Shared by CA. Pramod Jain 2nd October 2023,
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Shared by CA. Pramod Jain 2nd October 2023, ICAI-CMP, Jaipur Networking: Connect Share and Grow NETWORKING: Connect Share Grow MDP Guidelines for formation of multidisciplinary partnership came into force w.e.f. 8th July, 2021 and amended
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01
Shared by
CA. Pramod Jain
2nd October 2023, ICAI-CMP, Jaipur Networking: Connect Share and Grow<br>
CA. Pramod Jain
2nd October 2023, ICAI-CMP, Jaipur Networking: Connect Share and Grow<br>
02
NETWORKING: Connect Share & Grow<br>
03
MDP Guidelines for formation of multidisciplinary partnership came into force w.e.f. 8th July, 2021 and amended in September 2023
Members of following professional bodies have been permitted to become a partner under Regulation 53B as on date:
Company Secretary, Member, ICSI;
Cost Accountant, Member, The Institute of Cost and Works Accountants of India;
Advocate, Member, Bar Council of India;
Engineer, Member, The Institution of Engineers, or Engineering from a University established by law or an institution recognized by law;
Architect, Member, The Indian Institute of Architects;
Actuary, Member, The Institute of Actuaries of India.<br>
Members of following professional bodies have been permitted to become a partner under Regulation 53B as on date:
Company Secretary, Member, ICSI;
Cost Accountant, Member, The Institute of Cost and Works Accountants of India;
Advocate, Member, Bar Council of India;
Engineer, Member, The Institution of Engineers, or Engineering from a University established by law or an institution recognized by law;
Architect, Member, The Indian Institute of Architects;
Actuary, Member, The Institute of Actuaries of India.<br>
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MDP Amendments:
No need to change name if converted into MDP
Annual KYC of non- CA by HI
Non- CA not to become member of more than 1 CA MDP
Situation when no non-CA left in MDP (30+30 days)
Merger / Demerger of MDP enabled<br>
No need to change name if converted into MDP
Annual KYC of non- CA by HI
Non- CA not to become member of more than 1 CA MDP
Situation when no non-CA left in MDP (30+30 days)
Merger / Demerger of MDP enabled<br>
05
5 CONCERNS RELATING TO GROWTH OF INDIAN CA FIRMS Majority CA firms are SMPs Large number of firms have confined practice to audit and taxation Many firms have audits allotted through the ICAI-PDC empanelment process Attachment with firm name dissuades Merger or network due to fear of loss of identity Client switches over to larger firm when his business needs increase Need of the hour is to venture into non-traditional practice areas, specialism and forming large structure by networking<br>
06
NETWORKING To enable Indian CA Firms to Grow Stronger by
Coming Together;
Pooling Resources & Expertise; and
Build a PAN India Presence.
To enable Indian network firms to tap global opportunities by growing big without compromising with their identity.<br>
Coming Together;
Pooling Resources & Expertise; and
Build a PAN India Presence.
To enable Indian network firms to tap global opportunities by growing big without compromising with their identity.<br>
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NETWORKING BENEFITS<br>
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NETWORKING 8 Networking per-se may not create new professional opportunities instantly.
The individual firms in network have to put their efforts to grow / add clientele etc.
Initially tangible benefits may not be visible, but eventually, if the model succeeds, the firms will stand to gain substantially.<br>
The individual firms in network have to put their efforts to grow / add clientele etc.
Initially tangible benefits may not be visible, but eventually, if the model succeeds, the firms will stand to gain substantially.<br>
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MODELS OF NETWORKING 9<br>
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Registered | Not Recognised | Partially Regulated MODELS OF NETWORKING Registered | To be Recognised | Regulated<br>
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ALLIANCE MODEL – A Name will be “ABCD” or “ABCD & Alliance”
ICAI will register and allot Alliance Registration Number (ARN)
Constituent firms can carry on practice as independent firms
Display of Alliance name in professional stationery permitted
Firms of one Alliance cannot become Member of another Alliance or a Network
Firms in Alliance can apply for empanelment separately as individual firms. Their coming together is basically for non-audit services. For audit practice, they all remain as independent practitioners
“Independence” will have to be kept in mind i.e.:
if one firm does statutory audit of an entity, another constituent firm cannot do internal audit.
