisations, sixty five percent of the global industry
such as WIPRO, GENPACT etc. are now on offshore IT and forty six percent of
going for oursourcing on a large scale. the global business process industry.
Exhibit-II
TOP FIVE RANKS IN BPO
Rank Present Survey Previous Survey
1. Convergys Wipro spect.
2. Genpact Convergys
3. Wipro BPO WNS Groups
4. Progeon M Source E
5. 24/7 Customer ICICI
One source
* Source : Business World–5th June, 2006.
657
 Cover Feature

The above Exhibit-III shows that lowest cost anywhere across the world claims processing and corporate
the export revenues increased fairly to timely delivery. Wipro, TCS, Transworks planning departments of large fortune
from 2000-01 to 2005-06. The are making selective acquisitions to be 500 companies. As these services are
employment generated in the ITES-BPO near to their customers. project-based, small and medium sized
sector in financial year 2004, financial The entire gamut of work involved enterprises can also avail KPO services.
year 2005 is estimated to be 21,6000, in and outsourcing can be split into As per National Association of Software
31,6000 respectively. It is expected to three kinds – brawn work, brain work and Services Companies (NASSCOM)
create 409000 jobs in Financial year and a combination of the two. Brawn estimates, 45 percent of growth rate is
2006. expected by 2010 and mostly from India.
work includes artwork, designing and
The banking, financial services and production while brain work involves In future more and more countries
insurance (BFSI) vertically remained concept and content development. will outsource to low-cost countries.
the largest user of Indian ITES-BPO Knowledge Process Outsourcing : India can have an advantage on its side
services, followed by telecom because of excellent communicative
Knowledge Process Outsourcing skills (using English) and also in having
healthcare and airline segments.
(KPO) is another new industry with a varied specialized skills.
Customer care and support services
high growth rate in India and it is the Indian Companies have already
have been the main revenue earner from
latest dimension of BPO. forayed into this new area offering
the ITES-BPO export market.
Unlike conventional BPO where the analytics and research along with their
As a matter of fact, outsourcing
focus is on process expertise, in KPO, BPO Offerings. The global KPO market
started to address the ‘pain points’ and
the focus is on knowledge expertise. It is expected to touch $ 17 billion by 2010,
then the companies advised their
involves high-end qualifications such of which nearly $12 billion would be
customers on what technology they
as professional qualifications. It is outsourced to India providing
must use and implement, thus paving
mainly associated with analytical and employment to 2.5 lakh people. Currently
the way to the consulting practice, work it employees about 25000 people.
technical skills together with some
that is still in progress. This is how the Ofcourse BPO survives on its strategy
decision making skills. India, China,
companies started working on Business of cost effectiveness and its cost-
Russia, Canada, Israel and the
outsourcing. Infosys, calls the Global benefits monitored all the time. This is
Philippines are some of the major KPO
delivery model as Collaborative the new horizon looming large before
services providers today. Clients of
Distributed Development Model. It our profession.
KPO services include market research
recognizes that business models are
and consulting firms, investment banks, Legal Process Outstanding :
more important than choice of
and financial services instititons, patent Another new process integral to
destination. Its core premise is about
filling companies, legal and insurance business process outsourcing is Legal
marrying the best of skills available at
Process Outsourcing. Law firms, legal
Exhibit-III
departments of major corporations,
Total Export Revenue of ITES-BPO Services ITES-BPO Services particularly from countries like the US,
UK and Canada are increasingly
outsourcing in the legal industry across
8 the globe to follow the BPO to gain
Export Amount (bin $)

efficiency and reduce the cost in the

u 6.3 market place. For this three essentials
6
of Legal Processes outsourcing
u 4.5 professional are: Domain Specialization
4 ego Graduation, Post Graduation in law,
u 3.6 Good communication Skill and Good IT
Skill.
u 2.5
2 Conclusion :
u India, with its large base of highly
1.5
u 0.9 qualified knowledge professional is
0 perceived as a lucrative business
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 destination. The success in Business
Process Outsourcing in India
Year encouraged many firms to start
outsourcing their high-end processes
Source : National Association of Software and services Companies (NASSCOM) also.
658 the management accountant, September, 2008

Benefits derived from BPO can be
summarized as follows :
1) Productivity Improvements
2) Access to expertise
3) Operational cost control
4) Cost Savings
5) Improved accountability
6) Improved HR
7) Opportunity to focus on core
business.
As Abdul Kalaam visualized, India
may look forward for its bright future if
its youth are led in this knowledge path
towards success and aim being
remembered as good human being. This
can be achieved when learning is
purposeful, creativity blossoms, and
when creativity blossoms, thinking
emanates. When thinking emanates,
knowledge is fully lit, when knowledge
is lit, economy flourishes.
the management accountant, September, 2008
Cover Feature
References :
1. Business World–10th April, 2006, BPO,
True Value? by Singdha Sengupta.
2. Business World–26th June, 2006, BPO
Buzz and BPO Testing Times–The BW
Round Table-XIII.
3. Business World–20th March, 2006, Ad
Outsourcing–by Tanmoy Neog.
4. Business World–5th June, 2006, Into
Higher Orbit bit. Dennis Ross.
5. E-Business–Feb., 2006–IT Outsourcing
by Scott Kirkwood.
6. The Chartered Accountant–Journal of
the Institute of Chartered Accountants
of India–July, 2006–KPO–An
Emergency opportunity for CA–CA
Pawan Kumar Sharma.
7. The Chartered Accountant–May, 2006,
Business Process Management,
“Survival Mechanism in Competitive
landscape” by Dr. Malayendu Saha.
8. Business Vision–July-Sept. 2006,
Quarterly Journal of Management–
Education Outsourcing and legal process
outsourcing–Emerging trends in India by
M. Anuradha Reddy & C. Vidya
respectively.
9. ABHIGYAN–July-Sept., 2006. State,
FDI and Export of Software and BPO
Services from India-Candan Mukherjee.
10. Business Today–7th May, 2006. The
Real BPO Boom (And Bust), Editor
Breaking newground in BPO.
11. Business Today–16th July, 2006. The
next wave of outsourcing, editorial and
near shoring is here, Indian BPO-Shivani
latha.
12. Business Today-10th September, 2006,
27001 reason, India BPOs. Discover a
New Mantra-Amit Mukherjee.
13. The Hindu Speaks on Management,
Volume-II Outsourcing–an intelligent
alternative–S. Ramanadhan.q
659

Satisfied Stakeholders
Corporate social responsibility reporting is on the rise, but reporting processes
are still evolving. Stakeholder communication is the key — the more there is, the
better it will be
Robert Colman*
T
riple bottom line (TBL), or
corporate social responsibility
(CSR) reporting, is gradually
becoming a more common reporting
model. This is clearly demonstrated in
Building Confidence: Corporate
Sustainability Reporting in Canada, the
most recent study of Canadian firms
currently publishing some form of CSR
report, giving stakeholders key
information on the social, environmental
and economic performance of a
company.
The report is the second of its kind
and was published by Stratos, a
corporate sustainability consulting
company, in November 2003. Only 57
reporters were identified in the
company’s first study in 2001. Since
then, the number of CSR reporters has
risen to 100 companies. Currently, 60%
of companies on the TSX Composite
Index now report some sustainability
performance information, with 22%
producing stand-alone sustainability or
integrated annual reports for 2001 or
*Robert Colman is editor-in-chief of CMA
Management Magazine.
660
CMA Global Perspectives
2002. This is up from 10% in 2000.
Julie Pezzack, a consultant with Stratos
and one of the key contributors to the
study, notes that a lot of companies and
industries have substantially improved
their reporting practices during that time
as well. “The oil and gas industry is
strong in this area, and the quality of
reporting in the forestry industry has
improved dramatically since our last
report,” she says. “Reporting is an
iterative process and evolves over time.
Companies are realizing that corporate
responsibility can add value to their
business and needs to be managed and
communicated to their stakeholders.”
The challenge for companies that
are new to the idea of reporting on a
triple bottom line is where to start —
what to report and how to do so. There’s
no magic formula for such a process,
but there are a few guideposts to
consider along the way.
Balanced reporting
The Global Reporting Initiative (GRI)
released its most recent Sustainability
Reporting Guidelines in 2002, after two
years of consultations with a variety of
interest groups, and testing by a
number of corporations. The GRI’s
mission is to develop and disseminate
globally applicable sustainability
reporting guidelines for voluntary use
by organizations reporting on a triple
bottom line. The 2002 Guidelines, which
include 50 core indicators, are the
foundation on which many companies
build their CSR reports.
But the GRI isn’t considered a
panacea by anyone. Susan Todd,
principal of Solstice Consulting in
Vancouver, a sustainability auditing and
consulting firm, notes that it simply
creates a base standard.
the management accountant, September, 2008
“Some organizations are struggling
with the idea of reporting on all 50 core
indicators,” she notes. “However, the
issues are so complex and the interests
so varied, that to streamline reporting
standards further would be difficult.”
Allan Willis, an independent consultant
who collaborated with Stratos on their
report, is also involved with the
evolving GRI standards and attended a
meeting in NewYork City in January,
during which GRI users weighed in on
its effectiveness thus far.
“One of the main points they made
was that they don’t want anymore
indicators,” he notes. “Instead, they are
looking for guidance and protocols
around the indicators that already exist.”
Todd stresses that reporting has to
be reflective of the company and its
stakeholders. “You have to balance the
demands of comparability and relevance
in any CSR report,” she says.
This is something that is stressed
in Building Confidence as well. “One
of the key issues is that companies
shouldn’t be reporting for reporting’s
sake,” says Pezzack. “Companies need
to use the reporting process to drive
performance in their operations by
providing timely, relevant information
to improve decision making. The issues
reported need to make sense for the
business and its stakeholders.”
AccountAbility, an international
professional institute that develops
assurance and accountability
management tools and standards, has
created an assurance standard for CSR
reporting that can help companies
determine whether everything of
importance is included in their final
report. It’s called the AA1000
Assurance Standard and, although it’s
used mostly by CSR report auditors, it
addresses the essential points with
which a company should be concerned.
“GRI is a content standard. It’s about
comparability,” notes Todd. “AA1000
is a process standard. It’s about making

the reporting process relevant to
organizations and stakeholders. So the
GRI and AA1000 complement each
other nicely. “
The AA1000 standard addresses
three key issues:
Materiality: does the sustainability
report cover all areas of performance
that stakeholders need to judge the
organization’s sustainability perfor-
mance?
Completeness:is the information
complete and accurate enough to
assess and understand the
organization’s performance in all these
areas?
Responsiveness: has the
organization responded coherently and
consistently to stakeholders’ concerns
and interests?
The critical message is that
stakeholders have to be involved at
every stage of the reporting process,
“to create a sense of openness and also
to understand what information really
matters to the stakeholders,” says Todd.
“A report that covers all elements of
the GRI standards but doesn’t address
the key issues stakeholders want to
hear about isn’t useful.”
Setting parameters
Determining what stakeholders
want isn’t as difficult to establish as one
might think. “A lot of the forums in
which you can gather this information
already exist,” notes Todd. Market
research, employee engagement
surveys and similar venues all offer an
opportunity to get critical feedback.
Companies can simply add a couple of
questions to these to gauge what
environmental and social issues are
critical for stakeholders.”
If you create this dialogue, Todd
believes that it will lead to better
communication. “You will start to hear
from stakeholders if something goes
wrong,” she says.
Vancouver City Savings Credit
Union (VanCity), for instance, is an
the management accountant, September, 2008
CMA Global Perspectives
innovative financial services provider
that is currently working on its fourth
externally verified CSR report. The
company used stakeholder consultation
(primarily surveys and focus groups)
to help determine what they were going
to report. Indicators were also
developed based on VanCity’s social
and environmental policies and
commitments and best practices.
“We asked our stakeholders what
was important to them, and then created
indicators based on that feedback,”
notes Joanne Westwood, social audit
manager at VanCity. The company also
carefully chose which stakeholders it
would approach for feedback.
“For our last report, we limited our
consultation to staff, members
(customers) and community leaders,”
says Westwood. “We didn’t have the
resources to go beyond that, and we
felt that these are the stakeholders that
are most important to our business.
However, we may look at expanding our
consultations in the future.”
It’s certainly necessary to keep this
dialogue lively and relevant. If a
company’s stakeholders want to see
specific information about each
different operation of a large industrial
concern, for instance, it may be
worthwhile to have some mechanism to
ensure that material issues are covered
— perhaps an NGO panel or a panel of
other expert stakeholders. “This
assurance improves the report and
boosts a company’s credibility,” notes
Todd.
A number of reporting challenges
arise when trying to find the right
balance in a CSR report. For instance,
Building Confidence refers to a couple
of companies that, since 2000, have
expanded the scope of their CSR
reports, but in doing so have lost some
of the specificity regarding their
operations.
“Two years ago, Talisman was only
reporting on its Sudanese operations,”
notes Pezzack. “Now they are reporting
on all of their operations. They may not
have the information management
systems in some locations to gather all
of the relevant data to maintain the same
level of reporting, but as companies
identify these gaps, systems evolve to
capture the relevant information.”
B.C. Hydro is another company that
has altered its reporting method. “They
now produce one report that integrates
full financial and broader sustainability
information and data,” says Pezzack.
“This is challenging, as it requires trade-
offs on the amount of information that
can be included in one report.”
Changing the parameters isn’t a
problem, notes Pezzack, as long as
companies are clear about why they
aren’t reporting on certain issues.
VanCity experienced this as it further
developed its CSR report to conform to
the GRI Guidelines.
“In our second report, we piloted
the GRI Guidelines and reported on the
indicators that were relevant to VanCity
as a financial institution,” says
Westwood. “Now, we are planning to
report in accordance with GRI (which
requires reporting on all of the elements
and indicators in the Guidelines). If
there are areas that aren’t relevant or
material, we will clearly state this as a
reason why this particular information
isn’t included.”
Audits and alternatives
The completeness and rigour of the
information and figures supplied in CSR
reports is an important issue for
companies to consider, according to
Building Confidence. A small number
of Canadian companies use some form
of third party audit or assurance
process to verify the information in their
reports. According to a 2002 KPMG
study, only 10.5% of CSR reports in
Canada were audited, compared to 27%
globally.
“The most critical of readers are
worried about issues being left out
entirely,” notes Todd, who, along with
661

her work at Solstice, is director of The
Accountability Project (TAP), a new
Canadian initiative aimed at enhancing
CSR reporting through use of the
AA1000 standard. “If you do leave
critical information out and the
stakeholders know it, it shoots your
credibility to pieces. Even if the
information is negative or demonstrates
where you’ve failed in an initiative, as
long as it’s there it increases the
credibility of the report.”
But there remains an under-capacity
on the auditing side — a dearth of
professionals with the accounting
knowledge combined with the
environmental knowledge to do a
thorough audit. And, as Pezzack points
out, a third party audit can be very
costly. Some companies, she notes,
verify their reports every second year
as a cost-saving measure.
“Alternatively, some companies
create a stakeholder advisory panel, to
review the report and comment on
coverage of the relevant issues,” she
says.
Again, what is stressed is the
importance of communication.
“Reporting on both the positive and
negative aspects of a company’s
performance is important to demonstrate
credibility. Other aspects of quality
reporting include presenting trend data
over multiple years and explaining
changes in performance. Showing that
the company is setting targets for itself,
and that management is willing to hold
itself accountable for future
performance improvements, is also
considered best practice.”
Report designs
A recent worldwide stakeholder
survey on non-financial measures by
ECC Kohtes Klewes, called Shared
Values, noted that despite the valuable
information in many CSR reports, few
of the shareholders, investors,
employees and consumers actually read
the reports thoroughly, despite the fact
that they are the primary stakeholders.
662
CMA Global Perspectives
Todd suggests that this is not as
important as one would expect.
“Stakeholders get a certain amount of
comfort from knowing a report is there,
and therefore must be credible,” she
says. “Readers rely on experts to digest
the reports for them, just as they do with
financial reports.”
However, some CSR reporters are
trying to adapt their reports to reach a
wider audience.
“Effective communication of our
reports to employees and members has
been a key challenge for us,” says
Westwood. “We’re currently working
on an enhanced communication
strategy. We’re trying to design the
report so that it’s shorter, and we’re
using our Web site to provide more
detail. At the same time, we plan to
promote the report in our branches and
internally, through presentations to
employees.”
Other companies have altered their
reports to include chapters geared
toward specific stakeholders as well.
And with the use of the Internet, any
detailed drill down of information in
shorter reports can be supplied online.
Integrating value
The challenge of CSR reporting is
really taking the first step. From there,
the process will evolve with the
organization.
“The first step is to pull people
together within your organization and
determine where you have information
and where you need additional
information,” says Pezzack. “People are
often amazed to find out what
information is available to report on
immediately. These pieces form the
building blocks to what the company
will report in the future.”
Some companies will start with one
division or one stakeholder group and
develop the concept further in
succeeding years. VanCity, for instance,
organized its first report by stakeholder
groups. For its third report it used its
the management accountant, September, 2008
recently created Statement of Values
and Commitments as a framework. This
statement, which guides business
decisions and strategies at VanCity, was
created in consultation with members,
staff and community leaders to ensure
it was relevant to key stakeholders.
This consultative process continues
to pay dividends, and demonstrates the
value that CSR reporting offers.
“We’ve found that our commitment
to CSR and corporate accountability is
a way to differentiate ourselves from big
banks, and it helps attract and retain
members as well as employees,” says
Westwood. “It helps us identify
potential risks in our business and
keeps us aware of stakeholder concerns.
We’ve seen continuous improvement
on the triple bottom line, and have
integrated our social audit with our
business planning processes. The
social audit is built into our executive
performance partnership agreement,
which means we have accountability for
our commitments throughout the
organization.”
CSR reporting is not yet, and may
never be, an exact science, but the
process continues to offer companies
new perspectives on their operations,
their staff and their stakeholders.
To view the report Building Confidence
visit http://www.stratos-sts.com/. For
information about The Accountability
Project and related workshops and
seminars, please visit http://
www.theaccountabilityproject.ca/. To
view a Web-based sustainability
reporting toolkit, created by Canada’s
Federal Government in consultation
with Stratos, visit http://
www.sustainabilityreporting.ca/. For
information about VanCity’s CSR report
visit http://www.vancity.com/.
This article is reprinted with the
permission of Certified Management
Accountants of Canada from March
2004 issue of CMA Management
magazine.

Timing and precision
Implementing a scorecarding system successfully
Raef Lawson, William
Stratton, and Toby Hatch
I
n this final article in our series, we
look at issues involved in the
implementation of scorecarding
systems. In prior articles, we examined
features of scorecarding systems that
contribute to their successful
implementation and the role of software.
Based on the guidance provided in
those articles, organizations should be
able to design effective scorecarding
systems and are ready to proceed with
the actual implementation of the
systems. We now look at the time
required to implement a scorecarding
system, the role consultants should
play in the implementation, the effect of
using scorecarding software, and other
implementation issues.
As before, we draw on the insights
provided by our survey on scorecarding
usage by North American
organizations, sponsored by the
AICPA, CAM-I, CMA Canada, IQPC,
Targus Corporation, and Hyperion
Solutions.
Timing
It’s important to have a realistic time
frame for implementing a scorecarding
the management accountant, September, 2008
CMA Global Perspectives
system. The time required to implement
a system depends on a number of
factors, including the implementation
method, the degree of automation, the
use of consultants, and the resources
available. In practice, most
organizations implement their
scorecarding system in six months or
less (see Figure 1), although some take
more than two years.
A deadline is set in slightly more
than half of scorecard implementations.
For these organizations, 31% set a
deadline of less than three months, 33%
set a deadline of three to six months,
23% a deadline of six to 12 months, and
13% a deadline of more than one year.
Having a deadline for
implementation ensures that it’s
completed in a timely manner. In our
survey, there was no deadline set for
any of the implementations that took
more than two years. Most of the
implementations that took over a year
had the same problem.
The shorter the deadline for
implementation, the shorter the actual
implementation period. Overall, 92% of
organizations implementing a
scorecarding system complete it within
the given deadline.
Implementation impetus
Is faster better? Organizations that
took more than 24 months to implement
their scorecarding system reported, on
average, achieving much greater results
from their system than those that
implemented in a shorter period of time.
While many consider quick
implementation of a scorecarding
system desirable, it’s more important to
take the necessary time to properly
design and implement the system so that
the reasons for its deployment are
satisfied.
An organization may have a variety
of reasons for implementing a
scorecarding system. As we noted in
an earlier article (“The tactical
advantage,” CMA Management,
August/September 2003), scorecarding
systems are used for both tactical and
strategic purposes.
Organizations that implement
relatively quickly — in three months or
less — are more likely than those taking
longer to be doing so for tactical
reasons, such as tracking progress
towards achieving organizational goals,
linking compensation to performance,
and correlating measures and actions
to understand cause and effect.
Organizations that take longer to
implement their scorecarding system
can be divided into two groups. The
first group includes those that are
implementing the system to meet
governmental regulations and to
monitor regulatory compliance. The
longer implementation time frame is
understandable, given the necessary
complexity of these systems.
The second group takes longer to
implement for strategic reasons. These
reasons include the need to make
strategy everyone’s job, the need to
communicate the organization’s
strategy to everyone in a clear and
simple manner, aligning employee
behaviour with strategic objectives, and
linking and aligning the organization
around strategy. The time required to
accomplish the process necessary to
meet these objectives — including the
tasks of defining the organization’s
663

mission and vision, defining its strategy,
mapping its strategy to objectives, and
defining performance measures
associated with those objectives — is
necessarily longer than that for a
tactically-oriented system. However,
our survey results indicate that
organizations using this approach see
greater returns.
Number of measures
Performance measurement systems
are nothing new. Most organizations
use a plethora of measures, presented
on numerous key performance indicator
(KPI) reports. Correlation analysis often
indicates that organizations have too
many measures, with numerous
redundancies. Many of these measures
are tracked for dubious reasons. One
company in our survey stated that
measures were tracked “because we’ve
always tracked them.”
When an organization that already
has a KPI system rolls out a
scorecarding system, it needs to tie
them together. Otherwise questions will
arise such as “Utilization rates,
efficiency rates, etc. are on my KPI
report, but not my scorecard. Why?”
In a recent implementation, a large
manufacturer of machine parts received
considerable pushback from its
employees due to a failure to link the
two systems. Its employees were
evaluated using the KPI system’s
operational reports but were
compensated based on their scorecards.
A result of this situation was that the
company was focused on mass
production of unprofitable parts instead
of working on making those parts
profitably. The organization needed to
tie the KPIs into its strategy or modify
the measures (or add measures) to
ensure that the systems were tied
together.
Use of outside consultants
When proceeding with a
scorecarding system implementation,
organizations should consider the use
664
CMA Global Perspectives
of outside consultants to facilitate the
process. But they should do so with
care. Most organizations (68%) choose
not to use a consultant. Twenty-two per
cent of scorecard implementers use a
consultant somewhat, and the remaining
10% use a consultant extensively.
The use of consultants correlates
with the size of an organization. In
general, smaller organizations are less
likely to use consultants than larger
ones (see Figure 2). Mid-size
organizations were most likely to use
consultants somewhat, and the largest
organizations were most likely to use
them extensively.
The extensive use of an outside
consultant for a scorecarding system
implementation can speed up the
completion of the project substantially.
In our study, 40% of organizations that
went this route completed
implementation in less than three
months. Additionally, most took under
six months, and none took more than 24
months.
Many (35%) organizations that
don’t use consultants also complete
implementation in three months or less.
However, there are a substantial number
that take one, two or more years to
complete an implementation.
Organizations that use consultants
to a slight degree have a modal time for
implementation of six to 12 months, more
than that for organizations that use
consultants extensively, but less than
that for organizations that don’t use
consultants at all.
An advantage of using consultants
is that they generally have a well
defined, well thought out process for
the management accountant, September, 2008
implementing a scorecarding system.
Thus, none of the organizations that
extensively used consultants (and only
one that used consultants somewhat)
failed to use an organizing framework
for their performance measures. This
compares to 16% of those that didn’t
use a consultant. The consultants used
extensively by organizations almost
exclusively used the Kaplan-Norton
framework.
But the longer time required to
implement a scorecarding system
without outside consultants isn’t
necessarily a bad thing. On average,
organizations that don’t use
consultants report achieving the
greatest benefits from their system,
followed by those that only use a
consultant somewhat. Organizations
that extensively use outside
consultants report the fewest benefits
from their scorecarding system.
A reason for this may be that the
focus of many strategic (versus
software) consultants’ work is the
alignment of an organization’s
resources with its strategy. Problems
frequently arise, however, because they
fail to focus on sustainability. Thus the
thick binder delivered by the consultant
documenting the organization’s
mission, vision, and strategy sits on the
client’s desktop and fails to change its
employees’ behaviour. The big gap is
that clients don’t have anything that
takes them from where they are to where
they need to be. They need to deploy a
system that is both sustainable and
flexible.
The longer time required to
implement a scorecarding system
without outside consultants reflects a
greater involvement by the organization
in the design and implementation of the
system, and more attention to laying
the groundwork essential for successful
implementation. Organizations need to
spend the time up front, to
understanding their vision, and to make
sure that their data sources are

sufficient to meet their current and
future needs.
Implementing software
As discussed last month, 70% of
organizations implementing
scorecarding systems use software in
their implementation. As might be
expected, the quickest implementations
are those that don’t involve software.
Implementations involving off-the-shelf
applications take about the same
amount of time to implement as in-house
applications. The longest
implementations involve those that use
both off-the-shelf and in-house-
developed software (these accounted
for all instances of implementations
taking greater than 24 months).
Consultants and automation
Consultants are often used to assist
in the implementation of scorecard
automation. Organizations that believe
automation is an important feature of
their performance measurement system
are more likely to use the services of an
outside consultant. Of those
organizations that use consultants,
either somewhat or extensively,
approximately 80% use software in their
scorecard system, compared with only
64% for organizations that don’t use
consultants.
The use of consultants greatly helps
the implementation of new scorecarding
software. When asked about the
difficulty in automating their
scorecarding system, approximately
one-third of those organizations
extensively using consultants have
successfully implemented new software,
indicating either that it wasn’t difficult
or that it was difficult, but that the
problems had been solved. This
compares with only 14% for
organizations that used consultants
only somewhat, and for those not using
outside consultants at all.
Implementation approach
We have previously discussed the
various approaches to scorecard
the management accountant, September, 2008
CMA Global Perspectives
implementation (“Organizing the
implementation,” CMA Management,
November 2003), including the top-
down, bottom-up, and pilot project
approaches.
Implementations that start out at the
highest level and then roll down,
especially those that roll down to teams
(or products or services) are most likely
to be implemented quickly.
Implementations that take the longest
time tend to use a bottom-up approach,
and those that use a pilot project
approach tend to be somewhere in
between the other two approaches time-
wise.
When implementing a project using
a bottom-up approach, flexibility in the
system automation is essential,
especially for data availability. For
example, a large financial institution
implemented a scorecarding system
using a bottom-up approach. Each
branch was told to come up with its own
scorecard. Each of the branches’
scorecards had their own flavour. Each
branch had to make a leap of faith that
its scorecard was tied to overall
corporate strategy. The organization
subsequently decided to implement a
centralized scorecarding system, and its
information systems were able to meet
its changing data requirements. Now
this organization can track the same
performance measures at all of its
branches and use them for
benchmarking purposes.
Employee buy-in
An important aspect of
implementing a scorecarding system (or
any other performance measurement
system) is taking the steps in the
implementation process to ensure
employee buy-in. Our survey results
indicate that, on average, employee
acceptance and use of the scorecarding
system was greatest when the
scorecarding system took three to six
months to implement.
Implementing a scorecarding
system introduces something new to an
organization, something that may not
be immediately accepted. It’s critical to
communicate — even to
overcommunicate — with the
employees regarding the new system.
An organization needs to demonstrate
the new system and talk with employees
about what it will do for them. If this
isn’t done, they will question it when
they are asked to use the system.
Presenting scores alone will lead to
questions regarding why they are “that
colour” and what calculations are
behind them. Organizations that
communicate effectively prior to
implementation will find that the
scorecarding system is more easily
accepted.
Another critical level of the
organization at which buy-in for
implementing a scorecarding system is
essential is at the “C” level of an
organization — whether it’s the CEO,
COO, CFO or CIO. While
implementation can be top-down,
bottom-up, or done as a pilot project,
organizations may find it hard to
subsequently “sell up” or “sell down”
the idea of scorecarding without top
management support. This support also
ensures that adequate funding for the
initiative is available for future rollout
of the system.
Organizations that are implementing
a scorecard system need to ensure that
they have set apart a realistic amount
of time for it. While management may
be eager to get the system up and
running, it’s important for the
organization to take the time to
adequately prepare for the installation.
This includes thinking through the
organization’s mission and vision,
developing a strategy, mapping its
strategy to objectives, developing an
organizing framework for performance
measures that reflect the strategy of the
organization, developing appropriate
performance measures, designing an
appropriate information system to
665
 CMA Global Perspectives

support scorecarding, and selling the
system to all levels of the organization.
The use of outside consultants can
facilitate the process, but they cannot
and should not be used to replace the
necessary involvement of the
organization’s own personnel. By taking
these necessary steps, organizations can
go a long way toward ensuring a successful
scorecard implementation.
The results presented here are from
the first phase of our scorecarding
study. The next phase of the on-line
scorecarding study, open to participants
worldwide, is now commencing, and
interested readers are invited to
participate in the study by going to
http://graziadio.pepperdine.edu/shaps.
Dr. Raef Lawson and Dr. William
Stratton are the supervisors of this
study. Dr. Lawson is a professor at the
University at Albany, State University
of New York and can be reached at
lawson@albany.edu. Dr. Stratton is a
professor at Pepperdine University and
can be reached at William. Stratton
@pepperdine.edu. For information on
becoming a sponsor, contact the study
coordinator, Toby Hatch of Hyperion
Solutions, at toby_hatch @ hyperion.
com. Thanks to Jose Contreras of
Hyperion Solutions for his valuable
contribution.
This article is reprinted with the
permission of Certified Management
Accountants of Canada from March
2004 issue of CMA Management
magazine.

THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA

ORGANISING
MANAGEMENT DEVELOPMENT PROGRAMME
ON
AS, Service Tax & GST
3 - 4 October 2008
at
R&T Centre
84 Harish Mukherjee Road, Kolkata-700 025
Participation Fees
Rs.1750.00 (Rupees One thousand seven hundred and fifty only) per participant Rs.1500.00(Rupees one thousand five
hundred only) for practicing Members The programme is Non-Residential
Fees includes course fees, course material, lunch and tea/coffee during the programme.
The Cheque /DD to be sent along with nominations in favour of 'The Institute of Cost and Works Accountants of India',
payable at Kolkata
Registration
For further details and Registration please contact:
Shri D.Chandru
Jt.Director (PD&P)
The Institute of Cost and Works Accountants of India
Professional Development and programme Directorate
ICWAI Bhawan (2nd Floor)
3, Institutional Area, Lodi Road, New Delhi-110003
Ph.(011)2462 2156,2461 8645(D), (011) 2464 3273, 09313375256(M)
Tele Fax(011) 2462 2156,24618645
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Fax: 91-33-2252-1026 (M) 98310 43067

666 the management accountant, September, 2008


Scorecard Support
Larry B. Weinstein and
Joseph F. Castellano
Benchmarking and stretch targets are often adopted to support the Balanced
Scorecard. But do they do what is necessary to make scorecards effective? Using
statistical process control might be more effective.
The Balanced Scorecard (BSC), first
proposed by Robert Kaplan and David
Norton, has emerged as an important
strategic management system. The BSC
offers organizations an alternative
performance measurement system to
overcome the deficiencies associated
with an over-reliance on traditional
financial measurement systems. By
incorporating the perspectives of
customers, internal business processes,
and learning and growth, it enables
users to identify and measure factors
critical to an organization’s efforts to
become more flexible and responsive to
customer needs.
The BSC isn’t just a mixture of key
performance indicators that includes
financial and non-financial performance
measures. Rather, it’s a system that
translates the firm’s vision and strategy
into a linked set of performance
measures. These measures must include
both outcome measures (the lag
indicators), and the drivers of those
outcome measures (the lead indicators).
For some companies, the BSC has
evolved into a strategic management
system. Used in this manner, the
scorecard incorporates four new
management processes that enable
managers to link long-term strategic
objectives with short-term actions. The
first process – translating the vision –
helps the organization build consensus
around its vision and strategy. The
second process – communicating and
linking – facilitates management’s
efforts to communicate and link the
firm’s strategy to individual and
the management accountant, September, 2008
IFAC Article
department goals. The third process –
business planning – makes it easier to
integrate business and financial plans.
The final process– feedback and
learning – gives an organization the
capacity for strategic learning.
Whether the BSC is used as a
performance measurement or strategic
management system, a company must
address how targets and goals– the
metrics used in the scorecard process –
are established. While benchmarking
best practices of other organizations and
using stretch targets are methods
discussed in the scorecard literature, we
believe theseapproaches may
undermine the credibility and
usefulness of the BSC. Such
measurements are simply arbitrary
goals and targets. As such, they suffer
from the same deficiencies when used
in a BSC as when incorporated in more
traditional performance measurement
systems. More importantly, the use of
benchmarking and stretch targets
doesn’t consider the current
performance of the processes used to
achieve the firm’s strategy. Since
successful BSC strategy
implementation requires the
improvement of critical business
processes, the use of statistical process
control (SPC) should become an integral
part of establishing the numerical targets
and goals of balanced scorecards.
Statistical Process Control
Although a detailed explanation of
SPC and capability analysis is beyond
the scope of this article, the reader needs
to understand some basic concepts to
appreciate how SPC can enhance the
BSC. These concepts were first
developed by Walter Shewhart and
introduced in his text, “Economic
Control of Quality of Manufactured
Product.” Subsequently, SPC has
become one of the most important tools
for improving processes (for a more
detailed explanation of SPC, please refer
to the book Understanding Variation:
The Key to Managing Chaos, by
Donald Wheeler).
The targets and goals used for the
BSC are, in effect, specifications. The
common mistake in traditional
performance measurement is to confuse
these specifications – no matter how
important and desirable they may be –
with the capability of a given process.
A problem occurs if management
establishes targets and goals for BSC
without considering the current
performance of the processes used to
deliver the results. For example, if
management sets a target (specification)
of 95% on-time delivery (OTD) for a
customer delivery process without
considering the current capability of the
process, the goal is purely arbitrary.
Pressures to meet such targets and
goals can lead to the distortion of
processes and figures.
Traditional performance measure-
ment usually entails comparing some
specification target or goal to some
actual result. The outcome is favourable
if the target is met or exceeded, and
unfavourable if it isn’t met.
Unfortunately, traditional analysis can’t
determine the reason for meeting or
missing the target.
Unlike traditional performance
measurement, which attempts to attach
a meaning to every data point and
outcome, SPC focuses on the behaviour
of the time series of the underlying
process. In effect, SPC incorporates the
use of process behaviour charts (also
referred to as control charts) and other
quality tools to define the capability of
the process.
667

Analyzing Variation
Process behaviour charts allow
management to analyze process
variation. All processes exhibit
variation. The key question for
management is whether the variation is
random and inherent in the design of
the process (usually referred to as
common cause variation), or whether
forces outside the design of the process
are causing the variation (usually
referred to as special, or assignable
cause variation). Management must
respond to common cause variation and
special cause variation in distinct ways.
Confusing the two, or not being able to
distinguish between them, can cause
serious and costly mistakes.
Through the use of process
behaviour charts, management can
determine if the variation that is
occurring is a common cause or a special
cause. A process that displays only
common cause variation is one that is
said to be stable or in statistical control.
For example, Exhibit A shows a control
chart for the length of time it takes to
process a medical claim. Data is shown
for the number of days it takes to
process each claim. The control chart
shows a stable process since all of the
data points fall between the upper
control limit (UCL) of 26.7 days and the
lower control limit (LCL) of 8.6 days. The
current process average is 17.7 days.
If the process behaviour chart
reveals that special cause variation is
present – for example, by the
occurrence of points outside the upper
or lower control limits – something is
occurring outside management’s
original design of the process. For
example, Exhibit B shows a control chart
for the time it takes to resolve customer
complaints. Since the chart reveals the
presence of points above the UCL of
7.1 days and below the LCL of 3.0 days,
special cause variation is present in the
process. The proper course of action
when special causes are present is to
investigate the signal to eliminate the
668
IFAC Article
cause if it is an undesirable result or, in
the case of a desirable outcome, to
determine if and how it can be replicated
in the future. When the special cause is
eliminated, the process returns to a
state of statistical control.
Bsc And Process
Behaviour Charts
With process behaviour charts,
management can evaluate the current
performance of a process and determine
whether the process’s current
configuration is capable of achieving
the numerical targets and goals for BSC
measurements. If management isn’t
satisfied with the amount of variation
or the average output level of a stable
process, it must improve the process
by making changes to the process
inputs (people, methods, equipment,
materials, and environment). Returning
to the example in Exhibit A, if
management isn’t satisfied with the
current process average of almost 18
days to process a medical claim or the
amount of variation present, it has to
change the process to get better results.
Blaming process managers for the
the management accountant, September, 2008
variation or the failure to achieve BSC
results is futile. The process is
performing as best it can, given its
present design. Unless management
changes the process, similar results can
be expected in the future.
Once a process is in statistical
control, only common cause variation
is present. This allows management to
make predictions about the future
performance of this process because its
outputs are predictable and within a
definable capability. Since prediction is
an integral part of the BSC process,
efforts to bring processes into statistical
control are critical to ensure that
management will take the appropriate
action when undesirable results occur.
If a process is not stable, special causes
are present; it is useless to make
predictions about the future
performance of the process since it does
not have a definable capability.
Using process behaviour charts in
the BSC process also gives
management the added advantage of
focusing on the distribution of process
results over time. One of the dangers of

traditional performance measurement
systems is that they are used as the
basis for reports, which compare one
data point with another.
For example, if management were
given a report that showed that last
month the time it took to process a
medical claim increased from 18 days to
24 days, it might react as if this was a
signal that there was a serious problem.
Management would demand an
explanation or perhaps reprimand the
process manager. Worse yet, they may
be tempted to alter their strategy. But
as Exhibit A shows, these results are
still within the upper and lower control
limits of the process control chart.
Management shouldn’t just focus
its analysis on a few isolated data points
and interpret these without considering
the historical output of the process.
Results must be interpreted in the
context of the distribution of data shown
in the process control chart.
Management, in failing to analyze data
in this manner, runs the risk of inviting
tampering with a stable process (which
can increase variation) or of blaming
process managers for results over which
they frequently have little or no control.
Returning to our example in Exhibit A,
management might not be satisfied with
the results of this process, but it should
realize that these results came from a
stable process.
Management now must study the
process to determine how it can be
improved. One approach that is
employed to meet this need is the Six
Sigma process improvement program.
Six Sigma At Work
The Six Sigma initiative is aimed at
eliminating defects from products,
processes, and transactions. The
concept was popularized by Motorola
in the 1980s. The program’s name comes
from the statistical measure of six
standard deviations, or six sigma from a
process average, a range beyond which
no more than 3.4 defects per million
opportunities (DPMO) will occur when
the management accountant, September, 2008
IFAC Article
the process average drifts up to 1.5
standard deviations. The program is
designed as a disciplined, quantitative
approach for improvement of defined
metrics in manufacturing, service, or
financial processes.
A critical element of the Six Sigma
initiative is careful selection of projects
based on their potential to improve
performance metrics. Such projects
follow a four step process:
• Selection of the appropriate
measurements and collections of
preliminary data;
• Analysis of preliminary data and
identification of root causes of defects;
• Development of improvement
recommendations; and
• Implementation of sustainable
solutions.
The Six Sigma initiative is
characterized by top management
support, a focus on cost and waste
reduction, understanding customers’
expectations, and use of performance
metrics that directly measure
improvements in cost, quality, and yield.
The program emphasizes the formal
application of basic quality tools such
as flow charts, cause and effect
diagrams, run charts, and Pareto
analysis. It also stresses training and
participation for employees at all levels
of the organization.
An Enhanced Bsc
Exhibit C illustrates how SPC and
Six Sigma can be integrated to enhance
the BSC. Assume that an insurance
company has adopted a BSC initiative
and has identified the time it takes to
process a medical claim as one of its
key measurements to improve customer
satisfaction. The company selects
medical claim processing as one of its
key processes to monitor in the Internal
Business Process panel of their
scorecard. Based upon best practice
data it sets a stretch target of 14 days
for the processing of all medical claims.
Exhibit C replicates the data and
control chart already discussed as
Exhibit A with one addition. We have
added a line that represents the goal of
achieving a process average of 14 days
to process a medical claim. The current
average is 18 days (we round all data to
the nearest day). Although this process
is in statistical control it still shows a
considerable amount of variation. Given
the current design of the process we
can expect the next claim submitted to
be processed somewhere between 9
days and 27 days with the average over
time being around 18 days. However,
management, interested in improving
the time it takes to process a medical
claim, has set a target of 14 days.
The 14-day target represents a
specification limit. Unfortunately the
process for which the target has been
established is not capable of achieving
this specification. The current process
average is only 18 days. Management’s
failure to use process behaviour charts
to assess the current performance of
this process has resulted in setting a
target that is beyond the capability of
669

the existing process. Periodic reports to
management will show results that will
at times be better than the 14-day target
and at times worse.
Management will seek an
explanation for the unfavourable
variances and demand that action be
taken. The process manager, in response
to management’s request, will do his or
her best to explain why the targets are
missed some periods and met for others.
Blame will not be in short supply.
Decisions about the “problem” will be
made and actions taken in an effort to
meet the target. Unfortunately, unless
fundamental changes are made to the
process, the actions taken could very
likely make the variation and the results
worse.
These problems are compounded
when the BSC is used. The very nature
of the BSC process is to put the focus
of management on the real drivers of
outcomes/results, a firm’s processes. In
effect good processes are the key to
good results. Successful strategy
implementation in a BSC initiative
depends upon the current performance
of a firm’s processes. Process behaviour
charts reveal this performance and can
identify for management those
processes that must be improved to
achieve the firm’s strategy.
If management had used a process
behaviour chart in its efforts to analyze
and improve its medical claims process,
it could immediately have seen the
futility of setting a 14-day goal for this
process. The target line is clearly below
the current long-term average for this
process. More important, variation
between some upper and lower control
limit is inevitable. To expect that every
claim be processed in 14 days is simply
not realistic.
The target-setting problem is
exacerbated when firms tie performance
evaluation and reward systems to
arbitrarily determined metrics. Process
managers are now held accountable for
targets that are clearly beyond the
670
IFAC Article
current performance of the process.
This scenario invites the possibility of
wrong decisions being made in an effort
to achieve the target, which could
further undermine the BSC process.
A better approach would be for
management to use a process behaviour
chart to analyze the current behaviour
of the medical claim process. Their
scorecard processes would have been
enhanced in the following ways: (1)
management would clearly see that their
goal of 14 days was beyond the current
performance of the process. In effect, it
was nothing more than an arbitrary
target; (2) it would call attention to the
fact that if the goal was to reduce the
current average from 18 to 14 days, the
proper course of action would be to
engage in some process improvement
initiative following the outline of the Six
Sigma program discussed earlier to not
only improve the process average but
to also reduce the amount of variation
in days to process a claim; (3)
management would be able to analyze
the variation from a process to
determine if it is just a common variation
or a special variation so that the
appropriate course of action could be
taken, thereby saving the organization
valuable time, talent, and resources, and
(4) the futility of blaming process
managers for what is beyond their
control would become clear.
In situations where management
sets BSC goals and targets for processes
that are not in statistical control – where
special cause variation is present – the
process isn’t in statistical control, so it
doesn’t have a definable capability.
Setting goals or targets for these
processes is a waste of time since their
performance isn’t predictable. Again,
process managers and employees
attempting to achieve results for these
out-of-control processes waste valuable
time, talent, and resources. Without the
use of process behaviour charts,
management has no way to determine
the current performance of its processes
the management accountant, September, 2008
or whether processes are even in
control. Blame, fear, frustration, a loss
of confidence in the BSC initiative are
just a few of the costs that can result
from a failure to use process behaviour
charts to support a BSC initiative.
Of course, there is nothing wrong
with using measurements based on the
current performance of stable processes
to set improvement goals. Returning to
our example in Exhibit C, management
has set a BSC target of 14 days to
process a claim. The only way to
achieve this goal is through a process
improvement initiative such as Six
Sigma, which results in reducing
variation and improving the process
average. Setting this BSC target and
monitoring the results of the
improvement effort through the use of
a process behaviour chart is a way to
assess this BSC initiative.
The BSC process can be a powerful
tool to align, communicate, and link a
firm’s strategy to its performance
measurement system. However, the
credibility of the BSC process can be
undermined if firms try to use
benchmarking or stretch targets to
establish numerical targets for BSC
processes. These arbitrary goals and
targets invite fear, frustration, and
distortion of the system or distortion of
figures. Since one of the important
benefits of the BSC is to link the firm’s
measurement system to its strategy, it’s
extremely important to determine the
current performance of those key
processes that are the performance
drivers, the lead indicators of the BSC
outcome measures. The only way to
determine the behaviour and current
performance of these key processes is
through the use of process behaviour
charts.
All of the numerical targets and
goals for key BSC processes should be
determined through the use of process
behaviour charts. Such determinations
not only prevent the problems
Contd. on Page 675
 IFAC Article

The carpet industry is facing

Performance Measurement difficult times throughout the world. The
business market is susceptible to
cyclical trends, and the products are
Systems for Corporate constantly subject to environmental
debate. Interface is one of the stronger
players in this difficult market. This is
Sustainability due to such factors as:
l The Heuga brand name in Europe,
A case study which covers a range of strong
When a company chooses for corporate sustainability and to act accordingly, this products
usually means a drastic change in strategy. Inevitably it calls for adjustment of its l The consistently high quality of its
performance measurement systems, since the effects of the new strategy cannot carpet tiles, a technically difficult
otherwise be measured and monitored. This case study describes the perfor- product.
mance measurement systems at Interface, a company that opted ten years ago for With over 5,000 employees
a strategy of corporate sustainability. It firstly describes the performance mea- worldwide, Interface is a medium-sized
surement systems of Interface, followed by an assessment of their quality. company. It operates in a diversity of
cultures but obviously reflects the
Lineke. Sneller American management style of the
strategy of corporate sustainability. parent company.
Introduction Section 3 then covers the main features
The sections below cover the
Corporate sustainability is receiving a of the theory of performance
management control process of
great deal of attention in Europe. Large measurement systems, and it describes
Interface. They describe how the
multinationals such as Ikea, Bodyshop four quality criteria that apply to such
strategy of Interface came about, how
and BP opted for corporate sustaina- systems. In the final section the quality
objectives and targets are set, the
bility in recent years. In the Netherlands of the performance measurement
performance measurement systems that
the level of interest in the ecological and systems at Interface is assessed in the
Interface has designed and the
social aspects of entrepreneurship may light of these four quality criteria. relationship between performance and
have been less than optimal, but now Interface: Corporate Sustainability In variable compensation.
that corporations of the size of Shell are Actual Practice
focusing on these aspects it is clear that 2.1 Strategy
this is more than a short-term hype. Interface Inc, an American Until 1994 Interface Inc aimed at
corporation that is listed on the Nasdaq worldwide market leadership. This led
For any corporation, the transition
stock exchange, is engaged in the to a large number of business
to sustainable enterprise comes down
market for soft floor coverings as a acquisitions around the world. The
to a strategy change. To enable the
producer and supplier of carpet tiles. company's environmental policy was
effects of implementing the new
This is a niche market, with less than 10 simple: do what is minimally required to
strategy to be measured, monitored and
percent of the total production volume comply with relevant laws and business
managed, the performance measurement
systems and management control of the carpet industry. Interface is the regulations.
processes must be redesigned. This market leader in this niche, with a market In 1994, however, chief executive
article describes how corporate share of more than 50 percent in officer Ray Anderson came under the
sustainability can be embedded in the practically every country where it sells spell of the concept of corporate
management control processes of its products and services. sustainability. The mission of Interface
companies. This is done on the basis of The major part of sales by Interface
a case study at Interface, a corporation is realised in the business market as its "Interface will be the first company
that has applied sustainable business customers are mostly flooring that, by its deeds, shows the entire
practices since ten years. contractors and carpet fitters that lay industrial world what sustainability is
The article is built up as follows. carpeting in office buildings. In in all its dimensions: People, Process,
Section 2 describes the company and addition, Interface has a retail segment, Product, Place and Profit. In doing so
the performance measurement systems which serves the consumer market via we will become restorative by the year
that are used at Interface to support the do-it-yourself and furniture stores. 2020 through the power of influence."

the management accountant, September, 2008 671


was totally revisited at a large meeting
that involved the entire management of
the corporation.
The strategy of Interface is based
on the five Ps: People, Process, Product,
Place and Profit. The idea behind this is
that a company can only be sustainable
when the five Ps are developed in
conjunction. Disregard for one or more
of the five will endanger the long-term
existence of the company.
2.2 Objectives
The strategy of Interface is to
achieve sustainable entrepreneurship
by the year 2020. Interface will regard
itself as a sustainable enterprise when
the following seven objectives are
achieved 2:
l Eliminate waste
l Benign emissions
l Renewable energy reducing the
energy demands while substituting
non-renewable sources with
sustainable ones
l Resource-efficient transportation,
with transport of information instead
of people and products wherever
possible
l Redesign commerce
l Sensitivity hookup
l Closing the loop
The first four objectives speak for
themselves, but the next three call for
some explanation. The fifth objective,
redesign commerce, aims at supply of
Interface services instead of products
only. An example of this is carpet lease,
where, instead of a one-off delivery,
Interface provides carpeting, cleaning,
replacement and removal services for
an agreed period. The company in fact
takes total responsibility for the entire
life of the carpeting. In that way the
carpeting, a product that does not easily
degrade, will not end up in the garbage
dump, since Interface can arrange for
recycling.
As to the sixth objective, sensitivity
hookup for all stakeholders to natural
672
IFAC Article
systems, Interface tries to realise this in
various ways. Examples include
scholarship grants for development and
education in the field of corporate
sustainability, and stimulating
community involvement on the part of
employees. Writing articles,
appearances on radio or television and
giving speeches are also activities that
serve to promote sensitivity and
awareness.
The seventh objective, closing the
loop of material flows, is the most
ambitious one of all. A cyclical flow
originates when a product, after being
used, serves as input for a new
production process and is thus re-used.
For a chemical product such as
carpeting this cannot yet be realised in
a profitable way with current
technology. Interface therefore wants
to realise the cycle in phases. One of
the most recent developments is the use
of organic yarns that are produced from
corn, potatoes or soybeans.
Next to the above seven objectives,
which relate mainly to the four Ps of
People, Process, Product and Place,
there is the fifth P, that of Profit. For
sustainable enterprise, this is
indispensable. Profit-related objectives
include operating income, profit centre
contribution and cash flow.
the management accountant, September, 2008
2.3 Targets
The Interface strategy has a horizon
that expands over many years. To be
able to follow the implementation and
to adjust where necessary, such a
horizon is clearly too long. Each year
therefore, corporate management sets
target levels per division for each
objective. European management then
translates these into target levels for the
various European managers.
Table 1 presents an example of the
overall European target levels and the
consequent target levels for Sales in
Southern Europe and for Operations in
the Netherlands. The table only
presents targets in percentage terms.
However, there are also quality-related
targets. An example of such a target is
the preparation of a plan for the
development of carpet tiling produced
from corn.
2.4 Performance measurement
systems
Table 1 not only presents targets but
also actuals. These are measured using
the various performance measurement
systems that Interface has developed.
The financial reports are essentially no
different from reports at other
companies. They do, however, include
aspects that are specifically linked to
corporate sustainability such as
Ecopoints and Quest.

Ecopoints is a grading system that
relates to objectives associated with the
Ps of Process and Planet. The activities
that generate points can be quite varied.
Production sites, for example, can work
on improving their production
processes. In order to earn points, a plan
must be submitted in advance to
Interface Research. This laboratory unit
examines the feasibility of the plan and
determines the number of points that
can be earned. The production site
implements the plans, and Interface
Research then conducts an audit to
determine whether the intended
improvement has been achieved. When
this is the case, the points are granted.
There are also simpler ways to earn
points. For example, video conferencing
equipment is available at the larger
company sites. Such equipment
eliminates the need of air travel and the
consequent environmental burden. That
leads to Ecopoints.
Quest measures waste, thus
focusing on the Ps of Place and Profit.
The goal is to reduce the amount of
waste by 10% each year, in particular
from the production process. Employees
can also submit ideas to cut waste, a
feature that reminds of Japanese quality
circles. Figure 2 is an example of a Quest
report.
2.5 Linking to variable compensation
The performance measurement
systems are linked to variable
compensation. Some. thirty managers
fall under the European bonus plan.
This group consists of the European
executive directors, their direct reports
and a number of managers in strategic
functions. Table 2 sets out how this
bonus plan works for three managers
from different disciplines.
For each manager participating in
the bonus plan, a bonus potential is
determined at the time of assignment,
expressed as a percentage of the
manager's salary. The weightings of the
individual performance measures are
then determined. For example, Table 2
the management accountant, September, 2008
IFAC Article
shows that the Quest score has a
weighting of 16% in the bonus
potential of the Director of Dutch
Operations.
Each month, targets and actuals are
measured and reported in line with the
performance measurement systems
described in the previous section. The
score at the end of the year determines
what percentage of the bonus potential
is actually paid out. In the example, the
Director of Sales for Southern Europe
has achieved 80% of the targets. The
bonus to be paid is thus 80% of the
bonus potential of 55%, thus 44% of
salary.
Strategy And Performance
Measurement Systems:
Outline Of The Theory
We have just described how
Interface has put performance
measurement systems into place. This
section presents a brief outline of the
theory of performance management.
The relationship between strategy and
performance measurement systems is
clearly set out by Simons 5. A
company's strategy indicates how value
is created, and also which objectives
the employees must keep in mind in
order to ensure that such value actually
comes about. In order to monitor value
creation, the objectives must be stated
in terms of performance measures.
These are measurable interpretations of
the objectives.
A performance measurement system
consists of target levels and actuals of
performance measures. Targets are
specific goals or aspirations for
performance measures, while actuals are
the measured values. Using a
performance measurement system,
managers can compare targets and
actuals. According to the theory of
Simons, they can thus monitor the
implementation of strategy.
The quality of the performance
measurement system is decisive for the
extent to which it is useful for the
implementation of strategy. Bouwens
and Van Lent 1 identify three quality-
related criteria for performance
measures:
l Timeliness. After a manager has
taken a decision, a certain amount
of time passes before the effect of
that decision is noticeable. Only
then can the result be made visible
in the performance measurement
system. In a timely performance
measurement system, a minimum
amount of time passes between the
moment when a result is noticed and
the measurement and reporting via
the measurement performance
system.
l Accuracy. In an accurate
performance measurement system,
the measurements are a reliable
673
 IFAC Article

reflection of the performance of the

manager, and they are objective and
verifiable.
l Sensitivity. In a sensitive
performance measurement system
there is a strong relationship
between the efforts of the manager
and the performance measure.
When the manager ignores an
objective or pays great attention to
it, this is reflected in the performance
measures.
A good performance measurement
system thus provides timely, accurate
and sensitive insight into the various
performance measures.
relevant to corporate sustainability, European management. Based on these
The theory of performance namely: reports, the various management layers
measurement systems is especially
l Completeness. Corporate discuss actions to be taken. A poor
applied in companies that define their
sustainability calls for a value Quest score for Operations in Europe
strategy and added value in financial
concept with multiple dimensions. last year led in this way to revision of
terms such as share value. A well-known
A complete performance the quality system in the factories,
category of performance measurement
measurement system sets targets which resulted in a significantly higher
systems for which this applies is the
and measures actual performance in score.
Balanced Scorecard 3. In this particular
terms of each of these dimensions. Production and selling processes in
tool, non-financial aspects may well be It stimulates balanced improvement
included in the performance measures, the carpeting industry have a
across their full range. throughput time of many months,
but the prime intent of the Balance
Scorecard is to see the ultimate effect, In summary, a good performance whereas reports are produced monthly.
via cause-and-effect relationships, in measurement system for corporate The Interface performance
sustainability consists of a complete measurement system thus scores high
terms of financial measures.
collection of performance measures, and on timeliness.
In corporate sustainability, the it provides timely, accurate and
strategy and added value are not set Accuracy
sensitive insight into each of these
out strictly in financial terms. It applies Targets and actuals are determined
measures.
the principle of balanced development and reported both at local and division
Assessment level, leading to proper insight into the
in a variety of aspects. A well-known
example of a multidimensional value In this last section the quality of the performance of the individual managers.
concept is the theory of the Triple performance measurement system of The financial reports are reviewed by
Bottom Line 4. This theory assumes Interface is assessed in terms of the the accountant, while the Quest and
balanced development of ecology quality criteria described in section 3: Ecopoints reports are reviewed by
(Planet), social capital (People) and timeliness, accuracy, sensitivity and Interface Research, the independent
completeness. laboratory of the US parent. This
economy (Profit).
When the European performance ensures the objectivity of the reports.
A value concept with various
measurement system of Interface is The Interface performance
dimensions has consequences for the
assessed on the basis of the quality measurement thus scores high on
determination of performance measures
criteria mentioned in section 2, this leads accuracy.
that are to be included in the
to the following conclusions. Sensitivity
performance measurement system.
Therefore, in addition to the Timeliness The extent to which corrective
requirements of timeliness, accuracy Each month, no later than the fifth actions lead to actual improvement of
and sensitivity, I wish to add one more working day, actuals for the previous performance depends on the position
quality criterion that is particularly month aremeasured and reported to of the manager. The Sales Director for

674 the management accountant, September, 2008


Southern Europe, for example, is able to
exert direct influence on Operating
Income by pricesetting or increasing
sales. The Director of Dutch Operations
can impact the Quest scores by
producing less waste or by closing
contracts for sustainable energy. In the
direct functions there is a close
relationship between the actions of the
manager and actual performance. This
is different for the supporting functions.
The Manager of IT Development might
contribute most to the objectives by
closing the department, thereby
eliminating the related fixed expenses.
But this would be dysfunctional
behaviour since that is likely to lead to
lower scores on other performance
measures. The relationship between the
actions of the manager and actual
performance is less clear for the indirect
functions.
The Interface performance system
scores high on sensitivity for the direct
functions andinadequate for the
supporting functions.
Completeness.
Interface describes its strategy in
Contd. from Page 670
associated with arbitrary goals and
targets, but also give management
important feedback about the behaviour
and current performance of important
processes essential for monitoring
progress associated with the
organization’s strategy. Process charts
and Six Sigma can significantly improve
an organization’s chance for
implementing a successful BSC
initiative.
References
Castellano, Joseph F. and Harper
Roehm. "The Problem with Managing
by Objectives and Results." Quality
Progress. March 2001.
the management accountant, September, 2008
IFAC Article
terms of the dimensions that are
reflected in the five Ps. For each P one
or more objectives have been defined.
Each year targets are agreed for these
objectives, and each month the actuals
are measured. All objectives are
considered in the level of variable
compensation. European management
is thus stimulated to consider all
objectives. The Interface performance
measurement system scores high
therefore on the criterion of
completeness.
Summarising the above, the
European performance measurement
system is timely, accurate and complete.
Improvements are possible as to
sensitivity, in particular in the
supporting functions. On the whole it
is a useful system. It measures progress
in the implementation of strategy and
enables the managers to adjust where
necessary. The performance
measurement system is one of the
factors that have enabled Interface to
make substantial progress during the
past ten years on the road to corporate
sustainability.
Deming, W. Edwards. New Economics
for Industry, Government, and
Education. Cambridge: Massachusetts
Institute of Technology, Center for
Advanced Engineering Study, 1994.
Hart, Roger W. “Six Sigma and the
Future of the Quality Profession.”
Quality Progress. June 1988.
Kaplan, Robert and David Norton.
“Balanced Scorecard: Measures that
Drive Performance.” Harvard Business
Review. January-February 1992.
Kaplan, Robert and David Norton.
“Linking the Balanced Scorecard to
Strategy.” California Management
Review. Vol. 39, No. 1, Fall 1996.
Sources
1 Bouwens, J. and L. van Lent (2002):
Score Keeping: when is one
performance measure not enough?,
Reader Management Accounting in
Management Control. Atlanta.
2 Interface Research, The Interface
Sustainability Brief, Atlanta 2003
3 Kaplan, R. and A. Atkinson,
Advanced Management
Accounting, Upper Saddle River
2000
4 O’Riordan, T., Environmental
Science for Environmental
Management, Harlow 2000
5 Simons, R., Performance
Measurement and Control Systems
for Implementing Strategy, Upper
Saddle River 2000
Lineke Sneller is Director of IT &
Financial Accounting for Interface
Europe and Asia Pacific. Interface is the
global market leader in the production
and sale of carpet tiles, best known in
Europe under the Heuga brand name.
Kaplan, Robert and David Norton.
“Using the Balanced Scorecard as a
Strategic Management System.” Harvard
Business Review. January-February 1996.
Shewhart, Walter. Economic Control of
Quality of Manufactured Product. New
York:D. Van Norstrand Company, Inc.,
1931.
Wheeler, Donald. Understanding
Variation: the Key to Managing Chaos.
Knoxville: SPC Press, 1993.
Larry B. Weinstein, Ph.D, is an associate
professor at Wright State University in
Dayton, Ohio. Joseph F. Castellano is a
professor of accounting at University
of Dayton.
675
676 the management accountant, September, 2008
the management accountant, September, 2008 677

