Page 176 - Quick Insights Book 2022

Ann. 14 – Revised Guidelines of Network

(xi) Development of software and tools for the use of written arrangement demonstrating an intention to co-
member firms operate and create a Network would play a significant
role, along with the registration with the ICAI.
(xii) Resource sharing arrangements
Appendix-2
Appendix-1 (Referred to in para 4.7 of the Guidelines for Networking
(Referred to in para 4 of the Guidelines for Networking with Lead Firm concept and forms an integrated part of
with Lead Firm Concept and forms an integrated part of the Guidelines)
the Guidelines)
Modalities of Working
Concept
2.1 Globally Networks are not given work, but their combined
1.1 To enhance their ability to provide professional services, strength is recognised. Potential clients can assign non-
firms frequently form larger structures of a group attestation work in the name of Network. Consistent
of entities with other entities. Whether these larger efforts will be made by ICAI to enable networks to
structures create a Network, depends on the particular secure work in their own name. Till such time, a lead
facts and circumstances and does not depend on firm in the Network can secure work in its name on
whether the entities are legally separate and distinct. For behalf of the Network.
example, a larger structure of a group of entities may be
aimed only at facilitating the referral of work, which in 2.2 The constituent firms will be at liberty to choose a
itself does not meet the criteria necessary to constitute different constituent firm as the Lead firm to represent
a Network. Alternatively, a larger structure might be such the Network, depending upon the specialism and
that a group of Indian CA firms that have come together expertise required for a particular assignment.
for mutual benefits by pooling resources, showcase
their combined strength and have uniform policies, 2.3 By way of an internal agreement amongst the firms,
technology and collaterals, and showcase themselves one of the firms will be chosen as the Lead firm. Only
as one big unit, and, consequently, may be deemed to the Lead firm can apply for empanelment and not the
be a Network, if so intended. other member-firms. While submitting a bid, the lead firm
belonging to the Network may get credit points for the
1.2 Where the larger structure of group of entities is aimed combined resources of the whole of the Network firms.
at wider co-operation amongst professionals, sharing ICAI will make efforts for credit points for combined
of common name of network, showcasing one firm as strength to be given based on the mechanism in vogue
the lead firm , pooling of knowledge, guidance, training, with C&AG. Appropriate changes can be made in MEF.
4
resources and infrastructure, sharing of methodologies, ICAI will make all out efforts to secure recognition to the
practices, strategies, common quality control policies model of practice from appointing authorities by making
and procedures and wider geographical presence, and representations to different Government Departments,
it is clearly aimed at profit or cost sharing amongst the PSUs, Autonomous bodies etc.
entities within the structure, it may be a Network.
2.4 The Network firms may decide amongst themselves
1.3 Where the larger structure of a group of entities is aimed through agreement the strategy for execution of the
at co-operation and the entities within the structure share professional work. They may distribute the work on the
common ownership, control or management, it may be basis of expertise possessed by each firm or on the
a Network. basis of geographical location of the firms or on any
basis mutually acceptable to them. They will also decide
1.4 Where the larger structure of a group of entities is aimed how the fees will be distributed amongst the firms, on
at co-operation and the entities within the structure share the basis of quantum of work, mandays and expenses
the use of a common name, it may be a Network. A involved. Initially, some firms may sacrifice a bit in order
firm which is part of Network, may project itself as “A to sustain and continue in the Network, but gradually
Member Firm of A B” or “A Member Firm of A B & when work starts flowing in, all firms are benefitted and
Affiliates” or “A Member Firm of A B Network” can grow bigger. More importantly, when big professional
1.5 If an entity does not belong to a Network, it should not work starts flowing in, it will enhance the competency of
give the appearance that it belongs to a Network in any all the firms in Network. Capacity building and capability
manner. building will take care by itself.
1.6 Several factors may contribute in reaching a conclusion, 2.5 Name approval and registration of Network will be
whether a structure constitutes a Network or not. A centralized. Unique Network Registration Number (NRN)
to be allotted to all Networks by ICAI.

4 Lead Firm concept explained in Modalities under Appendix-2 of Guidelines

Quick Insights on Professional Opportunities for Chartered Accountants 163