Job with practice

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 July 2013 Dear Sir,

I am working in one of big 4 audit firm in pune. I qualified CA Fianl in Nov-12 exam. I would like to ask can also sign tax audit report if i joined as a sleeping partner in any local CA firm.

I am asking this query becasue clause (11) of part i of first schedule to the ca act clearly states if you are having full time employeement in CA firm ( other than industrial employment like finance manager, director etc.), then you can signed tax audit report on behalf of local CA firm as a non-active partner, only the requirement is that you have to take prior permission of Institute.

Kindly revert with commets.

Querist : Anonymous

Querist : Anonymous (Querist)

30 July 2013 Can anyone resolved my above query. im waiting for your responce.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2024 Under the Chartered Accountants Act, 1949, there are specific regulations concerning the signing of audit reports, including tax audit reports, by members who are employed or engaged in full-time practice. Here’s a detailed look at the situation based on the CA Act and related regulations:

### **Signing Tax Audit Reports as a Sleeping Partner**

1. **Clause (11) of Part I of the First Schedule:**
- **Employment Limitation:** Clause (11) mentions that a Chartered Accountant who is employed full-time in a firm (other than industrial employment) cannot sign an audit report or perform statutory functions unless they obtain prior permission from the Institute.
- **Sleeping Partner Provisions:** The clause also specifies that a partner in a firm must be actively engaged in practice, and not merely a sleeping partner. The term “sleeping partner” refers to someone who is a partner but does not participate in the day-to-day operations or management of the firm.

2. **Full-Time Employment:**
- **Big 4 Firms:** If you are employed full-time in a Big 4 audit firm, this is considered full-time employment, and generally, you would not be able to sign audit reports or participate actively in another firm’s practice without special permission.

3. **Requirements for Signing Audit Reports:**
- **Prior Permission:** As per the regulations, if you wish to act as a sleeping partner and sign tax audit reports in a local CA firm, you need to obtain prior permission from the Institute of Chartered Accountants of India (ICAI).
- **Non-Active Partner:** Being a non-active or sleeping partner means you are not involved in the day-to-day practice or management of the local CA firm. However, you can only sign tax audit reports if you have the appropriate permission and meet the criteria set by ICAI.

### **Steps to Take:**

1. **Seek Permission from ICAI:**
- **Application:** Submit an application to the ICAI seeking permission to sign tax audit reports as a sleeping partner while being employed in a Big 4 firm. The application should include details of your employment and your role as a sleeping partner.
- **Documentation:** Provide any required documentation and adhere to the ICAI’s guidelines for obtaining permission.

2. **Understand the Regulations:**
- **Compliance:** Ensure that you fully understand and comply with the regulations and requirements set forth by ICAI. This includes understanding any limitations or obligations imposed on signing audit reports.

3. **Consult ICAI:**
- **Clarification:** If you have any specific questions or concerns, it is advisable to consult with ICAI directly or seek advice from a senior member of the profession.

### **Conclusion:**
If you are employed full-time in a Big 4 firm, you can potentially act as a sleeping partner in a local CA firm and sign tax audit reports, but this requires obtaining prior permission from ICAI. Ensure that you comply with the relevant provisions and seek the necessary approval to avoid any conflicts or violations of the CA Act.

For the most accurate and up-to-date guidance, contacting ICAI directly is recommended.

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