A profile of Prabhakar Kalavacherla (PK)

The explosion in expansion of IFRSs around the world is reflected in the way that the accounting profession is itself now increasingly international in its career paths. The latest board member appointment to the IASB is an example.

Prabhakar Kalavacherla, known universally as PK, started his career in his native India, broadened his career in San Francisco, and then worked in London and India on international financial reporting issues before heading back to San Francisco to audit technology companies. It is the sort of career path that is rapidly becoming the norm as the profession grows beyond national boundaries.

And PK is delighted to be able to take his career to the heart of the creation of an international reporting language. ‘I feel they chose me for my international experience and having worked on three continents’, he says, ‘I bring a unique blend of multinational experience.’

Emerging economies

There are two strands to his desire to bring that experience to bear. The first is simply a desire to participate in the expansion of IFRSs and, second, what this will do for emerging economies. ‘I do feel very strongly about contributing to the growth of the emerging economies’, he says. ‘If you increase the circle of trust then more people will participate in the capital markets of these economies.’

He compares his experience of India and the US.

‘If you look at the participation in the capital markets by citizens in the US you find that more than 50 per cent of citizens are involved’, he says. ‘In India and other emerging countries the figure is low. This is where the language of accounting is so important. By improving the language of accounting perhaps trust in capital markets can be increased and the circle of trust can be widened.’

This growing importance of the emerging economies can sometimes be underestimated. Together, Europe, the US and Japan amount to only 60 per cent of the global capital markets. It is important that the other 40 per cent have their say.

‘That is very important’, he says. Providing a secure and trusted financial reporting language will enable the emerging economies to expand. ‘In order to make the IASB successful’, he says, ‘having a greater diversity of thought and viewpoint would increase the acceptability of accounting standards.’

He is energised by the success of IFRSs. ‘I see this as a unique opportunity’, he says. ‘Bringing in a common business language across the world is a unique and tremendous task and one of the reasons I have taken on this job is to be part of that, to feel that you have contributed to that body of knowledge’.

Multinational experience

PK did his first accounting degree and qualified as a chartered accountant in India and initially thought of doing a PhD after completing his masters in accounting in California.

Instead, in 1993 he joined KPMG in San Francisco and ‘worked on all sorts of companies in a range of industries’. In 1997 he went back to India for a brief period on a financial reporting assignment. ‘There was a lot of interest in US GAAP in India and I was going around companies talking about US GAAP and helping them with implementation’, he says.

Back in the US he moved to KPMG’s national office in New York working on financial reporting issues like business combinations, revenue recognition and stock options. This led to an 18-month stint in London before four years in India heading the US GAAP practice. Then it was back to San Francisco looking after large technology companies.

Issues of interest

When he starts with the IASB at the beginning of 2009 he would like to concentrate on several issues. Revenue recognition is one.

‘My personal view is that despite the current market challenges in most countries I feel that when people are asked how big is their company they don’t talk, for example, of debt. They talk of people or revenue.’ So revenue recognition and developing a common standard under the IASB/FASB memorandum of understanding is an important part of that. He would also like to help to bring universality to the issue of financial statement presentation.

But it is the recognition of the importance not only of emerging markets but of the benefits that their growth and success can bring that is at the heart of his thinking. ‘We need to understand their unique needs and articulate them in accounting standards’, he says. ‘Some emerging markets don’t have the depth of the markets to apply mark-to-market, for example’, he says. ‘So we have to be sensible about that. Emerging market issues need to be taken into consideration.’

The resulting benefits have to be seen as a goal. ‘One of the ways of improving the quality of life in these countries is that they need to have good accounting systems, accounting standards and regulatory bodies’, he says. ‘It is very important to participate actively in the growth of those things.’