In CA field even though we have to follow a lot of moral conducts as beginners, it seems it doesnot apply to the most senior CAs. I have a very unique situation. Please share your views, if any.
1. I joined a partnership CA firm and signed two copies of ICAI's form 18 ( for joining a firm) a few years back. Only one of those forms was actually used and the second copy is held at the office. My specific question is can it be used for submission to the ICAI for the purpose of my retirement too, from the firm.
2. As many CAs must be knowing. There are many CA firms who change theirs experianced CAs in to partners. In reality nothing changes with regard to payments. But this partnership agreement becomes a real problem at the time of retirement. For example in my case the Super Boss said " you were never a partner hence I need not give a share in the profit of the firm for any year. At the same time all the hard work as an employee also become a total waste since as a partner I am not entitled for any retirement benefit since I am not an employee. Assuming to take action next year, today I have completed my 18th year in this firm out of which 10 years are as partner, with out any share in the profit of the firm.
A decade back I signed the agreement faily under coiersion since I was an employee and entered in to a contract with my boss under whom I was working for last 8-9 years.
Any body can give me some Ideas. Or court will be the only option.
26 August 2010
The issue raised is really very crucial and a fit case to open the eyes of others also.
I am trying to reply in a very interesting way. Please don't take otherwise. Every person makes mistakes in his life and whenever he does; he is penalised for that. Either take them as a lesson or a training fee (whatever loss is there to you) !
1. It seems you put yourself in the above conditions. Where were you since last so many years to raise this question ?
Why you signed two copies of form 18 which was retained blank ?
2. One should be very careful about the terms and conditions of the employment.
Now-a-days; people leave any organisation (even if it is very good in the eyes of public ) if they don't find it suitable for themselves.
3. It also seems that you were really an employee (on papers as a partner) despite joining a professional firm.
4. You have not developed your skills to that extent which are supposed from a professional.
Still you ask for retirement benefits ?
One can easily conclude about the practical application of your signing the partnership deed because you never asked for actual profit sharing.
5. So far I heard for dummy articleship only.
6. Your case is also alike this : Dummy Partnership ! (The root cause may be as I mentioned in point 5 ).
Might be one has not taken practical training during his articleship.
Now one can easily understand the implications of non-performance of practical training. It is very interesting !
7. Such things happen in small cities where students pass CA and their parents don't wish that they should go to a right market where demand of CAs i.e. opportunities are there.
8. Many students pass CA in 18 years ! Still they feel happy. It seems your "Rahu Dasha" is over by passing such 18 years (Rahu Dasha remains for 18 years).
9. Now I come to the main point raised by you.
(a) It seems now no good relations are there with your employer.
(b) You have no hold in the firm on its clients.
If (a) is not applicable then continue the partnership (i.e. your employment) and try to influence its clients by giving better services with a plan to switch them over to your practice when you leave this organisation. It will hardly take 2 more years to set up your own organisation.
If (b) is not applicable to you; start your own practice by attracting its clients.
Make full preparation before you start your practice i.e. influence key personnel of the existing firm and offer them good remuneration with actual sharing.
10. If you go to court; it would be very difficult to prove that you were not paid because in the books; I presume no credits remain in your Capital Account.
11. It will take years to decide the case by the court.
Whatever labour you would do for this; if same is applied for your own profession; you will get an equal retirement benefits from the firm which I think is not more than Rs.5.00 lacs approx.
Too young to say anything, but one should be aware of the rules and its rights. Now a days, your status of job, practice and other information are available with the ICAI records or ICAI website.
One should always, check their updating status, to give effect to these.
Even, In today scenario many youngsters are doing like this, they are getting paid in cash from its CA firms, and in the books of CA firm they are not employee (even they are not aware of this). Also, they are not aware of taking COP and condsiering its a s professional fees or practice.
Only after a span of time (2..3..5.. years), they realize that what have they lost......
