Page 160 - 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
7 Accountability In case delinquency occurs in In case delinquency occurs in a In case delinquency occurs in a
a particular assignment, then particular assignment, then the particular assignment, then the
the firms that have jointly firms that have jointly executed the firms that have jointly executed the
executed the assignment will assignment will be accountable. assignment will be accountable.
be accountable. Therefore, Therefore, division of work needs Therefore, division of work needs
division of work needs to be to be well documented. to be well documented.
well documented.
Whatever is taboo for a firm under Whatever is taboo for a firm under
Whatever is taboo for a firm Code of Ethics, is taboo for the Code of Ethics, is taboo for the
under Code of Ethics, is taboo Network as well i.e. whatever Network as well i.e. whatever
for the Alliance as well i.e. cannot be done by a firm, cannot cannot be done by a firm, cannot
whatever cannot be done by a be done by Network as well be done by Network as well
firm, cannot be done by Alliance
as well A partner of firm that gets A partner of lead firm will sign
appointment will sign reports and reports and certificates, as it is
A partner of firm that gets certificates the lead firm which will get the
appointment will sign reports appointment in its name
and certificates Network shall have to submit to
ICAI copy of internal agreement Network shall have to submit to
Alliance shall have to submit to signed by an authorised partner of ICAI copy of internal agreement
ICAI copy of internal agreement all constituent firms signed by an authorised partner of
signed by an authorised partner all constituent firms
of all constituent firms.
8 Reconstitution Firms are free to join and exit Firms are bound by Network’s Firms are bound by Network’s
Alliance. internal integration agreement. internal integration agreement.

Reconstitution has to be Reconstitution has to be registered Reconstitution has to be registered
registered with ICAI with ICAI with ICAI
9 Exit/ closure Much more easier to quit the Easy to quit the arrangement Easy to quit the arrangement
arrangement
If one or more firms quit the If one or more firms quit the
If one or more firms quit the Network, it will not deprive the Network, it will not deprive the
Alliance, it will not deprive the remaining firms from doing the remaining firms from doing the
remaining firms from doing the work they have already secured by work they have already secured
work they have already secured virtue of Network. by virtue of Network. If Lead firm
by virtue of Alliance. 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

Lead Firm model – B2

The Network guidelines was issued by the Council in the year 2005 and thereafter was amended in the year 2011. These guidelines
have not evinced desired level of interest from firms, so much so that till date close to 100 networks have been formed. The Group
considered the probable reasons as to why firms are not forming a Network, which are illustrated hereunder:
• Network amongst Indian CA firms is not recognized by appointing authorities
• Confusion as to under which legislation, a Network should be registered
• Network cannot take up assignment in its own name
• Fear of being over-shadowed by Network, thereby loss of identity by individual firms.

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