Page 164 - Quick Insights Book 2022

Ann. 14 – Revised Guidelines of Network

For example, a larger structure of a group of entities representations to different Government Departments,
may be aimed only at facilitating the referral of work, PSUs, Autonomous bodies etc.
which in itself does not meet the criteria necessary to
constitute an Alliance. However, a larger structure of a 2.3 Name approval and registration of Alliance will be
group of Indian CA firms that have come together for centralized. Unique Alliance Registration Number (ARN)
mutual benefits may be deemed as an “Alliance” if so to be allotted to all Alliances by ICAI.
intended. 2.4 If one firm in the Alliance is performing Central Statutory
audit of an entity, another firm in the same Alliance
1.2 Where the larger structure of group of entities is aimed
at wider co-operation amongst professionals, wider cannot be allowed to perform internal/ concurrent/ branch
professional reach and wider geographical presence, audit of the same entity. However, both the Firms be
and it is clearly aimed at profit or cost sharing amongst allowed simultaneously to perform branch audits or
the entities within the structure, it may be an Alliance. concurrent audits of different branches if no firm in the
However, the sharing of costs does not in itself create Alliance is central statutory auditor.
an Alliance. Further, an association between firms to 2.5 Rotation of audit amongst the constituent firms in an
jointly provide a service or develop a product may in Alliance is not permitted.
itself create an Alliance.
2.6 The provisions of Section 144 of the Companies Act,
1.3 Where the larger structure of a group of entities is aimed 2013 which restricts auditor from rendering other
at co-operation and the entities within the structure share services to the same client, will apply to all constituent
professional work and fees, without common ownership, firms in the Alliance.
control or management, it may be an Alliance.
2.7 Standard on Quality Control (SQC) 1, “Quality Control
1.4 Where the larger structure of a group of entities is aimed for Firms that Perform Audits and Reviews of Historical
at co-operation and the entities within the structure share Financial Information, and Other Assurance and Related
the use of a common name, it may be an Alliance. A Services Engagements” issued by ICAI is applicable to
firm which is part of Alliance, may project itself as “An firms and Alliances.
Independent Member Firm of A B” or “An Independent
Member Firm of A B & Alliance”. 2.8 In a situation where the client or empanelment/
appointment authority awards work based on the
1.5 If an entity does not belong to an Alliance, it should not combined strength of Alliance, a subsequent change
give the appearance that it belongs to an Alliance in any in constitution of the Alliance will not debar rest of the
manner. constituent firms from executing the work. In a worst

1.6 Several factors may contribute in reaching a conclusion, case scenario, if the Alliance is unable to discharge the
whether a structure constitutes an Alliance or not. A work because one or more firms have left, it can always
written arrangement demonstrating an intention to co- resign from the assignment.
operate and create an Alliance would play a significant 2.9 Alliances can register themselves as AOPs as recognised
role, along with the registration with the ICAI. under income-tax laws. Alliances may form AOP and
Appendix-2 open bank account in their own name, obtain PAN
(Referred to in para 4.7 of the Guidelines for Alliance and and GST registration. Income received by AOP can
forms an integrated part of the Guidelines) be distributed as per MOU entered into amongst the
member-firms of Alliance. IT returns will have to be filed
by AOP.
Modalities of Working
2.10 AOPs can prepare common balance sheet and get it
2.1 Alliances may not be given professional assignment in audited.
their own name, but their combined strength may be
recognised. Potential clients can assign non-attestation Appendix-3
work in the name of Alliance. Consistent efforts will be (Referred to in para 5.1 of the Guidelines for Alliance and
made by ICAI to enable Alliances to secure work in their forms an integrated part of the Guidelines)
own name.
2.2 While submitting a bid, individual member firms Naming the Alliance & Name Approval
belonging to the Alliance may be assessed in terms of 3.1 The Alliance can be named as “A B” or “A B & Alliance”
their own strength. All firms belonging to Alliance can
apply for empanelment separately as individual firms. 3.2 The member firms of Alliance can project themselves
ICAI will make efforts to secure recognition to the as “An Independent Member Firm of A B” or “An
model of practice from appointing authorities by making Independent Member Firm of A B & Alliance”, in their
professional stationery and letterheads.

Quick Insights on Professional Opportunities for Chartered Accountants 151