capacity building of ca firms by :ca amresh vashisht, fca, disa capacity building of ca firms by :ca...
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Capacity Building of CA Firms BY :CA AMRESH VASHISHT, FCA, DISA
Capacity Building of CA Firms BY :CA AMRESH VASHISHT, FCA, DISA
Moderator,http://in.groups.yahoo.com/group/ICAI_CIRC_MEERUT_CAThe largest 25000 CA Members GROUP in the WORLD .
1 1 5, Chappel Street, Meerut Cantt, UP, INDIA. Phone: 0 1 2 1-2 6 6 1 9 4 6. Cell: 9 8 3 7 5 1 5 4 3 2.
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Present Scenario
Over Dependence on Statute Based Audits- Tax Audits- Bank Audits
Increased Cost of Attest Function Increasing Compliance with Technical Standards Stagnated Fees Structure Reduction in availability of Quality Human Talent
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Have I asked these questions to myself ?
Has my firm identified its business goals for 2011 (and beyond)?
Am I prepared for changes due to DTC, IFRS, Companies Act, GST, SAP?
Have I thought about my competitors and how I might lose out my clients to them?
Have I developed any long-term strategy for securing my position in the market?
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4
Is there an increase in competition?
44000
44500
45000
45500
46000
46500
2005 2006 2007 2008 2009
TO
TA
L N
O. O
F F
IRM
S
YEAR OF THE LIST OF FIRMS
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COMPOSITION OF PRACTISING UNITS IN INDIA ( AS ON 1st APRIL,2010)
No of Partners Western Southern Eastern Central NorthernTotal All
India
Percentage composition
1 ie; proprietary 13216 4304 3272 4932 6277 32001 70.83%
2 TO 4 3489 2394 1069 2335 2269 11556 25.58%
5 TO 7 261 226 131 215 315 1148 2.54%
8 TO 10 64 87 50 54 105 360 0.80%
11 TO 13 28 18 10 15 26 97 0.21%
14 TO16 3 1 3 2 0 9 0.02%
17 TO 19 5 1 3 1 2 12 0.03%
Total 17066 7031 4538 7554 8994 45183 100.00%
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Important Points to achieve your Vision
Invest time for DevelopmentRealise your True ValueIdentify what client needs, not push what
you haveBe Proactive, rather than being reactivePosition yourself appropriately
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Important Points to achieve your Vision
Specialise in One areaValue added Service, over compliance relatedQuality of DeliverablesInvest in Knowledge domain, Technology &
InfrastructureBe an Entrepreneur, prepared to Invest FirstRevenue to profit Ratio ( 25 to 40% )
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Small is Beautiful but big is beneficial
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Who will Grow?
Honey Bee Hive
New age Polyclinic / Hospital
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ICAI Initiative
Capacity Building Measures 2005
Networking MergersManagement Consultancy
Services Companies
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Net working of CA Firms
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What do I gain by Networking or Merging?
Extending the base of current offerings into new markets or territories
Securing new customers Acquiring complementary
capabilities Leveraging efficiencies of
scale
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Has Networking been Successful? (AS ON April 2010)
RegionNetwork Names
Approved
Networks Registered with
the Institute
Total No. of Firms in the Registered Networks
ERO 7 7 16
NRO 18 15 43
WRO 15 9 27
SRO 8 5 19
CRO 11 5 19
Total 59 41 124
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What is the Concept of Net working?
Joining together of different CA firms with the object of
display of collective resources.
Each Firm to retain Independent Status
Network to act as facilitation and not to do business
on own.
Registration with ICAI.
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What should I look for when Net working ?
Cost & time effective service
To satisfy the multi-locational clients
To Provide & accelerate multi-disciplinary services
Empowering the small firms
Consolidation of small & medium firms
Dissemination of Professional Expertise & Experience
Training & Sharing Methodologies
Networking will lead to Merger of Firms
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Can a Proprietor also join a network?
Proprietary/partnership firms as well as individual Members are permitted to form a Network.
Can I join more than one Formal network?
Allowed to join only one Formal network.
Can we pool all the resources for pitching of work?
Can show combined strength of network members as a pool of resources, expertise, manpower & location.
What are the Guidelines of ICAI?
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….What are the Guidelines of ICAI?