IAS 7,
Statement of Cash Flows
- A Closer Look
K.S.Muthupandian*
I
n June 1976, the International
Accounting Standards Committee
(IASC) issued the Exposure Draft
E7, Statement of Source and
Application of Funds. In October 1977,
the IASC issued IAS 7, Statement of
Changes in Financial Position. In July
1991, the IASC issued Exposure Draft
E36, Cash Flow Statements. Based on
the comments received, the IASC
issued revised IAS 7, Cash Flow
Statements in December 1992, which
supersedes 1977 version of IAS 7. The
effective date was fixed as January 1,
1994. On September 6, 2007, the
International Accounting Standards
Board (IASB) changed the title of IAS 7
from Cash Flow Statements to Statement
of Cash Flows as a consequential
amendment resulting from revisions to
IAS 1, Presentation of Financial
Statements.
Objective
The objective of IAS 7 is to require
the presentation or provision of
information about the historical changes
in cash and cash equivalents of an
enterprise by means of a statement of
cash flows, which classifies cash flows
during the period according to
operating, investing, and financing
activities. Information about the cash
flows of an enterprise is useful in
*M.Com., AICWA and Member of Tamil
Nadu State Treasuries and Accounts Service,
presently working as Treasury Officer,
Ramanathapuram District, Tamil Nadu.
Email: ksmuthupandian@yahoo.co.in
678
Accounting Standard
providing users of financial statements
with a basis to assess the ability of the
enterprise to generate cash and cash
equivalents and the needs of the
enterprise to utilize those cash flows.
The economic decisions that are taken
by users require an evaluation of the
ability of an enterprise to generate cash
and cash equivalents and the timing and
certainty of their generation.
Scope
An enterprise should prepare a
statement of cash flows in accordance
with the requirements of this Standard
and should present it as an integral part
of its financial statements for each
period for which financial statements are
presented. Users of an enterprise's
financial statements are interested in
how the enterprise generates and uses
cash and cash equivalents. This is the
case regardless of the nature of the
enterprise's activities and irrespective
of whether cash can be viewed as the
product of the enterprise, as may be the
case with a financial institution.
Enterprises need cash for essentially the
same reasons however different their
principal revenue-producing activities
might be. They need cash to conduct
their operations, to pay their obligations,
and to provide returns to their
investors. Accordingly, IAS 7 requires
all enterprises to present a statement of
cash flows.
Definitions
Cash flows are inflows and outflows
of cash and cash equivalents. Cash
the management accountant, September, 2008
comprises cash on hand and demand
deposits. Cash equivalents are short-
term, highly liquid investments that are
readily convertible to known amounts
of cash and which are subject to an
insignificant risk of changes in value.
Fundamental Principle in IAS 7
All enterprises that prepare financial
statements in conformity with IFRSs are
required to present a statement of cash
flows. The statement of cash flows
analyses changes in cash and cash
equivalents during a period. Cash and
cash equivalents comprise cash on hand
and demand deposits, together with
short-term, highly liquid investments
that are readily convertible to a known
amount of cash, and that are subject to
an insignificant risk of changes in value.
Guidance notes indicate that an
investment normally meets the
definition of a cash equivalent when it
has a maturity of three months or less
from the date of acquisition. Equity
investments are normally excluded,
unless they are in substance a cash
equivalent (e.g. preferred shares
acquired within three months of their
specified redemption date). Bank
overdrafts which are repayable on
demand and which form an integral part
of an enterprise's cash management are
also included as a component of cash
and cash equivalents.
Classification of cash flows
The statement of cash flows shall
report cash flows during the period in
the following classification:
(1) Operating activities:
(2) Investing activities:
(3) Financing activities:
A model statement of cash flows is
given as annexure.
Operating activities
Operating activities are the main
revenue-producing activities of the
enterprise and other activities that are
not investing or financing activities, so

operating cash flows include cash
received from customers and cash paid
to suppliers and employees. Cash flows
from operating activities are primarily
derived from the principal revenue-
producing activities of the entity.
Therefore, they generally result from the
transactions and other events that enter
into the determination of profit or loss.
The amount of cash flows arising from
operating activities is a key indicator of
the extent to which the operations of
the entity have generated sufficient
cash flows to repay loans, maintain the
operating capability of the entity, pay
dividends and make new investments
without recourse to external sources of
financing.
Examples of cash flows from
operating activities are:
(a) cash receipts from the sale of goods
and the rendering of services;
(b) cash receipts from royalties, fees,
commissions and other revenue;
(c) cash payments to suppliers for
goods and services;
(d) cash payments to and on behalf of
employees;
(e) cash receipts and cash payments of
an insurance enterprise for
premiums and claims, annuities and
other policy benefits;
(f) cash payments or refunds of income
taxes unless they can be specifically
identified with financing and
investing activities; and
(g) cash receipts and payments from
contracts held for dealing or trading
purposes.
Some transactions, such as the sale
of an item of plant, may give rise to a
gain or loss which is included in the
determination of net profit or loss.
However, the cash flows relating to such
transactions are cash flows from
investing activities.
An entity shall report cash flows
from operating activities using either:
the management accountant, September, 2008
Accounting Standard
(a) the direct method, whereby major
classes of gross cash receipts and gross
cash payments are disclosed; or
(b) the indirect method, whereby
profit or loss is adjusted for the effects
of transactions of a non-cash nature,
any deferrals or accruals of past or
future operating cash receipts or
payments, and items of income or
expense associated with investing or
financing cash flows.
Direct Method
The direct method shows each major
class of gross cash receipts and gross
cash payments. The operating cash
flows section of the statement of cash
flows under the direct method would
appear something like this:
Cash receipts from customers xxx
Cash paid to suppliers xxx
Cash paid to employees xxx
Cash paid for other operating
expenses xxx
Interest paid xxx
Income taxes paid xxx
Net cash from operating activities xxx
Under the direct method,
information about major classes of
gross cash receipts and gross cash
payments may be obtained either:
(a) from the accounting records of
the enterprise; or
(b) by adjusting sales, cost of sales
(interest and similar income and interest
expense and similar charges for a
financial institution) and other items in
the income statement for:
(i) changes during the period in
inventories and operating receivables
and payables;
(ii) other non-cash items; and
(iii) other items for which the cash
effects are investing or financing cash
flows.
Indirect Method
The indirect method adjusts accrual
basis net profit or loss for the effects of
non-cash transactions. The operating
cash flows section of the statement of
cash flows under the indirect method
would appear something like this:
Profit before interest and income xxx
taxes
Add back depreciation xxx
Add back amortisation of goodwill xxx
Increase in receivables xxx
Decrease in inventories xxx
Increase in trade payables xxx
Interest expense xxx
Less Interest accrued but not yet xxx
paid
Interest paid xxx
Income taxes paid xxx
Under the indirect method, the net
cash flow from operating activities is
determined by adjusting net profit or
loss for the effects of:
(a) changes during the period in
inventories and operating
receivables and payables;
(b) non-cash items such as
depreciation, provisions, deferred
taxes, unrealised foreign currency
gains and losses, undistributed
profits of associates, and minority
interests; and
(c) all other items for which the cash
effects are investing or financing
cash flows.
Alternatively, the net cash flow from
operating activities may be presented
under the indirect method by showing
the revenues and expenses disclosed
in the income statement and the
changes during the period in
inventories and operating receivables
and payables.
Investing activities
Investing activities are the
acquisition and disposal of long-term
assets and other investments not
included in cash equivalents. The
separate disclosure of cash flows arising
from investing activities is important
because the cash flows represent the extent
679

to which expenditures have been made for
resources intended to generate future
income and cash flows. The aggregate
cash flows arising from acquisitions and
from disposals of subsidiaries or other
business units shall be presented
separately and classified as investing
activities.
Examples of cash flows arising from
investing activities are:
(a) cash payments to acquire property,
plant and equipment, intangibles and
other long-term assets. These
payments include those relating to
capitalised development costs and self-
constructed property, plant and
equipment;
(b) cash receipts from sales of property,
plant and equipment, intangibles and
other long-term assets;
(c) cash payments to acquire equity or
debt instruments of other enterprises
and interests in joint ventures (other
than payments for those instruments
considered to be cash equivalents or
those held for dealing or trading
purposes);
(d) cash receipts from sales of equity or
debt instruments of other enterprises
and interests in joint ventures (other
than receipts for those instruments
considered to be cash equivalents and
those held for dealing or trading
purposes);
(e) cash advances and loans made to
other parties (other than advances and
loans made by a financial institution);
(f) cash receipts from the repayment of
advances and loans made to other
parties (other than advances and loans
of a financial institution);
(g) cash payments for futures contracts,
forward contracts, option contracts and
swap contracts except when the
contracts are held for dealing or trading
purposes, or the payments are
classified as financing activities; and
(h) cash receipts from futures contracts,
680
Accounting Standard
forward contracts, option contracts and
swap contracts except when the
contracts are held for dealing or trading
purposes, or the receipts are classified
as financing activities.
Financing activities
Financing activities are activities
that result in changes in the size and
composition of the contributed equity
and borrowings of the entity. The
separate disclosure of cash flows
arising from financing activities is
important because it is useful in
predicting claims on future cash flows
by providers of capital to the entity.
Examples of cash flows arising from
financing activities are:
(a) cash proceeds from issuing
shares or other equity instruments;
(b) cash payments to owners to
acquire or redeem the enterprise's
shares;
(c) cash proceeds from issuing
debentures, loans, notes, bonds,
mortgages and other short or long-term
borrowings;
(d) cash repayments of amounts
borrowed; and
(e) cash payments by a lessee for
the reduction of the outstanding
liability relating to a finance lease.
Presentation of the Statement of Cash
Flows
Key principles specified by IAS 7
for the preparation of a statement of
cash flows are as follows:
Information about the cash flows of
an entity is useful in providing users of
financial statements with a basis to
assess the ability of the entity to
generate cash and cash equivalents and
the needs of the entity to utilise those
cash flows. The economic decisions that
are taken by users require an evaluation
of the ability of an entity to generate
cash and cash equivalents and the
timing and certainty of their generation.
the management accountant, September, 2008
An entity shall report separately
major classes of gross cash receipts and
gross cash payments arising from
investing and financing activities.
Investing and financing
transactions that do not require the use
of cash or cash equivalents shall be
excluded from a statement of cash flows.
Such transactions shall be disclosed
elsewhere in the financial statements in
a way that provides all the relevant
information about these investing and
financing activities.
Interest and dividends received and
paid may be classified as operating,
investing, or financing cash flows,
provided that they are classified
consistently from period to period
Cash flows arising from taxes on
income are normally classified as
operating, unless they can be
specifically identified with financing or
investing activities.
For operating cash flows, the direct
method of presentation is encouraged,
but the indirect method is acceptable.
Foreign currency cash flows
Cash flows arising from transactions
in a foreign currency shall be recorded
in an entity's functional currency by
applying to the foreign currency
amount the exchange rate between the
functional currency and the foreign
currency at the date of the cash flow.
The cash flows of a foreign subsidiary
shall be translated at the exchange rates
between the functional currency and the
foreign currency at the dates of the
cash flows. Unrealised gains and losses
arising from changes in foreign
currency exchange rates are not cash
flows. However, the effect of exchange
rate changes on cash and cash
equivalents held or due in a foreign
currency is reported in the statement of
cash flows in order to reconcile cash
and cash equivalents at the beginning
and the end of the period.

Disclosures
An entity shall disclose, together
with a commentary by management, the
amount of significant cash and cash
equivalent balances held by the entity
that are not available for use by the
group and shall present a reconciliation
of the amounts in its statement of cash
flows with the equivalent items reported
in the balance sheet.
There are various circumstances in
which cash and cash equivalent
balances held by an enterprise are not
available for use by the group. Examples
include cash and cash equivalent
balances held by a subsidiary that
operates in a country where exchange
controls or other legal restrictions apply
when the balances are not available for
general use by the parent or other
subsidiaries.
Additional information may be
relevant to users in understanding the
financial position and liquidity of an
enterprise. Disclosure of this
information, together with a
commentary by management, is
encouraged and may include:
(a) the amount of undrawn
borrowing facilities that may be
available for future operating activities
and to settle capital commitments,
indicating any restrictions on the use
of these facilities;
(b) the aggregate amounts of the
cash flows from each of operating,
investing and financing activities
related to interests in joint ventures
reported using proportionate
consolidation;
(c) the aggregate amount of cash
flows that represent increases in
operating capacity separately from
those cash flows that are required to
maintain operating capacity; and
(d) the amount of the cash flows
arising from the operating, investing
and financing activities of each reported
industry and geographical segment.
the management accountant, September, 2008
Accounting Standard
The separate disclosure of cash *cash advances and loans made to
flows that represent increases in customers and repayments thereof
operating capacity and cash flows that Conclusion
are required to maintain operating IAS 7 permits the comparison of the
capacity is useful in enabling the user information on the performance of
to determine whether the enterprise is various companies because it eliminates
investing adequately in the the effect of using diverse accounting
maintenance of its operating capacity. procedures for the same transactions
An enterprise that does not invest and economic events.
adequately in the maintenance of its Appendix
operating capacity may be prejudicing
Statement of Cash Flows for Year Ended
future profitability for the sake of current
31 March …..
liquidity and distributions to owners.
Cash flows from operating activities:
Reporting Cash Flows On A Net Basis
Net profit before tax -
Cash flows arising from each of the
Adjustment for:
following activities of a financial
institution may be reported on a net Depreciation -
basis: Profit/loss on sale non-current
(a) cash receipts and payments for assets -
the acceptance and repayment of Interest expense -
deposits with a fixed maturity date; Operating profit before working
(b) the placement of deposits with capital changes -
and withdrawal of deposits from other *Increase in inventory -
financial institutions; and *Increase in receivables -
(c) cash advances and loans made *Increase in payables -
to customers and the repayment of Cash generated from operations -
those advances and loans.
Interest paid -
Cash flows from investing and
Dividends paid -
financing activities should be reported
gross by major class of cash receipts Tax paid -
and major class of cash payments Net cash flow from operating
except for the following cases, which activities -
may be reported on a net basis: Cash flows from investing activities:
*cash receipts and payments on Purchase of non-current assets -
behalf of customers (for example, receipt Proceeds of sale non-current assets-
and repayment of demand deposits by Net cash used in investing activities -
banks, and receipts collected on behalf
Cash flows from financing activities:
of and paid over to the owner of a
property) Proceeds, issue of shares -
*cash receipts and payments for Proceeds, issue of 10% loan
items in which the turnover is quick, the notes (also redemption) -
amounts are large, and the maturities Net cash flow from financing
are short, generally less than three activities -
months (for example, charges and Net increase in cash and cash
collections from credit card customers, equivalents -
and purchase and sale of investments) Cash and cash equivalents 1 April ….-
*cash receipts and payments Cash and cash equivalents
relating to fixed maturity deposits 31 March ….. -
681
 Accounting Standard

4. Resulting conclusion has been

Judgment and Indian drawn in Section V.
II. Prelude to the Indian Accounting

Accounting Standards Standards

Let us have a look to the parts of
Statements of Accounting Standards
Ayan Majumdar* which may, in any way, cover up the
Accounting standards issued by different authoritative bodies help to minimise judgment/standards connections.
and eliminate confusions and misunderstanding. Even then the accountants In order to make the standards
have to apply their ability and skill to judge properly what measures should be popular and to educate the users and
adopted by them in tackling a particular problem. So, it cannot be denied that members, a cautious attitude has been
there is a close relation between judgment and accounting standards. An noted in the Preface and in some of the
endeavour has been made in this paper to establish judgment categories and the Accounting Standards. The words of
caution as mentioned in the Preface
number of evidences of the selected Indian Accounting Standards that fall under
are :
these categories. A comparison between the U.S. and Indian judgment/standards
relationship has also been shown here. However, it has been shown that Indian In the initial years, the standards will
Accounting Standards cannot be implemented without the aid of proper judgment. be recommendatory in character (para
6.2).
In order to remove controversy arising out of implementation of standards or in
exercising a judgment a proposal for establishing an ‘accounting court’ may be The above noted pronouncement
made. has also been mentioned at the
beginning of some of the Accounting
Introduction in tackling a particular problem. So, it Standards exempli gratia AS-1, AS-2,
cannot be denied that there is a close

T
he subject matter of this paper
is based on judgment. Judgment
in a general sense refers to
decision making on any subject matter
to be dealt with. The term ‘accounting
judgment’ may be used in the sense that
the decision to be taken by an
accountant on a particular matter based
on his choice.
The standard setting bodies of
different countries, both developed and
developing, have taken up the
responsibility for reporting standards
for their respective countries to fulfil the
need for some standardised set of rules
and principles. The standards issued
by different authoritative bodies help
to minimise and eliminate confusions
and misunderstanding and also to
strengthen the doctrine of disclosure.
Moreover, comparability and uniformity
in accounting may be achieved with the
help of these standards.
In spite of the above efforts the
question of judgment may arise in
dealing with accounting standards. The
accountants have to apply their ability
and skill to judge properly what
measures should be adopted by them
*Lecturer, Accounting & Finance, Dept. of
Commerce, St. Xavier’s College, Kolkata.
relation between judgment and
accounting standards.
The purpose of preparing this paper
is to show a relation between Indian
Accounting Standards and judgment.
In doing so a suitable comparison has
been made between U.S. and Indian
evidences of the judgment/standards
relationship. The above relationship as
evidenced in the U.S.A. has been based
on the work of Mason and Gibbins.
Again, the categories of judgment that
had been used by them have also been
taken up in a slight varied from for the
purpose of this study.4 The discussions
that will be followed here are specified
in the following lines:
1. The prelude to the Indian
Accounting Standards has been
discussed in Section II so as to have
a better understanding of judgment/
standards relationship.
2. The establishment of judgment
categories and the number of
evidences of the selected Indian
Accounting Standards that fall
under these categories have been
shown in Section III.
3. Section IV has shown a comparison
between the U.S. and Indian
judgment/standards relationship.
AS-3, AS-7, AS-8, AS-9 and AS-10 in a
slight varied form.7 It may be noted here
that the phrase ‘initial years’ does not
signify what should be the actual span
of time. Perhaps this may lead to the
question of judgment. However, those
standards have been made mandatory
either for all enterprises or for some
selected category of enterprises.
In addition to the above some of the
Accounting Standards do have a caveat
at the end. For example :
Any change in the accounting
policies which has a material effect in
the current period or which is
reasonably expected to have a material
effect in later periods should be
disclosed (AS-1, para 26).
Examples of standards which have
also similar caveat at the end are AS-5
(para 32), AS-6(para 19), AS-17 (para 54)
etc. The phrase ‘material effect’ may
again direct us to raise the question of
judgment.
While disclosing ‘Compliance with
the Accounting Standards’ in the
preface it has been stated there that
the members of the Institute, in
performance of their duty, should
ensure that the Accounting standards
are properly implemented. In case of any

682 the management accountant, September, 2008

 Accounting Standard

deviation from the standards it has been TABLE-1

stated there that: SELECTED INDIAN STANDARDS FOR STUDY
…….. it will be their duty to make Serial AS No Title
adequate disclosures in their audit
No.
reports so that the users of financial
statements may be aware of such 1. 1 Disclosure of Accounting Policies
deviation (Preface para 6.1). 2. 3 Cash Flow Statements
But, the nature of ‘adequate 3. 4 Contingencies and Events Occurring After the Balance
disclosure’ has not been explained in Sheet Date
the standard. Therefore, a judgment
might have to be made in respect of it. 4. 8 Accounting for Research and Development
III. Establishment of judgment 5. 11 Accounting for the Effects of Changes in Foreign Exchange
Categories Rates
In this Section a relation between 6. 14 Accounting for Amalgamations
judgment and Accounting Standards
7. 15 Accounting for Retirement Benefits in the Financial
will be made. In doing so nine Indian
Accounting Standards have been Statements of Employers
selected. The Standards are identified 8. 22 Accounting for Taxes on Income
in Table-1. The wording of these nine 9. 26 Intangible Assets
Indian Standards has been reviewed in
detail and categorised according to the and No. 17 both having the same As Mason and Gibbins believed
norms stated later on. captions. Also, reference may be made that the pronouncements selected by
Mason and Gibbins had chosen five here that ‘Cash Flow Statements’ (AS- them had fulfilled the three criteria, as
APB Opinions and six EASB 3 of ASB) and ‘Accounting for already referred to, it may be taken for
statements.8 They had selected those Amalgamations’ (AS-14 of ASB) are granted that the nine selected Indian
eleven APB pronouncement and FASB almost similar to ‘Statement of Cash standards would also by and large fulfil
statements based on the following Flows’ (FASB Statement No. 95) and the said criteria. In addition, the selected
criteria: ‘Business Combinations’ (APB bases would facilitate a comparison
Opinion No. 16) respectively. It may be between ASB standards on the one
(i) the pronouncements that dealt with noted here that the coverage of the hand and pronouncements by APB and
a broad issue extensively ; subject matters of Indian standards and
(ii) the pronouncements that were not FASB on the other.
U.S. pronouncements taken as
limited to specific industry; surrogate to each other may be either To establish the judgment/
(iii)the pronouncements had not been wider or narrower in some of the cases. standards relationship four categories
substantially superseded. Even the way of presentation and the on the basis of sentences or complete
They believed that the pronounce- approach to the subject-matter may not phrases have been selected for this
ments selected by them were be alike to each other. But, in essence, paper. This is a slight varied form of
representative of those meeting the they are not far from each other. what had been contemplated by Mason
above criteria. TABLE-2
The selected nine Indian SELECTED U.S. PRONOUNCEMENTS FOR STUDY
Accounting Standards, that will be dealt
Serial APB Opinions/ Title
with in this paper, may be treated as
similar or almost similar to the nine out No FASB Statements
of eleven APB opinions and FASB 1. APB 22 Disclosure of Accounting Policies
statements that had been chosen by 2. FASB 95 Statement of Cash Flows
Mason and Gibbins. Table-2 shows
those nine APB opinions and FASB 3. FASB 5 Accounting for Contingencies
statements selected for the study. 4. FASB 2 Accounting for Research and Development Costs
In order to find out the nature of 5. FASB 52 Foreign Currency Translation
similarity between Indian Standards and
U.S. pronouncements it may be referred 6. APB 16 Business Combinations
to here that ‘Disclosure of Accounting 7. FASB 87 Employers’ Accounting for Pensions
Policies’ (AS-1 of ASB) and ‘Intangible 8. FASB 96 Accounting for Income Taxes
Assets’ (AS-26 of ASB) qualify for
similar nature of APB Opinion No. 22 9. APB 17 Intangible Assets

the management accountant, September, 2008 683


and Gibbins.9 They had selected five
categories of judgment /standards
connections in place of four which have
been considered here. Again,
judgment/standards relationship has
been established for the related
standards as a whole,i.e., no division
between ‘Standards’ and ‘Other
wording’ has been made as against what
had been done by them. In such a case
there is a possibility that similar views
may be expressed in both ‘Standards’
and ‘Other wording’ in some selected
standards. As a result, duplication in
counting in the number of items of
judgment/standards connections might
have occurred. For Example :
Where the market value of the
assets given up can not be reliably
assessed, such assets may be valued
at their respective net book values
(Other wording : para 14, Standard :
para 40, AS-14).
However, it may be presumed that
there might be little impact in case of
comparison between Indian and U.S.
standards in connection with the
number of items in each category of
judgment/standards relationship. This
is owing to the fact that the number of
judgment/standards connections may
increase proportionately in case of
findings of both the countries.
The selected categories of
judgment/standards relationship and
one example of each category are
presented below:
A. Positive mentioning of words like
‘Choice’ or ‘Judgment’
Terms like ‘choice’, ‘judgment’ or
‘management’s judgment’ are used in
this category. For Example:
In some cases, the classification of
a foreign operation as either a non-
integral foreign operation or an integral
foreign operation of the reporting
enterprise may not be clear, and
judgment is necessary to determine
appropriate classification (AS-11, para
20).
B. Need for judgment in case of
selecting from alternatives or
applicability of an element :*
684
Accounting Standard
Judgment is required to select one
from alternatives and no guideline has
been provided in the standards for
selecting which alternative is preferable
or desirable in place of another. Again,
judgment is needed in the selection of
an applicability of a disclosure or format
in particular circumstances. For Example:
In preparing the transferee
company’s financial statements, the
assets and liabilities of the transferor
company should be incorporated at their
existing carrying amounts or,
alternatively, the consideration should
be allocated to individual identifiable
assets and liabilities on the basis of their
fair values at the date of amalgamation
(AS-14, para 36).
C. Need for judgment in case of using
phrase
Phrase refers to here using words
like ‘significant’, ‘generally’, ‘usually’,
‘clearly’, etc. For example :
Estimates of the useful life of an
intangible asset generally become less
reliable as the length of the useful life
increases (AS-26, para 66).
D. Need for judgment in respect of the
Nature of Standard
Judgment requires while applying
the sentence mentioned in the standard
in specific circumstances even when
each word may be clear enough. For
example :
The identifiable assets and
liabilities may include assets and
liabilities not recorded in the financial
statements of the transferor company
(AS-14, para 12).
The above selection of category
classifications or number of items in
each category may have to face the
following criticisms.
(i) In the decision of selecting category
coding, opinions may vary, i.e., one
may be inclined to include a
particular connection in a category
which may be different from that
what has been identified here.
*
This particular category had been
segregated into two categories by Mason
and Gibbins
the management accountant, September, 2008
(ii) Reasonable care has been taken in
the selection of number of items in
judgment/standard connections.
Even then a few more connections
might have been observed which
may be omitted here.
It must be admitted, therefore, that
the above idea may not be treated as
out and out objective. There may still
remain the scope of variation of opinion.
In fact, this may be treated as a
suggestive effort.
Table -3 shows the results of the
above analysis. The total number of
judgment/standards connections are
found to be 137 in nine selected Indian
standards. These connections whether
found in the main parts of the standards
or in the other parts of the
pronouncements were analysed and
shown in the Table without segregating
them. Out of 137 connections majority
of them were claimed by B, C and D.
Regarding the nature of judgment 6
items out of nine Indian standards
represent the use of terms like judgment,
choice etc. It may be said, therefore, that
ASB is conservative enough to direct
the users to apply their own judgment
or choice. But, in case of categories B,C
and D the number of judgment/
standard connections are 42, 46 and 43
respectively. So, it is clear that the
nature of judgment of Indian standards
qualifies for either selection from
alternatives, using phrase or nature of
the standard itself. However, it is
apparent from the above that Indian
Accounting Standards can not be used
without the application of considerable
amount of judgment.
IV. Comparison between the U.S. and
Indian Judgment/Standards
Relationship
The number of items of U.S.
Judgment/standards connections
based on the four categories mentioned
earlier has been presented in Table 4. It
may be noted here that the judgment/
standards connections have been
completely based on the analysis of
Mason and Gibbins.10 The total number
of judgment/standards relationship
were found to be 188 in the nine selected
U.S. pronouncements. It is interesting
 Accounting Standard

