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For most government and public sector audits empanelment and also for the RBI empanelment norms for appointment of branch auditors of public sector banks etc are illogical and absurd especially for proprietary concerns of chartered accountants for conducting branch audits of nationalised banks. Already the Supreme Court has made proprietary concerns eligible for Comptroller and Auditor General (CAG) audits. It is equally and practically applicable for RBI Empanelment too. Therefore, it is ridiculous that under the norms that proprietary concerns of chartered accountants must have at least one paid assistant (CA) to get branch audits of nationalised bank audits etc. It is funnier that a proprietary firm successfully conducting branch audits for several years –even of large branches is suddenly made disqualified to audit branches of nationalised banks. It has no logic. Why a proprietary concern of Chartered Accountants who is successfully conducting such audits is now required to have compulsorily paid qualified chartered accountant as an employee or seek another partner just to be eligible for empanelment-conducting branches of nationalised bank.

Once a person has qualified and is eligible for practice as chartered accountant than throughout his life he should not be asked for any change for empanelment and /or audit requirements.

If norms are to be changed it should be made applicable for new entrants i.e., fresh applications for empanelment only and not for those who are already empanelled and successfully completing the audit assignments.

The emphasis should be only on the quality of audit –it is immaterial whether the actual audit is conducted by Articled Clerks/Paid Assistants (CAs) or partners/proprietor. If quality of the audit is not up to the mark in that case further audit assignments may not be allotted to such firms. Further, for the appointment of statutory central auditors of PSBs etc additionally it is required to have at least one partner of the firm or its paid chartered accountant must possess CISA / ISA or any other equivalent qualification. This is absurd too. What is the need to have an additional qualification from a qualified Chartered Accountant?

With the changing times, syllabus and training of CA course is changed and automatically slowly old members are phased out. And if quality of audit of firms is not up to the mark they too are phased out. So there is no need to have any extra qualification or change in status of firms/proprietary concerns of chartered accountants.

Last but the least 74% of total firms of chartered accountants are proprietary concerns. And if they are not interested in changing to partnership firms they have valid reasons for it. And sole and wholly it is the primary responsibility of individual chartered accountant-whether proprietor or partner who signs the audit report and than the responsibility (secondary) comes from the firm .Then how it is logical to insist on for partnership firms for allotment/empanelment of CAs firms?

Let me add here for an example that as a proprietor I have audited more than 400 branches of 23 Nationalised bank since 1973. How I am ineligible for different type of branch audits of Nationalised banks and also other government and public sector audits etc especially when I an registered with CAG too-as in most tenders /notification for different type of audits of almost all Nationalised banks and other government type audits minim mum requirement to apply is to have partnership-no proprietary concern is allowed. It is most illogical and absurd and necessary directives must be issued by concerned authorities to rectify it –all firms including proprietary concern must be eligible for all kind of audits.

It may kindly be noted that even in Partnership firms if one is found guilty of Code of Conduct member alone is held responsible and who has signed the audit report and not the firm. This means all members are personally liable and in fact are proprietors only (even if nomenclature is partnership firm).

A proprietor is like a head of any big company-CEO or President. Group Head etc who is responsible for quality control etc but actually does not do anything personally or is like a Prime Minister or Chief Minister etc –who controls his subordinates. Neither at such a level he is supposed to do all work personally.

Even Chairman and Managing Director of Bank controls his bank and is solely responsible for bank’s work but does not do everything himself at hundreds of his offices under him. Similarly, a proprietor controls and is responsible for quality of audit work only. He can employ tens of qualified Chartered Accountants to work under him if needed be. But why to employ first without their need?

Many well known branded companies get their goods manufactured from outside agencies but keep a quality control. Similarly, it is the quality of audit which matters and not who is actually on the job –whether proprietor or partner or Paid CA or an audit assistant. It is none of the business of client!

In sum up, only quality of a chartered account firm / concern matters irrespective of the fact whether it is proprietary concern or partnership firm. Are you listening concerned authorities and offices of government / bank / public sector undertakings?


 Composition of Firms

No. of Partners No. of firms Percentage
1 34524 73.9
2-3 9647 20.6
4-10 2466 5.3
10-20 95 0.2
Total 46732 100

Source: The Chartered Accountants World February 2004


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