Please note that I have already left practice and there is nothing more to loose.
I also know that in a firm like CAs it is not that easy to get some employee cum partner off the hook especially when he is 18years old. They give me saying x or y , really doesnot matter.
All my career is spent in Chennai, B'lore, Ahmedabad, Mumbai, Hyderabad these are not small places or towns.
Influencing clients ...god...nope. But yes after reading this I can always make them go away from the old firm too. There are some even bigger players waiting for these clients.
But overally ....yes thank you. The actual legal position is much complex in my case.
I have found another way out. The readers need to know that this also happens. And I would like to welcome any thoughts from anybody. At present, I have been questioning myself and in the same way you can put your thoughts which will help me in new ways.
Thank you very much. You have exactly conveyed your doubts where I have not mentioned anything. Seeing your profile makes me tell the whole thing.
Every thing is not like as it looks. I wrote this note very briefly, hence may be I could not convey my thoughts fully. I am giving the full details here. I am open to others thoughts hence posing detailed case.
The fight was going on for last two years and now I am putting an end to it. The full details are like :
1. In 1992 I joined the firms Sahani Natarajan & Bahl and Natarajan & Lakshmanan, Chennai office, as paid assistant. This was under Mr. Lakshmanan;
2. In 1995 I qualified as a CA and Become their audit manager again under S.Lakshmanan for both the firms;
3. In March 99, the partners of Natarajan & Lakshmanan and Sahni Natarajan & Bahl decided to split and a new firm called N L Associates and S N B Associate is created for Mr. Lakshmanan.
I become a partner with 5% profit share in N L Associates and also worked for S N B Associates. In reality no sharing of profit actually took place but the agreement always said it.
The accounts of the firm was never given to me ever. Not even today. I always knew that I am an employee so I continued with my salary. This I have always said to all other partners too and I can prove that. This was also conveyed to Mr. Lakshmanan always at an yearly interval.
4. In 2008, We all partners (so called)went for a consolidation round where every body signed to merge with S N B ASSOCIATES. And here things took a ugly turn when I signed two copies of the form 18. The reason being, since everybody had signed that form hence I also signed.
The benefit of merging an old firm i.e. NL Associates with SNB Associates is quite obivious.
I am stuck because of this form and it was signed by me when I was at an Outside location two copies are signed in good faith because in case of any fillinf error one more signed paper is required and the firm had to be declared as merged as on first of April.
And I am not the only one every partner of this office has authorised Mr. lakshmanan to sack everybody at his will. Now everybody has some problem definitely. Because the 20 page agreement contains a clause withregard to this too, which everybody has signed at the time of merger and absorption. You can say we have hit our own legs. But yes that is the truth. I am 42 years old and others are above 55 some are even above 65.
And yes donot have doubts of profit of the firm, it is in the range of 60-70 lacs net profit per annum.
And about retirement benefits, well that is why I am asking our friends whether the same is feasible. I know that a partner is not entitled for that. But in all reality I am an employee.
There are mistakes and all that was done in good faith. I have learnt a lesson and hence I am leaving the practice field.
And please donot talk about articleship trainning here we are talking about practicing members and some mistakes which are already done. I am asking for litlle help from every body's mind. This issue will also be soon addressed by others. It has got a link with rotation of partners and banning of the CA firm for negligency of one partner and responsiblity of signing partner. several Such cases are already highlighted in some different context to the upper level too.
you are an analytical person don't you know how a CA will escape the laws by asking a dummy partner to sign a risky or rigged balance sheet. Further it will be justified in the name of rotation of partners.
This is one of the reasons that in big firms the senior partners are justifying why they should not be held responsible if any one partner commits a mistake.
My contact number is 09937352950. I am in to full fledged Horticulture since 17th of July 2010. You can see my work at www.choudhryfarms.com
From your language it is proved that you are a humble person and the seniors have taken undue benefit of your good behaviour.
