Know your ‘3 Wise Men’

March, 2018

It is the end of the day, end of the week, end of the month and end of the financial year. Some of you may have already headed towards cooler climes to beat the heat, thanks to the extended weekend. Some of you may be giving the last minute push to reach the year-end target, year-end billing or recovery. Many of you may be busy with the taxes, turnover, appraisal, budgets, inventory stock take, cash balance checking etc. I know for sure an year end editorial piece will not catch the attention. Yet, I want to leave you all with a few thoughts on Knowing Your Professionals. In the context of an entrepreneur, in particular – Knowing Your CA / CS / Lawyer. These are the ‘3 wise men’ who will guide you and safeguard your interests in the long run. As an entrepreneur you may be focussing on market, technology, people, funding etc. but unless you have the right set of people for your audit, compliances & legal advice, you will not be able to go far.

As part of my profession, I get to meet many, many entrepreneurs from diverse backgrounds, businesses, ideas & requirements. While the ‘senior seasoned ones’ know our importance (read CA/CS/Lawyer), the newbies find it ‘easy & economical’ to access our breed online. Many e-businesses have sprung up offering ‘one-stop-shop solutions’ for startups who want to hire an auditor, company secretary or get some legal document drafted. While this is not new, what is, is most of the times you don’t know who your auditor is, whois managing your confidential board and shareholder records, who is using your Digital Signature and who has drafted your legal documents or offered you legal advice. When I say who – I mean what is the professional’s credentials ? Have you ever done a due diligence or Know Your Professional check when you sign up for these so-called online services ?

Once I was shocked to hear from a young founder that he just knows a coordinator on a service portal through whom he gets all his advice, audit, compliances done. He doesn’t even know who his statutory auditor is – one whom he has appointed for a 5 year period ? should he not appoint such an important professional after a thorough due diligence and meeting him in person ? this may sound old fashioned and archaic but trust me, it is required. Else you are entrusting all your business details and books to a stranger who just signs once a year and uploads on the MCA or the IT dept. portal. Can you afford this, especially when changing an auditor is so difficult under the law ? when information is king and data security is not guaranteed ? same is true for the auditor too. Is it not risky signing a Balance Sheet without even knowing who the client is ? is a Know Your Customer not important ? I bet there are umpteen inbuilt processes and terms to check on all this but my advice would be never, ever to appoint a statutory auditor whom you have not met or interacted with. Know your Professional.

This brings me to another revelation I had recently. I came across a so-called ‘legal advice website’ which didn’t disclose who the team were, who were the professionals offering the advice, where it was based out of, how old it was etc. It claimed wide media publicity, awards, number of customers, multi-state presence etc. but just reading some very basic compliance steps for a Company that they put out was shocking. It was completely wrong and not as per law. Any naïve entrepreneur who is fed on ‘bootstrapping’ (read buy the cheapest professional services available !) is bound to sign up with them because of the dirt cheap prices (as if professional services are commodities to be tariffed !!). How does he know if he has got the right advice or not ? Not until another professional points out or a due diligence red flags it or a regulator issues a notice. By then the damage is done. In most cases irreversible.

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