THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (Setup … · Chartered Accountants, being the experts in finance,have crucial role to play in the growth of the economy by providing

The Institute of Chartered Accountants of India(Set up by an Act of Parliament)

An Initiative by:

Committee for Capacity Building of

Members in Practice (CCBMP) of ICAI

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA(Setup by an Act of Parliament)

COMMITTEE FOR CAPACITY BUILDING FOR MEMBERS IN PRACTICE of ICAI 2019-20

CA. Prasanna Kumar D.Central Council Member and Vice-Chairman,

Committee for Capacity Building for Members in Practice (CCBMP) of ICAI

CA. Prafulla P. ChhajedPresident, ICAI

CA. Atul Kumar GuptaVice President, ICAI

CA. Rajesh SharmaCentral Council Member and Chairman,

Committee for Capacity Building for Members inPractice (CCBMP) of ICAI

Members of Committee

CA. Anil Satyanarayan Bhandari Central Council Member Mumbai CA. Dheeraj Kumar Khandelwal Central Council Member MumbaiCA Shriniwas Yeshwant Joshi Central Council Member Mumbai CA. Durgesh Kumar Kabra Central Council Member MumbaiCA. Dayaniwas Sharma Central Council Member HyderabadCA. Sushil Kumar Goyal Central Council Member KolkataCA. Pramod Kumar Boob Central Council Member JaipurCA. Manu Agrawal Central Council Member KanpurCA. Anuj Goyal Central Council Member Ghaziabad CA. Prakash Sharma Central Council Member JaipurCA. Kemisha Soni Central Council Member IndoreCA. Satish Kumar Gupta Central Council Member Jaipur CA. Pramod Jain Central Council Member New DelhiCA. Sanjeev Kumar Singhal Central Council Member Delhi CA. Charanjot Singh Nanda Central Council Member New DelhiMrs. Ritika Bhatia Central Council Member New DelhiDr. Ravi Gupta Central Council Member New Delhi

Co-Opted Member of CommitteeCA. Pramod Nahar Ratlam CA. Shishir Bajpai VaranasiCA. Anilkumar Inderchand Kothari MumbaiCA. Charmi Shah MumbaiCA. Kirti Rakesh Agrawal NagpurCA. Vijay M Jain ThaneCA. Vikram Rameshchandra Golechha AkolaSecretary, Committee for Capacity Building of Members in Practice (CCBMP), ICAI : Dr. Sambit Kumar Mishra

Dr. Sambit Kumar Mishra, Secretary, Committee for Capacity Building of Members in Practice (CCBMP), ICAIICAI Bhawan, A-29, First Floor, Administrative Building, Sector – 62 Noida -201309, UP, IndiaPh: 0120-3045994; E-mail : [email protected]

Roadmap-Young Practitioners

COMMITTEE FOR CAPACITY BUILDING OF MEMBERS IN PRACTICE (CCBMP)

PROFILE

The Committee for Capacity Building of Members in Practice (CCBMP) is a non-standing Committee of the

Institute of Chartered Accountants of India formed under regulatory provisions of Chartered Accountants Act,

1949. This Committee was formed in the month of February, 2010 under nomenclature ‘Committee for

Capacity Building of CA Firms and Small & Medium Practitioners’ (CCBCAF & SMP) by combining previously

formed Committees, Committee for Capacity Building of CA Firms and Committee for Small & Medium

Practitioners. Initially, this Committee was thought to establish for facilitating consolidation and capacity

building of CA firms in order to address various problems faced by CA firms and to conceptualize and

implement various means for strengthening their capacity as well as providing comprehensive guidelines for

consolidation of CA firms. Similarly, Committee for Small & Medium Practitioners was formed in 2009 to

empower Small & Medium Practitioners to assimilate and apply ways for carrying out their profession in

efficient manner. Thus the ultimate objective of the Committee is to strengthen CA firms as well as Small &

Medium Practitioners to rejuvenate their practice portfolio.

Bearing above objective, the prime duty of the Committee is to create awareness amongst CA firms on

capacity building through consolidation by networking, merger & setting up management consultancy

services firm and popularizing the concept of union through arranging workshops, symposia and summit on

the benefits of consolidation and endurance to better accounting, auditing and ethical standards. The

Committee assists Small & Medium Practitioners in improving their visibility amongst the business community

and also attempts to create additional professional opportunities for them.

In tune to vision of ICAI which is ‘The Indian Chartered Accountancy Profession’ will be the valued trustees of

world class financial competencies, good governance and competitors, the committee has its motto for

Capacity Building of Indian CA firms through consolidation and empowering small & medium practitioners by

developing and upgradation of their professional competence. Accordingly, the Committee has following

issues to deal with;

• Preparation of code for consolidation of CA firms.

• Identifying means and ways for empowering SMPs.

• Upgrading and updating the knowledge and skills set on standard practice.

• Developing practice areas for SMPs.

• Identifying Role of SMPs in emerging areas.

• Developing technical material to facilitate practice in new areas of profession.

• Facilitation on IT savvy office management and audit tools for CA firms & SMPs.

• Re-engineering of profession and establishment of CA Firms with sound infrastructure and finance.

