Problem Variable

I wrongly thought it to be just a boring beginning of the year partner’s weekly  meeting in the CA firm, when most staff was busy at audit sites which assured just procedural problem solving not demanding much cerebral effort. Imagine the jolt I received when I saw more than a dozen partner’s faces glaring at me as if I had committed a blunder to dissolve the firm. Frankly, the post lunch session had a drowzy effect and I had not paid much attention to the topic under discussion even though it was heated which I had dismissed as some people having a habit of making mountains out of molehills.

‘Huh?’ I asked everybody in general. ‘Can you specify what point you want me address?’ I feigned alertness. ‘All our Information Technology company audits are taking longer even after your inovative through the computer audit techniques.’ The prospect of my excess of 4000 hours of involvement last year being discounted angered me. ‘From SQL and Oracle to SAP and ERP, I have personally tested last year to save us more than 40% of audit time at each site. If there is a new module perhaps I may have to design but nothing to get worked up.’ I tried to assure them. ‘Simple salary vouching is taking longer by 300%’ spoke the eldest of our partners. ‘Don’t be silly’ I remarked, ‘it is so simple that we assign it to the junior most of the audit team.’

‘Have you heard of the variable element in the salary’ asked one in contempt. In equal icy tones I answered, ‘Dearness allowance is around for donkey’s years and my Audit techniques have accounted for them.’ Realising my ignorance he slid a newspaper across the table and if I was not sitting I would probably have fainted. Now a whole section of salary is variable and that too not standard across the board. It is as per the circular of the management and knowing how (un)clear circulars are, the nightmare was just beginning to get defined. ‘Even the audit team leader cannot audit this simple function correctly and  the signing partner has to personally do that’ complained one equally senior partner. I excused myself asking time to study how overnight the salary definition had turned upside down. The ending note of the meeting was a warning to all through me that though today, only the IT industry has variable salary, tomorrow all shareholders will demand full salary be variable – after all bread and butter is the greatest motivation! So, all our audits are likely to suffer the same drop in efficiency!

I started jotting down. Long ago, bonus was paid if the company made a profit. Then Union negotiations especially in the loss making public sector made bonus a right; not contingent upon profitability. Then came the performance bonus where seniors patted themselves on their back with huge amounts. The definition of ‘performance’ varied and it had no connection with the profitability of the company sometimes. Now, salary itself was largely variable from top to bottom. Hetherto, only the very top had the cream as a variable but now even the juniors had a variable and that too not cream but bread and butter.

Just then the receptionist announced the unsceduled appearance of one senior relative. I had just introduced a suitable boy for matrimonial purposes for his daughter. Perhaps he has come to give me the good news of confirmation and hopefully with some Indian sweets I thought. The issues in the partner’s meeting had increased my acidity. As the senior man came,  instead of a happy disposition I sensed anger. ‘You know I am a retired man’ he began. ‘As a middle class Maharastrian, I wanted my daughter to get married to a man whose income is assured by way of salary and not variable due to business.’ I sat up. It was that dreaded word of the day again – variable. He continued his lament, ‘we were about to announce the engagement on the auspicious day next Wednesday when he told us that he had to take a 50% salary cut due to non expected performance of his company. You had assured us that since he was in the IT sector, it would be raining assured money.’ Whoops, I had introduced a boy from the IT sector and here was a visible impact. I called for a cold drink for the heated man and profousely apologised for being ignorant that salaries are now variable. He left wondering loudly if I was completing annualy my manadatory ‘continuing professional education’(CPE).

As he left, my overtime began. People from all sectors came with their unique problems due to the variable salary concept. After the end of a marathon 48 hour consultation with more than 70 persons, I began summarising the issues to draft common replies to people with common problems.

My old student asked: If sharing of profit is the basis of salary, is there any difference between employee and partner?

System designer of a company asked: What controls can I build in a salary module if neither percentages are standard across the board or even categories nor the determinant? For some, it is increase in turnover while others are linked to profit and more complex are those who are linked to whims of the senior management.

Union leader of Class IV (peons/delivery boys) workers asked: How can my members be held for any performance? All they do is deliver packets and tea/coffee. They have no say in business decisions. So, will it be right to claim that their mere attendance should be determinant for bonus even if the company is under performing?

Just passed CA student asked: Should I go into practise or employment? What is more variable in income terms? Vagaries of practice or performance determined by hundreds of employees?

Association of industries asked: Can you help design Accounting standards which are flexible to permit us to use any which shows better performance?

Crafty Chairman asked: Can you design an accounting policy which shows I have performed well but my juniors have not?

All salaried employees asked: For our Income Tax returns, can we classify our income under business and claim expenses like conveyance, depreciation, carry forward losses etc.?

Marriage website: We are under pressure to have a new classification regardless of  religion or qualification or industry or profession for a category of employed persons with no variable salary. Is there any industry where variable salary is not paid to employees? Is is worthwhile to make such a category for the remaining industry or do you think that all companies will make most salary as variable?

Bank General Manager in charge of credit asked: Till date we were classifying salaried borrowers as low risk. Should we classify them equivalent to businessmen or professionals?

Neighborhood Grocer asked: Should I continue monthly credit to salaried customers or is the variable element in salary also upwards?