to note that out of 188 connections TABLE -3

majority of them stood for Categories C STATEMENT SHOWING INCIDENCE OF JUDGMENT IN INDIAN AC-
and D and FASB 87 alone claimed 45% COUNTING STANDARDS
of the total judgment/standards
connections. Therefore, as surmised by Sl. AS Title No. of items of Judgment Categories
Mason and Gibbins it may be pointed No. No. A B C D Total
out that U.S. Accounting standards also 1. 1 Disclosure of Accounting 1 2 8 5 16
can not be applied without the Policies
application of suitable judgment.
2. 3 Cash Flow Statements - 5 7 6 18
Now, it is the time to compare the
judgment/standard connections 3. 4 Contingencies and Events
between U.S. pronouncements and Occurring After the 1 3 7 2 13
Indian standards. The results of such a Balance Sheet Date
comparison have shown in Table-5. The 4. 8 Accounting for Research - 1 2 1 4
averages, i.e., mean of the data of the and Development
two countries showed that each U.S.
5. 11 Accounting for the Effects
Categories C and D are 72% and 102%
of Changes in Foreign 1 7 5 1 14
higher than the corresponding Indian
categories; while the mean of U.S. Exchange Rates
categories A and B stand 83% and 40% 6. 14 Accounting for - 8 - 7 15
of the corresponding Indian categories. Amalgamations
The Standard deviation cannot be the 7. 15 Accounting for Retirement
sole basis for comparing two or more
Benefits in the Financial - 7 9 5 21
distributions. It is difficult to know the
Statements of Employers
dispersion of a set of data until the
standard deviation, the mean and how 8. 22 Accounting for Taxes on - 4 2 4 10
the standard deviation compares with Income
the mean are known. What is needed is
a relative measure, i.e., coefficient of TABLE-4
variation, that will give a feeling for the STATEMENT SHOWING INCIDENCE OF JUDGMENT IN U.S. ACCOUNT-
magnitude of the deviation relative to ING PRONOUNCEMENTS
the magnitude of the mean. So far as
the Categories A, B, C and D are Sl. APB Opinions/ TitleNo. of items of Judgment Categories
concerned, the variability of U.S. No. FASB Statements A B C D Total
observations are A-1.60, B-2.21, C-2.39 1. APB 22 Disclosure of 4 1 2 4 11
and D-1.57 times respectively higher Accounting Policies
than Indian observations and taken the 2. FASB 95 Statement of - 5 15 11 31
total number of observations together Cash Flows
the variability is 2.90 times more. It may
3. FASB 5 Accounting for - 2 1 6 9
be concluded, therefore, that the Contingencies
variation of U.S. judgment/standards
connections is significantly higher than 4. FASB 2 Accounting for
India. Research and - - 1 2 3
Development Costs
The reasons for this state of affairs
may be the outcome of several factors. 5. FASB 52 Foreign Currency 1 1 7 8 17
Disparity in local customs, environment Translation
etc. on the one hand and dissimilar 6. APB 16 Business Combinations - 1 3 8 12
nature of existing laws, e.g., Income Tax
Act, Companies Act, etc. of the two 7. FASB 87 Employers’ Accounting - 6 40 38 84
countries on the other may be for Pensions
attributed to the reasons for such 8. FASB 96 Accounting for - 1 10 6 17
variability. In addition, the policy of the Income Taxes
standard setters may also result in such
deviation. Now, it may be said that the 9. APB 17 Intangible Assets - - - 4 4
mean, standard deviation and Total 5 17 79 87 188

the management accountant, September, 2008 685


coefficient of variation of judgment/
standards relationship of both the
countries may vary, but it cannot be
denied that at least there exists the said
relationship.
V. Conclusion
The foregoing discussion makes us
to believe that there is a close tie
between judgment and Indian
Accounting standards. If that be the
case, it can be emphatically said that
Indian standards cannot be
implemented without the aid of proper
judgment. Now, it is important to decide
whether those accounting standards
which do not concede to the application
of judgment are to be prescribed. If such
standards are presented the
accountants may face with the
situations mentioned below.
Supposing that the enforcement of
accounting standards without the
exercise of judgment is strictly adhered
to in the working of the accountants, in
that case the accounting principles will
become too much rigid. As a result, the
accountants will become a tool in the
hands of the standard setters and their
creative faculty will not find any scope
for its application and development.
Accountants will lose their initiative in
further development of accounting and
that would cause the principles of
accounting to be mechanical for
working under certain fixed processes.
Therefore, it may be suggested for the
development of accounting principles
and for the growth of accounting theory
that the accountants may be left free to
work according to their own judgment
and skill. Furthermore, standards in
question should be such that would be
flexible enough and would go a long
way to all-round development of
accounting.
From the above it is clear that the
accountants might have the experience
of facing with the above situations if
there is imposition of too much of
regimentation. In order to remove
controversy or to eradicate disputes
arising out of implementation of
standards or in exercising judgment, a
proposal for establishing an
‘accounting court’ may, therefore, be
686
Accounting Standard
TABLE-5
STATEMENT SHOWING COMPUTATION OF DATA
Category/ Country Mean Standard Deviation Coefficient of variation
Category A
U.S. 0.556 1.257 226.274
India 0.667 0.943 141.421
Category B
U.S. 1.889 2.025 107.182
India 4.667 2.261 48.445
Category C
U.S. 8.778 11.998 136.685
India 5.111 2.923 57.187
Category D
U.S. 9.667 10.328 106.841
India 4.778 3.258 68.199
Total
U.S. 20.889 23.662 113.274
India 15.222 5.940 39.022
made11. The justification and validity of and Recommendations, New York,
the controversies arising out of 1978, p. 16
situations just mentioned may be 3. Report of the National Commission on
brought to the aforesaid court. The party Fraudulent Financial Reporting, New
concerned, in order to present ‘a true York, October, 1989, p.47.
and fair view’ of accounting, would 4. Mason, A.K. and Gibbins, M., op.cit.,
have to prove that the procedures pp. 18-19.
followed by him are preferable to those 5. Kapadia, G.P., “History of the
for which controversies arise. However, Accounting Profession in India”, The
the establishment of such a court in Institute of Chartered Accountants of
India, 1972, pp. 170-324.
India will contribute to the growth of
6. Roy, G.D., “India’s Bid for Construction
accounting. It may not be out of point
of Accounting Standards”, Indian
here to mention that the accounting Journal of Accounting, Vol. XV, June &
court in the Netherlands failed to December, 1985, Part- I, p.45.
achieve the objective for which it had 7. Compendium of Accounting Standards,
been set up. After going through the 1997, The Institute of Chartered
case history of the court Klaassen (1980) Accountants of India, New Delhi.
observed that the court “makes its 8. Mason, A.K. and Gibbins, M., op.cit.,
judgment only on the specific p.17.
circumstances of each case” and 9. Ibid., pp. 18-19.
remarked that “This makes the 10. Ibid., p. 20
Enterprise Chamber an inadequate 11. Spacek, Leonard, “Draft of a Bill That
vehicle for the development of Would Create a United States Court of
accounting standards”. 12 Notwith- Accounting Appeals”, in A Search for
standing the fact, it is believed that the Fairness in Financial Reporting to the
shortcomings of the court are not due Public, Chicago, Arthur Andersen & Co.
to its incompetence rather it demands 1969, pp. 576-582. Also see Majumdar,
Debabrata, “Legal Parameters of
removal of defects inherent. Accounting”, The Management
References : Accountant, ICWA November 1972, pp.
1. Mason, A.K. and Gibbins, M., 661-662.
“Judgment and U.S. Accounting 12. Klaassen, Jan, “An Accounting Court :
Standards”, Accounting Horizon, The Impact of the Enterprise Chamber
A.A.A., June, 1991, pp. 14-24 on Financial Reporting in the
2. The Commission on Auditors’ Netherlands”, The Accounting Review,
Responsibilities, Report, Conclusions April 1980, p. 337.
the management accountant, September, 2008
the management accountant, September, 2008 687

Knowledge Assets: An
Underestimated Attribute
to be Identified &
Quantified
Today knowledge is considered as a key strategic asset for many corporations
and organizations. Still it is one of the least understood attribute, lacking formal
recognition by the accounting system and often receives less attention than it
deserves. Knowledge and its corollary human capital have no formal place on
the balance sheet.
Key-words: Knowledge assets; Intangible assets; Intellectual capital; Human
capital; Knowledge management.
Subhajit Ghosh*
Introduction & Background
E
mergence of the service society
after the last world war brought
increased realization of role of
employees’ knowledge and creativity in
adding value to the company. Attempts
to capitalize company investments in
people on the balance sheet in the 1970s
failed because of measurement
problems. The subject gathered
increased interest more recently in the
1990s, with the rapid emergence of
information and communication
technologies (ICT), as information
systems designers attempted to capture
employees’ implicit and explicit
knowledge in “corporate memory”. It
was recognized, that in contrast to the
knowledge of individual employees,
such corporate memory does form part
of a company’s capital. Accordingly,
“knowledge” has become a key
production factor, however the financial
accounts are still dominated by
traditional factors of production,
including buildings and machinery.
Hence, there is an imperative need for
developing an understanding of
“knowledge asset”, or the so-called
intangible assets.
*Research Scholar, Department of
Commerce, University of Calcutta
688
Finance
Virtually every business in the world
faces the same fundamental problem:
maintenance of their competitive edge
through the application and formation
of knowledge. The plain unvarnished
truth is that, in many companies, much
of the operating knowledge is tacit
(undocumented); this tacit knowledge
can easily be lost through retirement or
attrition. Knowledge workers with key
competitive and proprietary knowledge
are literally stolen away by competitors.
And, without the ability to organize,
store, retrieve and manage it, much hard-
won knowledge leaves with them. In
fact, in most industries, there is no
objective means to measure knowledge.
We do not identify knowledge except
in highly subjective terms. Much of
what we call knowledge is really
information. The much referenced, ill-
defined knowledge asset has no clear
objective definition, except to imply that
it contributes in some way to the value
of the company. In truth, knowledge is
the asset bearing component of human
capital. Knowledge and the
“Knowledge Asset” are essential to the
demonstration of the value of people in
our business model. With this backdrop
an attempt has been made to analyze
the innovative role of knowledge assets
essential to gain competitive advantage
the management accountant, September, 2008
in complex market situation, giving
importance on its evaluation and
measurement aspects.
Knowledge Assets: Concept &
Identification
Accountants define an asset as a
stock from which a number of future
services are expected to flow.
Accordingly, knowledge assets are
defined as: “stocks of knowledge from
which services are expected to flow for
a period of time that may be hard to
specify in advance.” (Boisot, 1998, p.3).
Physical assets have a limited life
because of wear and tear, but knowledge
assets may last forever. Such assets
have open-ended value, and they are
non-linear also with respect to the
effects they produce.
Knowledge assets are the
knowledge regarding markets,
products, technologies and
organizations, that a business owns or
needs to own and which enable its
business processes to add value and
generate profits. Boisot (1998) notes that
knowledge assets are manifested in
terms of technologies, competences and
capabilities
The traditional factors of
production like land, labor and capital
are governed by the ‘law of increasing
returns’. Knowledge assets may be
distinguished from the traditional
factors of production – in that they are
governed by what has been described
as the ‘law of increasing returns’. Every
unit of knowledge used effectively
results in a marginal increase in
performance.
In spite of the increasing importance
of knowledge-based assets in national
performance, most countries still assess
their performance based on traditional
factors of production. Today’s
measurement systems are limited in their
capability to measure knowledge
embedded in the human resources,
although there is some agreement on
measuring other categories of
knowledge, including patents and
trademarks.

Constituents of knowledge assets:
Knowledge assets can be thought of a
subset of dispositions to act, or
‘potential for action’ (Malhotra, 2004;
Malhotra 2002a; Malhotra 2000a;
Malhotra 2000d) embedded in
individuals, groups, or socio-physical
systems with future prospects of value
creation. National knowledge assts are
the “intangible” assets of a country
that have significant implications for
future national growth and future value
of the country to various stakeholders.
There is growing realization about
knowledge management (KM) as the
enabler of innovation and learning
(Malhotra 2000c; Malhotra, 2000d) as
well as national gross domestic product
(GDP) (Malhotra 2000b; Malhotra, 2003c).
If we want to distinguish between
physical assets and knowledge assets
we will have to differentiate between
data, information and knowledge.
Data: Unrelated bits of corporate
business content.
Information: Data to which context
has been added. Everything external to
the mind is Information.
Knowledge: Knowledge is a
uniquely human attribute. It exists only
in one’s mind. Information is
transformed into knowledge through
the application of intelligence,
integration, and synthesis.
Performance: Knowledge applied to
a measurable accomplishment that adds
value to the corporation.
DATA>INFORMATION>KNOWLEDGE=PERFORMANCE
It shows the logical progression of
content types and their relationship to
improved organizational performance.
Data, information, and knowledge all
have value in that they contribute to
improved performance and corporate
profit. Thus data becomes information
and as intelligence, integration and
synthesis occur, information is
transformed into knowledge.
Identification Criteria of a Knowledge
Asset
the management accountant, September, 2008
Finance
The knowledge asset combines a
number of factors which can be
objectively proven by the observation
and accomplishment of a specific set of
criteria. Accomplishment is represented
by the realization of a discrete set of
behaviors, called tasks, which, when
employed by an individual, or group,
results in a measurable outcome that
adds value to the corporation.
There are four conditions that are
required to verify the existence of a
knowledge asset. These conditions or
criteria are:
l Creation of a set of graphical
procedure guides which will permit
a nominally trained worker to
perform the task, or tasks,
independently and without further
assistance.
l Observation of correct job
performance, which is proof of
accomplishment.
l Quantification of the value of the
accomplishment, as represented by
an economic measure.
l Verification by an independent,
certified assessor.
In most current financial
measurement and valuation model, an
asset is typically a tangible object
which, through appreciation or
depreciation, accrues value to the
corporation. A Patent, or copyright, is
an example of an intangible asset that is
considered intellectual capital. The
knowledge asset is the tangible
representation of the corporations
“know-how,” and is prima facie proof
of corporate competence. It represents
the competence of the corporation. The
sum total of these knowledge assets is
the human and intellectual capital of the
company. One of the major reasons for
the failure of newly acquired
businesses is that the purchaser does
not recognize that its intellectual capital
is at risk, since it resides in a limited
number of employees. The loss of these
key knowledge assets (both the
individuals and the knowledge they
represent) could render the corporation
incapable of performing. It is true that
the ability to operate effectively is not
sufficiently demonstrated by patents or
copyrights. Ownership of a patent is not
objective proof that the company can
effectively or efficiently produce the
product.
Finally, there must be economic
value. It is fundamental that the proof
of the knowledge asset lies neither in
the ownership of the patent or the value
of the accomplishment of production.
The proof is the combined elements of
human knowledge assets, and their
contribution to the value of the product,
or service, delivered to the customer.
Unless we can include the knowledge
asset and human capital on the balance
sheet to offset investment (as we do
with other corporate assets), our ability
to justify knowledge asset and human
capital will always be problematic.
Unless formally recognized by the
Financial Accounting Standards Board
(FASB), and reflected in the Generally
Accepted Accounting Principles
(GAAP), the financial and accounting
systems will continue to work against
such mission.
Types of Knowledge Assets
Knowledge assets are the bases of
the knowledge-creating processes.
There is a definite relationship between
knowledge assets and knowledge
creation. The knowledge creation
process is a subunit that depends on
the nature of tasks it performs.
Knowledge assets are firm-specific
resources that may facilitate knowledge
creation from both the static and
dynamic perspectives. For the former,
knowledge assets provide precious
information and knowledge that are easy
to share and articulate. Based on this
information, individuals solve the
problems and then develop new
knowledge through the action of
problem solving. From the dynamic
perspective, knowledge assets provide
a context, method, or environment that
facilitates social interaction among
individuals and organization to
transform knowledge between tacit and
explicit knowledge. Therefore, in order
to facilitate a certain type of knowledge
689

creation process effectively, we have to
adopt appropriate knowledge assets. In
this context we may subdivide
knowledge assets in the following
categories:
1. Experiential knowledge assets:
Experiential knowledge assets
consist of the tacit knowledge that is
built through working experience among
employees. This knowledge also can be
shared between the members of
organization and its customers,
suppliers, and affiliated firms. Other
examples of experiential knowledge
assets are skills and know-how that are
acquired and retained by individuals
from their working experiences. There
are four other types of experiential
knowledge assets. The first one is
emotional knowledge such as care, love,
and trust. The second one is physical
knowledge such as facial expressions
and gestures. Energetic knowledge is
the third type of experiential knowledge
assets such as senses of existence,
enthusiasm, and tension. The last type
is rhythmic knowledge such as
improvisation and entrainment. The
contents of experiential knowledge
assets are usually difficult to grasp,
evaluate, and trade, but they play a
critical role in gaining a sustainable
competitive advantage to a firm. Thus
the main purpose of experiential KAs is
to facilitate the tasks that have focused
domain, because the main concern of
experiential KAs is to share skills and
know-how of individuals. In addition,
with the help of experiential KAs, the
tasks that are process-oriented become
easier to achieve. The reason is that
experiential KAs provide “know-how”
or procedural knowledge, which belongs
to the category of process-oriented
tasks. For example, experiential KAs
include experiences, skills, care, trust,
facial expressions, enthusiasm, tension,
and so on.
2. Conceptual knowledge assets:
Conceptual knowledge assets
consist of explicit knowledge articulated
through images, symbols and
languages. They are the assets based
on the perceptions held by customers
690
Finance
and employees of the organization. For
example, brand equity represents the
perceptions of customers. Another
example includes concepts or designs,
which are perceived by the members of
the organization.
Conceptual knowledge assets
usually have tangible forms and are
easier to articulate. Conceptual KAs
contains issues such as what products
need to be developed and the specific
design features that need to be
designed in the products. Conceptual
KAs try to facilitate the tasks with low
task variability but greater specialization.
3. Systemic knowledge assets:
Systemic knowledge assets consist
of systematized and packaged explicit
knowledge, such as explicitly stated
technologies, product specifications,
manuals, and documented and
packaged information about customers
and suppliers. Legally protected
intellectual properties such as patents
and licenses also fall into this category.
Since systemic knowledge assets are
visible and tangible, they can be
transferred easily. Most of the
knowledge management focuses on
systemic knowledge assets, e.g.
intellectual property rights. In addition,
systemic KAs facilitate dynamic
interaction in which individuals units
of knowledge are combined and
exchanged through communication and
collaboration across different functional
groups. The definition of combination
is converting explicit knowledge into
more complex and systemic sets of
explicit knowledge. In order to convert
the knowledge, explicit knowledge is
collected from inside or outside the
organization and then combined, edited,
or processes to form new knowledge.
4. Routine knowledge assets:
This type of asset consists of the
knowledge that is embedded and
regulated in the actions and practices
of a firm. Know-how, working practices,
organizational culture, and
organizational routines for carrying out
day-to-day business are examples of
routine knowledge assets. The task
domain of routine KA is basically
the management accountant, September, 2008
process-oriented, since the knowledge
that routine KAs manipulate is know-
how or procedural knowledge. In order
to formulate routine KA, organizational
members share, integrate, and
continuously exercise routine practices
to form certain patterns of thinking and
action. Since interaction and
coordination among organizational
members is critical in conducting routine
KA, the task domain of routine KA is
broad.
Role of Knowledge Assets
The role of deploying the
knowledge assets within an
organization to create competitive
advantage becomes more crucial as:
l The marketplace is increasingly
competitive and the rate of
innovation is rising, so that
knowledge must evolve and be
assimilated at an ever faster rate.
l Corporations are organizing their
businesses to be focused on
creating customer value. Staff
functions are being reduced as are
management structures. There is a
need to replace the informal
knowledge management of the staff
function with formal methods in
customer aligned business
processes.
l Competitive pressures are reducing
the size of the workforce which
holds this knowledge.
l Knowledge takes time to experience
and acquire. Employees have less
and less time for this.
l There are trends for employees to
retire earlier and for increasing
mobility, leading to loss of
knowledge.
l There is a need to manage increasing
complexity as small operating
companies a re trans-national
sourcing operations.
l A change in strategic direction may
result in the loss of knowledge in a
specific area. A subsequent reversal
in policy may then lead to a renewed
requirement for this knowledge, but
the employees with that knowledge
may no longer be there.

Measuring Knowledge Assets and
Intellectual Capital
Knowledge asset measurement
relates to the valuation, growth,
monitoring and managing a number of
intangible increasingly important for
business success. Managers of
enterprises and national economies are
trying to find reliable ways for
measuring knowledge assets to
understand how they relate to future
performance.
The terms knowledge capital and
intellectual capital are used side by side.
They include an organization’s
unrefined knowledge assets as well as
wealth generating assets whose main
component is knowledge. Unless
effectively utilized and applied,
knowledge assets may not necessarily
yield any returns in terms of financial
performance measures. In other words,
“knowledge assets, like money or
equipment, exist and are worth
cultivating only in the context of
strategy… you cannot define and
manage intellectual assets unless you
know what you are trying to do with
them” (Stewart 1997).
So measurement of KAs creates the
need to measure intellectual capital. A
few popular methods of assessment of
intellectual capital are as follows:
1. Skandia Navigator:
Skandia, a Swedish company
developed its first internal intellectual
capital report based on the
measurement model proposed by
Edvinsson and Malone (1997) in mid-
80s. In Skandia’s view, intellectual
capital denotes intangible assets
including customer/market capital;
process capital; human capital; and
renewal and development capital. The
value of intellectual capital is
represented by the potential financial
returns that are attributable to these
intangible or non-financial assets.
The Skandia model attempts to
provide an integrated and comprehe-
nsive picture of both financial capital
and intellectual capital and it describes
the framework of intellectual capital as
a complement of financial capital.
the management accountant, September, 2008
Finance
In this model, there are four
components of intellectual capital:
market capital (also denoted as
customer capital); process capital;
human capital; and renewal and
development capital. While financial
capital reflects the achievements of the
past; intellectual capital represents the
hidden potential for future growth. The
value chain according to Edvinsson and
Malone (1997, p. 11) expresses the
various components of market value on
the basis of the following model:
Market Value = Financial Capital +
Intellectual Capital
Financial Capital: Financial capital
is an indicator of a nation’s past success
and achievements. The valuation of the
assets as they appear on a traditional
balance sheet does not reflect the real
value as assessed by the global market.
This component of the nation’s balance
sheet is based upon past performance
and statistical data that express the rate
of change in tangible assets. Such
factors include gross domestic product
(GDP), dollar exchange rate, external
debt, unemployment, productivity rates
within various sectors of the national
economy, breakdown of exports
according to industries, and inflation.
The key determinants of hidden or
intellectual capital are human and
structural capital. Thus:
Intellectual Capital = Human Capital +
Structural Capital
Human Capital: Human capital is the
combination of knowledge, skill,
innovativeness, and ability of the
individuals to meet the tasks at hand,
including values, culture and
philosophy. This includes knowledge,
wisdom, expertise, intuition, and the
ability of individuals to realize tasks and
goals. Human capital is the property of
individuals, it cannot be owned by the
organization or nation. The key
indicators of human capital are
education, equal opportunities, culture,
health, crime etc.
Structural Capital: Structural capital
signifies the knowledge assets that
remain in the company when it doesn’t
take into consideration human capital
that is the property of individual
members. It includes organizational
capital and customer capital [also
known as market capital]. Unlike human
capital, structural capital can be owned
by the nation and can be traded.
Structural Capital = Market Capital +
Organizational Capital
Market Capital: This component of
intellectual capital is referred to as
customer capital to represent the value
embedded in the relationship of the firm
with its customers. In the context of
intellectual assets, it is referred to as
market capital to signify the market and
trade relationships within the global
markets with its customers and its
suppliers. Indicators of market capital
include outgoing tourism, openness to
foreign cultures, international events
and language skills. Such core
capabilities create a basis for assessing
the country’s attractiveness from the
perspective of international clients.
Organizational Capital: It includes
national capabilities in the form of
hardware, software, databases,
organizational structures, patents,
trademarks, and everything else of
nation’s capabilities that support
individuals’ productivity through
sharing and transmission of knowledge.
Organizational capital consists of two
components: process capital & renewal
and development capital.
Organizational Capital = Process Capital
+ Renewal & Development Capital
Process Capital: This component
represents the country’s intellectual
assets that support its present activities
including sharing, exchange, flow,
growth and transformation of
knowledge from human capital to
structural capital. Such assets include
information systems, laboratories,
technology, management attention and
procedures. Indicators of process
capital include communications and
computerization, education, agriculture,
management, employment, develop-
ment of service sector and absorption
of immigrants.
Renewal and Development Capital:
Renewal and development capital
691
 Finance

reflects the country’s desire and ability focus perspectives: (1) financial (COGS) minus fixed costs (assets) minus
to improve and renew itself in order to perspective; (2) customer perspective; administrative costs to get a profit:
progress. Early identification of (3) internal process perspective; (4) Revenue
changes in the dynamic business learning perspective. The indicators are
–Variable costs
environment and their translation into based on the strategic objectives of the
business opportunities contributes to firm. –Fixed costs
the nation’s future growth and 3. Intangible Assets Monitor: This –Administrative costs
performance. Six key indicators of such model was developed by Sveiby (1997) = Profit
capital are - national expenditure on based on the premise that people are In a factory, we can cut our variable
civilian R&D, scientific publications in the only true agents in business and all and administrative expenses if we wisely
the world, registration of patents, work aspects of structure, internal and invest in assets, up to a point. A better
force employed in R&D, start-up external, are embedded in human factory means that each unit of raw
companies and biotechnology actions. Management selects indicators material is more efficiently converted to
companies. based on the strategic objectives of the a product. This conversion from variable
In the context of the intellectual capital firm to measure four aspects of creating costs to fixed assets is like applying an
assessment, while financial capital value from intangible assets by growth, assembly line to an auto manufacturing
reflects the achievements of the past, renewal, efficiency and stability. plant. Similarly today, investing in
l Process capital and market capital V. Accounting for Knowledge Assets systems and technology should make
are components upon which Accounting for Knowledge: In a knowledge workers more efficient.
nation’s present operations are traditional simplified income statement, But due to diminishing returns, at
based; we have revenues minus variable costs some point, adding more plant and
l Renewal and development capital
Figure 1: Components of Intellectual Capital
determines how the nation prepares
for the future; and, (Based upon Edvinsson & Malone, 1997)
l Human capital lies at the crux of
intellectual capital. It focuses upon
capabilities, expertise and wisdom
of the people and represents the
necessary lever that enables value
creation from all other components.
2. Balanced Scorecard: The
Balanced Scorecard (Kaplan and
Norton, 1992, 1996, 2000) aims to balance
the traditional perspective of
accounting for intangibles by adding
four perspectives related to: innovation
and learning, business process
improvement, customer relationships Figure 2: Financial Capital and Intellectual Capital
and value creation in financial and (based upon Edvinsson & Malone, 1997)
intangible terms. It has focus on both
financial objectives as well as building
of capabilities and acquiring intangible
assets for future growth. The scorecard
attempts to seek balance between
external measures for shareholders and
customers, and internal measures of
critical business processes, innovation
and of learning & growth. Balance is
also sought between relatively objective
outcome measures and subjective/
judgmental measures of performance. A
company’s performance is measured
with indicators covering four major
692 the management accountant, September, 2008

machinery (or computer systems) won’t
help if there aren’t enough people or
resources to take advantage of them. It
seems that the amount of money spent
on information systems as a ratio to
staff should have some relevance to the
value of knowledge.
In an information factory a request,
usually with some relevant information
from a customer is the raw material.
Application of knowledge with staff and
information resources will add value to
it and makes it sellable.
Staff—people—have now become
current assets rather than the traditional
variable costs of the factory. They are
assets because they are converting
information to knowledge. They are still
“current” since they may, at any time,
win the lottery and move. Information
is the raw material and the systems that
contain information are the fixed assets.
The more we invest in fixed assets, the
more concentrated will be our variable
assets that can be applied to produce
profit.
If staff and systems are creating
knowledge assets, then an “expense”
Models For Measuring Knowledge Assets (At a Glance)
Models
Skandia Navigator
Edvinsson and Malone
(1997)
Balanced Scorecard
Kaplan and Norton
(1992, 1996, 2000)
Intangible Assets Monitor
Sveiby (1997)
the management accountant, September, 2008
Finance
does not contribute to adding value. It
includes anything that distracts us from
the work. These expenses include going
to the file room, making copies,
distributing paper, looking for lost files
etc.
Net Knowledge Worth:
Net worth is the total tangible
assets minus liabilities.
A company’s profit is created from
the work we do. Some of that work is on
plant and equipment, some is created
from raw materials, the rest is knowledge
in the heads of the staff and knowledge
in repositories (books, computers, etc.).
“Knowledge earnings” = Annual
cost of technology + knowledge (staff
costs) – knowledge expenses –
operating profit
The value of knowledge is the
amount of money left over after we have
taken out materials, operating expenses,
and time wasted on non-productive
tasks. Most of the money a company
makes is because it knows how to make
money. Knowledge earnings at the end
of an accounting cycle become
knowledge equity.
Strengths
These models allow
measurement closer to
actual inputs, processes,
outcomes and reporting can
therefore be faster. They are
particularly suitable to the
task of ‘detection and
correction of errors’ in
aligning the inputs and
outcomes. The indicators
capture contextual nuances
and result in ‘rich’ data
analysis of which can
provide useful insights for
policy making.
A Unit of Knowledge: Theoretically,
dividing the knowledge earning by the
total equity of the company we can get
the value of a unit of knowledge.
The problem with trying to affix a value
to knowledge units is:
l There is no gold standard to help
determine value.
l Knowledge can be easily
duplicated, but a second piece of
the same knowledge has little value.
l Knowledge can lose value rapidly
or even convert to a large liability in
a short period of time.
l Knowledge is not easily convertible
to other currencies (language
barriers).
To evaluate and to protect
knowledge assets we should;
i) look at how much knowledge is
captured and reused versus stuck in
peoples heads proposition, through
operating knowledge ratio.
Operating Knowledge Ratio =
Company Net worth/ Fixed assets
Fixed knowledge assets/Staff costs
Weaknesses
The strengths of these
measures that make them
particularly effective can
also be interpreted in terms
of weaknesses of efficiency.
Contextual influences that
facilitate more corrective
policy responses make
comparison across different
contexts somewhat
challenging. Rich data that
yield insightful observations
on in-depth analysis may
not be efficient in terms of
quick analysis and may not
easily yield a single
‘standard’ numeric or
financial composite index.
693

ii) try to convert knowledge to a fixed
long-term asset (a system) rather than a
variable short-term asset (a person).
iii) develop appropriate and secure
places to put and store our information
and knowledge.
iv) write down knowledge to
convert current asset knowledge to
fixed asset knowledge.
v) locate as many kinds of
knowledge as we can through process
mapping or ISO certification to make
knowledge assets more efficient
vi) reduce operating expenses by
applying business process
reengineering (BPR) and cutting out
time wasting activities.
vii) apply workflow technologies
where an assembly line mentality will
be appropriate.
viii) get the assets to where they are
needed most through good network
design, and accessible infrastructure.
ix) protect and keep staffs as they
are means of production in an
information age.
x) understand the role of HR and IT
as HR (current assets) and IT (fixed
assets) seldom seem to work together
to solve company problems.
VI. Maximizing the Knowledge Asset
Value within the Enterprise
To maximize the knowledge asset
value within the organization the
following issues are important:
l Description of KAs - Knowledge
assets described in terms of tangible
data, applications, people or a
combination of these. Information
described in physical, tangible terms
is easier to access than a worker’s
tacit knowledge. The initial plan
should identify how previously
inaccessible, tacit knowledge can be
translated into explicit, accessible
knowledge.
l The better way to describe the value
of KAs–combination of separate
sources into one function- based
description.
694
Finance
l Determination of location of
knowledge within the enterprise.
l Consolidation of separate areas into
one theme to avoid knowledge
duplication.
l All expertise in a critical business
area is tied into an individual rather
than the enterprise system to work
out a new knowledge-based
application to enable the company
to gain a competitive advantage.
l Identification of form of knowledge.
· To locate the sources of knowledge-
internal or external, structured or
unstructured, paper-based or
historical.
l To look for the opportunities, such
as improved internal communication
through the creation of an enterprise
portal, improved customer service,
reduced margins and faster time to
market for new product
development.
l Determination of the tangible,
monetary benefits as well as
intangible benefits such as improved
staff morale, better interaction etc.
l To identify the challenges and
obstacles- Identifying the obstacles
(like lack of understanding and
meaning of information or mixed
messages from different levels in the
organization etc) at this stage helps
the organization solve problems
before they occur.
l Development of collective
responsibility-Individuals or
groups may believe that they are
more valuable if they retain
knowledge instead of sharing
knowledge. Workers need to be
reassured that their contributions
are recognized and benefit
everyone. A culture of collective
responsibility has to be
communicated, embraced and
rewarded.
l Constant refinement of knowledge:
out-of- date information can be
the management accountant, September, 2008
worse and useless because it may
lead to incorrect judgments and
decisions. So the pool of knowledge
must be constantly reviewed,
replenished and reappraised if
knowledge asset value is to be
maintained and enhanced.
l Finding the right tools- Tools that
organize, search and alert workers
to new information are the
foundation of a successful
knowledge management system.
Workers need to find the precise
information they need, quickly and
efficiently, which requires a suite of
integrated, intelligent information
tools.
l Selection of trained & alert workers
to cope up with additions in the
knowledge collection- they will
refine suggested additional topics
based on training and learn to adapt
to the user’s unique needs.
l Knowledge maintenance and
measurement- Just as other assets
are audited, a knowledge
management plan must regularly be
reviewed, evaluated, tested to
enhance and maximize knowledge
asset value.
Conclusion
Knowledge assets represent a firm’s
competences and capabilities that are
deemed essential for economic growth,
competitive advantage, human
development and quality of life.
Knowledge-creating process may be
facilitated effectively by adopting an
appropriate tool or context, i.e.
knowledge assets. The effectiveness of
a knowledge creation process depends
on the circumstances under which it is
used. However in spite of the existing
measurement tools time has come to
develop some future knowledge asset
measurement framework based upon
more sophisticated understanding of
human capital and social capital.
Contd. on Page 704

