Page 156 - Quick Insights Book 2022

Ann. 14 – Revised Guidelines of Network

1.9 Accordingly, Outreach Programmes were held in January, 2.3 The Council of ICAI, with a view to ensuring small and
2021 and views of members were collected. The same medium practitioners (SMPs) to stay relevant with the
were considered by the Council at its 397th meeting times, has enabled the CA firms to –
held on 9th-11th January, 2021 at Kumarakom, Kerala
and thereafter at its 398th meeting held on 9th-10th • form LLPs so as to overcome the limitation of
February, 2021 at New Delhi. Accordingly, the existing number of partners;
Guidelines have been revised and the same are given • merge so as to form a larger structure, with a
at Annexure I “The Guidelines for Alliance”, Annexure II provision to demerge within 5 years, if merger is
“The Guidelines for Networking” (revised) & Annexure III not meeting the objective;
“The Guidelines for Networking with Lead Firm concept”
to this Paper. • establish multidisciplinary firms, working together
with other professionals such as Cost Accountants,
1.10 The Council decided that the the existing Guidelines be Company Secretaries, Advocates, Engineers,
revised in the light of above and brought into force from Architects and Actuaries (the modalities for same
9th February, 2021, and an appropriate ecosystem be are presently being developed and will be notified
developed in the Self Service Portal for registration and in due course);
regulation of the Alliance, the Network and the Lead Firm
in Network Models. • form Network with other firm(s).

2. Concerns relating to growth of Indian CA firms 3. Why Networking?
2.1 The practising CA firms in India have generally done 3.1 It is of paramount importance to enable Indian
well. The common features noticed with Indian CA CA Firms to come together and grow stronger
profession are – so that they can serve the need of the country
as we move to become a $5 trillion economy
• Majority CA firms are small sized firms. and also render services in the global market.
The Government of India has a firm commitment
• A large number of firms have confined practice to
audit and taxation. for export of accounting services and has listed
same as one of the champion sectors for export
• Many firms have audits allotted through the ICAI- promotion. It is also in line with the vision
PDC empanelment process. expressed by Hon’ble Prime Minister of India when
he addressed the profession from the precincts
• Members have attachment with their firm name of I.G. Indoor Stadium, New Delhi on the 68th
and do not want to go for Merger or Network due Chartered Accountants Day held on 1st July, 2017,
to fear of loss of identity. and called upon the CA profession to form 100 big
• When client grows bigger, they tend to switch over Indian firms.
to a larger firm with an expectation that a larger 3.2 The Indian CA firms have to be given opportunity
firm will better cater to the diversified and growing for pooling resources, expertise and build a Pan
needs. India presence. The focus eventually ought to be

• Firms that have ventured into newer areas of on how to enable Indian network firms to tap global
practice have found success and have been able opportunities by growing big, without compromising
to scale up. with their identity.
• Firms that have developed expertise or 3.3 It is acknowledged that no model of network will be
specialisation have prospered. successful, unless the firms meet some reasonable
economic considerations. Unless networking can
• Firms that have networked and formed a larger result in substantially more earnings to all the
structure have by and large scaled up. firms in the network, any model presented to
2.2 Technology is gradually replacing human intervention. the firms will only remain on paper. Therefore,
Competition from other professionals has been a it is imperative that ICAI through its relevant
perennial challenge and will continue to be so in areas Committees should make all out efforts to secure
other than audit. Merger of public sector banks and recognition to the Network model of practice from
consequent reduction in number of branches, increase appointing authorities by making representations
of tax audit limits, etc are also factors to be taken note to different Government Departments, PSUs,
of. autonomous bodies etc. Initially, the networks may

Quick Insights on Professional Opportunities for Chartered Accountants 143