If one firm does audit work, another constituent firm cannot perform accounting services of same client.
Rotation of audit amongst constituent firms not permitted 11 MODELS OF NETWORKING<br>
ICAI will register and allot Alliance Registration Number (ARN)
Constituent firms can carry on practice as independent firms
Display of Alliance name in professional stationery permitted
Firms of one Alliance cannot become Member of another Alliance or a Network
Firms in Alliance can apply for empanelment separately as individual firms. Their coming together is basically for non-audit services. For audit practice, they all remain as independent practitioners
“Independence” will have to be kept in mind i.e.:
if one firm does statutory audit of an entity, another constituent firm cannot do internal audit.
If one firm does audit work, another constituent firm cannot perform accounting services of same client.
Rotation of audit amongst constituent firms not permitted 11 MODELS OF NETWORKING<br>
12
Whatever is taboo for a firm under Code of Ethics, is taboo for the Alliance as well i.e., whatever cannot be done by a firm, cannot be done by Alliance as well
Referral of professional work and sharing of fees / cost permitted
A partner of firm that gets appointment will sign reports
In case delinquency occurs in a particular assignment, then the firms that have jointly executed the assignment will be accountable. Therefore, division of work needs to be well documented.
Firms are free to join and exit Alliance. Reconstitution to be registered with ICAI
If one firm leaves Alliance, it will not deprive other firms from completing the work
Alliance should have its own bye-laws which should not contradict CA Act, CA Regulations, Code of Ethics and Council Guidelines
Alliance shall have to submit to ICAI copy of internal agreement signed by an authorised partner of all constituent firms 12 MODELS OF NETWORKING ALLIANCE MODEL – A<br>
Referral of professional work and sharing of fees / cost permitted
A partner of firm that gets appointment will sign reports
In case delinquency occurs in a particular assignment, then the firms that have jointly executed the assignment will be accountable. Therefore, division of work needs to be well documented.
Firms are free to join and exit Alliance. Reconstitution to be registered with ICAI
If one firm leaves Alliance, it will not deprive other firms from completing the work
Alliance should have its own bye-laws which should not contradict CA Act, CA Regulations, Code of Ethics and Council Guidelines
Alliance shall have to submit to ICAI copy of internal agreement signed by an authorised partner of all constituent firms 12 MODELS OF NETWORKING ALLIANCE MODEL – A<br>
13
NETWORK MODEL – B1 Name will be “ABCD” or “ABCD & Affiliates” or “ABCD Network”
ICAI will register and allot Network Registration Number (NRN)
Constituent firms are bound by internal integration agreement and practice as independent firm, subject to internal agreement. Network’s decision prevails upon other firms
Display of Network name in professional stationery permitted
Firms of one Network cannot become Member of another Network or Alliance 13 MODELS OF NETWORKING<br>
ICAI will register and allot Network Registration Number (NRN)
Constituent firms are bound by internal integration agreement and practice as independent firm, subject to internal agreement. Network’s decision prevails upon other firms
Display of Network name in professional stationery permitted
Firms of one Network cannot become Member of another Network or Alliance 13 MODELS OF NETWORKING<br>
14
All firms belonging to Network can apply for empanelment separately as individual firms.
“Independence” issues will have to be kept in mind – same as alliance
All other guidelines same as Alliance 14 MODELS OF NETWORKING NETWORK MODEL – B1<br>
“Independence” issues will have to be kept in mind – same as alliance
All other guidelines same as Alliance 14 MODELS OF NETWORKING NETWORK MODEL – B1<br>
15
LEAD FIRM IN NETWORK MODEL – B2 Constituent firms will choose one of the firms as Lead firm e.g. if A & Co. is selected as Lead Firm, then name of Network will be “A & Co. & Affiliates” or “A & Co. Network”
ICAI will register and allot Network Registration Number (NRN)
Constituent firms are bound by internal agreement recognising one of the firms as Lead firm, depending upon specialism and expertise required for each assignment
Firms of one Network cannot become Member of another Network or Alliance
Lead firm is entitled to apply for empanelment in its own name, but by way of internal agreement, it will be on behalf of entire Network. When Lead firm applies for empanelment, other constituent firms cannot apply. ICAI will put in efforts to get recognition of the combined strength and resources
Individual firms take up professional work on their own, and a partner of said firm can sign the reports and documents
Referral of professional work and sharing of fees/ cost permitted 15 MODELS OF NETWORKING<br>
ICAI will register and allot Network Registration Number (NRN)
Constituent firms are bound by internal agreement recognising one of the firms as Lead firm, depending upon specialism and expertise required for each assignment
Firms of one Network cannot become Member of another Network or Alliance
Lead firm is entitled to apply for empanelment in its own name, but by way of internal agreement, it will be on behalf of entire Network. When Lead firm applies for empanelment, other constituent firms cannot apply. ICAI will put in efforts to get recognition of the combined strength and resources
Individual firms take up professional work on their own, and a partner of said firm can sign the reports and documents
Referral of professional work and sharing of fees/ cost permitted 15 MODELS OF NETWORKING<br>
16
In case delinquency occurs in a particular assignment, then the firms that have jointly executed the assignment will be accountable. Therefore, division of work needs to be well documented.