Who can sign the Report? Only the firms forming Network are eligible to issue / sign / attest any
Certificate / Report / professional document / assignment.
Who will be liable for Disciplinary action? In case of alleged violation of the provisions of the CA Act, Regulations
framed there under, guidelines/direction laid down by the Council from time to time and Code of Ethics by the Network firm, the proprietary/partnership firms/individual Member constituting the Network would be answerable.
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….What are the Guidelines of ICAI?
What are the Procedures for formation? A declaration to be submitted in prescribed format.
Distinct name which should be approved by ICAI in accordance with the guidelines.
To distinguish a “Network” from a “firm” of Chartered Accountants, the words “& Affiliates” should be used after the name of the network and the words “& Co.” /“& Associates” should not be used.
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….What are the Guidelines of ICAI?
Can a Network Advertise? Network is neither permitted to advertise(except as permitted for
members) nor to use logo and status quo as regards solicitation and advertisement shall be maintained.
The firms constituting the network is permitted to use the words “Affiliates/Members of ……..” (a formal network of Indian CA firms) on their professional stationery.
Can I disassociate from the Network? Firm may disassociate with network by sending the declaration and the
concurrence/acceptance by other firms of the network firm shall not be required.
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Are there any ethical compliances required?
Internal - Statutory Auditor relationship cannot exist
Cap on Management Consultancy Fees
Rotation to be applicable where prescribed.
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Mergers of CA Firms
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INTRODUCTION TO MERGERS & DEMERGERS
In the Corporate world, merger and demerger have become universal practices for securing survival, growth, expansion and globalisation of enterprise and achieving multitude objectives.
Merger is the fusion of two or more existing companies.On the other hand, demerger signifies a movement in the
company just opposite to merger.To incorporate the spirit of Corporate World and to imbibe
the consultation creed, probably the Council of ICAI used the term `merger’ and `demerger’ of C.A. Firms.
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Has Mergers been successful ? ( May 2010)
Region
Total Merger till date
Total No of Partners as on date
Total No of Prop as on date
Number of Firms involved in Merger
(Active today)
Number of Firms involved in De Merger
(Active today)
PartnerSole proprietary Partner
Sole proprietary
Western 364 850 7 101 228 11 21
Southern 154 470 6 63 88 3 12
Eastern 179 511 5 41 114 10 22
Central 385 1045 11 86 306 15 51
Northern 470 1351 5 107 322 18 47
TOTAL 1552 4227 34 398 1058 57 153
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STATUS OF MERGER / DEMERGER (as on May, 2010)
Share of CA Firms
43 1552
13594
32198
0
5000
10000
15000
20000
25000
30000
35000
Network Merger PartnershipFirm
ProprietoryFirm
Value
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Mergers & Demergers
o Merger Agreement has to be filed with the Institute within 30 days from the date of Agreement.
o The Reconstitution Agreement/Partnership Deed shall be filed with the Registrar of Firms.
o After the merger of the firms, the Institute will freeze the names of the merging firm and shall not allot the same names to any other firm.
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Advantages
Pooling of resources – Expertise, Experience, Efficiency. Demand for one-stop-shop service can be met
Capability to handle assignments of varying complexity and dynamics
Exposure to various clients builds confidence Risk bearing capacities increases Dependence on large clients reduces Professional standing improves/Helps to attract and retain talent Client servicing capabilities improves Ability to provide training Investment in technology/infrastructure Promotes specialisation
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DOES ONE WANT SUCH A MERGER ?
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What are the key factors holding back members from Merging?
