Hello everyone it’s part of my profession to read analyse and present CA Act and its regulations. So today we have a big confusion in front of us and we need a clarification from CA institute about it.
Chartered Accountants are governed by CA Act.
CA Act was amended in Nov 2006. Law makers had multidisciplinary firms in their mind so changes were made in CA Act / CS Act / CWA Act.
Let's analyse the situation.
1st Point
I read background material cum article by TN Manoharan sir of this amendment and without any doubt it was clear partnership with MBA is not possible.
I am thankful to CAclubindia I got this article.
Multidisciplinary firms — Care, caution and credits
So it was clear we can do contracts with MBA where we can do case to case contracts to share fees but no partnership.
2nd Point
We will have to focus on First Schedule Part 1 of CA Act. Particularly Clause 2 / 3 / 4
Clause 2 says CA in practice can pay share of the fees (i.e he can share his assignment with) …… and it gives power to ICAI to “specify”
- Members Professional Body “OR”
- With persons with certain Qualification
Clause 3 says CA in practice can accept share of fee from other (i.e he can share others work)….. and it gives power to ICAI to “specify”
- Members Professional Body “OR”
- With persons with certain Qualification
Form this it is clear that law wants ICAI to prescribe 2 lists Members of professional bodies and 2nd people with qualifications
To implement it ICAI has issued Regulation 53A with title “Other Professional Bodies” and it has 2 lists
- List of members of professional bodies
- List of persons with Qualification (includes MBA)
So from this it is clear we can do contract for sharing of fees (give & take) with MBA as per clause 2, clause 3 and Regulation 53A.
Now comes Clause 4 which says CA in practice can do partnership… and again gives power to ICAI to “specify”à“Member of professionalbody having such qualifications”
Here law didn’t use “OR” that means law wants ICAI to specify only one list “members of prescribed bodies who also have some qualification”.
To implement above ICAI has issued Regulation 53B which specifies only one list of professional bodies which excludes MBA. SO it is clear partnership is not allowed.
Many professors & authors have taken same view.
But now comes something which I didn’t tell, I think it is drafting error, one line in regulation 53A says part of the list also applicable for clause 4 and this list includes MBA.
So as per background, drafting of law and way regulations are drafted (reasonable interpretation) partnership with MBA is not allowed. But if someone takes literal interpretation then 53A is also for clause 4 that means MBAs can enter into partnership with CA in practice.
So ball is in court of ICAI to clarify the situation. Surprisingly no question is asked in CA examination about this issue in past 10 years, that’s again fishy, that indicates doubts in mind of people at ICAI.
People with some background knowledge and keen interest in the subject may enjoy this article.
I will be happy if you guys can share any practical life situation or any interpretation or logic on same.
CAclubindia
