Professional Ethics-Code of Ethics

This query is : Resolved 

25 October 2010 A CA and a lawyer enter in an agreement to pay each other 12% of gross receipts received by them from clients referred to each other.

Will the CA a practising member b guilty of prof misconduct?

Since Bar council of india is one of the bodies prescribed by the council.(wherein a CA can enter in agreement with a member of a prescribed Prof body.)-Clause 2 Part 1





27 October 2010 they can enter in agreement but not for % age basis


29 October 2010 they cannot enter this type of agreement and if done it is profeesional misconduct.


30 October 2010 But they can enter in such agreements with members of prescribed fields and the bar council is one such prescribed bodies by the council.

Am i right?

30 October 2010 Sry forgot to change the status..

10 August 2024 The scenario you described involves a Chartered Accountant (CA) and a lawyer entering into a referral agreement where they agree to pay each other a percentage of the gross receipts from clients referred to each other. This arrangement involves several ethical and professional considerations under the Code of Ethics for Chartered Accountants and relevant legal provisions.

### **Analysis of the Agreement:**

1. **ICAI Code of Ethics:**
- **Clause 2 of Part 1 of the Code of Ethics** deals with the integrity and objectivity of the CA profession. It states that a CA should not engage in any arrangements that might compromise their independence or integrity.
- According to the ICAI Code of Ethics, Chartered Accountants are generally prohibited from sharing fees with non-members and other professionals, as it could affect their independence and create a conflict of interest.

2. **Bar Council of India and Professional Bodies:**
- The Bar Council of India (BCI) is indeed one of the bodies prescribed by the ICAI Council, and agreements with members of such bodies are subject to certain conditions.
- However, even if the Bar Council is a prescribed body, the nature of the agreement (i.e., sharing a percentage of fees) raises concerns under the professional ethics guidelines.

### **Key Considerations:**

1. **Professional Misconduct:**
- The **ICAI Code of Ethics** prohibits the sharing of fees with other professionals (including lawyers) unless there is a clear professional relationship that justifies such an arrangement. In general, direct sharing of fees based on a percentage is seen as an improper arrangement as it might lead to conflict of interest and compromise the independence of the CA.

2. **Referral Fees:**
- While referral arrangements are permissible under certain conditions, they must comply with the regulations set out by the professional ethics and regulatory bodies. These arrangements should not involve sharing of fees but may involve nominal referral fees, if at all.

3. **Regulations and Guidelines:**
- **ICAI Guidelines:** The guidelines issued by ICAI regarding referral arrangements must be adhered to, ensuring that the arrangement does not lead to the appearance of a compromise in professional independence or integrity.
- **Bar Council Regulations:** Similarly, the Bar Council of India has specific rules regarding fee sharing and referral arrangements, which must be followed.

### **Conclusion:**

- **Professional Misconduct:** Yes, a CA could be found guilty of professional misconduct under the ICAI Code of Ethics if they enter into an agreement to share a percentage of their gross receipts with a lawyer, as this could compromise their independence and integrity. Such arrangements are typically discouraged to maintain professional standards.
- **Referral Agreements:** While referral agreements are allowed, they must be in line with the ethical guidelines and should avoid any fee-sharing arrangements. CAs should ensure that any such agreement is compliant with the relevant rules and does not compromise their professional independence.

**Recommendation:**

To ensure compliance, the CA should consult the ICAI Code of Ethics and potentially seek advice from the ICAI Ethics Committee. Additionally, reviewing the Bar Council of India’s regulations and guidelines on such agreements would be prudent.



You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join CCI Pro
CAclubindia's WhatsApp Groups Link


Similar Resolved Queries


loading


Unanswered Queries