Page 169 - Quick Insights Book 2022

Ann. 14 – Revised Guidelines of Network

intimation is received at ICAI beyond 30 days, then the (iii) Contribution of membership fees to meet the cost of the
change in constitution or discontinuation, as the case administration of the Network.
may be, will be reckoned from the date of receipt of
intimation at ICAI. (iv) Identifying a partner of any of the member firms of the
Network to be responsible for the administration of the
7.2 The Network will cease to exist, in case only one entity Network
remains in Network on account of change in constitution
of Network. (v) Dispute settlement procedures through arbitration and
conciliation and assumption of liabilities
8. Ethical Compliance (vi) Development of training materials for members of the
Network
8.1 Once a Network as referred to in para 4.1 is registered
with the ICAI, it will be necessary for such a Network (vii) Development and maintenance of data bases relevant
and its constituent entities to comply with the Code for different types of assignments
of Ethics prescribed by ICAI and relevant Council
Guidelines. (viii) Library
8.2 If one firm of the network is the statutory auditor of an (ix) Appointment of a technical director to whom references
entity then the associate [including the networked firm(s)] can be made
or the said firm directly/ indirectly shall not accept the (x) Development of software and tools for the use of
internal audit or book-keeping or such other professional member firms
assignments which are prohibited for the statutory
auditor firm. If one firm does audit work, another firm in (xi) Resource sharing arrangements
the Network cannot perform non-audit services of same
client. 11. Repeal and saving
8.3 In those cases where rotation of firms is prescribed by The Networking Guidelines issued in 2011 shall stand withdrawn
any regulatory authority, no member firm of a Network from this date.
can accept appointment as an auditor in place of any
member firm of the Network which is retiring. 12. Existing Networks and affiliations registered with the
ICAI
8.4 A Network may advertise the Network to the extent
permitted by the Advertisement Guidelines issued by the The existing Networks registered with the ICAI will be
ICAI. The firms constituting the Network are permitted to deemed to be registered under the new Guidelines as per its
use the words “A Member Firm of A B” or “A Member corresponding provisions. The Network should comply with the
Firm of A B & Affiliates” or “A Member Firm of A B new Guidelines on a prospective basis.
Network” on their professional stationery. The Council
will make appropriate changes to this effect in Code of Appendix-1
Ethics. (Referred to in para 4 of the Guidelines for Networking
and forms an integrated part of the Guidelines)
9. Consent of Clients
Concept
The effect of registration of a Network with the ICAI will be
deemed to be a public notice of the Network and, therefore, 1.1 To enhance their ability to provide professional services,
consent of client will be deemed to have been obtained. firms frequently form larger structures of a group
of entities with other entities. Whether these larger
structures create a Network, depends on the particular
10. Framework of internal byelaws of a Network
facts and circumstances and does not depend on
A Networking arrangement, as referred to in para 3 above may whether the entities are legally separate and distinct. For
include the following (illustrative only): example, a larger structure of a group of entities may be
aimed only at facilitating the referral of work, which in
(i) Appointment of a Managing Committee, from among itself does not meet the criteria necessary to constitute
the managing partners of the member firms of the a Network. Alternatively, a larger structure might be such
Network and the terms and conditions under which it that a group of Indian CA firms that have come together
should function. The minimum and maximum number for mutual benefits by pooling resources, showcase
of members of the Managing Committee shall also be their combined strength and have uniform policies,
agreed upon. technology and collaterals, and showcase themselves
(ii) Administration of the Network as one big unit, and, consequently, may be deemed to
be a Network, if so intended.

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