“Independence” & Code of Ethics issues - same as alliance and Network B1
A partner of lead firm will sign reports and certificates, if the lead firm gets appointment in its name
Firms will be bound by Network’s internal integration agreement. Reconstitution has to be registered with ICAI
If one firm leaves Network, it will not deprive other firms from completing the work. If Lead firm quits the network, after having secured professional work, then it will have to share the fees with other constituent firms. A clause to this effect can be incorporated in the internal agreement
Network will have its own bye-laws which should not contradict CA Act, CA Regulations, Code of Ethics and Council Guidelines 16 MODELS OF NETWORKING LEAD FIRM IN NETWORK MODEL – B2<br>
“Independence” & Code of Ethics issues - same as alliance and Network B1
A partner of lead firm will sign reports and certificates, if the lead firm gets appointment in its name
Firms will be bound by Network’s internal integration agreement. Reconstitution has to be registered with ICAI
If one firm leaves Network, it will not deprive other firms from completing the work. If Lead firm quits the network, after having secured professional work, then it will have to share the fees with other constituent firms. A clause to this effect can be incorporated in the internal agreement
Network will have its own bye-laws which should not contradict CA Act, CA Regulations, Code of Ethics and Council Guidelines 16 MODELS OF NETWORKING LEAD FIRM IN NETWORK MODEL – B2<br>
17
NAME 4<br>
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NAMING PROVISIONS FOR NETWORKING OF INDIAN CA FIRMS Naming provisions as are applicable for approval of firm / trade name under Regulation 190(2)(ii) for approval of Firm name:
Name approval will be subject to availability of proposed name.
Name of Firm should resemble name of member-firms or a combination of their acronym.
Firm should not bear the name of god/ goddess/ deity or which has no relationship with name of member-firms
Descriptive name not allowed
Names which smack of publicity will not be allowed.<br>
Name approval will be subject to availability of proposed name.
Name of Firm should resemble name of member-firms or a combination of their acronym.
Firm should not bear the name of god/ goddess/ deity or which has no relationship with name of member-firms
Descriptive name not allowed
Names which smack of publicity will not be allowed.<br>
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REGISTRATION 4<br>
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PRACTICE 4 Firms belonging to one Alliance can’t be allowed to become Member of another Alliance or Network. Firms belonging to one Network can’t be allowed to become Member of another Network or Alliance.<br>
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EMPANELMENT 4 For audit practice, they all remain as independent practitioners ICAI will put in efforts to secure recognition of the combined strength and resources<br>
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INDEPENDENCE Independence issues exists in all three Models viz. Alliance, Network Model and Lead Firm in Network Model
For example, if one firm does statutory audit of an entity, another firm in Alliance / Network cannot do internal audit.
Similarly, if one firm does central audit, another firm in Alliance / Network cannot do branch audit of same client.
If one firm does audit work, another firm in the Alliance / Network cannot perform accounting and non-audit services of same client.
Rotation of audit amongst constituent firms is not permitted 4<br>
For example, if one firm does statutory audit of an entity, another firm in Alliance / Network cannot do internal audit.
Similarly, if one firm does central audit, another firm in Alliance / Network cannot do branch audit of same client.
If one firm does audit work, another firm in the Alliance / Network cannot perform accounting and non-audit services of same client.