I agree that seniors talk too much about integrity and ethics; but they don't follow AT ALL.
I wrote on some presumptions which I derived from your writing. Thank God that you are well settled.
Recently; before 3 months approx; one junior CA came to me and he told that seniors have considered my share as Rs. 15,000/- pm (paid at the year end). This guy did a lot to form a partnership firm of 10 CAs. The seniors' firm was having only 2 partners with 24 years standing.
This firm is in first 6 firms in Gujarat Region due to its number of partners. Last year it got audit of Rs. 40 lacs as Bank Audit assignments.
After discussion a lot; I convinced him that he has lost NOTHING.
I told : Whatever you have lost; treat it as TRAINING FEE (alike MBA course with premier institution - running into lacs).
Now he has formed another partnership firm and doing well within 3 months !
It is true that many CAs play with laws for the sake of small benefits.
If one is brilliant in application of laws; I don't think that one should resort to such practices.
I had to mention about CA articleship training because it is root cause of all the malpractices.
Just to mention : Many parents (who are clients) approach CA firms to give dummy to their children. Further; I don't wish to discuss.
I agree that rotation of partners would not serve the purpose at all. Because only big firms will get the same job again at rotation without losing anything.
The unfortunate state of the profession is that when a student qualifies CA; he doesn't find enough work in Auditing despite having expertise in the field !
If someone finds; it remains only for 3 months in a year. So rest of the year; he has to find out some other fields.
In these circumstances; what course of action can be taken when juniors themselves are ready to sign the balance sheet due to want of money. If they don't sign; surely the work will go in the hands of juniors.
Junior CAs should swear that they will not sign the balance sheets for the sake of fake audit fee.
From your selection of fresh career in horticulture; again it is proved that you are a good person who loves nature.
Practically; you were never so cautious about money. If someone can enjoy small things; he never bothers for big things.
(Humour : In my office building I see regularly one Computer Technician who is smoking cigarettes with GREAT PLEASURE. I also use to smile whenever I see this guy. Despite having good knowledge and experience; he is not so careful about earning).
My Dear Shivaram; I congratulate you to "find out" such a nice career to enjoy life.
Forget about money (your seniors have already forget it to give you).
Please accept my friendship at caclubindia.
I would like to have friendship with person like you.
27 August 2010
Sorry to Interfere in the conversation between the senior persons.
But i would also like to thank both of the respectable persona and mentors for guiding and telling the facts of real life in such an elaborate manner. Your experience and learning will help me a lot to understand this CA World.
THANKS to both of you. Also, special thanks to Surendra sir for understanding and replying to the query in a way as one does for his own.
Thanks to you all. I am a Chartered Accountant and can not leave the Balance Sheet untallied.
I am giving a copy of the letter based on my experiance in my own firm and some big other firms which is already sent to Our dear president of ICAI and Ministry of corporate affairs. This is only a formal way of telling the ICAI.
To: president@icai.org, vicepresident@icai.org Cc: hq.delhi@mca.gov.in, oandm.dca@sb.nic.in Bcc: disc@icai.org, councilaffairs@icai.org, legal@icai.org Reply | Reply to all | Forward | Print | Delete | Show original Respected Sir,
Sub: Uncontrolled download facility for Form -18 nd it's misuse. This also defies the ICAI's basic purpose of introducing rotation of signing partners and there by the “Signing Auditors” independency.
In view of the Ministry's Vision "To be a leader and partner in initiatives for corporate reforms, good governance and enlightened regulation, with a view to promote and facilitate effective corporate functioning, investor protection and inclusive growth, empower the Indian citizen and have a global footprint"
Sir,
I am here to explain some issues which affects a lot of CAs with more than a decade experiance. However, I can provide the evidences when required.
1. ISSUES:
1.1 At present the Institute is giving only one kind of form i.e form-18, for New constitution of firm, reconstitution of firm and retirement of a partner from the firm which is again construed as a reconstitution of firm. Should not the Institute consider using different forms for different purposes. To add to it the ICAI also provides for a free and uncontrolled downloading of the forms at their website.
