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ICAI: CA Extending Services to Networks Not Authorized

CA Extending Services to Networks

Declared by Institute of Chartered Accountants of India (ICAI) any member Chartered Accountants found guilty of giving professional services to any of the Unrecognized Organisations will be subjected to Disciplinary Proceedings by the Institute.

Such memorandum is a result of the information received by the institute that some members of ICAI are associating themselves with the Networks not registered with the institute (invalid entities). Coming in contact through mutual referrals, attaining professional services from the experts is the major deal of such Networks.

Further declared by the institute that the association/joining with Networks via referral of professional work is acceptable only if the Network is registered in the records of Institute comprising of only Chartered Accountants or Chartered Accountants Firms and monitored by the Institute’s Network Guidelines. Any discrepancy will personally be interrogated by the authorities.

The memorandum also highlights certain provisions of the Chartered Accountants Act 1949:

Clause (2) of Part I of First Schedule to the Act

A Chartered Accountant in practice shall be deemed to be guilty of professional misconduct, if he pays or allows or agrees to pay or allow, directly or indirectly, any share, commission or brokerage in the Fees or profits of his professional business, to any person other than a member of the Institute or a partner or a retired partner or the legal representative of a deceased partner, or a member of any other professional body or with such other persons having such qualifications as may be prescribed, for the purpose of rendering such professional services from time to time in or outside India.

Explanation — In the schedule, “partner” means a person/entity located outside India with whom a practising chartered accountant has entered into a partnership which is not in contravention of the item (4) of this Part;

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Clause (3) of Part I of First Schedule to the Act

A Chartered Accountant in practice shall be deemed to be guilty of professional misconduct if he accepts or agrees to accept any part of the profits of the professional work of a person who is not a member of the Institute: Provided that nothing herein contained shall be construed as prohibiting a member from entering into profit sharing or other similar arrangements, including receiving any share commission or brokerage in the fees, with a member of such professional body or other person having qualifications, as is referred to in item (2) of this Part;

Clause (5) of Part I of First Schedule to the Act

A Chartered Accountant in practice shall be deemed to be guilty of professional misconduct, if he secures, either through the services of a person who is not an employee of such Chartered Accountant or who is not his partner or by means which are not open to a chartered accountant, any professional business. Provided that nothing herein contained shall be construed as prohibiting any arrangement permitted in terms of items (2), (3) and (4) of this Part;

Clause (6) of Part I of First Schedule to the Act

A Chartered Accountant in practice shall be deemed to be guilty of professional misconduct if he solicits clients or professional work either directly or indirectly by circular, advertisement, personal communication or interview or by any other means: Provided that nothing herein contained shall be construed as preventing or prohibiting — (i) any chartered accountant from applying or requesting for or inviting or securing professional work from another chartered accountant in practice; or (ii) a member from responding to tenders or inquiries issued by various users of professional services or organizations from time to time and securing professional work as a consequence;

It is clear from the above norms that no practising CA or CA Firm is strictly prohibited from extending their professional services / join the Networks which are not registered with the Institute.

Any association with the unrecognized Networks will lead to Disciplinary Proceedings from the Institute referring to the norms of the Chartered Accountants Act 1949

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