Think twice before joining ca as a career

Raghavendra Prasad M (Partner of Prasad Rao & Associates Chartered Accountants GUDIVADA-521301)   (596 Points)

10 June 2015  

Think Twice to advise CA as career, to start practice, to apply Bank Concurrent Audit/to participate in Tenders​

 

Dear CA,

I qualified CA in 1985. After 30 years , -----

Think Twice to advise a student to pursue CA.

Think Twice to start/opt   Practice.

Think Twice to Apply  Bank Concurrent Audit/ to participate in a Tender.  

 

  1. Before advising any student to Join CA Course, I have been explaining the Opportunities for a Practicing CA and Employee CA duly drawing Comparison of 1985 and 2015.

Employment:

 

2015>At present majority are opting for employment.

 

In 1986, first I applied for Employment in a Public Sector Company as well a Professionally managed, diversified, Listed Private Sector company. Both paid me 1st Class Train fare and Lodging , Boarding  for attending interviews at New Delhi and Nagpur respectively . Public Sector Top officials who interviewed assured me that the Salary Scales are under revision and I can expect more than the Scale advertised .

 

Present: ICAI has taken the initiative of Capmus Selections, good initiative. Before that for some years , Newly Qualified has to apply to different companies, incur travelling, lodging and boarding from pocket besides – one date , 2 or more companies at different places – impossible to attend – may not get the employment in which interview attended and missed the other company also , due to absent.

  1. Practice:

In 1985 majority opted for practice. Some of my good friends working in Public Sector Banks, Public / Private Sector Undertakings quit the employment , started their own practice.

Section 44AB of the Income Tax Act, 1961 gave good professional opportunity , differentiated CAs , particularly in mofussil/taluk / district head quarters from ITPs and Tax Advocates.

Sunrise Profession.

 

I try to be an Optimist but not a pessimist , -----

Recent Observations:

Practicing son/daughter opting for employment.

Leading South Indian CA Firm branch –in-Charge , an MBA from USA and also a CS  , good academic record, quit practice and opted for employment after more than 2 decades practice.

 

 

Competition Commission Of India. Tendering System . News items CAs quoting as low as Rs 45 for Audit of a Sarva Siksha Abhiyaan account in AP  , Rs 100 for Audit of a Village Account in MP.

 

Recently, I attended Technical and Fiancial Bid opening of a State Government Undertaking. The Minimum Bid is Rs 2,00,000. Out of about 120 Bids , about 100 are for the Minimum Bid and one is for Rs 50,00,000 some are even below Minimum Bid. The GM , a CS/CMA, informed that for a No Profit/No Loss situation, Bid has to be for a Minimum of Rs 4,00,000 and in 2nd Year there may be some surplus as Study of organization helps saving man days . He wondered , CAs are trying through Politicians do it even for Rs 50,000 and For Free also stating they will have Experience in their Resume.

We are doing, along with 2 digit number of CA firms, Internal Audit of a State Government Undertaking and Fees last REVISED more than 6 years Ago. Inflation ?

 

The Companies Act,2013 – but for some changes by Companies(Amendement) Act,2015 , some Rules , Forms modified, 8 Member committee appointed , a Ray of Hope, …???

 

A large Bank called for Applications for Allotment of Concurrent Audit.

In my opinion, better to Think Twice , to apply this. We may not get Fees and No Wonder , if we end up paying to the Bank. I herwith attach the Fee Cuts , and a Summary is as follows:

Fees as per Scheme :

Sl No

Nature of Lapse/Shortcoming

Measure

Penalty-Rs

1

Audit Staff absent for 6 days

6days* Rs 1,000 *2

12,000

2

Leakage not pointed in time

Max 20% of  Fees

6,000

3

Lacunae in Systems not pointed out

Max 5% of  Fees

1,500

4

Frauds not detected

Max 25% of  Fees

7,500

5

Scrutiny failure

Max 5% of  Fees

1,500

6

Delay in submission of report

Max 10% of  Fees

3,000

 

 

 
  1.  

 

End of the Month, CA to pay ? Face the threat of Termination ?