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Mukhopadhyay, BSC, FICWA
57, N.K. Ghosal Road,
P.O. Kasba, Kolkata 700042
M/6278
Shri Jitander Kumar Gupta,
BCOM(HONS), MCOM,
LLB, MBA, FICWA
Chief Financial Officer, CMC
Limited, PTI Bldg., 5th Floor,
Parliament St.,
New Delhi 110001
M/22725 C/o. M/s. Prize Petroleum Co.
Shri Ketan Kishore Ltd., B-504-505, Millennium
Rukhmaiya, BCOM, FICWA Plaza, Sector-27,
205, Giridwar, Mathuradas Gurgaon 122002
Road, Next to Punjab National
Bank, Kandivali (West), M/20614
Mumbai 400067 Shri Rupen Basu Mallik,
MCOM, FICWA
M/23220
14A, Radhanath Mallik Lane,
Ms. Madhuvanti Sameer Sathe,
Kolkata 700012
MCOM, FICWA
‘Renuka’, Plot No. 44,
Patwardhan Baug, Erandwana, M/21113
Pune 411004 Shri Mukesh Kumar Gupta,
BCOM, FICWA
Tower-9, Flat No. 301, Sushant
M/23344
Ms. Radhika Kasturirangan, Estate, Sector 52,
BCOM, FICWA Gurgaon 122002
Piping Centre, B.H.E.L.,
80, G.N. Chetty Street, M/23208
T. Nagar, Chennai 600017 Shri Hiranya Kumar Mohanty,
BCOM, FICWA
M/8541 Ferro Chrome Plant, Ferro
Shri Niranjan Patra, Chrome Project, Jajpur Road,
BSC, FICWA Jajpur 755020
Black Diamond Apartments -
III, 53F, Trimurty Nagar,
M/11075
Nagpur 440022
Shri N. Ganesan, BSC, FICWA
302, Gopalakrishnadhama
M/13844
Apartments, #55, 6th Main,
Shri Nagarajan Narayanan,
15th Cross, Malleswaram,
MSC, FICWA
Bangalore 560003
524, 41st Cross, 8th Block,
Jayanagar, Bangalore 560082
M/18543
Shri Amitava Das,
M/12090
Shri R. Subramanian, BTECH(HONS), FICWA
BCOM, FICWA 60/113, H. P. Dutta Lane,
Raman & Associates, Cost Gold Gardens,
Accountants, Old No 17, New Kolkata 700033
No. 38, Sripuram,
Tirunelveli Junction, M/19378
Tirunelveli 627001 Shri Manish Bhagvandas
Analkat, MCOM, FICWA
M/22760 R-6, Vardhman Krupa Flats,
Shri Vijay Narendrabhai Darji, B/H, Sarvodaya-2, Near
MCOM, FICWA Satadhar Society, Sola Road,
C/o. Shri C. Venkateshwara Ahmedabad 380061
Rao, 8-3-231/72/A/2, Shri
Krishna Nagar,
M/11780
Near Church, Yousufguda,
Shri Pradip Kumar Jana,
Hyderabad 500045
FICWA
M/23030 NHPC Ltd., O/o. Executive
Shri Umesh Chandra Agrawal, Director R-III, DP-3,
BCOM(HONS), ACA, ACS, Sector-V, Salt Lake,
FICWA Kolkata 700091
695

M/10845
Shri Srinivasan Raghavan
Veeravanallur,
BTECH(MET.ENGG.),
MBA(FIN), FICWA
Dy. General Manager (F & A),
National Highways Authority
of India, G-5 & 6, Sector-10,
Dwarka, New Delhi 110075
M/12124
Shri Ashok Kumar Phukan,
BSC(HONS), LLB, FICWA
Deputy Registrar (F & A),
Dibrugarh University, P.O.
Dibrugarh University,
Dibrugarh 786004
M/20024
Shri Abhijit Roy,
MCOM, FICWA
Lecturer of Commerce, Dept.
of Commerce, Coochbehar
College, 2, Kalighat Road,
Coochbehar 736101
M/12862
Shri Santosh Sarkar,
BCOM, FICWA
A-4, Sona Apartments,
237, R. N. Guha Road,
Kolkata 700074
M/11097
Shri Santanu Kumar Saha,
BCOM, FICWA
Saha & Associates, 35-J,
Raja Naba Krishna St.,
Kolkata 700005
M/14094
Dr. B. Venkatachalam,
BCOM, MBA(FIN.),
PHD, FICWA
No. 57, 2nd Main, I Block,
BEL Layout, Vidyaranyapura,
Bangalore 560097
M/22719
Shri Rajesh Prasad,
BSC, FICWA
Manager (Fin. & Acctts.),
JSW Steel Limited, Pottaneri,
Mecheri, Mettur Taluk,
Salem 636453
M/8087
Shri Ramanathan Sankar,
MCOM, FICWA
14/6, “Thiruvenkata Agam”,
696
Admission to Membership
Rangaraja Puram Main Road, 5B/15A, N.I.T., M/20457
Kodambakkam, Faridabad 121001 Ms. Sejal Bhupendra Shah,
Chennai 600024 BCOM(HONS), FICWA
M/7338 Sejal B. Shah & Co., 326, Shivaji
M/21864 Shri S. Gopalakrishnan, Nagar, N.M. Joshi Marg, Lower
Shri Ojas Surendra Vora, MSC, MBA, FICWA Parel (E), Mumbai 400013
BCOM, FICWA 102-Sri Thangam Nagar I,
A-1/14, Scindia Society, Pavalathampalayam, M/17757
Sir M.V. Road, Andheri (E), Kathirampatti-Post,
Shri R. Anbu Thirunavukkarasu,
Mumbai 400069 Erode 638107
BSC, FICWA
M/22045 1, Solai 2nd Street, Aynavaram,
M/9351
Shri Sivadasan Arakkan, Chennai 600023
Shri Dattatreya,
BCOM, FICWA
BCOM, FICWA
Chief Accounts Officer, Kerala M/23301
No. 52, 1st Floor, 3rd Main,
Tourism Devlopment Corpn. Shri Siva Subramanian,
3rd Cross, 3rd Block, Javaraiah
Ltd., Mascot Square, Vikas BCOM, FICWA
Gardens, Thyagarajanagar,
Bangalore 560028 Bhavan P.O., 5303, Nandi Park, Gotikere,
Trivandrum 695033 Bangalore 560083
M/8630
Shri Ashok Kumar Maganlal M/15593 M/22488
Shri Ramabadran Rajendran,
Desai, BCOM, MA, ACWA, Shri Vallurupalli Srinivasa Rao,
BSC, LLB, MFM, FICWA
FCMA, FICWA BCOM, FICWA
Vice President (Accounts), Flat No. 106, Ramu Towers,
109, Parsell Square,
Shipping Corpn. of India, 245, A.C. Guards, H. No. 10-2-6,
Scarborough,
Madam Cama Road, Hyderabad 500004
Ontario-M1B 2A5, Canada
Mumbai 400021
M/6403 M/13506
M/10010
Shri Kali Kinkar Sarkar, Shri Subhendu Sekhar Daw,
Shri Lakhpat Rai Goyal,
MCOM, LLB, FICWA BSC, FICWA
BCOM, FICWA
“Renu-Lipi”, Aradanga, S. S. Daw & Associates, 12B,
Manager (Finance &
Asansol 713303 Accounts), Power Grid Chandra Nath Chatterjee St.,
(2nd Floor), Bhowanipur,
Corporation of India Ltd.,
M/22611 Kolkata 700025
B-9, Qutab Institutional Area,
Shri Mahendra Singh, Katwaria Sarai,
MCOM, LLB, FICWA New Delhi 110016 M/22705
Shukla Vihar Colony (Para), Shri Ranatosh Majumdar,
Near Para Police Chowkey, M/6518 BCOM(HONS), FICWA
Hardoi Ring Road, Shri Rajapeta Satyanarayana, Kalyani Apartment, Flat No.
Lucknow 226017 MCOM, FICWA ‘GB’, 302/1, N.S.C. Bose Road,
Chief Manager (Finance & Kolkata 700047
M/8736 Accounts), Lubrizol India Pvt.
Shri G. Satyananda Rao, Ltd., 9/3, Thane Belapur Road, M/10044
BCOM, FICWA Turbhe, Navi Mumbai 400705 Shri Thomas Mathew,
D-6, BDL Township,
BCOM(HONS), FICWA
Bhanur 502305 M/15527 B-2, Monalika Apts., Old
Shri Vikas Digambar Peshave, Station Bazar,
M/22874 MCOM, FICWA
Bhubaneswar 751006
Shri Bolisetti Gopala Krishna B-12, Saket Apartment,
Murty, BCOM, FICWA Patwardhan Baug, Erandavana,
H. No. 2-62/B/102/96, Behind M/12092
Pune 411052
Sri Sai Residency, Shri Pradip Harilal Desai,
Madhuranagar, Pragatinagar, BCOM, LLB, FICWA
M/20602
Hyderabad 500072 Shri Ashwin Madhusudan P.H. Desai & Co. 29-A, Govt.
Solanki, BCOM, FICWA Servants’ Society, B/H
M/2338 D/104, Koyna, Shantivan, Near Navrangpura Municipal Market,
Shri Hari Kishan Bhatia, National Park, Borivli-East, Navrangpura,
BA, FICWA Mumbai 400066 Ahmedabad 380009
the management accountant, September, 2008

M/9769
Shri Rajeev Uppal,
MA(ECON), MCOM(BUSI.
ADMN.), ACS, FICWA
AG-1/141-A (DDA MIG
Flats), Vikas Puri,
New Delhi 110018
M/15898
Shri Shivannarayana
Garlapati, BCOM,
LLB, FICWA
#69, Ist Cross, I Main, I
Block, Near Sai Mandir,
Thyagarajanagar,
Bangalore 560028
M/5702
Shri Mehendi Sultanali
Chandani, BCOM(HONS),
FICWA
5-A, Silver Jubilee Bldg.,
Fidai Baug, S.V. Road,
Andheri (West),
Mumbai 400058
M/11739
Shri Ajeet Kumar Gupta,
MMS, FICWA
K-2/B, Saket,
New Delhi 110017
M/8385
Shri Sudhir Padmakar
Kulkarni, BCOM,
LLB, FICWA
B-18, Icchamani, Mayur
Colony, Kothrud,
Pune 411038
Admission To Associateship
Date Of Admission :
20th July 2008
M/26966
Shri Dharmesh Shirish
Anjaria, BCOM, AICWA
29-B, Laxman Apts., Azad
Lane, Andheri (West)
Mumbai 400058
M/26967
Shri Sumanta Nath Bhunia,
BCOM(HONS), AICWA
P-861/1 Lake Town, Block-A,
Kolkata 700089
the management accountant, September, 2008
Admission to Membership
M/26968
Shri Perunduru Vijaya Bhaskar,
MCOM, ACS, AICWA
Plot No. 34 A & B, Flat No.
407, Park View Residency,
Rajeev Nagar Colony,
Hyderabad 500045
M/26969
Shri Anindamoy Paul Biswas,
MCOM, AICWA
6, Selimpur Road,
Kolkata 700031
M/26970
Shri Suhas Sunderlalji Bohra,
BCOM, LLB, ACS, AICWA
22/1735 MHB Colony, Gorai
Road, Borivali (West),
Mumbai 400091
M/26971
Shri Santanu Chatterjee,
BCOM(HONS), AICWA
9, Dwarik Mukherjee Road,
Behala, Kolkata 700034
M/26972
Ms. Tapasi Das,
BCOM, AICWA
“Ananda AAhar”, West High
Court Road, Dharampeth,
Nagpur 440010
M/26973
Shri Anand Nandkishor
Deshmukh, MCOM, AICWA
“Aditya” 149-14/1, Ganesh
Nagar, Dhayri, Pune-Sinhgad
Road, Pune 411041
M/26974
Shri V. S. Ganesh,
BSC, AICWA
19, 2nd Street (East),
Bryant Nagar,
Tuticorin 628008
M/26975
Shri Anup Kumar Gupta,
BA, AICWA
C/o. Hotel Kaveri Kali Manda
Road, Gandhi Chowk,
Giridih 815301
M/26976
Shri Ingale Sunil Govind,
BCOM, FCA, AICWA
6, Madhuban Nagari, Behind
BOI Officers Qrts., Nr. Sharda
Society, Jule Solapur,
Solapur 413004
M/26977
Shri Jinu John Jacob,
BCOM(HONS), AICWA
Plot No. SRA 72A, Souhurdha
Nagar, Vazhakala,
Thrikkakara,
Ernakulam 682021
M/26978
Shri Pramod Kumar Jena,
BSC(HONS), AICWA
Flat No. B-II-06, NALCO
Nagar, P.O. E. Co. Railway,
C. S. Pur, Bhubaneswar
M/26979
Shri Subhash Jajoo,
BCOM(HONS),
ACA, AICWA
Satyam Co-op. Hsg. Society,
Flat No. 2/2/A, 9-B, Bechulal
Road, Near CIT Road,
Padmapukur, Kolkata 700046
M/26980
Shri Manindra Kumar,
BCOM, AICWA
F-31, Ambuja Cements
Colony, Daburji, Lodhimajra,
Ropar 140113
M/26981
Shri Pakkam Krishnan
Kesavan, BCOM, AICWA
63, Washer Man Street,
Chintadripet,
Chennai 600002
M/26982
Shri Madhavan Kesavan,
MCOM, ACA, AICWA
Old No. 3, New No. 13/2,
Second Street, Annamalai
Nagar, West Mambalam,
Chennai 600033
M/26983
Ms. Mugdha Yogesh Keskar,
MCOM, AICWA
A-1404 Royale Neelkanth
Palms, Near Tatvadnyan
Vidyapeeth, Behind Cinemax,
Kapurbawdi,
Thane (West) 400607
M/26984
Shri K. Vivek Kamath,
BCOM, AICWA
B-406, Lake Side Raheja Vihar,
Off Chandioli Farm Road,
Powai, Andheri (East),
Mumbai 400072
M/26985
Shri H. Krishnan,
MCOM, AICWA
Plot No. 2C1 & 2C2, Flat No.
G3, Aadhi Kailash Flats, Ambal
Nagar, 23rd Street, Keelkattalai,
Chennai 600117
M/26986
Shri Sanjay Kumar Kasliwal,
BSC, AICWA
158-A, Alkapuri Colony,
Habibganj,
Bhopal 462024
M/26987
Shri C. Dilip Kumar,
BSC, AICWA
EWS-2066, M.P. Housing Board,
Light Industrial Area, Near Ganga
STD., Ambedkar Chowk,
Bhilai 490026
M/26988
Shri Abhay Kumar,
BCOM(HONS), AICWA
Rajendra Chatra Bhawan, Room
No. 75, 34A, Ratu Sarkar Lane,
Kolkata 700073
M/26989
Shri Mahesan Kasirajan,
MCOM, BL, AICWA
C/o. S.P. Subramanian 20/19
Customs Colony,
Chennai 600015
M/26990
Shri Indranil Mazumder,
BCOM, AICWA
Jr. Manager (Finance) Steel
Authority of India Ltd., Branch
Sales Office, Surya Sen Sarani,
Durgapur 713208
M/26991
Shri Ornab Mookherjee,
BCOM(HONS), AICWA
30, Banerjee Para Lane, Dhakuria,
Kolkata 700031
697
 Admission to Membership

M/26992 M/27000 M/27008 M/27016

Shri Debasis Mohanty, Shri Sathiraju Girajala, Shri Kanhaiya Kumar Singh, Shri Karthik R.,
MCOM, AICWA MCOM, MBA, AICWA MCOM, AICWA BCOM, AICWA
S/o. Basant Kumar Mohanty Flat No. 107, Janapriya Hills Vill- Teotha, P.O. 315, Prasanth Nagar, West Fort,
Mahima Nagar, Nayabazar, Apts., Dattatreya Colony, Maharajganj, Dist- Siwan, Trivandrum 695023
Cuttack 753004 Asifnagar, Maharajganj 841238
Hyderabad 500028 M/27017
M/26993 M/27009 Ms. Priya Krishnamoorthy,
Shri Harshad B. Patel, M/27001 Shri Sirisha Kumar Sahoo, BCOM, AICWA
BCOM, AICWA Shri M. Raja Rajeswaran, BCOM(HONS), AICWA A-1, 11, 29th Street, Nanganallur,
8-B, Suvas Apartment 68 F BCOM, AICWA Qr.No. I-3/7, N.H.D.C. Ltd., Chennai 600061
Nepean Sea Road, No. 4, Devi Illam, 7th Street, Urja Vihar, Siddhwarkut, Dist-
Mumbai 400006 1st Cross, Vaishnavi Nagar, Khandwa, Siddhwarkut M/27018
Rly. Carshed Complex Post, 450554 Shri Eravelil Augustine Antony
M/26994 Chennai 600109 Mary, BA, AICWA
Shri S. Raghupathy,
M/27010 House No. IV/794A,
BSC, AICWA M/27002
T 3 Raasi Enclave, No. 30, Shri Sridhar Setty, Koorippalam,
Shri Rajesh Kumar Sogarwal, BCOM, AICWA Kochi 682002
18th Avenue, Ashok Nagar, BCOM, MBA, AICWA
Chennai 600083 #904, 1st Floor, 3rd B Cross
House No. 2629 Sector - 16, 9th A Main, 1st Block, H R B M/27019
Faridabad 121002 Shri Sujit Menon,
M/26995 R Layout, Kalyan Nagar,
Shri D. K. Ravindran, Bangalore 560043 BCOM, AICWA
M/27003 “Shreyas” 59/1, III Cross,
BCOM, AICWA Shri Kamlesh Sankhla,
Flat No. F2, Vijayalakshmi M/27011 Marappa Thota, J. C. Nagar,
BCOM, MBA, AICWA Bangalore 560006
Flats, Plot No. 5, Veeramani Shri Ajay Anand,
Flat No. A-032, Ashiana
Street, Periyar Nagar Extn. II, BA, AICWA
Greens, Bhiwadi,
Madipakkam, 10, Pulteney Close, M/27020
Alwar 301019
Chennai 600091 Isleworth, Middlesex, Shri Badri Kumar Mehta,
London U.K. TW76PX BCOM, AICWA
M/27004
M/26996 22, TT Place, L.H.M.C.
Shri Avneet Kaur, Shri Manish Kumar Sinha,
M/27012 Residential Complex, Opp.
MCOM, AICWA BSC, LLB, AICWA
Ms. Monica Gupta, Kalawati Saran Children
17/1, Gurdwara Road, Flat No. 8, Plot No. 9, Shree
BCOM(HONS), AICWA Hospital, New Delhi 110001
Karanpur, Prasanna Hsg. Society,
Bhibewadi, 25/66, Shakti Nagar,
Dehradun 248001 M/27021
Pune 411037 Delhi 110007
Shri Francis Xavier Nelson Leo,
M/26997 BCOM, MBA, AICWA
Shri Adinarayana Reddy M/27005 M/27013
386, Street No. 8, “K” Block,
Pedinekalua, AICWA Shri Rammani Sarkar, Shri Shambhu Sharan Jha,
Mahipalpur, New Delhi 110037
No. 41, Devinagar Colony, MCOM, AICWA BA(HONS), AICWA
R. K. Puram, 9C, Khudiram Basu Road, C/o. Prabhash Kumar Jha H.
Nabagram (Konnagar), M/27022
Secunderabad 500056 No. 16, Madangir Village, Shri Manik Lal Nayak,
Hooghly, New Delhi 110062
Nabagram 712246 MCOM, AICWA
M/26998 Gali No. 2, Shakti Nagar,
Shri R. Rajarajan, M/27014
M/27006 Rewari 123401
BCOM, AICWA Shri Kannan B.,
New No. 14A, Old No. 194A, Shri Gyan Chand Singhvi,
MCOM, AICWA M/27023
Flat - F2, Podchendu Villa, BCOM, AICWA
Imperial Residency Flats, Shri Sandeep Kumar Pandey,
Sainagar Third Main Road, Chief General Manager
29/235-B, Janatha Road, MCOM, AICWA
Virugambakkam, BGH Exim Ltd.,
DBZ-S-140, Ward-12A, Vytilla, Cochin 682019 502, Ahlcon Apartments, Sector-
Chennai 600092
Gandhidham 370201 3 Vaishali,
M/27015 Ghaziabad 201010
M/26999
Shri K. Venkata Rama Subba M/27007 Shri Pardeep Kumar Khaneja,
Reddy, BCOM, Shri Ashit Kumar Saha, MCOM, MBA(FIN.), M/27024
MBA, AICWA BCOM, AICWA AICWA Shri Rahul M., BSC, AICWA
78, Devdoot Apartment, 198, Alipore Road, H. No. 964/6, Partap Chowk, Lalvilla, Vallamkulam-P.O.,
D-Block, Vikaspuri, P.O. Nimta, Belghoria, Punjabi Ram Lila Wali Gali, Thiruvalla, Dist- Pathanamthitta
New Delhi 110018 Kolkata 700049 Rohtak 124001 Vallamkulam 689541

698 the management accountant, September, 2008


M/27025
Shri Ramachandran
Vadukkoot, BCOM, AICWA
A 403, Sanskar,Neelam Nagar,
Phase-II Mulund (E),
Mumbai 400081
M/27026
Shri Umesh Sagta,
MCOM, AICWA
G-1001, Neelpadam-I,
Sector-5, Vaishali,
Ghaziabad 201012
M/27027
Shri Santhosh Kumar V.,
BCOM, AICWA
Kariparambil House, Opp.
Union L.P. School, S R M
Road, Ernakulam,
Kochi 682018
M/27028
Shri Kalloo Sahu,
BCOM, AICWA
B 1/25, Gali No. 2, New
Ashok Nagar,
New Delhi 110096
M/27029
Shri Gagnendu Sharma,
BCOM(HONS), AICWA
233, Indra Garden, Rajinder
Nagar Indl. Area, Mohan
Nagar, Ghaziabad 201007
M/27030
Ms. Alaknanda Sen,
BCOM(HONS), AICWA
10/1/A, Lake Place,
Kolkata 700029
M/27031
Ms. Aarti Ramakant Tripathi,
BCOM, AICWA
A/40-A, Shanti Niketan,
L B S Marg, Ghatkopar
(West), Mumbai 400086
M/27032
Shri V. Balaji, BCOM,
MBA, AICWA
Plot No. 5092, Ram Nagar
North Extn., 7th Street,
Madipakkam,
Chennai 600091
the management accountant, September, 2008
Admission to Membership
M/27033
Shri Subramony
Venkiteswaran, MCOM,
MFM, ACS, AICWA
TC-37/1050, “Gokul”, Asra-
48, Ayya Vadhyar Street,
Fort, Trivandrum 695023
M/27034
Shri Subhajit Banerjee,
BCOM(HONS), AICWA
Plot No. 21, Block-AH,
Sector-II, Salt Lake City,
Kolkata 700091
M/27035
Shri Ranjan Misra,
BCOM(HONS), FCA,
AICWA
E-973, Saraswati Vihar,
Delhi 110034
M/27036
Shri Kartik Subramanian,
BCOM, ACA, AICWA
9/4, Kuppuswamy Street,
Lotus Apartments, T. Nagar,
Chennai 600017
M/27037
Shri Ranjan Kumar Gupta,
BSC, AICWA
12/A, Jagat Roy Chowdhury
Road Barisha,
Kolkata 700008
M/27038
Shri Sandeep Prasad,
BCOM(HONS), AICWA
118-H, Pocket-4, Mayur
Vihar, Phase-I,
Delhi 110091
M/27039
Shri Ritesh Agarwal,
MCOM, PH.D, AICWA
12, North City, Pocket-B,
Near Kodesia Phatak,
Izzatnagar, Bareilly 243001
M/27040
Shri Chandan Chatterjee,
BCOM, AICWA
Choti-Raniganj, P.O.
Raghunath Chowk, Via-
Sitarampur, Dist- Burdwan,
Sitarampur 713359
M/27041
Shri Narender Singh Hinwar,
BCOM, MBA(FIN),
AICWA
108, Kilokari Village,
Near Maharani Bagh,
New Delhi 110014
M/27042
Shri Sachin Bishnoi,
BCOM, AICWA
H. No. 555, Srinath Nagar,
Street No. 3, Jwalapur,
Hardwar 249407
M/27043
Shri Cherukuru Raghu,
BCOM, AICWA
No. 14, Devaraj Nagar, Opp.
IVPM., Navalpur Post,
Ranipet, Vellore Dist.,
Ranipet 632402
M/27044
Shri Dharmendra Bansilal
Mehta, BCOM,
ACA, AICWA
803, Acropolis,
Light House Hill Road,
Mangalore 575001
M/27045
Shri Balasubrahmanyam
Sivalenka, BCOM, AICWA
C/o. M A Prasad D. No. 2-4-
16, Mydhili Street, Srinagar,
Kakinada 533003
M/27046
Shri Sandipan Sarkar, BSC,
AICWA
C/o. P. C. Sarkar Hirapur,
Durgamandir, Opp. to
Agrasen Bhawan, Dhanbad
826001
M/27047
Shri Eknath Goutam,
MCOM, AICWA
134, Maliwada Phool Chowk,
Burhanpur 450331
M/27048
Shri Raghu Veera Sarma
Josyula, MCOM, AICWA
23-11-9, Sri Ram Nagar,
Rajahmundry 533105
M/27049
Ms. Sucharita Halder,
BCOM, AICWA
4/C Bompas Road,
Kolkata 700029
M/27050
Shri R. Srinivasan,
MCOM, AICWA
1A, G3, Sripriya Manasa Flats,
V. V. Koil Street, Chinmaya
Nagar, Chennai 600092
M/27051
Shri Abhik Kusari,
MCOM, AICWA
28/9, Mahendra Banerjee Road,
Behala, Kolkata 700060
M/27052
Shri Shital Jhunjhunwala,
BCOM(HONS), ACA, AICWA
1-2-300, Gagan Mahal Road,
Hyderabad 500029
M/27053
Shri Rangarajan Krishnakishore,
MSC, ACA, AICWA
Flat 105, AL Yamama Tower,
AL Qasba’a Street, Majaz Area,
Corniche, Sharjah, U A E
M/27054
Ms. Chaitali Damodar
Sahasrabuddhe, BCOM, AICWA
E-1103, Sainath Tower, Near
Neelam Nagar Phase-II, Jain
Temple, Mulund (East),
Mumbai 400081
M/27055
Shri Janardanan Krishnamurthy,
BCOM(HONS), AICWA
No. 8, Bompas Road,
Ground Floor,
Kolkata 700029
M/27056
Shri Divya Sharma,
MCOM, AICWA
Plot No. 14, Swej Farm, Ganesh
Nagar, Sodala,
Jaipur 302004
M/27057
Shri Jaldu Venkata Soma Raju
Gupta, BCOM, AICWA
699
 Admission to Membership