Rotation of audit amongst constituent firms is not permitted 4<br>
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CHARACTERISTICS 4 Bye-laws / agreement is entered by all firms, the provisions of which should not run contrary to CA Act, CA Regulations, ICAI Code of Ethics and Council Guidelines Referral of work and sharing of fees/ profits is permitted. Individual firms take up professional work on their own, and a partner of said firm can sign the reports and documents<br>
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ACCOUNTABILITY Alliance shall have to submit to ICAI copy of internal agreement signed by an authorized partner of all constituent firms. Network shall have to submit to ICAI copy of internal agreement signed by an authorized partner of all constituent firms A partner of firm that gets appointment will sign reports and Certificates A partner of firm that gets appointment will sign reports and certificates Whatever is taboo for a firm under Code of Ethics, is taboo for the Alliance as well i.e. whatever cannot be done by a firm, cannot be done by Alliance as well Whatever is taboo for a firm under Code of Ethics, is taboo for the Network as well i.e. whatever cannot be done by a firm, cannot be done by Network as well<br>
25
RECONSTITUTION Reconstitution has to be registered with ICAI<br>
26
EXIT/ CLOSURE If Lead firm quits the network, after having secured professional work, then it will have to share the fees with other constituent firms.
A clause to this effect can be incorporated in the internal Agreement<br>
A clause to this effect can be incorporated in the internal Agreement<br>
27
GUIDANCE BY COUNCIL OF ICAI The Council has given following further guidance to the members:
Firms might need to have detailed knowledge of other firms to make up their mind as to with which firm they will go for Alliance/ Networking. Therefore, data of firms would be made available for the members to view and take informed decision.
Any firm of Chartered Accountants can become a part of any one Alliance or any one Network. If it intends to become part of one Alliance, it cannot become part of a Network, and vice versa.
ICAI will consider providing a Model deed/ template.
Name of Alliance/ Network should be as per the naming guidelines. Names which resemble any of the existing firms or network will not be allowed. Brand name should be owned only by Indian citizen who is resident in India.
Alliance/ Network will be permitted as joint ventures for specific assignments. 27<br>
Firms might need to have detailed knowledge of other firms to make up their mind as to with which firm they will go for Alliance/ Networking. Therefore, data of firms would be made available for the members to view and take informed decision.
Any firm of Chartered Accountants can become a part of any one Alliance or any one Network. If it intends to become part of one Alliance, it cannot become part of a Network, and vice versa.
ICAI will consider providing a Model deed/ template.
Name of Alliance/ Network should be as per the naming guidelines. Names which resemble any of the existing firms or network will not be allowed. Brand name should be owned only by Indian citizen who is resident in India.
Alliance/ Network will be permitted as joint ventures for specific assignments. 27<br>
28
GUIDANCE BY COUNCIL OF ICAI Documents such as deeds, MOUs, forms can be signed by the Managing Partner of each of the member-firms and need not be signed by all partners.
Only firms and LLPs can become member-firms in Alliance/ Network. Individual practitioners are not permitted to be part of Alliance/ Network.
Every agreement, bye-law, MOUs, by whatever name called, must be filed with ICAI, without which registration will not be given.
The legal status of Alliance/ Network can be that of AOP as recognised by tax laws. Alliance/ Network may open bank accounts in its own name, obtain PAN and GST registration.
Alliance/ Network can take up non-attest assignments in its own name, if work is so assigned.
Alliance/ Network may prepare a common balance sheet and get the same audited.
Alliance/ Network can have website of its own. 28<br>
Only firms and LLPs can become member-firms in Alliance/ Network. Individual practitioners are not permitted to be part of Alliance/ Network.
Every agreement, bye-law, MOUs, by whatever name called, must be filed with ICAI, without which registration will not be given.
The legal status of Alliance/ Network can be that of AOP as recognised by tax laws. Alliance/ Network may open bank accounts in its own name, obtain PAN and GST registration.
Alliance/ Network can take up non-attest assignments in its own name, if work is so assigned.
Alliance/ Network may prepare a common balance sheet and get the same audited.
Alliance/ Network can have website of its own. 28<br>
29
No. of Networks (Total 121)<br>
30
Tuesday, February 2, 20XX Sample Footer Text 30<br>