1.2. Please remember Form-18 is our Firm’s Birth Certificate and also Death Certificate. How can such a professional Organization, use the same form-18 for both the purposes.
2. PROBLEMS:
2.1.All of us know that we have to start with a new Identity if we loose the firm name in which we worked for 15 years. And just because the member has 15 years of experience his new firm does not become 15 years old on the day of new registration. In such a situation how will a chartered accountant feel when he knows that he has already signed two copies of form-18. One of which is used for constitution of the firm and other can be used for his expulsion from the firm on any day. This a big misuse of your facility. The modus operandi is as given below:
2.1.1. At the time of taking a new partner it is being explained that two forms need to be signed. In reality one form is enough. The second form is being kept in the possession of the senior most partner to expel all the partners or some of them in case of any disagreement.
2.1.2. Some times the signatures are availed under the context that the first form is rejected.
2.1.3. Some times it is being obtained from the employees with a Mountain of promises which is just oral. And Young CAs Fall for it.
2.2. Further even though ICAI stipulates that in case of retirement of a partner, the forms should be handed over to the institute with in 30 days of retirement, there is no control to ensure that the forms are handed over to the institute with in 30 days from the date of download. This is being misused for putting earlier dates or future dates if required or no dates are mentioned so that the form can be used at the time of need for expelling some partners.
2.3. This basically forces other Partners \ auditors to agree to the demands made by the senior partners with regard to signing of the Clients Annual Accounts since otherwise they can loose the firm as an expelled partner.
2.4. This also defies the ICAI's basic purpose of introducing rotation of signing partners. At present after the Satyam Fraud every senior partner thinks twice before signing the Accounts. And doesn’t sign the accounts if he has got a old person i.e. employee cum partner at his disposal. ICAI’s old system of constitution and reconstitution has given them a much better tool in hand to escape initially and blame the signing partner. Otherwise, I donot understand why should a partner who gets a salary of Rs. 30000 /- p.m. (thirty thousand) sign the balance sheet of a company who gives an audit fee of Rs. 67.50 Lacs. This lack of control from ICAI has ensured that atleast half of the CAs are nothing but dummy partners.
2.5. The Company law and ICAI have made it tough for the companies to remove the auditors so that the auditor remains independent where as no such procedure is needed to be followed in case of removal of a partner from the CA firm. ICAI’s this policy has given a back end to the companies to reach up to the signing partner and have him changed. In case of irregularities the management looks for somebody who will cooperate and agree to give some time, if not one partner then the other partner. One of the biggest reasons for reconstitutions taking place in some of the big firms. In this scenario how do you expect the signing partner to be independent and what are the legal options but to leave the firm. Further since ICAI is an autonomous body hence I donot think why the Government have to review our systems.
2.6. Company’s have nothing to do with the partnership firms, they deal with a specific partner-in-charge which doesn’t change in reality. However the signing partner changes for the sake of showing the rotation of partners. Don’t you think that this is all sham in the name of controls and strength of the auditing.
3. SOLUTION:
I donot say that it can be fully controlled. However the ICAI should take some initiatives to ensure that such instances are minimized. May be you will consider the following:
3.1. Control over the downloading of Form-18 with serial numbers and the date of download controls. More than 30 days time should not be allowed under any circumstances. If the ICAI checks to match the date of download based on the serial number and the date of acctual submission then it will ensure that the senior partners don’t influence the other partners for signing the Annual accounts in the name of expulsion.
3.2. The ICAI should declare that all the pre-signed form-18 are cancelled as on date, since this will ensure that all the Dummy partners will be given the support from the ICAI. This will also ensure that the senior partners do not influence the valid audit decisions of the signing partners.
3.3. The earlier system of request from all the partners should be re-introduced to ensure that earlier copies of constitution certificates cannot be used.
