THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI)
(Set up under The Chartered Accountants Act, 1949)
Council Guidelines No.1-CA(7)/02/ 2008, dated 8th August,2008
GUIDELINES FOR THE MEMBERS OF ICAI
(Issued under the provisions of The Chartered Accountants Act, 1949)
Chapter I
Preliminary
1.0 Short title, commencement, etc.
(a) These Guidelines have been issued by the Council of the Institute of Chartered Accountants of India under the provisions of The Chartered Accountants Act, 1949, as amended by The Chartered Accountants (Amendment) Act 2006, in supersession of the Notifications issued by the Council under erstwhile Clause (ii) of Part II of the Second Schedule to the Chartered Accountants Act, 1949.
(b) These Guidelines be called the ‘Council General Guidelines, 2008’.
1.1 Definitions.
1.1.1 For the purpose of these Guidelines:
(a) ‘Act’ means the Chartered Accountants Act, 1949.
(b) “Chartered accountant” means a person who is a member of the Institute.
(c) “Council” means the Council of the Institute constituted under section 9 of the Act.
(d) “Institute” means the Institute of Chartered Accountants of India constituted under the Act.
1.1.2 All other words and expressions used but not defined herein have the same meaning as assigned to them within the Chartered Accountants Act, 1949 and the Rules, Regulations and Guidelines made there under.
1.2 Applicability of the Guidelines
Chapter II
Conduct of a Member being an employee
Chapter III
Appointment of a Member as Cost auditor
3.0 A member of the Institute shall not accept:-
(a) is an auditor of the Company appointed under Section 224 of the Companies Act or
(b) is an officer or employee of the Company; or
(c) is a partner, of any employee or officer of the Company; or
(e) is indebted to the Company for an amount exceeding one thousand rupees, or has given any guarantee or provided any security in connection with the indebtedness of any third person to the Company for an amount exceeding one thousand rupees;
Chapter IV
Opinion on financial statements when there is substantial interest
4.0 A member of the Institute shall not express his opinion on financial statements of any business or enterprise in which one or more persons who are his “relatives” within the meaning of Section 6 of the Companies Act, 1956 have, either by themselves or in conjunction with such member, a substantial interest in the said business or enterprise.
Explanation: For this purpose and for the purpose of compliance of Clause (4) of Part I of the Second Schedule to the Chartered Accountants Act, 1949, the expression “substantial interest” shall have the same meaning as is assigned thereto under Appendix (9) to the Chartered Accountants Regulations, 1988.
Chapter V
Maintenance of books of accounts
Chapter VI
Tax Audit assignments under Section 44 AB of the Income-tax Act, 1961
Provided that in the case of a firm of Chartered Accountants in practice, the “specified number of tax audit assignments” shall be construed as the specified number of tax audit assignments for every partner of the firm. Provided further that where any partner of the firm is also a partner of any other firm or firms of Chartered Accountants in practice, the number of tax audit assignments which may be taken for all the firms together in relation to such partner shall not exceed the “specified number of tax audit assignments” in the aggregate.
Provided further that where any partner of a firm of Chartered Accountants in practice accepts one or more tax audit assignments in his individual capacity, the total number of such assignments which may be accepted by him shall not exceed the “specified number of tax audit assignments” in the aggregate.
6.1 Explanation:
For the above purpose, “the specified number of tax audit assignments” means –
(b) in the case of firm of Chartered Accountants in practice, 45 tax audit assignments per partner in the firm, in a financial year, whether in respect of corporate or non-corporate assesses.
6.1.2 In computing the “specified number of tax audit assignments”, the number of such assignments, which he or any partner of his firm has accepted whether singly or in combination with any other Chartered Accountant in practice or firm of such Chartered Accountants, shall be taken into account.
6.1.6 A Chartered Accountant in practice shall maintain a record of the tax audit assignments accepted by him in each financial year in the format as may be prescribed by the Council.
Chapter VII
Appointment of an Auditor in case of non-payment of undisputed fees
Provided that in the case of sick unit, the above prohibition of acceptance shall not apply.
For this purpose, “sick unit” shall mean where the net worth is negative.
Chapter VIII
Specified number of audit assignments
Provided that in the case of a firm of Chartered Accountants in practice, the “specified number of audit assignments” shall be construed as the specific number of audit assignments for every partner of the firm.
Provided further that where any partner of the firm of Chartered Accountants in practice is also a partner of any other firm or firms of Chartered Accountants in practice, the number of audit assignments which may be taken for all the firms together in relation to such partner shall not exceed the “specified number of audit assignments” in the aggregate.
Provided further where any partner of a firm or firms of Chartered Accountants in practice accepts one or more audit of Companies in his individual capacity, or in the name of his proprietary firm, the total number of such assignments which may be accepted by all firms in relation to such Chartered Accountant and by him shall not exceed the “specified number of audit assignments” in the aggregate.