Plot No. 8C, D. No. 24-128,
Lathakunj Apartment,
Bharani Colony, Sainikpuri,
Secunderabad 500099
M/27058
Shri Apte Chandrashekhar
Moreshwar, BCOM, AICWA
Flat No. C-1/11, Manibandh
Complex, Opp. Nityanand
Hall, Hingre Khurd,
Pune 411051
M/27059
Shri Karve Shashank Jayram,
BCOM, AICWA
189, Shukrawar Peth,
Patwardhan Wada, Near
Kelkar Museum,
Pune 411002
M/27060
Shri Rajaram Mohan Dev K.,
BCOM, ACA, AICWA
5-535, Deepthi, Srinagar
Colony, Chandanagar,
Hyderabad 500050
M/27061
Shri Duvvuri Sarveswara Rao,
BCOM, AICWA
Flat No. C-24, Steelmines
Complex, Srinagar Colony
Extn., Hyderabad 500073
M/27062
Shri Susan Abraham,
BCOM, LLB, ACS, AICWA
11C, Sylvan Heights, Sylvan
Heights Road, Chilavannoor,
Kochi 682020
M/27063
Shri Rahul Anant
Chincholkar, BCOM,
AICWA
B/108, Prestige Classic, Near
Chinchwad Station,
Chinchwad, Pune 411019
M/27064
Shri Abhishek Kiran Kannal,
MCOM, AICWA
127/3 Kamada Housing
Society, Behind Hindustan
Bakery, Chinchwadgaon,
Pune 411033
M/27065 H. No. 9-145, H.M.T. Nagar,
Shri Ketkar Neelakshi Nacharam,
Chandrakant, Hyderabad 500076
MCOM, AICWA
30, Bldg. No. S-11, Ekata M/27073
Society, Indira Shankar Nagari, Shri Prakriti Ranjan Sahu,
Paud Road, Kothrud BCOM(HONS), AICWA
Pune 411038 Road No. 22, Qrt. No. K2-10,
Telco Colony,
M/27066 Jamshedpur 831004
Shri Narhari Govindrao
Mallurwar, M/27074
Shri Ashok Kumar Patra,
MA,MCOM,LLB,CAIIB,AICWA
MCOM, LLB, IACWA
C/o. Konal Sadan Near Gandhi
B1/G1, IFFCO Township,
College, Yadopur Road,
Musadia, P.O. Paradeep,
Gopalganj, Dist- Gopalganj, Dist- Jagatsinghpur,
Gopalganj 841428 Paradeep 754142
M/27067 M/27075
Shri Thirumalaiswamy Shri Bhagwani Pratap
Parthasarathy, Pinanlal, MCOM, AICWA
BSC, ACS, AICWA Sector No. 27A, Plot No. 396,
9, New Colony, 8th Street, Pradhikaran, Nigdi,
Adambakkam, Pune 411044
Chennai 600088
M/27076
M/27068 Shri Kiran Govindrao
Shri Avinash Choudhary, Kulkarni, MCOM,
BCOM, AICWA LLB, AICWA
C-85, Prathmesh Nagari,
MP-34, Palakmati Park,
Deolai Road, Satara Parisar,
Nehru Nagar,
Aurangabad 431005
Bhopal 462003
M/27069 M/27077
Shri M. Chinnathambi, Ms. Tanjit Kaur,
MCOM, AICWA BCOM, AICWA
D 54/2, V O C Nagar, Police F-53 C, Second Floor,
Quarters, Ganapathy, GTB Apartments,
New Delhi
Coimbatore 641006
M/27078
M/27070
Shri Madhab Chandra
Shri R. Giri, BCOM,
Mandal, BCOM, AICWA
FCA, AICWA Block C/67, Kurla Camp,
No. 90, Arokiasamy Road (E),
Ulhas Nagar, Thane 421004
R S Puram,
Coimbatore 641002
M/27079
Shri Anjan Kumar Saha,
M/27071 MCOM, AICWA
Ms. Shikha Gupta, 179E, Mayur Vihar Phase-I,
BCOM, MBA, AICWA Pocket-1, New Delhi 110091
D/o. Dinesh Kumar Gupta B-
31, Arjunpuri, Imali Ka Fatak, M/27080
Jaipur 302005 Shri Sandeep Kumar
Aggarwal, BCOM, AICWA
M/27072 B-93A, IInd Floor, Ashoka
Shri Sistla Venkata Chandra Enclave-II, Sector-37,
Sekhar, MCOM, AICWA Faridabad 121003
M/27081
Shri Sohan Kumar Garg,
BCOM, AICWA
C/o. Swrajy Prakash Garg Vill-
Birpur, Dist- Sheopurkalan,
Sheopurkalan 476335
M/27082
Shri Guru Charan Katta Rama
Murthy, BCOM, AICWA
No. 33, Sree Hari Nivas, Pipeline
Main Road, O.T. Road,
Malleshwaram,
Bangalore 560003
M/27083
Shri Amay Hattangadi, AICWA
601, Jamuna Sagar, 59/60 Shahid
Bhagat Singh Road, Colaba,
Mumbai 400005
M/27084
Ms. Nisha K. Jose,
BSC, AICWA
A2-603, Ganga Hamlet,
Vimannagar, Pune 411014
M/27085
Shri Rajeev Kumar Khanna,
BCOM, AICWA
Flat No. 2, Pocket-B 8,
Sector - 4, Rohini,
Delhi 110085
M/27086
Shri N.J.R.V. Girish Kumar,
MCOM, AICWA
# 977A/9, 8th Cross, 13th Main,
BSKJ Stage, Srinagar,
Bangalore 560050
M/27087
Shri Pratap Madhukar Pathak,
BCOM, AICWA
B-103, Parmeshwari Paradise,
Majiwade Village Road,
Majiwade, Thane 400601
M/27088
Ms. Vaani Polavarapu, BCOM,
AICWA
D/o. P S Prakasa Rao Plot No. 6-
59/1, Flat-301, Vikas Residency,
Nr. Vidya Nursing Home,
Chandanagar
Hyderabad 500050

700 the management accountant, September, 2008


M/27089
Shri Chakka Ravikumar,
BCOM, AICWA
Airforce Instt. of Dental
Sciences, Airport Road,
Bangalore 560007
M/27090
Shri Vipin Kumar Sharma,
BCOM, AICWA
698/2, Sector-5B,
Gandhinagar, B/H. MRF
Showroom,
Gandhinagar 382005
M/27091
Shri Ramesh Srinivasan,
BCOM, ACA, AICWA
Flat-2, “Gajanah”, New No.
6, Temple Avenue, Srinagar
Colony, Chennai 600015
M/27092
Shri Sudhir Kumar Sharma,
BSC,LLB,MBA,MCA,
ACS,AICWA
B - 4/100 Yamuna Vihar
Delhi 110053
M/27093
Shri Ratan Kumar Sharma,
AICWA
Block-L, Flat No. 38C,DDA
Flats, Nr. New Green Fields
School, Saket,
New Delhi 110017
M/27094
Shri Buddhadev Saha,
MCOM, AICWA
C/o. Bimal Chandra Saha,
Mahendra Dutta Road, Dist-
North 24 Parganas,
Banipur 743233
M/27095
Shri Mahboob Alam Usmani,
MCOM, AICWA
Vill.: Bibipur, P.S. Maduban,
Teh-Ghosi, Dist- Mau, U.P.
Bibipur
M/27096
Ms. Pooja Verma,
BCOM(HONS), AICWA
H. No. 19 Mc No. 243/28,
Jyoti Park,
Gurgaon 122001
the management accountant, September, 2008
Admission to Membership
M/27097 M/27105
Shri Shivaraj Namdeo Bhor, Ms. Sangita Shrirang
BE(MECH), AICWA Kulkarni, BCOM, AICWA
EA-329, Maya Enclave, 9, Shriniwas Apartment,
DDA Flats, Tarde Colony, Hingne (KH),
New Delhi 110064 Sinhgarh Road,
Pune 411051
M/27098
Shri Deenbandhu Deshmukh, M/27106
MCOM, AICWA Shri Narsingh Prasad,
13, Mewa Nursery, MCOM, LLB, AICWA
C/o. Jag Prasad H. No. 535,
Nishatganj, Near Indira
Keshaw Nagar, Shiva Colony,
Flyover, Lucknow 226007
(Infront of Sarswati Shishu
Mandir),
M/27099
Basti 272002
Shri Addepalli Subramanya
Gupta, BCOM, AICWA
M/27107
Plot No. 381, 6th Sector, 27th
Shri Pradyumna Pattnaik,
Street, K K Nagar,
BCOM, AICWA
Chennai 600078
E-29, Sector-2,
Rourkela 769006
M/27100
Shri Krishnarathnam Ganesh, M/27108
BSC, AICWA Ms. T. S. Radha,
A-707, Sarojini Nagar, BCOM, AICWA
New Delhi 110023 Flat No. TC, 3rd Block,
Kamalakkannan Garden,
M/27101 Vembuli Amman Koil Street,
Shri Rakshit Goyal, Virugambakkam,
BCOM, AICWA Chennai 600092
Plot No. 129, Sector-1,
New Vidhyadhar Nagar, M/27109
Jaipur 302023 Shri Samuel Diwakar
Waghchourey,
M/27102 BSC(HONS), AICWA
Shri Shankar Lal Kumhar, A/1, Ashram Building, 40,
MCOM, ACS, AICWA Gokhale Road (N), Dadar,
403, Silver Coin Mumbai 400028
Appartments, Opp. Bhavans
M/27110
School, Makarpura Road,
Shri Vineet Srivastava,
Vadodara 390009
AICWA
B-417/1 Raja Ji Puram,
M/27103
Lucknow 226017
Shri Sisir Kumar Koley,
BCOM(HONS), AICWA
M/27111
C/o. K K Sharma 3rd Floor,
Shri Lokendra Tiwari,
Rani Bagh, MCOM, AICWA
New Delhi 110034 80/168, Pratap Nagar,
Sanganer,
M/27104 Jaipur 302033
Shri Krishna Kumar V. S.,
MCOM, LLB, AICWA M/27112
Dy. General Manager-Finance Ms. Harshada Vivek
Kennametal India Ltd., 8/9th Tongaonkar,
Mile, Tumkur Road, BCOM, AICWA
Bangalore 560073 A-6, Pratibimb, Plot RH-159,
Mamata Hospital Lane, MIDC,
Dombivli (E),
Thane 421203
M/27113
Shri C. Yamunapathi,
BCOM, AICWA
C/o. Subash Bhattacharjee R.N.C.
Path, H. No. 14, Lachit Nagar,
Guwahati 781007
M/27114
Shri Sunil Arora,
BCOM, AICWA
6/195, Shivaji Nagar,
Gurgaon 122001
M/27115
Shri Arup Bagui,
MCOM, AICWA
#38, 5th Cross, IInd Floor,
Royal Residency Layout,
BTM 4th Stage, IIMB Post,
Bangalore
M/27116
Shri Sanjaykumar A. Chavda,
MCOM, AICWA
Flat No. 12, Ambika Bhuvan,
Patel Colony -2/3, Road No. 3/4,
Jamnagar 361008
M/27117
Ms. Srabani Chatterjee,
BSC, AICWA
H. No. 1689, Mamurpur (Near
Masjid), Narela,
New Delhi 110040
M/27118
Shri Debdip Chatterjee,
BSC, AICWA
N-11, Vikramaditya Sarani,
Sector - 2 (B),
Bidhannagar 713212
M/27119
Shri Abhradip Dey,
BCOM, AICWA
87/24 A. K. Mukherjee Road,
Kolkata 700090
M/27120
Shri Bibhas Das,
MCOM, AICWA
Malsouth Colony, P.O. Mal
Bazar, Dist- Jalpaiguri,
Jalpaiguri 735221
701
 Admission to Membership

M/27121 AICWA Hardware Stores, Rangpur M/27144

Shri S. K. Gupta,
BSC(HONS), AICWA
Flat No. 7-C, Plot No. 30/2,
Ayodhya Enclave, Sector-13,
Rohini, New Delhi 110085
M/27122
Shri Jitendra Jenamani,
BCOM(HONS), AICWA
C/o. Subhas Sarkar
Krishnapally Bandh Road,
Malda
M/27123
Shri K. G. Karthikeyan,
BCOM, AICWA
Plot No. 10, Rara Rajeswari
Nagar (South),
Tirunelveli 627007
M/27124
Ms. Narasimhan Krithiga,
MCOM, AICWA
Plot No. 9, Manikandan
Street, Ayyappanagar,
Madipakkam,
Chennai 600091
M/27125
Shri Rajiv Kumar,
MCOM, AICWA
Flat No. 51, Lotus, Nelco
Gardens, Viman Nagar,
Pune 411014
M/27126
Shri Nilay Kanti Maji,
BSC, AICWA
L-6, Anasua Housing
Complex, Durgachak,
Haldia 721602
M/27127
Shri Sasanka Bhusan Mishra,
BCOM, LLB, AICWA
Plot No. 1168, Ratnakar
Bag-2 Tankapani Road,
Bhubaneswar 751018
M/27128
Shri Atanu Kumar Mohanty,
BCOM(HONS), AICWA
A-17, HIG, Palaspali,
Bhubaneswar 751020
M/27129
Shri Md. Abdur Rasid
Mandal, BCOM(HONS),
C/o. Sahanoor Alam C-5/1,
Santoshpur Station Pally,
P.O. Santoshpur,
Kolkata 700142
M/27130
Ms. Parvatha Lakshmi
Natarajan, MCOM, AICWA
Flat No.7, 3rd Floor, 131/12
N.S.C. Bose Road,
Kolkata 700040
M/27131
Shri Manchukonda Nanda,
MCOM, AICWA
H. No. 4-12-111, Road No. 7
Arunodaya Nagar,
Bhagyalatha,
Vanasthalipuram,
Hyderabad 500070
M/27132
Shri Nilam Prasad,
BCOM(HONS), AICWA
82/13, Jawpur Road, Dum
Dum, Kolkata 700074
M/27133
Shri Ramesh Babu
Nallagopula,
MCOM, AICWA
Qtr. No. FBM-91, Central
Township, HAL Qrts., Nr.
Borewell Busstop,
Marathahalli-P.O.,
Bangalore 560037
M/27134
Shri Bomidika Dasharatha
Reddy, BCOM, AICWA
H. No. 10-01-99/3, Road No.
4, Bhagya Nagar Colony,
Lingojiguda, Saroor Nagar,
Hyderabad 500035
M/27135
Shri Raja Ram,
BCOM, AICWA
H. No. 16, Chals Raghunath,
Mirzapur Road, Naini,
Allahabad 211008
M/27136
Shri Goutam Roy,
BCOM, AICWA
C/o. Jitendra Nath Roy Janata
Road, P.O. Bara Atiabari,
Dist- Cooch Behar
Cooch Behar 736135
M/27137
Shri Ramesh Chandra Sahoo,
MCOM, AICWA
Asst. Manager (F & A)
Paradeep Phosphates Ltd.,
Bayan Bhawan, PT. JN
Marg, Bhubaneswar 751001
M/27138
Shri Srinivas Koushik
Garigipati, MCOM, AICWA
H.No. 35-77/11, Plot No. 29,
Brindavan Colony, Sainikpuri
Post, Secunderabad 500094
M/27139
Shri Ranjit Singh,
MCOM, ACA, AICWA
Ranjit Singh & Associates,
Near Student’s Cottage, P.P.
Compound,
Ranchi 834001
M/27140
Shri Pokhraj Sharma,
BCOM, AICWA
35/D/2 Umesh Mukherjee
Road, Belghoria,
Kolkata 700056
M/27141
Shri Sathisha,
BCOM, AICWA
No.585, II Floor, I Block, III
Stage, UVCE Layout,
Basaveshwara Nagar,
Bangalore 560079
M/27142
Shri Shankarakrishnan
Srinivasan, BCOM, AICWA
705 B, Komarla Brigade
Apts., Uttarahalli Main
Road,
Bangalore 560061
M/27143
Shri Soosally Thomas,
MSC, AICWA
32/468 A, “TAJ”, Kailas
Nagar, Puthiya Road,
Palarivattom,
Ernakulam 682025
Shri Anil Xavier,
MCOM, AICWA
Veliyanthara Puthen Veedu,
Maliyekal Lane, P.O. Thevara,
Cochin 682013
M/27145
Shri Battini Santosh Babu,
MCOM, AICWA
330, 2nd Block, 2nd Main,
Ayyappa Nagar, Devasandra,
K.R. Puram,
Bangalore 560036
M/27146
Shri A. Srijith Kumar,
BCOM, AICWA
Plot 2602/11, Zebbaway,
Gaborone, Botswana
M/27147
Shri N. Srinivasan,
BCOM, AICWA
15/6, Seshadri Street, Srirangam,
Trichirappalli 620006
M/27148
Shri Ugresan Jena,
BSC, AICWA
H-32, Sector-2, Executive Flat,
Rourkela 769006
M/27149
Shri Parmeshwar Yadav,
BSC(HONS), AICWA
Quarter No. 795, Sector-3D,
Bokaro Steel City,
Bokaro 827003
M/27150
Ms. Durga Reshmi M.R.,
BCOM, AICWA
39/5400B, “Uthram” Alappatt
Cross Road, Ravipuram,
Cochin 682016
M/27151
Shri Sujit Ray,
BSC, AICWA
15, Ocean Road, Dares Salaam,
451 P.O. Box,
Tanzania
M/27152
Shri Vamsi Krishna Sreekakulam,
BCOM, ACA, ACS, AICWA
1-2-170/5, Rajamudhaliar Street,
Secunderabad 500003

702 the management accountant, September, 2008


M/27153
Shri Prem George,
BCOM(HONS), AICWA
No. 14, 4th Street, DAE
Township, Kalpakkam,
Chennai 603102
M/27154
Shri Brahmadevara Avinash,
MCOM, ACS, AICWA
R.B.III, 1301/1 Railway
Quarters, Mettuguda,
Secunderabad 500017
M/27155
Shri Giridhari Mandal,
BCOM, AICWA
East Bhuggaidih Colliery,
Staff Colony 3 No., Near
Prag Ice Factory, P.O. Jharia,
Dhanbad, Jharia 828111
M/27156
Shri Govind Prasad,
BCOM, AICWA
House No. 46, HIG Colony,
Sector-4, Vaishali,
Ghaziabad 201010
M/27157
Shri Sumit Singh Basisth,
BCOM(HONS), AICWA
A2-73, Ashmita Jyoti CHS
Ltd., Marve Road, Malad
(West), Mumbai 400095
M/27158
Shri Sachin Chaturvedi,
MCOM, AICWA
C-S/101, BILT Officers
Colony, BILT Graphic
Paper Products Ltd., 105,
Pune-Solapur Highway,
Bhigwan, Tal:- Indapur,
Pune 413105
M/27159
Shri P.S.S. Chandra Sekhar,
BCOM, MBA(FIN.),
AICWA
Palace Shiv Sagar, Bldg. No.
68, B-Wing, Flat-1001, Road
No. 13, Tilaknagar, Chembur
Mumbai 400089
M/27160
Shri Parag Vinodkumar
Chokshi, BCOM, AICWA
the management accountant, September, 2008
Admission to Membership
44, A/6/15, Blue Grotto
Society, LIC Colony, Borivali
(West), Mumbai
M/27161
Shri Nikhil Vilas Deshpande,
MCOM, AICWA
118/7, Mahesh
Society,Bibwewadi,
Pune 411037
M/27162
Shri Aseem Dhru, AICWA
301, Oyster, 19th Road,
T.P.S. Next to Beams
Hospital, Khar (West),
Mumbai 400052
M/27163
Shri Parmod Kumar Gulia,
MCOM, MPHIL, AICWA
H. No. 1280, Ward No. 21,
Prem Nagar,
Rohtak 124001
M/27164
Shri Pitambar Jha,
BCOM, AICWA
A-5, Jay Shakti Nagar
Society, Behind Ram Nagar
Minicipal School, Ram Nagar
No. 1, Vijalpore,
Navsari 396450
M/27165
Ms. Neeta Jagotra, AICWA
House No. 1, Type-IV,
Presidency Estate,
Rashtrapati Bhawan,
New Delhi 110004
M/27166
Shri Ashwani Khurana,
BCOM(HONS), AICWA
WZ-1755, Rani Bagh,
New Delhi 110034
M/27167
Shri Ajay Kumar,
BCOM, AICWA
H. No. 294-E, Pocket-II,
Mayur Vihar, Phase-I,
New Delhi 110091
M/27168
Shri Dhaval Dhanji Lalan,
MCOM, AICWA
49/26, Reheman Building,
2nd Floor, Elphinstone Road,
Mumbai 400013
M/27169
Ms. Pragya Virender
Mansukhani,
BCOM, AICWA
H. No. 25, Sector-15 A,
Noida 201301
M/27170
Ms. Sangita More,
BCOM, AICWA
1A, Apurba Mitter Road, “
A.M. Enclave “,
Flat No. 2A, Kalighat,
Kolkata 700026
M/27171
Shri Chaganty Surya
Narayana Murthy,
MCOM, AICWA
Qr. No. B-20, HAL
Township, Hindustan
Aeronautics Ltd., H A L -
P.O., Hyderabad 500042
M/27172
Shri Radhakrishnan
Kuttappan Nair,
BCOM, AICWA
191/2004, Sector-6, Kane
Nagar, Antop Hill,
Mumbai 400037
M/27173
Ms. Ankita Prabhakar,
AICWA
House No. 113, Sector-7,
Pocket-H/17, Rohini, New
Delhi 110085
M/27174
Shri Kopparam
Vasanthakumar Rajdeep,
BCOM, AICWA
No. 10, Goutham Hsg. Co-
op. Society, R B I Layout,
kothnoor, Dinne Main Road,
J. P. Nagar 7th Phase,
Bangalore 560076
M/27175
Shri Vijay Rawat,
BCOM(HONS), CMA,
AICWA
Flat No. 60, Himalaya Apts., 61
I.P. Extension, Patparganj,
New Delhi 110092
M/27176
Ms. Sonia Sharma,
BCOM(HONS), AICWA
Z-489, Timarpur, Opp.
B D Estate,
Delhi 110054
M/27177
Ms. Sarita , AICWA
NU-56C, Pitam Pura,
Vishakha Enclave,
New Delhi 110088
M/27178
Shri Dinesh Thapar,
BCOM(HONS), ACA, AICWA
601, Shweta Apartments, N M
Kale Marg, Prabhadevi,
Mumbai 400028
M/27179
Shri Nand Kishor Upadhyay,
MCOM, AICWA
P-7/125, Sector-6, Rohini,
New Delhi 110085
M/27180
Shri Ulhaskumar Sidramappa
Arakeri, BCOM, AICWA
Arakeri House, Chalukyanagar,
Solapur Road,
Bijapur 586103
M/27181
Shri Anindya Kumar Kundu,
BCOM(HONS), MBA, AICWA
110/7, Kali Kundu Lane,
Howrah 711101
M/27182
Shri Gagan Bihari Pradhan,
BSC(HONS), AICWA
B-108, Sector-3, Damanjodi,
NALCO Township,
Koraput 763008
M/27183
Shri Dnyanesh Ramchandra Bhat,
AICWA
Block No. 297, Bldg No. 25, Type
- III - A, RCF Colony, Nr. Golf
Club, Chembur,
Mumbai 400074
703
 Admission to Membership

M/27184
Shri Harshal Shrikant Darne,
BCOM, AICWA
C-11, Mahindra Hsg.
Society, Shrikrishna Nagar,
Borivali-East,
Mumbai 400066
M/27185
Shri Manoj Gupta,
BCOM(HONS), AICWA
Bungalow No. 56, H.P.
Nagar (East), Vasinaka,
Mahul Road, Chembur,
Mumbai 400074
M/27186
Shri Gaikwad Ravindra
Anna, MCOM, AICWA
B 25/12, Shri Gurukrupa
CHS., Sector-48, Nerul,
Navi Mumbai 400706
M/27187
Shri Iswar Chandra Kundu,
BSC, LLM, AICWA
Plot No. 491, Nuasahi,
Nayapalli,
Bhubaneswar 751012
M/27188
Shri Ajay Prabhakar Palay,
BCOM, ACA, AICWA
D-201, Sainath Tower, Near M/27193
Neelam Nagar PH-II, Jain Padalkar Narendra Jagannath,
Mandir, Mulund (East), BE, AICWA 18-B, Ulka
Mumbai 400081 Nagari, Near Omkareshwar
Mandir, Garikheda,
M/27189 Aurangabad 431001
Shri Sakalabattula Suresh,
MCOM, MBA, AICWA M/27194
D. No. 50-48-11, P & T Chapalamadugu Syam
Colony, P.O. Prasad, BA, AICWA
Seethammadhara, Flat No. 8, I.D.L. Colony,
Visakhapatnam 530013 West Desai Nagar,
Sonaparbat,
M/27190 Rourkela 769016
Ms. Meenakshi Aggarwal,
BCOM(HONS), AICWA M/27195
House No. 1544, Sector 7E, R. Srinivasan,
Faridabad 121006 MCOM, AICWA
C/o. Zile Singh Ground Floor,
M/27191 91A-1, Prateek Market,
Shri Deepak Malpani, Munirka,
BCOM, AICWA New Delhi 110067
House No. 186A, Sector 11D,
Faridabad 121006 M/27196
Sirisha Alapati,
M/27192 BCOM, AICWA
Arcot Sreekanth, BSC, D/o. A.S. Murthy MIG-9/2,
AICWA Pithapuram Colony,
#154, 2-G-1, Reliance Cluster, Visakhapatnam 530003
Gruhalakshmi Layout,
Kamalanagar, M/27197
Bangalore 560079 Shivendra Kishore,
MSC, MBA, AICWA
B-142, Apna Nagar, N.U. 3,
Gandhidham, Dist- Kutch,
Gandhidham 370201
M/27198
Ms. Munmun Chatterjee,
BCOM, AICWA
66, R.K. Ghosal Road,
Kolkata 700042
M/27199
Shri Balakrishna Panigrahi,
BA(HONS), AICWA
C/o. Shri J.S. Balasubramaniam,
No. 6/30, Ground Floor,
Mugappair West, Chennai
600037
M/27200
Ms. Basanti Sahu, MA(ECON),
AICWA
Accounts Executive, BPL Ltd.,
Dynamic House, No. 64, Church
Street,
Bangalore 560001
M/27201
Ms. Renu Dahiya,
MCOM, AICWA
House No. 2015/A, Sector 47/B,
Chandigarh 160047

Contd. from Page 694

References
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(2001), “Organizational Knowledge
Management: A Contingency
Perspective”, Journal of Management
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“Knowledge Assets”, Courtesy of
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projects”, Sloan Management Review,
Vol. 39.
l Gold, A. H., Malhotra, A., and Segars,
A. (2001), “Knowledge Management:
An Organizational Capabilities
Perspective”, Journal of MIS, 18(1).
l James B. Rebitzer, Lowell J. Taylor
(2006), “When Knowledge Is an
Asset:Explaining the Organizational
Structure of Large Law Firms”, IZA
Discussion Paper No. 2353.
l Jerome J. Peloquin (2001), “An Essay
On Knowledge As A Corporate Asset
Building the case for Human Capital”.
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l Nahapiet, J. and Ghoshal, S. (1998),
“Social Capital, Intellectual Capital,
and The Organizational Advantage”,
Academic Management Review, 23(2).
l Nonaka, I. (1994), “A Dynamic Theory
of Organizational Knowledge
Creation”, Organization Science, 5(1).
l Nonaka, I. and Konno, N. (1998), “The
Concept of “ba”: Building a Foundation
of Knowledge Creation”, California
Management Review, 40(3).
l Nonaka, I, and Takeuchi, H. (1995), The
Knowledge-Creating Company, Oxford:
Oxford University Press.
l Spender, J. C. (1996), “Making
Knowledge the Basis of a Dynamic
Theory of the Firm”, Strategic
Management Journal, (17).
l Shih-Wei Chou, Mong-Young He
(2004), “Facilitating Knowledge
Creation by Knowledge Assets”,
Proceedings of the 37th Hawaii
International Conference on System
Sciences.
l Yogesh Malhotra (2000), “Knowledge
Assets in the Global Economy:
Assessment of National Intellectual
Capital”, Journal of Global Information
Management.
l Yogesh Malhotra (2003), “Measuring
Knowledge Assets of a Nation:
Knowledge Systems for Develpoment”,
Martin J. Whitman School of
Management, Syracuse University. q

704 the management accountant, September, 2008


Problems and Prospects of
Commodity Futures
Market in India
A futures contract is an agreement to purchase / sell the commodity at a specific
price and on a specific future date. These are traded in commodity futures
exchanges where the counterparty risk is taken over by the exchange itself.
Unlike in the stock market derivatives, the settlement in the commodity derivative
markets is often accomplished through physicaldelivery of the underlying asset.
Dr. V. Gangadhar*
G. Naresh Reddy**
Introduction:
D
eveloping countries have been
exporting commodities for
earning foreign exchange as well
as income. According to the pragmatic
estimates primary commodities account
for 68 percent of exports of low-income
and developing countries, while it is 44
percent in case of high income and
developed countries. In the recent past,
the share of commodity exports from
developing countries has declined, but
it is still quite high. The dependency on
a few commodities for income
generation evidently exposes the
traders and producers to commodity
price uncertainties in the global markets.
The variations in commodity prices
affect even the traders who are
otherwise known to operate on tight
margins. For instance, a trader who
purchased tobacco or coffee from local
farmers with an intention to export faces
enormous risk if the international prices
collapse before he sells his stock of
*Convener, ICET-2006, Professor of
Commerce and Business Management,
Kakatiya University, Warangal-506 009.
**Lecturer, Department of Commerce &
Business Management, University Arts &
Science College, Subedari, Kakatiya
University, Warangal-506001.
the management accountant, September, 2008
Commodity Futures
tobacco / coffee. Uncertainty in
commodity prices also affects the debt
servicing capacity of the traders and the
producer -farmers of the commodity.
This indirectly makes the cost of their
debt prohibitively high, leading to
increased cost of production. Even the
availability of credit may at times
become difficult, particularly for farmers
whose earlier debt remained
outstanding owing to a previous year’s
price disaster. The price-risk associated
with commodities is also known to
impact Government revenue. Uncer-
tainty associated with national revenues
ultimately makes the planning exercise
of the Government puzzled. Such risk
even impacts the Government’s debt-
servicing ability.
Meaning of Futures Contract:
A futures contract is an agreement
to purchase / sell the commodity at a
specific price and on a specific future
date. These are traded in commodity
futures exchanges where the
counterparty risk is taken over by the
exchange itself. Unlike in the stock
market derivatives, the settlement in the
commodity derivative markets is often
accomplished through physicaldelivery
of the underlying asset. Secondly, to
meet the margin requirements either
under “initial margin” or “mark-to-
market-margin”, farmers can as well
lodge the title pertaining to the
underlying commodity with the
exchange / clearing corporation.
Objectives of the Study:
This research paper is focused on
the following objectives:
Ø To present the nature problems of
commodity price pattern for
managing commodity price risk.
Ø To analyze the importance of
commodity derivative markets in
India.
Ø To examine the role of commodity
futures trading in India.
Ø To study the impediments for the
development of commodity futures
trading in India.
Ø To suggest the measures for the
development of commodity futures
trading in India.
Nature and Problem of Commodity
Prices:
Primary commodity prices and their
markets are known to behave differently
from those of the manufactured goods
or services. Theoretical analysis
suggests that commodity prices will fall
relative to others because of the
inelastic demand. Thus, the real income
of the commodity producers falls
because inelastic demand prevents them
from offsetting price movements with
volume changes. The prime reason for
extra volatility in commodity prices is
the presence of natural shocks that are
not predictable and mostly relate to the
previous year’s production or
consumption decisions. A reduction in
supply that can result in shocks, will
lead to a sharp increase in price,
followed by a slow or rapid reduction
depending on the nature of the
commodity. Commodity price cycles
mostly have flat bottoms with
occasional sharp peaks.
705