3.4. The ICAI should tighten it’s control over the formation , merger , de-merger, retirement of partners and reconstitution of the firm with new partners. At present most of the security issues relating to the client and the Audit firm is taken care of. However no such security measures are provided to the partners of the firm. The very entity (Audit Firm) which is safe guarded from the client stands unsecured by it’s own man. There are a number of measures to counter check the Firms with Dummy partners e.g.
- One partner having all the controls of the firm; - One partner taking more than 80% of the total profit, other Partners taking either 1% or 2% of the total profit to show that they are profit sharing partners; - One partner charging goodwill to the firm if he decides to leave the firm or in case of his death. - All the partners authorizing one partner to have all the controls, profits and bank account operation capacity; - One partner making all the other partners incapable of making any contracts or decisions on behalf of the firm; - All the partners authorizing one partner to expel them as per his own wish;
I hope that the ICAI will do something to ensure the AUDIT FIRMs stability and Independency.
Your presentation is one of the best I have noticed so far.
People like you should represent Council than the persons who make rules and regulations in the favour of big firms.
Due to certain lapses; only our profession is not so rewarding in initial stages. Although there are many professions of same line who establish their professions so early.
CA firms' charging pattern is one of the worst in current scenario. I can say even a CS is better in charging fee than a CA. Generally it is a misconception in the mind of public that the value of a CS is just 10% what a CA has. This is told in terms of examination pattern. In real life; they are very near to CA profession and even better. They charge in advance and sign all the documents on the basis of CA Audit Reports. This is the general nature of work difference between the two.
CWAs are engaged in industrial audits hence even their general services are regarded very useful because whenever they comment about increased cost or its calculation methods; it directly benefits the organisation.
Recently I have visited two MBA institutes who are Directors; qualified from IIM(Ahmedabad).
When discussed about the education; I found they just structure their studies in a very concise manner which is not there in the case in CA curriculum.
Even for qualified members' "CPE Hours" studies are not structured well. That is why even unstructured study is also included in our CPE hours. Ha..Ha...Ha..
To give some ideas about IIMs; I wish to share here that CA students read Management as a theory subject and IIM takes it as a practical subject.
Although ICAI also requires expert knowledge from the students about Management but practically students are not properly guided towards it. Good study materials are also not provided to students which can create interest of students in the subject (MANAGEMENT).
Many times it has been said by the council members of CA institute "
"A CA student is supposed to have concentration towards self study."
(Now she is also in search of good faculties who can provide better coaching facilities to the students - again contradictory !! Ha...Ha...Ha..)
IF REALLY GOOD COACHING IS APPLIED; I CAN CLAIM THAT A CA WILL GET THE HIGHEST PACKAGE IF HE WISH TO JOIN AN ORGANISATION & GET ONE OF THE PREMIUM WORK IN HIS HANDS IF HE HAS "REAL" EXPERT KNOWLEDGE ABOUT THE PROFESSION.
Thank God that now Institute's has taken some steps which are in right direction according to the demand of students.
Dear Friend, come forward and serve the profession in right direction ( Humour : Your quota of other "service" is already over).
AFTER A LONG TIME BATTLE NOW IT HAS BEEN RULED BY THE ICAI THAT I CONTINUE TO BE PARTNER IN THE EARLIER FIRM AND ALL THE PARTNERS PUT TOGETHER, CAN NOT REMOVE A SINGLE PARTNER IF HE HAS NOT GIVEN A SEPARATE RESIGNATION LETTER.
FUTHER EVEN IF SOMEBODY HAS GIVEN A PRESIGNED RESIGNATION LETTER THEN ALSO DONOT WORRY, TELL THE ICAI ABOUT THE SAME BEFORE THE LETTER IS GIVEN BY THE OTHER PARTNERS. GOOD LUCK TO ALL OF YOU
CAclubindia