8.1 Explanation:
For the above purpose, the “specified number of audit assignments” means –
8.2 In computing the “specified number of audit assignments”-
8.4 A Chartered Accountant being a part time practicing partner of a firm shall not be taken into account for the purpose of reckoning the audit assignments of the firm.
------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------
S.No. Name Regis- Date of Date of Date on which
of the tration Appoin- Accep- which Form
Company Number tment tance 23-B filed with
Registrar of
Companies
1 2 3 4 5
------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------
Chapter IX
Appointment as Statutory auditor
9.0 A member of the Institute in practice shall not accept the appointment as statutory auditor of Public Sector Undertaking( s)/ Government Company(ies) /Listed Company(ies) and other Public Company(ies) having turnover of Rs. 50 crores or more in a year where he accepts any other work(s) or assignment(s) or service(s) in regard to the same Undertaking( s)/ Company(ies) on a remuneration which in total exceeds the fee payable for carrying out the statutory audit of the same Undertaking/ company.
Provided that in case appointing authority(ies)/regulatory body(ies) specify(ies) more stringent condition(s) /restriction( s), the same shall apply instead of the conditions/restrict ions specified under these Guidelines.
(i) the term “other work(s)” or “service(s)” or “assignment(s)” shall include Management Consultancy and all other professional services permitted by the Council pursuant to Section 2(2)(iv) of the Chartered Accountants Act, 1949 but shall not include: -
(a) audit under any other statute;
(b) certification work required to be done by the statutory auditors; and
(c) any representation before an authority;
(ii) the term “associate concern” means any corporate body or partnership firm which renders the Management Consultancy and all other professional services permitted by the Council wherein the proprietor and/or partner(s) of the statutory auditor firm and/or their “relative(s)” is/are Director/s or partner/s and/or jointly or severally hold “substantial interest” in the said corporate body or partnership; (iii) the terms “relative” and “substantial interest” shall have the same meaning as are assigned thereto under Appendix (9) to the Chartered Accountants Regulations, 1988.
Chapter X
Appointment of an auditor when he is indebted to a concern
Chapter XI
Directions in case of unjustified removal of auditors
Chapter XII
Minimum Audit Fee in respect of Audit
(b) consisting of 10 or more partners with at least one partner holding a certificate of practice for five years or more.
Practising firm having Practising firm having
5 or more partners but 10 or more partners
------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --
|
(i) In cities with population of 3 million and above (as per the last census)
|
Rs. 6000/- p.a |
Rs. 12,000/- p.a
|
|
(ii) In cities/towns having population of less than 3 million
|
Rs. 3500/- p.a |
Rs 8000/- p.a |
Provided that such restriction shall not apply in respect of the following: -
(ii) statutory audit of branches of banks including regional rural banks;
(v) Sales Tax Audit and VAT Audit.
12.1 Explanation:
The Council has clarified that for the above purpose the audit of Provident Fund Trust; Gratuity Fund etc. carried out by the statutory auditor are to be considered as separate and distinct audit so that the above restrictions are applicable to it.
Chapter XIII
Repeal and Saving
13.1 Notwithstanding such repeal:-
____________ _________ _________ _________ _________ _________ _________ _________
SCHEDULE
NOTIFICATIONS ISSUED BY THE COUNCIL UNDER ERSTWHILE CLAUSE (ii) OF PART II OF THE SECOND SCHEDULE TO THE CHARTERED ACCOUNTANTS ACT, 1949.
1. No.1-CA(7)/65, dated 6th November, 1965.
2. No.1-CA (37)/70, Published in Part III Section 4 of the Gazette of India dated
30th May, 1970.
3. No.1-CA (39)/70, Published in Part III Section 4 of the Gazette of India dated
24th October, 1970.
4. No.1-CA (44)/71, Published in Part III Section 4 of the Gazette of India dated
20th March, 1971.
5. No. 1-CA (153)/86, Published in Part III Section 4 of the Gazette of India dated
30th August, 1986.
6. No.1-CA (7)/3/88, Published in Part III Section 4 of the Gazette of India dated
4th February, 1989.
7. No.1-CA (7)/9/89, Published in Part III Section 4 of the Gazette of India dated
19th August, 1989 (Since quashed by the Supreme Court vide Order dated
16th May, 2007).
8. No. 1-CA (7)/43/99, Published in Part III Section 4 of the Gazette of India dated
31st July, 1999.
9. No. 1-CA (7)/46/99, Published in Part III Section 4 of the Gazette of India dated
13th November, 1999.
10. No. 1-CA (7)/53/2001, Published in Part III Section 4 of the Gazette of India
dated 12th May, 2001.
11. No.1-CA (7)/60/2002, Published in Part III Section 4 of the Gazette of India
dated 23rd March, 2002.
12. No.1-CA (7)/63/2002, Published in Part III Section 4 of the Gazette of India
CAclubindia