The following are four important
commodity price problems:
a) Short-term fluctuations: These
are common among the agriculture
products, either within a year due
to seasonal variations or from year
to year because of abnormal weather
variations and conditions.
b) Medium- term changes: As seen
often in oil or other mineral markets,
responding to multi-year business
cycles in the world economy.
c) Permanent changes: These are
affecting one or a few countries
owing to technological changes or
the discovery of new technology
which alters competitiveness.
d) Long-term declining commodity
prices: Normally, the behavior of
commodity prices will be short-term
in the nature and show sudden rise
or fall and this asymmetric behavior
tends to impose costs on any
scheme meant for balancing price
fluctuations. All these expose
producers to the dual problem of
lower returns and higher risks.
Managing Price Risk Through
Commodity Derivatives:
The slow withdrawal of govern-
ments from market stabilization activities
resulted in a search for new alternatives,
and thus derivatives entered into the
commodity markets. Commodity
derivative instruments aimed at making
commodity prices and revenue more
predictable, rather than stabilizing them.
They simply remove price uncertainty
for commercial transactions and thereby
reduce uncertainty in revenues. Trading
in Commodity Derivatives has following
advantages over price stabilization
schemes hitherto regulated by the
Government:
a) Transfers of risk from domestic
markets to global markets;
b) Increases credit worthiness of a
706
Commodity Futures
borrower by insuring his revenue
from future price fluctuations
and thus, his loan repaying
capacity increases;
c) These are market neutral and the
premiums are determined by
markets.
d) Comparatively commodity deriva-
tives operating expenses are
relatively lower; and
e) Secured prices help the farmers to
make appropriate decisions about
allocation of resources.
Development of Commodity Futures
Market in India:
India has a long history of trade in
commodity derivatives; this sector
remained underdeveloped due to
control, regulation and intervention of
Government for many years on
commodities prices. The production,
supply and distribution of many
agricultural commodities are still
governed by the state and forwards &
futures trading are selectively
introduced with stringent controls. Free
trade in many commodity items is
restricted under the Essential
Commodities Act, 1955 and Agriculture
Productive Marketing Committees Acts
of various State Governments.
The “Bombay Cotton Trade
Association” has set up the first
commodity exchange in India and
formally organized futures trading in
cotton in 1875. Subsequently, many
exchanges came up in different parts of
the country for futures trading in
various commodities. The “Gujrati
Vyapari Mandali” came into existence
in 1900, which has undertaken futures
trading in oilseeds for the first time in
the country. The “Calcutta Hessian
Exchange Ltd” and the “East India Jute
Association Ltd” were set up in 1919
and 1927 respectively for futures trade
in raw jute. Futures trading in cotton
the management accountant, September, 2008
were organized in Mumbai under the
auspices of “East India Cotton
Association” in 1921. Simultaneously,
several exchanges were set up in major
agricultural centres in North India
before the World War broke out and
they were mostly engaged in wheat
futures until it was prohibited in 1921.
The existing exchanges in Hapur,
Muzaffarnagar, Meerut, Bhatinda, etc.,
were established during this period.
The Government of India has banned
trading in commodity futures in the year
1966 in order to have an effective control
over the fluctuations of prices of
agricultural and essential commodities.
As a result of this, all the commodity
exchanges went out of business and
many traders started resorting to
unofficial and informal trading in
futures. On the recommendation of the
Khusro Committee in 1980, Government
reintroduced futures trading on some
selected commodities including cotton,
jute, potatoes, etc. As a part of
Economic Reforms, the Government of
India has appointed an expert
committee on forward markets under the
chairmanship of KN Kabra in the year
1993. The committee has submitted the
report in 1994 and recommended for the
reintroduction of futures, with a wider
coverage and scope to more agricultural
commodities. In order to give thrust on
agricultural sector, the National
Agricultural Policy 2000 envisages
external and domestic market reforms
and dismantling of all controls and
regulations on agricultural commodity
market. It also proposed enlargement of
coverage of futures market to reduce
the wide fluctuations in commodity
prices and for hedging the risk arising
from price fluctuations.
Present Scenario of Commodity
Futures Market:
In the Budget speech delivered on
28th February 2002, the then Finance

Minister announced expansion of
futures and forward trading to cover all
agricultural commodities. This was
followed by the removal of prohibition
of futures trading on 27 (out of 81 items)
of oilseeds, oils and their cake in August
2002. Subsequently, in February 2003,
the Government removed the
prohibition on the remaining 54
commodities also under the Forward
Contract (Regulation) Act, 1952, thus
removing the statutory hurdles on
futures trading in general and the
agricultural sector in particular. The
Securities Contracts (Regulation) Act
1956 was also amended in August 2003
to provide for commodity derivatives.
Soon thereafter, the Forward Markets
Commission granted permission to three
National Multi Commodity Exchanges,
viz., National Multi-Commodity
Exchange of India Ltd. (NMCE),
Ahmedabad, National Commodity &
Derivatives Exchange (NCDEX), and
Multi Commodity Exchange (MCX),
Mumbai. The ‘National Status’ was
given to these exchanges so that they
would be automatically permitted to
conduct futures trading in all
commodities subject to clearance of
bye-laws and contract specifications by
the FMC. While the NMCE,
Ahmedabad commenced futures
trading in November 2002, MCX and
NCDEX, Mumbai commenced
operations in October/December 2003
respectively.
Presently, futures trading3 permitted
in all the commodities. Trading takes
place in about 78 commodities through
25 Exchanges/Associations (Table-3).
Besides, this Forward Markets
Commission has also given in principle
approval to NSC InfoTech Ltd.,
Hyderabad, United Planters Association
3
The options’ trading in commodity
derivatives is prohibited by the Government
of India.
the management accountant, September, 2008
Commodity Futures
of South India, Connoor (Tamil Nadu),
and SGI Commodity Exchanges,
Mumbai. While the first two exchanges
will trade in Sugar and Tea respectively,
the SGI commodity Exchange will deal
with Soya Bean, Groundnut, their oils
and oil cakes.
There were 25 exchanges
functioning in India as on 31st March,
2004, of these three viz., National Multi-
Commodity Exchange of India Ltd.,
(NMCE) Ahmedabad, National
Commodity & Derivatives Exchange
Ltd., (NCDEX) Mumbai and Multi
Commodity Exchange Ltd., (MCX)
Mumbai are national exchanges. The
other remaining 22 exchanges are
regional exchanges. All the national
exchanges are demutualized,
managed by a Board comprising
independent directors, adopt screen
based trading system and daily mark to
market margin system.
Pattern of Commodity Futures Trading
in India:
The third component of organized
trading of standardized products in the
country is in the commodity futures
market. In recent years, these markets
have drawn upon the success of
nationwide electronic trading on the
equity market, and three new exchanges
have come about: NCDEX, MCX and
NMCE. The NCDEX has setup 505
terminals in 138 centers, MEX has setup
763 terminals in 132 centers and NMCE
has setup 346 terminals at 96 centers.
These terminals facilitate pooling up of
orders from across the country and feed
them to the computerized order system
to match them. This has offered
transparency in price discovery.
We observed the following trends
and pattern of commodity derivatives
trading in India over a short period of
its launching in India and Table-2
presents the relevant data.
a. National Commodity & Derivatives
Exchange (NCDEX): It was
commenced operations only in
December 2003 and in the four
months ended March 2004, the
exchange achieved a turnover of Rs.
1,490 crore and in the first half of
2004-05 its turnover is increased to
Rs. 54,011 crore. Its contribution to
total turnover is 1.8 percent and 37.6
percent in the year 2003-04 and the
first half of 2004-05 respectively.
b. National Board of Trade (NBOT):
The commodity futures trading on
this exchange was commenced on
2001 before the commencement of
trading in three national exchanges.
Its proportion to total turnover of
derivatives is 100%, 88.3%, 65.6%
and 35.5% from the first year of the
study to the first half of the last year.
This downward trend shows the
importance of national exchanges in
the commodity derivatives market.
c. Multi-commodity Exchange (MCX):
This exchange commenced
operations in November 2003,
during the first four months the
exchange achieved a turnover of Rs.
2,456 crore and it increased to Rs.
30,695 crore in the first half of 2004-
05. Its contribution has increased
from 3.0% to 21.4% for its ten months
period of commencement.
d. National Multi-commodity
Exchange (NMCEX): It is the first
to commence operations among the
national exchanges. This exchange
is reported to be the only commodity
exchange in the world to have
received ISO 9001:2000 certification
from British Standard Institution
(BSI). It commenced futures trading
in 24 commodities on 26th November,
2002. Turnover is increased from Rs.
4,572 crore to Rs. 23,842 crore in the
year 2003-04 and it decreased to Rs.
7,943 over the study period.
707

e. In the first half of 2004-05, all
commodity (national as well as
regional) futures exchanges clocked
trading volume of Rs. 1.7 lakh crore.
This works out to be roughly one
third of the Government of India’s
Bond Market and one-tenth of
exchange trading on the equity
market.
Impediments for Promotion of Futures
Trading in Commodity Exchanges:
Commodity futures market in India
is still not developed as compared to
other countries. The dominant political
ideology for control and regulation of
commodity market during early years
after independence dealt a severe blow
to development of futures markets in
India. It is only after the onset of
liberalization during 1991, the attitude
towards futures trading has changed
perceptibly and its potential benefits are
now being acknowledged in the policy
circles. The major problems afflicting the
commodity markets are:
a) Poor infrastructure in the exchanges,
b) Lack of on-line trading facilities
in the large number of exchanges,
c) Low level of awareness among
various stakeholders including
farmers,
d) Strong presence of unofficial
“havala” trading,
e) High operational costs,
f) Unfavorable/stringent trading
parameters,
g) Single commodity focus, and
h) Poor transparency in transactions.
Suggestions:
The following prerequisites are
certain to give a big boost to commodity
futures trading in India:
a) A negotiable document may be in
demat form is to be created to
underlying asset of the futures
708
Commodity Futures
being traded so that the title of the
goods can be transferred from one
individual to another without
undertaking the physical delivery of
stocks.
b) An agency is to be set up to help
the seller and buyer by grading the
stocks being offered by them for
sale and certify its quality; grade so
that the buyer can be sure of buying
is required grade of commodity.
c) There must be a Clearing House
that takes care of the commodity
that is being traded in the derivative
exchanges and ensures that quality
is maintained till the stock under the
traded contact is delivered to the
ultimate buyer, at a reasonable cost.
d) Commodities trading must be settled
in dematerialized form so that traders
from across the country can trade
on futures being certain of the
underlying commodity in terms of
its quality, grade, quantity and
its maintenance during the
intervening period.
e) Banks can come forward to sanction
agriculture produce loans to farmers
against the pledge of warehouse
receipts and futures contracts of
national derivative exchanges.
They should also explore the
possibility of offering hedge
prospects to farmers on a pooled
basis, with banks as intermediaries
between exchanges and farmers and
thus pave the way for active futures
trading on agriculture commodities
so that farmers can enjoy the benefit
of dependable price discovery well
in advance to their planting and
sowing season.
f) The Forward Contracts
Regulations Act (FCRA) 1952
doesn’t permit index based
products and these are traded
on the commodity exchanges. But
the management accountant, September, 2008
this may soon as the FCRA 1952 is
in the process of undergoing
considerable changes, subject to
parliament clearance.
g) The market must be efficient
with widespread awareness
amongst various market players,
liquidity would increase further with
a well-diversified basket of
commodities.
h) The FMC does not have similar
powers as enjoyed by the CFTC in
the US. The FCRA 1952 is under the
scanner of the present Government
and its amendment is likely to
bestow more powers on the FMC to
regulate this market.
i) The Union Finance Minister, in his
Budget-2005, has quoted for a
single regulatory regime. It will find
very difficult to tackle complexities
in the socio-economic dimensions
of this fledging commodity futures.
j) Healthy competition is always
beneficial to catalyze the growth in
any market. In this case too, the
Government has to take necessary
steps for the implementation of
online commodity trading on the
regional exchanges also.
k) The market should be made more
broad-based by allowing banks and
FIIs to participate in commodity
futures. Options should be allowed
to be traded, as that will give one
more efficient tool to the participants
to apply various hedging strategies
for averting their price risks.
I) The regulator will need to develop
strong human resources
management in the behavior of
underlying commodity exchanges.
m) Competition between the
exchanges must be within the
framework of rules and the FMC
should ensure this.
 Commodity Futures

Conclusion:
Developing countries have large
exposure to commodity price risk. Their
exports are often concentrated in a few
primary commodities with positively
correlated price movements. The
dependency on a few commodities and
uncertain commodity prices exposes
such countries to uncertain revenues
and expenditures. This has varied
consequences such as affect to the
Government revenue, adverse impact on
commodity financing in terms of
increased cost of debt or no or low debt
due to poor credit worthiness, etc.
Liberalization of commodity markets and
WTO provisions have made the
Governments to withdraw their
intervention on commodity markets
through various modes of price control
and stabilization schemes. Thus,
derivative instruments in commodity
futures have become essential and they
are found to be more efficient in ‘price-
discovery’ and transferring the risk.
However, successful commodity
derivative trading calls. for appropriate
institutional support and awareness
among the commodity producers.
The future is certainly bright for the
Indian commodities market. Once the
much-awaited institutional partici-
pation enters the market, it will create
speculation, arbitration and hedging for
all kinds of players in the market.
Although, there is enough depth in the
market, large institutional participation especially in those commodities where Ø Economic and Political Weekly, July
would bring liquidity and better price India is a major producer or consumer. 30th, 2005, page No. 3364 to 3368.
discovery for all players, especially for Ø The Hindu Business Line, Monday,
REFERENCES:
the retail investors who can now look November 7th, 2005, page No. 7.
Ø Indian Economic Review, Vol. XXXIX,
at commodities as an investment option. No. 2, 2004, page No. 315 to 325. Ø The Hindu Business Line, Thursday,
If one adopts a disciplined approach, Ø Economic Survey 2004-05. November 10th, 2005, page No. 13.
commodities can give the returns on par Ø Chartered Financial Analyst, December, Ø The Hindu Business Line, Friday,
with the equities. As the market matures 2005, page No. 28 to 30. November 18th, 2005, page No. 13.
and deepens further, we can hope to Ø Financing Agriculture, October -
Ø The Hindu Business Line, Wednesday,
see the day very soon, when Indian December, 2005, Volume 37, No. 4, page
No. 2 to 51. December 14th, 2005, page No. 11.
commodities market will provide a
Ø The Hindu Business Line, February Ø The Economic times, Tuesday,
benchmark for traders worldwide, 13th, 2005, page No. 13. February 14th, 2006, pate No. 9.

the management accountant, September, 2008 709

 Commodity Futures

710 the management accountant, September, 2008


Quality of Work Life of
Employees in Engineering
Industry
A survey on quality of work life (QWL) in engineering industry, various factors of
QWL and their correlation.
S.Varadaraj*
Dr.R.Sellappan* *
Introduction
O
bviously, without the efforts of
the workers, the other two
economic factors of
production, namely, land and capital,
would be useless. The crucial
importance of the workers in industry
as a vital resource for the interest of the
business has been well recognized by
the Industrial Policy Resolution.
If a business enterprise has to
achieve and maintain sound and
profitable operations, it has to recognize
the importance of its workers as human
beings who enter the organization with
certain needs, wants, motives,
expectancies and aspirations (Sangeeta
Jain, 2004). In many ways, Quality of
Work Life (QWL) represents a blending
of these very real concerns for human
values in today’s society with
awareness that all individuals devote
the greater part of their mature lives to
work, expanding time, energy and
physical and mental resources to this
endeavour.
Objectives
The purpose of this paper is to
study the quality of work life of
employees of engineering industry and
explore the relevant dimensions of
* Lecturer in Management, Gobi Arts &
Science College, Gobichettipalayam – 638
453.
** Reader, HOD of Management, Gobi Arts
& Science College, Gobichettipalayam – 638
453.
the management accountant, September, 2008
HR
quality of work life and to pin-point
those dimensions where there is
predominance of favourable orientation
and those dimensions where there is
predominance of unfavourable
orientations of the employees towards
certain aspects of work environment like
wage, working condition, opportunities
for growth, etc.
Factors Determining Qwl
The study intends to assess the
quality of work life with emphasis on
the factors such as, Nature of Job, Pay
and Compensation, Development and
Encouragement, Human Relation and
Social Integration, Workers
Participation in Management, Working
Condition, Occupational Stress,
Alternative Work Schedule, Grievance
Procedure and Promotion Policy.
Related Studies
An abundance of studies pointed
out that, employees perception
regarding availability of influence and
autonomy, economic compensation
interpersonal support, respectful
supervisory behaviour are important
factors of general life satisfaction
(Mehta, 1977). Few evidences are
available to support the relationship
between “economic factor and quality
of work life.” Kapoor (1967) found that
wages were ranked first in importance
by Indian workers because of
inflationary economy. Sirota (1973)
found that underutilization of worker’s
skill and abilities cause low quality of
work life and suggested job enrichment
programme to correct the problems of
worker’s skill and abilities. Very few
studies could be cited in the context
human relations to review how good
relationships between superior and
subordinate enhance quality of their
working life. Singh and Pestonjee (1974)
studied the differential effect of
supervisory behaviour on job
satisfaction those are under employee-
oriented supervision.
Encouraging employee partici-
pation is an idea everyone favours;
translating the idea into practice,
however, steps on people’s toes (David
and Edward, 1983). The evidence shows
that opinions on working conditions
have reservations with regard to several
central claims of the quality of work
movement. Johnston (1975) supported
the studies which view that workers
often value factors such as job interest
and good working conditions above
pay. The perceived stress has been
linked to job dissatisfaction, depressed
feelings, work absence, and turnover. It
is highest among women, especially
those working in service occupations
(Wilkins & Beaudet, 1998).
Rigidity in the work schedule will
cause negative effect on the
performance of employees. A system
of flexible working hours, also called
‘Flexi Time’, to suit the convenience of
individual employees has often been
pointed out as one of the techniques of
motivation. Studies of the personal
characteristics of those who have filed
grievances, as contrasted with those
who have not, revealed some
differences. In general, those who filed
grievances were younger, had more
formal education, and got more wage
increases (Thomas, 1986). Lawler (1973)
indicated that the data from a number
of studies show that problems or
concerns with promotion are factors
that provide a major source of
dissatisfaction for employees.
711

Research Design
To determine the Quality of Work
Life of the employees working in
engineering industry, the author feels
that Exploratory Research is most
suitable. Data required for the study
were collected from the employees of
engineering concerns situated in
Coimbatore district. Among 100 and odd
engineering concerns in Coimbatore
district, five were selected from different
blocks and from each concern adequate
number of respondents were selected
according to the size of the concern. In
total 200 respondents were selected on
the basis of stratified random sampling
method.
A structured, non-disguised
interview schedule was prepared for the
purpose of collecting the data. The
survey was preceded by a pilot study,
conducted by interviewing a sample of
10 respondents. Based on the result of
the pilot study, some of the questions
were deleted and a few were modified.
The statistical tools used to
interpret the data are Mean, Standard
Deviation, Correlation and Factor
Analysis. Based on the various
analyses the findings were drawn.
These findings may be helpful in
deciding whether the existing quality of
work life is congruent with the demands
and expectations of the employees and
are helpful to pinpoint the areas where
Table No. 1
Mean Scores and Standard Deviation Scores for the factors of QWL
S. No. Factors of QWL
1. Nature of Job
2. Pay and Compensation
3. Development and Encouragement
4. Human Relation and Social Integration
5. Workers Participation in Management
6. Working Condition
7. Occupational Stress
8. Alternative Work Schedule
9. Grievance Procedure
10. Promotion Policy
712
HR
the quality of work life needs
improvement.
Data Analysis And Interpretation
The findings of the study show that
most of the respondents are between
the age group of 41 and 50 years and
are between 6th and 10th standard of
educational qualification. About 50% of
respondents are with the experience of
above 10 years in the present concern.
About 70% of respondents have the
monthly income of above Rs.4000.
Three fourth of the respondents are
having 3 and 4 dependent members and
most of them are coming to the
organization by the company vehicle.
Factor analysis is used to study the
major factors considered important by
the respondents. Factor analysis
applies an advanced form of correlation
analysis to the responses given by the
respondents. If the response to a
number of statements is significantly
correlated, it is believed that the
statement measures some factor
common to all of them.
Likert’s scale was employed to
determine scores, where respondents
were asked to rate each attribute on 5-
point scale ranging from highly satisfied
to highly dissatisfied. The data so
collected was subjected to Factor
Analysis. The ten variables and the
points assigned to them by the
respondents were analysed using SPSS
Mean S. D.
3.68 0.856
3.41 0.708
3.40 0.690
3.54 0.690
3.58 0.820
3.55 0.810
3.41 0.817
3.38 0.716
3.42 0.969
3.32 0.918
the management accountant, September, 2008
11.0 package and an unrotated factor
matrix was obtained. To decide when to
stop functioning so as to get the final
rotated matrix, the latent root criteria was
applied i.e., only the factors having
eigen values greater than 1 were
considered significant, and all the
factors with eigen values less than 1
were considered insignificant and
discarded.
After the initial responses had been
fed into it, the package provided us with
the descriptive statistics, correlation
matrix, initial factor matrix, rotated factor
matrix and component plot in rotated
space to enhance its interpretability.
The above table shows that the
mean score for Nature of Job is maximum
with 3.68 points; Works Participation in
Management has 3.58 points followed
by Human Relation and Social
Integration with 3.54 points. The
standard deviation of the score ranges
between 0.690 and 0.969.
The correlation matrix of the ten
variables pertaining to quality of work
life was computed. The factor Nature of
Job positively correlated with Human
Relation and Social Integration,
Workers Participation in Management
and Alternative Work Schedule and
negatively correlated with Promotion
Policy with 5% significant level. Pay and
Compensation is correlated with Human
Relation and Social Integration. Human
Relation and Social Integration is
positively correlated with Workers
Participation in Management and
significant at 5% level and correlated
with Occupational Stress, Grievance
Procedure and Promotion Policy and
significant at 1% level. Grievance
Procedure is positively correlated with
Workers Participation in Management
(5%) and Occupational Stress (1%)
The data consisting of ten variables
pertaining to quality of work life was
further subjected to principal
component analysis. The eigen values,
the percentage of total variance
explained by each component and the
 HR

Table No. 2
Correlation among the Factors of Quality of Work Life

Workers Participation in
Pay and Compensation

Grievance Procedure
Human Relation and

Occupational Stress
Working Condition
Social Integration
Development and

Promotion Policy
Alternative Work
Factors

Encouragement
Nature of Job

Management

Schedule
1 -0.028 0.096 0.157* 0.149* 0.069 -0.007 0.148* 0.065 -0.139*
Nature of Job
(0.695) (0.178) (0.026) (0.035) (0.329) (0.925) (0.036) (0.364) (0.050)

Pay and -0.028 0.019 0.157* 0.078 0.033 0.049 0.072 -0.001 0.137
1
Compensation (0.695) (0.788) (0.026) (0.269) (0.641) (0.487) (0.312) (0.986) (0.054)

Development and 0.096 0.019 0.050 -0.033 -0.013 0.016 -0.037 0.064 -0.063
1
Encouragement (0.178) (0.788) (0.479) (0.638) (0.854) (0.818) (0.601) (0.368) (0.378)

Human Relation and 0.157* 0.157* 0.050 0.170* -0.070 0.196** 0.108 0.238** 0.182**
1
Social Integration (0.026) (0.026) (0.479) (0.016) (0.327) (0.005) (0.126) (0.001) (0.010)

Workers Participation 0.149* 0.078 -0.033 0.170* 0.065 0.045 0.035 0.162* 0.103
1
in Management (0.035) (0.269) (0.638) (0.016) (0.360) (0.524) (0.620) (0.022) (0.147)

0.069 0.033 -0.013 -0.070 0.065 -0.065 0.088 0.096 -0.057

Working Condition 1
(0.329) (0.641) (0.854) (0.327) (0.360) (0.361) (0.217) (0.174) (0.423)

-0.007 0.049 0.016 0.196** 0.045 -0.065 -0.015 0.284** 0.127

Occupational Stress 1
(0.925) (0.487) (0.818) (0.005) (0.524) (0.361) (0.831) (0.000) (0.074)

Alternative Work 0.148* 0.072 -0.037 0.108 0.035 0.088 -0.015 -0.121 0.095
1
Schedule (0.036) (0.312) (0.601) (0.126) (0.620) (0.217) (0.831) (0.089) (0.180)

0.065 -0.001 0.064 0.238** 0.162* 0.096 0.284** -0.121 0.048

Grievance Procedure 1
(0.364) (0.986) (0.368) (0.001) (0.022) (0.174) (0.000) (0.089) (0.501)

-0.139* 0.137 -0.063 0.182** 0.103 -0.057 0.127 0.095 0.048

Promotion Policy 1
(0.050) (0.054) (0.378) (0.010) (0.147) (0.423) (0.074) (0.180) (0.501)

* Correlation is significant at the 0.05 level (2-tailed).

