Page 170 - Quick Insights Book 2022

Ann. 14 – Revised Guidelines of Network

1.2 Where the larger structure of group of entities is aimed cannot be allowed to perform internal/ concurrent/ branch
at wider co-operation amongst professionals, sharing audit of the same entity. However, both the Firms be
of common name of network, pooling of knowledge, allowed simultaneously to perform branch audits or
guidance, training, resources and infrastructure, sharing concurrent audits of different branches if no firm in the
of methodologies, practices, strategies, common quality Network is central statutory auditor.
control policies and procedures and wider geographical
presence, and it is clearly aimed at profit or cost sharing 2.5 Rotation of audit amongst the constituent firms in a
amongst the entities within the structure, it may be a Network is not permitted.
Network. 2.6 The provisions of Section 144 of the Companies Act,
2013 which restricts auditor from rendering other
1.3 Where the larger structure of a group of entities is aimed
at co-operation and the entities within the structure share services to the same client, will apply to all constituent
common ownership, control or management, it may be firms in the Network.
a Network. 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 a Network. A Services Engagements” issued by ICAI is applicable to
firm which is part of Network, may project itself as “A firms and networks.
Member Firm of A B” or “A Member Firm of A B & 2.8 In a situation where the client or empanelment/
Affiliates” or “A Member Firm of A B Network”. appointment authority awards work based on the
1.5 If an entity does not belong to a Network, it should not combined strength of Network, a subsequent change
give the appearance that it belongs to a Network in any in constitution of the Network will not debar rest of the
manner. constituent firms from executing the work. In a worst
case scenario, if the Network is unable to discharge the
1.6 Several factors may contribute in reaching a conclusion, work because one or more firms have left, it can always
whether a structure constitutes a Network or not. A resign from the assignment.
written arrangement demonstrating an intention to co-
operate and create a Network would play a significant 2.9 Networks can register themselves as AOPs as recognised
role, along with the registration with the ICAI. under income-tax laws. Networks may form AOP and
open bank account in their own name, obtain PAN
Appendix-2 and GST registration. Income received by AOP can
(Referred to in para 4.7 of the Guidelines for Networking be distributed as per MOU entered into amongst the
and forms an integrated part of the Guidelines) member-firms of Network. 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 Globally Networks are not given work, but their combined audited.
strength is recognised. Potential clients can assign non- Appendix-3
attestation work in the name of Network. Consistent (Referred to in para 5.1 of the Guidelines for Networking
efforts will be made by ICAI to enable networks to and forms an integrated part of the Guidelines)
secure work in their own name.
2.2 All firms belonging to Network can apply for empanelment Naming the Network & Name Approval
separately as individual firms. ICAI will make efforts for
credit points for combined strength to be given based 3.1 The Network can be named as “A B” or “A B & Affiliates”
on the mechanism in vogue with C&AG. Appropriate OR “A B Network”
changes can be made in MEF. ICAI will make all out 3.2 The member firms of Network can project themselves
efforts to secure recognition to the model of practice as “A Member Firm of A B” or “A Member Firm of A B
from appointing authorities by making representations to & Affiliates” or “A Member Firm of A B Network”, in their
different Government Departments, PSUs, Autonomous professional stationery and letterheads.
bodies etc.
3.3 Following naming provisions as are applicable for
2.3 Name approval and registration of Network will be approval of firm/ trade name under Regulation 190(2)
centralized. Unique Network Registration Number (NRN) (ii) will be applicable for approval of Network name:
to be allotted to all Networks by ICAI.
• Name approval will be subject to availability of
2.4 If one firm in the Network is performing Central Statutory proposed name.
audit of an entity, another firm in the same Network

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