 

Attachment:

 
 

 
 

 
 

 
 

 
 

 
 

SN
 

Coverage

  Area
 

Scope of work expected from

 Service Provider /CA Firm
 

Quantum of Measurement
 

Penalty to be imposed (For Service

        Provider / CA Firm)
 

1.
 

Attendance at

The Work

Area.
 

Attending branch/unit on daily

basis, by Representative of the

Service Provider /CA Firm,

and 2-3 times a week by the

Partner of the Firm.
 

Days of Absence in a month in

attending the branch/unit

(i) by the representative of the

Service provider / Firm or

(ii) by the Partner of the Firm
 

Twice the proportionate remuneration

of the month on a pro-rata basis for the

days of absence.

Eg.30 days in a month; Remuneration

of Rs.30000/-p.m. with an absence of

2days:Penalty to be charged :

Rs.2000x2= Rs.4000.
 

For Non-detection/ non-reporting:

1% of the amount, in the area of

incomeLeakagenotdetected/

reported. i.e. (i) Processing Fee (ii)

Upfront Fee (iii) BG/LC Comm. (iv)

Locker rent etc.,

 (Overall cap for both not to exceed

20% of monthly remuneration).

Eg. Processing Fee of Rs. 1 lac. is

identified by an Auditor other than CA.

after 2 weeks of its becoming due.

Penalty will be Rs.1000 for one

instance.If such instances are more,

then overall cap of 20% of

remuneration i.e.Rs.6000 (20% of

30000) to be charged.
 

Rs.250/- per major lacunae in an

account with a maximum penalty of 5%

of monthly remuneration.
 

2.
 

Detection

Income

Leakage
 

of
 

On a day to day basis income

leakage, if any detected, to be

reported.
 

Non-detection/ non-reporting /

short recovery of income

leakage from the date it

becomes due within a period

of 2 weeks. The penalty to be

levied is on account of

opportunity loss for the Bank.
 

3.
 

Detection of

Major lacunae

in the conduct

of the account,

systems&

procedures

etc.,
 

Failureto

comment on

Frauds, which

maycause

loss to the

Bank.
 

Detailed

Scrutinyof

Accounts and

submission of

observations.
 

Timely detection

lacunae.
 

of
 

major
 

Nondetectionofmajor

lacunae as enumerated in the

CRM Value Statements of

WBCAS.
 

4.
 

Detection/ Reporting of Fraud.
 

Non detection/ not reporting of

Fraud arising on account of

failure in implementation of

systems & procedures and

security lapses.
 

10% of monthly remuneration per

instance, with a cap of 25% of

monthly remuneration.
 

5.
 

Detailed Scrutiny of Accounts

within a reasonable time and

submission of observations

online on a daily basis.
 

Detailed scrutiny of accounts

by commenting as per Value

Statementsmentionedin

WBCAS, if not done:

Eg. All accounts within 3

months and thereafter once, at

the time of renewal/ review/

new sanction;
 

Rs.250/ per account with an overall

capof5%ofthemonthly

remuneration.
 

 

 

6.
 

Submission of

Monthly / Qly.

Concurrent

Audit Reports

 
 

Unacceptable

delay in the

performance

of obligations.
 

MonthlyReportstobe

submitted within a week of the

succeeding month to the

BM/HeadoftheUnit.

Thereafter, with their remarks to

                          nd

RM/DGM (BO) within 2 week

of the succeeding month of

report.
 

Non submission

schedule.
 

as
 

per
 

Non Submission: 10% of Audit Fee

p.m.

Non submission by over 3 months:

Termination of the Contract giving one

Month’s notice.

Delayed Submission: Rs.250/ per

day till submission.

(With a overall cap of 10% of monthly

remuneration p.m.)
 

7.
 

Should be done in accordance

with the time schedule specified

in the Agreement.
 

Identified areas of deficiency in

performance:

(i) Partner‟s not attending

branch/ unit 2-3 times a week;

(ii)Non-deputationof

representative every day;

(iii)Non-submissionof

Reports;

(iv) Non-detection of Income

leakage in time, resulting in

opportunity loss; &

(v) Non-detection/reporting of

Frauds.

(vi) Poor Quality of Reports.
 

Termination of Contract, by giving a

month's notice, as per Service Level

Agreement (SLA).