** Correlation is significant at the 0.01 level (2-tailed).
cumulative percentages of total variance
are given in the following table:
The well established criteria (Yesh
Pal, 1999) suggested for the retention
and rotation of first four principal com-
ponents. These components accounted
for an explanation of variation to the
extent of 17.24, 12.93, 12.48 and 10.60
percent respectively in the descending
the management accountant, September, 2008
order of their magnitudes. scree is observed by the break where
The Cattell’s Scree Test was per- onwards the line or graphic curve
formed by plotting the eigen values of shows a new start of a line or curve.
a pertinent matrix. In case of principal The above figure shows the plotting of
component analysis we graphically plot eigen values and the scree. The scree
the eigen values of the correlation ma- starts from fifth eigen values onwards.
trix. On X-axis we take the eigen values Therefore, the estimated number of com-
and on Y-axis we plot the correspond- mon factors is four.
ing magnitudes of eigen values. The
713
 HR

Table No. 3
Total Variance Explained

Extraction Sums of Squared Rotation Sums of Squared

Initial Eigenvalues
Loadings Loadings
Component
% of Cumulative % of Cumulative % of Cumulative
Total Total Total
Variance % Variance % Variance %
1 1.724 17.241 17.241 1.724 17.241 17.241 1.001 10.014 10.014
2 1.293 12.930 30.171 1.293 12.930 30.171 1.001 10.010 20.024
3 1.248 12.482 42.653 1.248 12.482 42.653 1.001 10.010 30.034
4 1.060 10.601 53.253 1.060 10.601 53.253 1.001 10.008 40.042
5 0.979 9.794 63.047 0.979 9.794 63.047 1.001 10.008 50.051
6 0.919 9.193 72.240 0.919 9.193 72.240 1.000 10.005 60.055
7 0.826 8.261 80.501 0.826 8.261 80.501 1.000 10.003 70.058
8 0.720 7.200 87.701 0.720 7.200 87.701 1.000 10.001 80.058
9 0.649 6.485 94.186 0.649 6.485 94.186 0.998 9.977 90.035
10 0.581 5.814 100.000 0.581 5.814 100.000 0.996 9.965 100.000
Extraction Method: Principal Component Analysis. participation in the management is the
Figure No. 1 second factor influencing the quality of
Cattell’s Scree Test work life of employees. The third
important factor affecting the quality of
work life of employees is wage and
compensation. The alternative work
schedule is the fourth most significant
factor influencing the employees in the
engineering industry.
Suggestions
Based on the findings it is suggested
that
v the occupational stress is the area
where the organizations should take
all possible measures to improve.
The organizations may take steps
to reduce work stress by arranging
special sessions on yoga and
meditation.
v the workers may be given
opportunity to convey their opinion
and suggestions for the
improvement of the organization by
means of workers participation in
management.
The factor matrix as obtained in the It is clear from the above that the v a well defined pay and
principal component analysis was fur- occupational stress is the most compensation plan will help the
ther subjected to varimax rotation. The important factor affecting the quality of organizations in improving the
obtained results have been presented work life of employees in the morale of the employees and in turn
in the following table. engineering industry. The workers quality of work life.
714 the management accountant, September, 2008

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in 6 iterations.
v the workers may also be provided
with facilities such as alternative
work schedule, restroom, recreation
facilities, etc.
Conclusion
It may be concluded that quality of
work life of an employees are related to
an individual’s expectation of different
characteristics of the job and perception
of how much is attained. The aspiration
varies for various reasons from
individual to individual and with in the
same individual at different times of age,
education, length of service. This
accounts for the conflicting results with
the management accountant, September, 2008
HR
Table No. 4
Rotated Component Matrix
regard to effect of these variables on
quality of work life.
References:
David A. Nadler and Edward E. Lawler III(1983), “Quality of
Work Life: Perspectives and Directions,”
Organizational Dynamics, Winter, pp. 20-30.
Duxbury, L., & Higgins, C.(1998). “Work-life balance in
Saskatchewan: Realities and challenges.” Saskatoon: Government
of Saskatchewan.
Herrick, N. Q.(1981),, “The Means and end of the Work,” Human
Relations, July, Vol. (34)(7), pp. 611-32.
Johnston, R.(1975), “Pay and Job Satisfaction: A Survey of Some
Research Findings,” International Labour Review, 111(5), May,
pp. 441-49.
Kapoor, S. D.(1967), “The Prepotency of Specific Motive Among
Indian Industrial Workers,” Journal of the Indian Academy of
Applied Psychology, 4(2), pp. 29-33.
Mehta, P.(1977), “The Role of Worker Participation,’ Vikalpa,
1976, 1(4), pp. 39-46 and “Employees Motivation and Work
Satisfaction in Public Enterprises,” Vikalpa, 2(3), pp. 233-36.
Sangeeta Jain(2004), “Quality of Work Life of Indian Industrial
Workers,” in Arya, P.P. and Tandon, B.B. (Eds.), Human Resource
Development, Deep & Deep Publications Pvt. Ltd., New Delhi,
pp. 419-31.
Singh, J. D. and Pestonjee, B. M.(1974), “Supervisory Behaviour
and Job Satisfaction,” Indian Journal and Industrial Relations,
Col. 9(3), 407-16.
Sirota, D.(1973), “Production and Service Personnel and Job
Enrichment,” Work Study, 22(1), January, pp. 9-15.
Thomas R. Knight,(1986), “Feedback and Grievance Resolution,”
Industrial and Labour Relations Review, July, pp. 585-98.
Yash Pal(1999), “A principal component analysis approach to
equity share pricing,” The Management Accountant, January.q
715
 Letters to Editor

STATEMENT OF COSTING PROFIT AND LOSS ACCOUNTS

A. V. RAMANA RAO
The profession of CMA has been examining the possibility of a modified scheme of maintenance of cost records and
conduct of cost audit and reporting. In an earlier article, (published in Management Accountant of September 2007 pages
705-706, on ‘A Draft of Cost Audit Report to Shareholders’, I had suggested a possible inclusion of a ‘Segmental Cost
Statement’.
It is time for the profession to formulate a “Costing Profit and Loss Account”, representing a “Summary Segmental
Statement” combined with a “Statement of Reconciliation of Cost and Financial Accounts.
The “Cost Audit Report to Shareholders will disclose the “Costing Profit and Loss Account” reconciled with the
financial accounts that will make entire corporate accounting integrated, inclusive and complete, a holistic approach,
comprehensive and supportive to companies for cost management and efficiency improvement. The summary statement will
not in any way compromise on confidentiality. It will also be transparent enough for companies to disclose information on
earning efficiencies by product groups.
I have given below a suggested format for the same. Members may consider the feasibility and practicability of using the
same and give their comments and suggestions for improvement, which can be recommended to the Central Government,
(MCA).
Members may send their responses to help improve the statement, or even replace it, within 30 days of (the month of
publication of this article).
SUGGESTED FORMAT
A B C COMPANY LTD.
COMBINED STATEMENT OF COSTING PROFIT AND LOSS ACCOUNT (WITH RECONCILIATION OF COST AND
FINANCIAL ACCOUNTS) FOR THE YEAR ENDED
(month/date .................................. (year).
DRAFT PART III OF SCHEDULE VI OF THE COMPANIES ACT, 1956
STATEMENT OF COSTING PROFIT AND LOSS ACCOUNT
PRODUCT SEGMENT
PRODUCT/SERVICE 1 2 3 4
SEGMENT

Components of costs, nsv,

margins etc.
1. Material Direct / Indirect
2. Conversion costs/combined Dir
operating costs (See Notes) Ind
3. Total cost Dir
of production/operations Ind
4. Adjustments for (a) Dir
work-in-process Ind
(b) Finished goods Dir / Ind
5. Total Sales Costs of
Operations Dir / Ind
6. Selling distribution costs
(See Notes) Dir / Ind
7. Total costs of sales Dir / Ind
Total
8. Net sales realisation
9. Margins (Profit A/cs)
10. % Value of margins
Segmental Profits) over
(a) Production value
(b) Sales value

716 the management accountant, September, 2008

 Letters to Editor

PRODUCT SEGMENT
PRODUCT/SERVICE 1 2 3 4
SEGMENT

Components of costs, nsv,

margins etc.
11. Adustments (not forming part
of cost statements) listed
itemwise
Add (Specify)
a)
b)
c)
d) etc
Deduct (Specify)
a)
b)
c)
d) etc
12. Net margin / Profit
(as per Financial P&L A/c)
13. Total of all incidences of
Taxex & Levies included) in
above transactions
14. Percentage of tax indicences
a) Over Total Costs
b) Net Sales Value
NOTES FORMING PART OF THE COSTING PROFIT AND LOSS ACCOUNT, (as appropriate)
1. Every company conducts its operations under specified distinct segments, categories, product groups etc, each of them termedthe ‘Product’ of the Company.
2. The summary statement is the aggregation of individual product statements, under each segment, details of which are audited and handed over to the company.
3. In the individual product statements ‘Margins’ are analysed product–wise by values, as well as in quantities by total and per unit of product, with percentages
of “Margins over production and sales values”, to facilitate evaluation of operational efficiency, product–wise and segment–wise.
4. The Summary Statement will form part of the “Cost Audit Report”, and published with the “Annual Report” and “Annual Accounts”.
5. Interested parties can obtain details, if any, following same procedure as prescribed for financial accounts.
6. ‘Costs’ and ‘Revernes’, relevant to each product and product segment of the company are included in the “Costing P&L A/c; others are shown separately in
the ‘Reconciliation’.
7. Conversion Costs can be further categorised as.
a) Electricity, fuel etc costs Dir
Ind.
b) Employee Costs Dir
Ind
c) Factory overheads Ind.
d) Depreciation Dir
Ind.
e) Administration overhbeads Factor/etc
HO
8. Selling and Distribution costs can also be categorised into
a) Discounts
b) Commission on sale,
c) Freight, Insurance etc
d) Marketing overhead
e) Others (Specify)
9. Corresponding previous years figures can be indicated below current years figures within brackets
10. Cost Accounting standards can emenate from the above statement, as required.
The author is a former president of the Institute (1980-81) and is a Practicing Cost Accountant.

the management accountant, September, 2008 717


Advanced Accountancy-Volume-I
by
P. C. Tulsian
Published by :
Pearson Education
(Singapore) Pvt. Ltd.
Indian Branch, 482 F.I.E.,
patparganj, Delhi-110092, India
First Indian Print, 2004
PP. (vii-xiii) 1.1 - 15.10 + Al - A4
The present book adopts a fresh
and novel approach to the study of
Advanced Accountancy. It presents a
systematic and of-late discussion of
Advanced Accountancy concepts,
principles and standards to get the
students well-acquainted with the latest
coverage and to make it a logical and
analytical discipline worthy of
occupying its rightful place.
Although there is no dearth of books
on the subject, yet in the recent
publication of the book under review
entitled Advanced Accountancy -
Volume-I, Professor P. C. Tulsian
attempted to present the subject-matter
in a simple, precise and student-friendly
manner. The book is enriched with
pedagogical features of contributing to
the process of an easy comprehension
of the subject leading to develop a
sound understanding of basic
Accounting principles, guideline of
accounting standards and mechanics of
accounting process.
In the preface, the author has
intimated that the book is primarily
written to cope with the needs of the
students appearing in the C.A.
Professional examination. It also
provides useful guidance for students
of B.Com. and intermediate standard of
professional courses like I.C.W.A. and
I.C.S.I. Because of clarity and lucidity
of language supported by relevant
concepts and suitable illustrations at
appropriate places, the book is expected
to be very much helpful for the students
concerned.
The contents of the book are
718
Book Scan
divided into 15 chapters. “Accounting
for Partnership Firms-Fundamentals”
has been aptly discussed in the
introductory chapter.
Reconstitution of Firms - change in
profit-sharing ratio, Admission of a
partner. Retitement/Death of a partner
have been narrated exhaustively in
chapter 2, 3 and 4. Recommendations in
Accounting standard 10, issued by
I.C.A.I. in chapter 2, calculation of
hidden goodwill in chapter 3,
recommendations of accounting
standard 10 (AS 10) issued by ICAI,
application of section 37 of Indian
Partnership Act, 1932 in chapter 4 have
been given due emphasis here. Students
will be much benefitted from the study
of these chapters.
Accounting for Partnership Firms-
Dissolution of a Firm and Partnership
Insolvency, Piecemeal Distribution, sale
of a firm and amalgamation of Firms
have been discussed logically and
analytically. That a professional
approach worthy of occupying its
rightful place has been duly justified
here.
The author has made an earnest
effort in the discussion of Accounts
from Incomplete Records, various
accounting problems have been duly
compiled and these are expected to be
very useful for the students.
The discussion of Accounting for
Branches, Accounting for Departments,
Accounting for Hire-Purchase,
Instalment and lease, etc. provides an
indepth study of various accounting
problems involved in these topics. The
discussion is simply fascinating.
Insolvency Accounts of Non-
Corporate Entities has been given due
weightage here.
Accounting for construction
contracts, is, no doubt, a novel idea. It
provides an easy way of understanding
the activities involved in the industry
and commerce.
The author have discussed
the management accountant, September, 2008
“Accounting for Investments” and
“Accounting for Agricultural Farms” in
a nutshell leaving a scope for further
inputs for future editions.
Finally, discussion on “Introduction
to Government Accounts” is an elegant
feature of the book. Government
Accounts are designed to contain both
capital and current Accounts and their
inter-relationship. The author has tried
to show how Government Accounts are
maintained in India. Codification of
heads of accounts and treasury
operations opens up a new outlook on
the chapter.
The contents of the book are
systematically arranged. Each chapter
in the volume has been up-dated with
latest worked-out illustrations based on
the questions from different
examinations to enable the students to
grasp the subject-matter easily. At the
end of each chapter, self-evaluation
exercise containing true or false
questions, short and long answer-type
and essay-type theoretical questions
have been added except in chapter 2
where long answer type/essay type
questions are not properly allocated.
Adequate unsolved practical
questions along with answers have also
been given at the end of each chapter
to enable students to test their
understanding of the subject. An
interesting feature of this book is the
use of latest professional views and
techniques in theoretical discussions as
well as in accounting treatments.
The appendix deals with the
important distinctions, important short-
notes and other theoretical questions.
It should have been necessary to point
out the possible problems of more
advanced and complex nature and to
mark these out with asteristics.
If in the concluding pages of the
book, a glossary of useful technical
terms in the arena of Advanced
Accounting, a selected bibliography
and an alphabetical index could be

provided, the book would have been
more purposive.
The printing and get-up of the book
deserves appreciation.
– Dr. P. K. Basu
Cost Accounting
by
Dr. P. C. Tulsian
Published by :
S. Chand & Company Ltd.
(An ISO 9001 : 2000 Company)
Ram Nagar, New Delhi-110055
First Edition - 2008
Price : Rs. 290.00
PP 1.1 - 14.55
Cost Accounting plays a very
significant role to-day in expanding
business, public bodies and other
organisations to ascertain cost, to
control cost, to provide information for
decision-making, to determine selling
price and to ascertain profit or loss.
The outstanding features of this
edition are that changes, additions and
alterations have been made in
conformity with the changing
requirements of the subject matter. It has
been written in a teach-yourself-style
strictly following a student-friendly
approach and it serves as a tutor at
home. The coverage and pedagogical
features of the book meet the
requirements of all courses having
touch with Cost Accountancy.
The book under review has been
designed as a self-study text-book for
the students of B.Com. and partly
M.Com. of all Indian Universities.
This book attempts to present
concept and theories of Cost
Accounting in a simple and lucid
manner. Appropriate examples have
been provided throughout the book for
better understanding of the topics
discussed.
The book is divided into fourteen
chapters. After an overview of Cost
Accountancy as a subject, the topics
like meaning and scope of Cost
the management accountant, September, 2008
Book Scan
Accountancy, objectives and
limitations of Cost Accountancy,
Installation of a costing system, various
cost concepts, Cost Audit, Cost Sheet,
etc. have been discussed in chapter one
as per requirements of the students.
Chapter two relates to Accounting
for Material cost. Here the author has
discussed material control, Inventory
control, ABC Analysis, Stock-levels
and selection of pricing methods in an
elegant manner.
In the chapter Accounting for
labour cost, discussions have been
centred round on labour control,
methods of wage payments, incentive
system, etc. very skillfully.
While explaining Accounting for
overheads, classification, appor-
tionment and allocation and accounting
treatment of under and over-absorption
of overheads, treatment of some
specific items in Cost Accounts like
research and development expenses,
training expenses, etc. have been
narrated in logical sequence in chapter
four.
Next chapter deals with Activity
Based Costing. It is a method of
charging overheads to cost objects on
the basis of benefits derived from the
particular indirect activity. Here the
author has discussed the chapter in a
sketchy manner identifying the
appropriate cost drivers against various
cost pools.
The introduction of specific order
costing-unit costing, job, batch and
contract costing, process costing I and
II elaborates how costs are accumulated
for determining costs in different
industries. In Process Costing II, the
difference between FIFO method and
average method in case of equivalent
production technique is worth-noting
for the students of academic and
professional studies.
Joint Products and By-products,
their apportionment and accounting
treatment are also nicely presented. The
issue as to how to decide whether to
process further after split or not has
been highlighted here in a fascinating
manner.
In service Costing method of
determining the costs of services have
been properly dealth with. To exemplify
the system, Transport Costing, Boiler
House Power Costing, Canteen Costing,
etc. have been discussed here elegantly.
In Integral and Non-Integral system,
theoretical and practical aspects have
been elaborated judiciously.
Reconciliation of cost and Financial
Accounts are the indicators of the
accuracy of the cost recording system
and are very easy to understand and
attractive for study.
The last chapter Marginal Costing
is an interesting chapter of the book. It
deals with conceptual framework but
management decisions have got to be
re-informed in details. Students will be
benefited from this chapter in view of
ample illustrations and necessary
diagrams.
The practical aspect of the book is
that each chapter begins with a set of
learning objectives. At the end of each
chapter, true/false questions,
explanatory notes, theoretical and
practical questions have been arranged
to develop the over-all knowledge of
the students community.
The style and presentation of the
book is “to-the-point approach”. It
would have been better if the author
had up-dated the volume with latest
worked-out questions and problems for
B.Com. (Hons.) and M.Com. from
different under-graduate and post-
graduate examinations of various
universities.
In comparison with volume, printing
and knowledge-packed throught-
provoking novel ideas, the book is
reasonably priced.
– Dr. P. K. Basu
719

EASTERN REGION
The following Office Bearers of EIRC of
ICWAI have been unanimously elected
for the year 2008-2009 in the Council
Meeting of the Eastern India Regional
Council held on 8th August, 2008.
Debasish Saha Chairman
Manas Kumar Thakur Vice Chairman
Ajay Deep Wadhwa Secretary
Pallab Bhattacharya Treasurer
HOWRAH CHAPTER
Inauguration of Oral Coaching
Classes
Howrah Chapter organized the
inauguration of Oral Coaching Classes
for July 2008 Session at the Chapter
Premises ICWAI Bhawan on 28th July
2008. The students of Stage-1, Stage-2,
Stage-3, Stage-4 and Foundation
Course admitted for this Session were
addressed by the Faculty members and
Office-Bearers of the Chapter. Soumitra
Som, Chairman of the Chapter welcomed
the participants and informed the
strategic role of Cost & Management
Accountants as the financial leaders of
organizations in the globalized
economic scenario.
WESTERN REGION
BARODA CHAPTER
List of Members of Executive Committee
for the year 2008-2009 :
Y. S. Thakar Chairman
S. S. Puranik Vice Chairman
& Secretary
K. Vasavada Treasurer
KALYAN AMBERNATH CHAPTER
Office bearers for the year 2008-09 :
D. M. Batthija Chairman
G. B. Shamnani (V. C. Admn.)
M. R. Dudani (V.C.-P.D.)
P. B. Patange Secretary
G. U. Keswani Treasurer
KOLHAPUR-SANGLI CHAPTER
One day Seminar on Service Tax,
Central Excise & Cenvat – Recent
Changes
The chapter organised one day
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Regions & Chapters
Seminar on 26/06/2008 which was nos., mobile nos. and E-mail address and
inaugurated by Mr. Vasudev, Hon’ble Photo. The updated information in the
Commissioner of Central Excise & Directory will promote interaction
Customs Pune II. Sanjay Bhargave, amongst our members and will serve a
CCM Pune & Ashok Nawal, RCM, great purpose in furtherance of the
Nashik were main speakers in the profession.
technical Sessions. A. G. Anikhindi–
Chairman of chapter, stressed the need LUCKNOW CHAPTER
for increasing the use of Practising Cost Seminar on
Accountants in the Central Excise & Management Accountants-
Service Tax matters at Govt. level. Challenges ahead
NORTHERN REGION A seminar on “Management
Accountants-Challenges ahead :
ALLAHABAD CHAPTER Valuation Management & International
The following office bearers have Financial Reporting Standards” was
been elected for the year 2008-09 : held on 13/07/08 at ICWAI Bhawan,
Gomti Nagar, Lucknow. The seminar was
S. M. Anwar Hasan Chairman inaugurated by Chandra Wadhwa, ex-
Indrasen Singh Vice Chairman President ICWAI.
Jawahar Lal Koery Secretary On this occasion the website of
P.S. B.S. Rao Joint Secretary Lucknow Chapter was inaugurated by
Naveen Chandra Treasurer the President. The website address of
the LCCA is “lucknowicwai.org”.
FARIDABAD CHAPTER The Technical paper on valuations
The following Members have been management was presented by BB Goel,
elected unanimously for the year adviser (Cost), Ministry of Company
2008-09 : Affairs and A. K. Kapur Adviser (Cost),
Ministry of agriculture and on IFRS by
Achal Jain Chairman Balwinder Singh, CCM.
C. M. Malpani Vice Chairman A. K. Kapur highlighted the salient
D. Patra Secretary features of techniques of valuations. He
Meenakshi Agarwal Treasurer said that business valuations using any
method should not be too high or too
JAIPUR CHAPTER low because that could be costly,
resulting in either overpayment or lost
The following members were elected opportunities.
office bearers for the year 2008-09 :
Balwinder Singh Practicing Cost
Vinod Chittora Chairman Accountant & CCM deliberated on
D. K. Gupta Vice-Chairman
“International Financial reporting
R. K. Bhandari Secretary Standards”. He gave a detailed
presentation on IFRS and linkage
S. N. Vijay Joint Secretary
between IFRS and Indian GAAP.
Sanjay Jain Treasurer
While summing up the session,
Jaipur Chapter Members Directory Chandra Wadhwa, explained the role
2008 released which can be played by Cost &
A “Members Directory 2008” of the Management Accountants in this vast
members of Jaipur Chapter of ICWAI subject of valuations.
was released in the 39th AGM of the Earlier, Sanjay Mehra, Chairman,
Chapter held on 8th June, 2008 and LCCA welcomed the dignitaries and the
distributed to the members present in paper writers and said that deliberations
the meeting. The Directory contained will go a long way in updating the
member’s Membership No. Academic/ professional knowledge of the members
Professional Qualification their updated on these contemporary most wanted
office and residential addresses, phone subjects.
the management accountant, September, 2008

Students & Faculty Meet with
President
A student/faculty meet with
President was organized on 13th July
08 at Chapter premises. The meet was
attended by approx 150 students of
LCC. and the Faculty members. The
students brought out their problems
such as non-availability of study notes,
career opportunities, mandatory
practical training, and non
responsiveness on problems of the
students on the part of HQ etc. The ex
President Chandra Wadhwa replied their
satisfaction. Faculty members stressed
upon making training for faculty
members. The President replied that
such training is already on the cards
and very soon it will be started.
Press Conference with President
ICWAI
A press conference was organized
at ICWAI Bhawan, Gomti Nagar,
Lucknow at 12.00 Hours on 13th July
08. Chandra Wadhwa, Ex President
ICWAI and Rakesh Bhalla, Secretary
NIRC, Sanjay Mehra Chairman LCCA
and O P Saxena Secretary, LCCA
addressed the print and TV media
reporters.
Chandra Wadhwa briefed the Press
about the Cost & Management
Accountancy profession, the Institute
and the Lucknow Chapter. He explained
the features of the recently signed MOU
with IGNOU.
Practicing Cost Accountants Meet
On 13th July 08, a Practicing Cost
Accountants meet was organized with
President. Approx. 20 Practicing Cost
Accountants participated in the
meeting. Various points and future
plans for enhancing the scope for
practice were discussed in detail. K. L.
Prabhakar, Practicing Cost Accountant
and Past Chairman LCCA stressed upon
the quality of the report being submitted
by the practicing members to
authorities. He added that it is the report
which ultimately decides the need for
practioners. He added that some
concrete steps needed to be taken in
this area. Most of the Cost Accountants
stressed that equal focus be given to
non statutory work as there is a vast
the management accountant, September, 2008
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scope in non statutory field.
Report on Session Inaugural Function
July to Dec 08
The Inaugural function of ICWAI
course for the session starting from July
08 was held on 09th July 08 at ICWAI
Bhawan, Gomti Nagar, Lucknow. The
session was inaugurated by P.
Muthuswamy, Director (Finance)
Scooters India Ltd. C. Sundramurthy
GM (Finance) Scooters India Ltd. and
past Chairman of LCCA was Guest of
Honour. Meritorious students were
honoured by various awards (List
Enclosed) by the Chief Guest on this
occasion.
Earlier, Sanjay Mehra, Chairman
LCCA welcomed all the dignitaries,
students and faculty members. The
meeting was also attended by O. P.
Saxena, Secretary, LCCA.
Sunil Kumar Singh Director
(Studies) LCCA, gave presentation on
New Syllabus 2008 and explained the
course contents and coverage,
coaching policy, mandatory training,
Modular training and others aspects of
the coaching.
Ms. Seema Singh, Treasurer of
LCCA proposed the vote of thanks.
SOUTHERN REGION
The Southern India Regional
Council of the Institute of Cost and
Works Accountants of India at its
Meeting held on Sunday, the 27th July,
2008 elected the following Office bearers
for the year 2008-2009 :
A. Om Prakash Chairman
A.V.N.S.
Nageswara Rao Vice-Chairman
Dr. I. Ashok Secretary
B. R. Prabhakar Treasurer
BANGALORE CHAPTER
Professional Development Meet
A Professional Development Meet
was held on 26th June 2008. Y. Srivathsa,
Managing Director, M/s. Streamline
Consulting, spoke on Supply Chain
Management. The meeting was well
attended by our members and there was
a live interaction at the end of the
lecture. Y. H. Anegundi, Chairman of the
Chapter welcomed the Speaker and the
Members. Dattatreya, Chairman-PDC,
introduced the Speaker to the members.
The meeting ended with a vote of thanks
by N. Shiva Kumar, Secretary of the
Chapter.
A. Professional Development Meet
was held on 10th July 2008. T. A.
Shivakumar, Chief Finance Officer,
M/s. DBOI Global Services Pvt. Ltd.
gave a lecture on Balanced Score Card.
The meeting was well attended by our
members and there was a live interaction
at the end of the lecture. Y. H. Anegundi,
Chairman of the Chapter welcomed the
Speaker and the Members. Dattatreya,
Chairman-PDC, introduced the Speaker
to the members. The meeting ended with
a vote of thanks by N. Shiva Kumar,
Secretary of the Chapter.
A 3-day Training Programme was
organized for the executives of M/s
Karnataka Power Corporation Ltd., on
Maintenance of Cost Accounting
Records and Cost Accounting in Power
Sector from 2nd to 4th July 2008. The
participants appreciated the conduct of
the training programme.
COIMBATORE CHAPTER
The Cosmafest 2008 of the ICWAI
Coimbatore Chapter was conducted on
Saturday, the 9th August, 2008. Nearly
110 students attended comprising
ICWAI students and students from
thirteen colleges in Coimbatore.
Session I : Inaugural Session
Chairman of the ICWAI Coimbatore
Chapter J. Sridhar, chaired the session
and welcomed the gathering. He
highlighted the increasing demand for
Cost and Management Accountants in
the industrial sector.
The Chief Guest for the inaugural
programme was Dr. S. P. Viswanathan,
Vice-President, KG Design Services. He
showed some rare and beautiful
clippings explaining the various
sequences of design in the aero space
industry especially designing vertical
take-off helicopters and other aircrafts.
Such high precision technology
demands severe complex design
considerations where significant roles
exist for Cost Accountants. He
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mentioned the importance of cost
management at the design, Product
Development and R & D stages and how
Cost Accountants could influence
decision-making and guide in achieving
Target Costing. Dr. Viswanathan
answered enthusiastically several
questions raised by the audience.
Mr. Subramanyam, Head Master of
the Suburban Higher Secondary
School, Coimbatore who was adjudged
the Best Teacher of the State was
felicitated by our Chief Guest and
Chairman of ICWAI Coimbatore
Chapter. The vote of thanks was given
by Secretary Mrs. Meena Ramji.
Session II Paper Presentation
The welcome address of the second
session was given by the Students
Association Chairman Mr. Shyam
Sundar.
Ten students made Paper
Presentation on : Brand building - Rise
of Inflation - Fluctuations in foreign
Exchange - Role of Cost Management
Profession for Corporate Excellence
Session III Quiz–Final
The welcome address was given by
Pranesh, Vice Chairman, Students
Association.
The quiz competition final round
turned out to be a lively one. The Quiz
Master G. Balasubramaniam, Secretary,
Roots Multiclean Industries Ltd., was
ably supported by our Committee
Member R. Maheshwarn. The
questions ranged from General
knowledge, Identifying the logo, Guess
the Personality, Rapid fire round,
Guessing the product brand through
Dumb Charade.
Session IV Valedictory Session
Vice-Chairman P. K. Jayaram who
chaired session IV welcomed the
gathering and the Chief Guest Dr.
Keshivino Aram., Director, Shanthi
Asram, Coimbatore. Dr. Kezhivino Aram
gave inspiring talk explaining how a
professional could bring out a change
in the society with empathy for the
under-privileged. Prizes for proficiency
in ICWAI examination and for winners
of paper presentation, quiz etc., were
distributed.
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Mrs. Meena Ramji, Secretary of the
Coimbatore chapter delivered the vote
of thanks.
ICWAI Students Association
The meeting for the month of July,
2008 was held at the Chapter on 12th
instant. Mrs. Meena Ramji, Chapter
Secretary was on the Chair. The meeting
started off with a management game and
all the students participated
enthusiastically, followed by a
discussion on the conduct of “COSMA
FEST 2008”, the annual festival for
students of Cost and Management
profession to be held on 9th August,
2008. Treasurer S. Subbaraman and the
P. D. Committee Chairman V.
Mathanagopal were also present during
the programme to interact with the
students.
Professional Development Programme
A meeting on the topic “EXIM
Policy & Its Implications” was held at
the Chapter on the 19th July 2008. L.
Purandaran, Liaison Officer, Office of
the Director General of Foreign Trade,
Coimbatore spoke on the subject. The
meeting was chaired by Mr. P. K.
Jayaram, Vice-Chairman of the chapter.
The introduction of the speaker was
given by the P. D. Committee Chairman
V. Mathanagopal and vote of thanks was
given by Secretary Mrs. Meena Ramji.
MoU for a Satellite Centre
The Memorandum of Under-
standing between Coimbatore Chapter
and KG College of Arts and Science,
Coimbatore was signed on 28th July,
2008 for starting a Satellite Centre at their
college premises. The ICWAI
foundation course will be offered to the
students of KGISL as satellite centre of
Coimbatore chapter at their premises.
HYDERABAD CHAPTER
Service Tax-Dispute Resolution
Scheme-2008 - 28.06.2008
Hyderabad Chapter of Cost
Accountants organized a lecture on
Dispute Resolution Scheme 2008 jointly
with Hyderabad Chapter of ICSI on 28th
June, 2008 Hyderabad for the benefit of
the members of both the Institutes. The
the management accountant, September, 2008
Chairman of Hyderabad Chapter of
ICWAI CMA G. Narayan Rao, while
speaking on the Dispute Resolution
Scheme 2008 indicated the details of the
scheme and the procedure involved for
making an application under the
scheme. Later R. S. Maheswari, IRS,
Joint Commissioner addressed the
participants on the scheme.
KOTTAYAM CHAPTER
The following office-bearers have
been elected office bearers for the year
2008-09 :
Benoy Varghese Chairman
R. Jayachandran Vice Chairman
Muraleedharan Pillai Secretary
Jiji Varghese Treasurer
Report on the Faculty Meeting held on
21st June 2008
A meeting of the Faculty Members
of the TCCA was held on 21st June 2008
at the Chapter premises. K. C. Thomas,
Chairman, TCCA presided over the
function. P. S. Devakumar, Chairman,
Coaching Committee welcomed the
gathering. K. C. Thomas, Chairman, in
his address spoke about the Revised
syllabus, introduced with effect from 1st
January 2008 and the responsibilities of
Faculty Members to update their
knowledge in tune with the contents of
the Revised syllabus.
N. P. Sukumaran, Past President of
ICWAI in his special speech address
stressed the need for introducing new
techniques in the method of teaching.
He suggested introduction of Laptop
with LCD projector in class rooms for
effective teaching. He also proposed
change in the present method of taking
feedback about faculty members, from
students. He suggested that efficiency
of the faculty member should be judged
from the number of students attending
his/her classes.
All the faculty members were
provided with copy of Revised
syllabus.
K. Murali, Secretary, Trivandrum
Chapter of Cost Accountants, proposed
vote of thanks.