Educating women will help create a strong society

N.R. Gajendran:

Hiran H. Senewiratne

The government should provide more opportunities for local students to gain international educational qualifications by setting up international institutes in the country, said Partner, Gajma and Company N.R. Gajendran.

He said that education is everybody's prime right and nobody can deprive people from pursuing education. Therefore, students obtain educational qualifications especially in international institutes to enhance their knowledge and skills.

Gajendran said that more educational opportunities for women will help to create a strong society because educating a woman is educating a whole family. Therefore, providing equal educational opportunities for women will create a strong society in the country.

He also said that setting up international educational institutions would help to enhance the knowledge and analytical skills in the society in the long-term perspective, especially for students who could not afford to gain international qualifications here.

Q: What do you think of the accounting standards in Sri Lanka?

A: I would say that all accounting standards developed by the West, are based on the free market capitalization. Whatever money companies earn is for the shareholders and employees.

But the concept of Corporate Social Responsibility (CSR) also came in to give charity to needy people within the system.

The new evolving concept was the creative capitalism that is no longer left for volunteer organizations and for government to supports needy people. It is now embedded in the corporate aspects.

These Western concepts have failed as some major banks collapsed and the accounting standards could not be detected by them before hand. In this scenario we have to look at it in a different model, which is suitable for local standards.

Q: What are the changes we need to introduce accounting and reporting standards in the country?

A: Currently, accounting standards are based on real value with a little element of prudence which is based on the judgmental base.

A prudent approach does not consider realised profits. What we have to do is to bring an element of trust between the lenders and the borrowers especially in the banking sector.

Therefore, the whole business model has to be changed to build on trust and confidence.

We have to domesticate all accounting and reporting standards to suit the local conditions without blindly following failed Western concepts.

The element of prudence was also brought back for reporting and accounting standards.

Q: Recent incidents in the banking and financial sector have shown that the auditing job becomes risky as they could be criminally liable in the event of a fraud and the collapse of companies. What is your view?

A: The first man to be put on the mat when a company collapses or a fraud is committed is the auditor and criminal charges are levied against him.

Today we see that there is a total misconception on the roles and functions of the auditor's job. The Auditor only expresses an opinion on financial reporting where he becomes the scapegoat of some others' wrongs doing.

This error of judgement is not a criminal offence. However, the auditor should be made liable if he does not carry out or fail in his duties, but he must be liable for just expressing an opinion that is shocking for the profession.

Therefore, the Institute of Chartered Accountants should rise against this and all accounting professionals must educate the public and lawmakers on this whole issue.

In the famous South African Bannerman case it was held that Auditors must state all reports and statements for shareholders. But under the current system anybody could take action against the Auditor.

Q: How would the global recession impact Sri Lanka?

A: The crisis has three components - these are loss of employment, trust, deficit and the Subprime issue.

The Western world dumps more than US$ Trillion on the combat war on terror where 30 per cent of employment is based in the armament industry and there was no money for investments.

On the other hand in the Subrime issue, small customers were give loans by banks to purchase real estates without looking at the credit base/collateral, which resulted in banks and financial institutions collapsing. In this crisis most banks faced balance sheet problems. However, Sri Lanka won't be affected by this recession but our exports may be considerably affected because the financial world is integrated with exports.

N. R. Gajendran Picture by Saliya Rupasinghe

Q: Do you think that there is any drop in the quality of Chartered Accountants?

A: I feel that our accountants are now losing their power of analytical skills. This is due to the lack of the command of English and too much standardization.

Q: What problems will our economy face despite the recession?

A: We have many problems to address at this juncture. There is a drop in exports, increased level of inflation, high cost-of-living, and interest rates and over managing exchange.

With the dawn of peace in the country shortly we could position ourselves as an international financial hub in the region. As long as agriculture is in place we are comfortable.

Q: What is your advice for national leaders to resolve the current issues in the country?

A: We have to move away from the period of surge to a transcended solution to all issues. We have to adopt win-win solutions for all our issues.

Q: What is your opinion of our tax structure?

A: We cannot expect a simplified tax structure.

As a country which consist of people with an unequal level of income with divergent wealth proportions having a simplified tax structure is inevitable. What has happened is unnecessary complications due to periodical adjustments to fulfil revenue shortfalls of the government.

Q: What is your philosophy in life?

A: Do good to people and help others to go up in life. My philosophy is also a passion for knowledge and excellence. ****----