Meeting of mindset. Selection of firm – finding the right fit Lack of vision The merged entity losses its trade name and also seniority forever. Lurking fear that the relationship with the firm pre-merger may not
continue to be the same Reluctance to share specialization Conservative thinking Difficulty in trusting the other professional’s competencies
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Success
…Do’s Remove I from our minds and think for WE Senior / Junior concept must be redefined Sourcing & Execution must be the core areas
Purpose of Merger should not be only for PSU / Bank Work
Private Sector Opportunities should be tapped Rules for Admission & Retirement of Partner must be defined
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Merger
Models of Merger
We could have three models
• Model I : Profit Centre
• Model II : Pool Centre
• Model III : Responsibility Centre
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ICAI DATA ANALYSIS-Partner/ Prop. As on I st July 2010
Partner Counts Western South Central North East Total Percentage
Proprietor 1 13371 4488 4898 6454 3359 32570 70.46%
Partner 2 2363 1626 1443 1475 709 7616 16.47%
Partner 3 848 536 632 615 278 2909 6.29%
Partner 4 318 242 218 299 118 1195 2.85%
Partner 5 154 107 146 200 85 692 1.49%
Partner 6 90 69 78 92 36 365 0.78%
Partner 7 50 49 51 84 34 268 0.57%
Partner 8 30 39 36 58 26 189 0.40%
Partner 9 21 33 20 49 15 138 0.29% Partner10 20 25 13 26 13 97 0.20%
Partner 11 13 18 7 19 7 64 0.07%
Partner 12 11 7 5 10 2 35 0.02%
Partner 13 8 2 4 1 3 18 0.07%
Partner 14 9 2 2 1 3 17 0.03%
Partner 15 4 0 0 3 5 12 0.02%
Partner 16 0 1 0 4 5 0.01%
Partner 17 1 0 1 1 3 0.01%
Partner 18 1 0 3 0 0 4 0.01%
Partner 19 3 1 0 1 4 9 0.01%
Partner 20 10 3 0 1 1 15 0.03%
Total 17324 7248 7557 9389 4703 46221 100.00%
COMPOSITION OF PARTNERS IN CA FIRMS (AS ON July 1st 2010)
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Year Wise Growth Of Prop. & Partnership Firms(2005 to 2010)
Growth of Proprietory Firms
32697
31950
3216532001
31871
32198
31400
31600
31800
32000
32200
32400
32600
32800
2005 2006 2007 2008 2009 2010
Year
Valu
e Value
Growth of Partnership Firms
1367513753
13439
13209 13179
13594
12800
13000
13200
13400
13600
13800
2005 2006 2007 2008 2009 2010
YEAR
VALU
E
Value
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Future of SMP Firms
Limited Empanelment based work
Limited growth opportunity in Statute based work
Increased compliance requirements
Availability / Retention of human resources
CPE – New developments/updates
Technology updation
Super Specialisation
Value adds – gaining more importance
Networking / Merger
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If we don’t act now, is this the Future?
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Members interesting for PRACTICE IN CORPORATE FORM
A Chartered accountant in practice can practice in corporate form. the Council at its 261st meeting held in August 2006 permitted the Chartered Accountant in practice to practice in Corporate Form subject to compliance of Guidelines for Practice in Corporate Form.
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What is Management Consultancy Company?
Management Consultancy Company means a Company which complies with the Guidelines for Practice in Corporate Form issued by the Institute. A Chartered Accountant in practice in corporate form thus can run a Management Consultancy Company. This Management Consultancy Company shall have a distinct name which shall be approved by the Institute. The prescribed format of application for approval of name for Management Consultancy Company is Form G
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Can a practicing chartered accountant run a Company in addition to his/her proprietary/partnership professional firm?
- Yes he can operate both the entities simultaneously. The Council at its 261st meeting held from 1st to 3rd August 2006 decided to allow members in practice to hold the office of Managing Director, Whole-time Director or Manager of a body corporate within the meaning of the Companies Act, 1956 provided that the body corporate is engaged exclusively in rendering “Management Consultancy and Other Services” permitted by the Council in pursuant to Section 2(2)(iv) of the Chartered Accountants Act, 1949 and complies with the conditions(s) as specified by the Council from time to time in this regard. The guidelines in this regard have been issued w. e. f. 01.10.2006.
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What kind of services can be provided through Management Consultancy Company
Management Consultancy & Other Services permitted by the Council in pursuance to Section 2(2)(iv) of the Chartered Accountants Act, 1949. The definition of the expression “Management Consultancy and other Services” as appearing at pages 8-10 of Code of Ethics, 2005 edition, is as under:
The expression “Management Consultancy and other
Services” shall not include the function of statutory or periodical audit, tax (both direct taxes and indirect taxes) representation or advice concerning tax matters or acting as liquidator, trustee, executor, administrator, arbitrator or receiver, but shall include the following:
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WORK , WHICH CAN BE UNDERTAKEN? A
Financial management planning and financial policy determination. Capital structure planning and advice regarding raising finance. Working capital management. Preparing project reports and feasibility studies. Preparing cash budget, cash flow statements, profitability statements,
statements of sources and application of funds etc. Budgeting including capital budgets and revenue budgets. Inventory management, material handling and storage. Market research and demand studies. Price-fixation and other management decision making. Management accounting systems, cost control and value analysis. Control methods and management information and reporting. Personnel recruitment and selection.
