Page 175 - Quick Insights Book 2022

Ann. 14 – Revised Guidelines of Network

in the prescribed Form “BB‟ shall be duly filed. Every 8.4 A Network may advertise the Network to the extent
agreement, bye-law, MOUs, by whatever name called, permitted by the Advertisement Guidelines issued by the
must be filed with ICAI, without which registration will not ICAI. The firms constituting the Network are permitted to
be given. The ICAI shall register or reject the application use the words “A Member Firm of A B” or “A Member
within 30 days of filing the application or submission of Firm of A B & Affiliates” or “A Member Firm of A B
information as desired by the ICAI. Network” on their professional stationery. The Council
will make appropriate changes to this effect in Code of
6.3 In order to use the name of a Network within the Ethics.
meaning of the Network Guidelines, its registration with
the ICAI is mandatory. A Network Registration Number 9. Consent of Clients
(NRN) and a certificate of registration to this effect will
be issued by the ICAI. The effect of registration of a Network with the ICAI will
be deemed to be a public notice of the Network and,
6.4 Unregistered Networks, if any, are not permitted to derive therefore, consent of client will be deemed to have been
undue advantage over registered networks. However, all obtained.
restrictions imposed by Network Guidelines on registered
Networks will be applicable to them. Hence, they are
advised not to operate unless registered with ICAI. 10. Framework of internal byelaws of a Network
A Networking arrangement, as referred to in para 3
7. Change in constitution of a registered Network above may include the following (illustrative only):
7.1 In case of change in the constitution of a registered (i) Appointment of one of the firms as the Lead Firm
Network on account of any entry into or exit from or to act as a facilitator on behalf of the member-
a discontinuation of the Network, the Network shall firms of the Network. The same may be agreed
communicate the same to the ICAI by filing a prescribed to by the member-firms by way of an internal
Form “CC‟ within a period of thirty (30) days from agreement, a copy of which will have to be filed
the date of such change and a revised certificate of with the ICAI. The constituent firms will be at liberty
registration will be issued by the ICAI in this regard. In to choose a different constituent firm as the Lead
case, an intimation is received at ICAI beyond 30 days, firm to represent the Network, depending upon the
then the change in constitution or discontinuation, as the specialism and expertise required for a particular
case may be, will be reckoned from the date of receipt assignment.
of intimation at ICAI.
(ii) Appointment of a Managing Committee, from
7.2 The Network will cease to exist, in case only one entity among the managing partners of the member
remains in Network on account of change in constitution firms of the Network and the terms and conditions
of Network. under which it should function. The minimum and
maximum number of members of the Managing
8. Ethical Compliance Committee shall also be agreed upon.
8.1 Once a Network as referred to in para 4.1 is registered (iii) Administration of the Network
with the ICAI, it will be necessary for such a Network
and its constituent entities to comply with the Code (iv) Contribution of membership fees to meet the cost
of Ethics prescribed by ICAI and relevant Council of the administration of the Network.
Guidelines. (v) Identifying a partner of any of the member
firms of the Network to be responsible for the
8.2 If one firm of the network is the statutory auditor of an
entity then the associate [including the networked firm(s)] administration of the Network
or the said firm directly/ indirectly shall not accept the (vi) Dispute settlement procedures through arbitration
internal audit or book-keeping or such other professional and conciliation and assumption of liabilities
assignments which are prohibited for the statutory
auditor firm. If one firm does audit work, another firm in (vii) Development of training materials for members of
the Network cannot perform non-audit services of same the Network
client. (viii) Development and maintenance of data bases

8.3 In those cases where rotation of firms is prescribed by relevant for different types of assignments
any regulatory authority, no member firm of a Network (ix) Library
can accept appointment as an auditor in place of any
member firm of the Network which is retiring. (x) Appointment of a technical director to whom
references can be made

162 Quick Insights on Professional Opportunities for Chartered Accountants