16 February 2016
Hi, One of my friends needs guidance on following issues pertaining to prevailing ICAI Code of Conduct. Would appreciate your kind guidance please:
1- As per Section Sec. 2(2)(iv) of Chartered Accountants Act 1949, A Member of the Institute would be Deemed to be in Practice if incl. others inter-alia, he renders Management Consultancy Services.
Question - (a) If that member is not in full time practice & is not performing any attest function, will he still be still be deemed to be in Practice.
(b) If Yes, getting deemed to be in practice - will he be bound by all the provisions for Code of Ethics for members in Practice including restriction relating to advertising his consultancy business.
What is seeked as clarification is that, if a Member of Institute, although not holding COP, forms a company only for Management Consultancy - Would he still be restricted by Clause 6 & 7 of First Schedule to Code of Ethics & other clauses thereof....?
2- Is there a distinguishing difference apparent on face of COP - identifying the same as either Full time COP or Part Time COP ...?
To my understanding - It's only in the form for applying the COP & institute's records, else there is no way of distinguishing between the same. Hence, in case, if any member still goes on to perform attest function with part time COP as applied & issued by ICAI - he can be caught only if the breach comes to notice of ICAI , otherwise not ...? Pls Confrm..
3 - Clause 11 - First Schedule to ICAI COC, 2009 read with Appendix 10 under CA Regulation 190A:-
(A) A Member in Practice is permitted to engage in following generally :
...(2) Private Tutorship
(B) A Member in Practice may engage in following occupations after obtaining Specific Permission from Council:-
...(7) Part time of Full time tutorship under ANY educational institution other than Coaching Organisation of the institute
Since, word used in ANY for specific permission,
Question: 1- how is private tutorship permitted generally in Part (A) different from specific - both are subject to 25 hrs condition ..? 2- As per my knowledge, a member in practice can not start his own coaching centre - else, he will not be entitled to perform any attest function ..? Pls confirm 3- If yes, for Ques. 2 above, how are so many senior Members showing themselves being into practice & actually doing both the activities.
4- Clause 6 & 7 to First Schedule :
(i) - CA Coaching Centres - (a) Can Members of ICAI advertise their coaching classes any which as CA with their names in pre-fix. There advertising is so aggressive with such adjectives like No. 1 Classes, Best Classes showing their attainments with detailed descriptions ....Is there no conduct applicable to them...?
If the CA concerned in not in full time practice - is he not bound by Clause 6 & 7 for Coaching Centers.
(ii)- Similarly, If a CA is not in full practice & is carrying Management Consultancy Business...two questions:-
a) Can he advertise & seek business any which way ..? Does Clause 6 & 7 not apply to him ...? b) Will he not automatically be treated as CA Deemed to be in practice & thus whole Code of Ethics would apply to him ...?
21 February 2016
I am providing answer only to your first question. You are right if a member is rendering Management Consultancy Service, he is deemed to be in Practice and ought to have a COP.
However, if he sets up a company, not a proprietorship, for rendering Management Consultancy Services, and is engaged as an full time director / manager, then he would not be deemed to be a member in practice, because the business is being rendered by a different entity.
Since the member is not in practice there is no requirement for COP and in response to your query 4(ii) Clauses 6 & 7 will not apply to him and the new entity can advertise and canvass business.
A CAVEAT: If the business entity is a partnership / LLP then one or more partners should be a non-member, else the Code of Ethics would apply to the firm / LLP as well.
CAclubindia