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WORK , WHICH CAN BE UNDERTAKEN? B
Setting up executive incentive plans, wage incentive plans etc. Management and operational audits. Valuation of shares and business and advice regarding
amalgamation, merger and acquisition. Business Policy, corporate planning, organisation development,
growth and diversification. Organisation structure and behaviour, development of human
resources including design and conduct of training programmes, work study, job-description, job evaluation and evaluation of work loads.
Systems analysis and design, and computer related services including selection of hardware and development of software in all areas of services which can otherwise be rendered by a Chartered Accountant in practice and also to carry out any other professional services relating to EDP.
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WORK , WHICH CAN BE UNDERTAKEN? C
Acting as advisor or consultant to an issue, including such matters as: - (a) Drafting of prospectus and memorandum containing salient features of
prospectus. Drafting and filing of listing agreement and completing formalities with Stock Exchanges, Registrar of Companies and SEBI.
(b) Preparation of publicity budget, advice regarding arrangements for selection of (i) ad-media, (ii) centres for holding conferences of brokers, investors, etc., (iii) bankers to issue, (iv) collection centres, (v) brokers to issue, (vi) underwriters and the underwriting arrangement, distribution of publicity and issue material including application form, prospectus and brochure and deciding on the quantum of issue material (In doing so, the relevant provisions of the Code of Ethics must be kept in mind).
(c) Advice regarding selection of various agencies connected with issue, namely Registrars to Issue, printers and advertising agencies.
(d) Advice on the post issue activities, e.g., follow up steps which include listing of instruments and despatch of certificates and refunds, with the various agencies connected with the work.
Explanation: For removal of doubts, it is hereby clarified that the activities of broking, underwriting and portfolio management are not permitted.
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WORK , WHICH CAN BE UNDERTAKEN? D
Investment counseling in respect of securities [as defined in the Securities Contracts (Regulation) Act, 1956 and other financial instruments.] (In doing so, the relevant provisions of the Code of Ethics must be kept in mind).
Acting as registrar to an issue and for transfer of shares/other securities. (In doing so, the relevant provisions of the Code of Ethics must be kept in mind).
Quality Audit. Environment Audit. Energy Audit. Acting as Recovery Consultant in the Banking Sector. Insurance Financial Advisory Services under the Insurance Regulatory
& Development Authority Act, 1999, including Insurance Brokerage.
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Benefits that are available to members if member opts for corporate practice.
i) The member can retain full time Certificate of Practice besides being the Managing Director/Whole-time Director/Manager of Management Consultancy Company.
ii) The member will be entitled to train articled/audit assistant(s).
iii) There will be no restrictions on the quantum of the equity holding of the member, either individually and/or along with his relatives, in such a company.
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Opportunities – PD Portal
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Opportunities – CA Net ICAI Facilitation
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Tool kit with ready to use Checklists & templates
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First Release of Check-lists and Templates
Many More to
Come
Main Slide
Income Tax
Service Tax And Central Excise
Audit Manual for Small Entities
Bank Branch Auditing
Standards On Auditing
Accounting Standards
Tax Audit
CARO
Practice Management
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General Audit Programme
Audit Manual for Small Entities
General Audit Programme
Audit Manual for Small Entities
49
Audit Program: Intangible Assets
Audit Manual for Small Entities
50
AS - 2 - Valuation Of Inventories
Checklist For Accounting Standards
51
Clausewise Checklist For Form No.3 C D
Tax Audit
52
Tax Audit Report With Annexures
Tax Audit
Checklist & Templates
Main Slide
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CARO Checklist
Checklist for CARO
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L F A R Checklist
Checklist For Bank Branch Audit
Checklist & Templates
Main Slide
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SA 300 (Revised) Planning An Audit...
Checklist For Standards On Auditing
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Special Scheme for Transfer Pricing
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Special Financial Scheme for CA’s
