Page 159 - Quick Insights Book 2022

Ann. 14 – Revised Guidelines of Network

S. Criteria Approach A Approach B1 Approach B2
No. Alliance Model Network Model Lead Firm Model
4 Empanelment All firms in Alliance can apply All firms belonging to Network can Lead firm is entitled to apply for
for empanelment separately as apply for empanelment, separately empanelment in its own name,
individual firms. Their coming as individual firms. but by way of internal agreement,
together is basically for nonaudit it will be on behalf of entire
services. For audit practice, ICAI will put in efforts to secure Network. When Lead firm applies
they all remain as independent recognition of the combined for empanelment, other constituent
practitioners strength and resources. firms cannot apply.
ICAI will put in efforts to secure
recognition of the combined
strength and resources
5 Conflict Conflict exists e.g. if one firm Conflict exists e.g. if one firm Conflict exists e.g. if one firm
does statutory audit of an entity, does statutory audit of an entity, does statutory audit of an entity,
another firm in Alliance cannot another firm in Network cannot another firm in Network cannot
do internal audit. If one firm do internal audit. If one firm does do internal audit. If one firm does
does audit work, another firm audit work, another firm in the audit work, another firm in the
in the Alliance cannot perform Network cannot perform non-audit Network cannot perform non-audit
non-audit services of same services of same client. Rotation of services of same client. Rotation
client. Rotation of audit amongst audit amongst constituent firms will of audit amongst constituent firms
constituent firms will not be not be permitted will not be permitted
permitted
6 Characteristics Firms come together for mutual Firms come together for mutual Firms come together for mutual
benefits Individual firms take up benefits by pooling resources, benefits by pooling resources,
professional work on their own showcase their combined strength, showcase their combined strength,
and have uniform policies, and have uniform policies,
Since all constituents are technology and collaterals, and technology and collaterals, and
Indian CA firms, referral of work showcase themselves as one showcase themselves as one
and sharing of fees/ profits is big unit Quality control is well big unit Quality control is well
permitted.
documented and complied with, documented and complied with,
They should have own bye- which is applicable to network as which is applicable to network as
laws, the provisions of which well as to individual constituent well as to individual constituent
should not run contrary to CA firms. firms.
Act, CA Regulations, ICAI Code I ndividual f irms t ake up Individual firms take up
of Ethics and Council Guidelines
professional work on their own, professional work on their own,
and a partner of said firm can sign and a partner of said firm can sign
the reports and documents the reports and documents
Since all constituents are Indian Since all constituents are
CA firms, referral of work and Indian CA firms, referral of work
sharing of fees/ profits is permitted. and sharing of fees/ profits is
permitted.
Bye-laws / agreement is entered
by all firms, the provisions of which Bye-laws / agreement is entered
should not run contrary to CA Act, by all firms, the provisions of
CA Regulations, ICAI Code of which should not run contrary
Ethics and Council Guidelines to CA Act, CA Regulations, ICAI
Code of Ethics and Council
Guidelines

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