• Arrangement of social security & insurance protection for Practitioners & CA Firms

OVERVIEW

For Further Detail Please Contact at:Dr. Sambit Kumar MishraSecretary, Committee for Capacity Building of Members in Practice (CCBMP), ICAIICAI Bhawan, A-29, First Floor, Administrative Building,Sector – 62 Noida -201309, UP , IndiaPh: 0120-3045994; E-mail : [email protected]

CA. Rajesh SharmaChairman, CCBMP, ICAI

CA. Prasanna Kumar D.Vice Chairman, CCBMP, ICAI

i

Messages ii-iii

1. SetupofPractice—ChoiceofEntity 1-4

2. AdaptingToAChangingWorld 5-11

3. PointerstoSpecialization— 12-18

3.1 DT,IDT,Audit,FEMA,CompaniesActandothers

3.2 TierIIpractitionerscanbreakthebarriertoo

4. TheImportanceofaFunctional,yetProductiveWorkPlace 19-24

5. Branding&Marketing 25-26

6. ClientRelationships 27-28

7. Staffing&HRManagement 29-33

8. RevenueManagement 34

9. WorkFlowManagement 35

10. DocumentManagementSystem(DMS) 36-40

11. AuditTechniquesandTools 41-42

12. AuditPrograms 43-44

12.1GeneralAudit

12.2BankAudit

13. BestPractices—MappingwithotherGlobalAccountingBodies 45

14. Appendices 46-52

14.1ChecklistwhilePreparingaPartnershipAgreement

14.2EnrolmentofCharteredAccountantasaPractisingCharteredAccountant

CONTENT

CONTENT

ii

Intoday’scompetitivescenariothecontinuouslearningisimperative.Tocompetewiththeedgeandforenduringthevisibility,continuousupdatingtheknowledgeandlearningisprerequisite.ThereisnoscarcityofindividualExcellencies,knowledgeandtalentintheprofessionbutthereisanutmostneedtoempowertheyoungprofessionalstoenablethemtobecomesuccessfulleadersinthisgrowingeconomicalphase.

The Committee for Capacity Building of Members in Practice (CCBMP) has been workingassiduouslytoequipitsyoungmembersinmeetingthechallengeslikelytobefacedbythemandtoenhancevision,knowledgeandskillsoftheyoungmembers.Attractiveremuneration

packagesenticeyoungmemberstochooseindustryastheircareeroverPractice.However,opportunitiesforyoungCAshavebroadenedconsiderablyinpracticeintherecenttimes,notjustduetotheglobalizationofeconomies,butalsobecauseofnewlawsbeing inforce.TherearenumerouscareeropportunitiesforpracticingyoungCharteredAccountants.Theonlyrequirementistogearthemupandtoprovidethemindepthknowledgeofsubjectmattersoashaveanedgeovertheircounterparts.

KeepingthisisinviewCommitteeforCapacityBuildingofMembersinPracticehascomeupwithabookletforYoungMembersPractitionersi.e.‘A Road map for young Member Practitioners’.ThesaidBookletwillprovidepathforyoungCAswhodesirousofchoosingtheircareerinpractice.Thekitincludesoverviewofthevariousareasinpracticewithrelatedchallenges,areasofspecialisationssuchasIndirectTaxes,DirectTaxes,FEMA,CorporateFinance,newemergingareasforthespecializationsuchasMerger&Acquisitions,ForensicAccounting,Carboncredit,IFRS,basicinfrastructurerequirementsforsettinguppractice.TheKitwillmakethemembersawareofthewaysofbrandingandmarketingwithintheethicalframeworkofICAI.

IcongratulatetoCA.RajeshSharma,Chairman,CCBMP,ICAI,CA.PrasannaKumarD.ViceChairman,CCBMP,ICAIandearnestlyappreciatetheteameffortsoftheCCBMPfortheircontributionindevelopingaforesaidbooklet.

Ihopethattheyoungmemberswillfindthepractitioners’Bookletimmenselyuseful.

BestWishes

CA. Prafulla P. Chhajed President, ICAI

YoungCharteredAccountantswith theirenergy,zealandenthusiasmarestrongpillarsandwouldcertainlyleadtheprofessiontohighergrowthpath.Theyhavecrucialroletoplayinthecomprehensivegrowthofthecountrybyrenderingtheirservicestopublicatlarge.Becauseoftheirexpertiseanddeepunderstandingofnitty-gritty’soffinancialandbusinessarena,thedemandofCharteredAccountantshasbeenmultiplyingdaybyday.Inordertoberesponsivetothechangingexpectationsofvariousstakeholdersandthesocietyatlarge,ICAIhasbeentakingvarious initiativestokeepouryoungmembersabreastwiththe latestdevelopmentstakingplacearoundus.

TheCommitteeforCapacityBuildingofMembersinPractice(CCBMP)isbringingoutaYoungMembersPractitioners’bookleti.e.‘ARoadmapforyoungMemberPractitioners’toprovidetheyoungmemberswithinsightsintonumerousareasofpractice.Thepractitioner’sbookletaimsatequippingtheyoungmemberswiththeknowledgethatwouldenablethemtosetuptheirpractice,realizetheimportanceoftheirfunctionalareaandsharingwiththemtheknowledgeoftheauditprogramssothateffectivebusinesspracticescouldbefollowedthatcanbemappedwithglobalaccountingpolicies.Italsoaimsatknowledgeupdationswhicharethecorerequirementofeachandeveryprofessional.

ThispractitionerbookletalsoincludesvariousnewemergingareasforthespecializationandexpertisesuchasMerger&Acquisitions,ForensicAccounting,CarbonCredit,Arbitration,etc.

IcomplimentCA.RajeshSharma,Chairman,CCBMP,ICAI,CA.PrasannaKumarD.,Vice-Chairman,CCBMP,ICAIandothermembersofCommitteeforbringingoutthisbooklet.Ihopethatyoungmembers’practitioners’bookletwouldbeofimmensehelptotheyoungmembersintheunderstandingofchallengesandenablethemtohandleit.

WithKindRegards,

CA. Atul Kumar Gupta Vice President, ICAI

Message from President, ICAI

Message from Vice President, ICAI

ROadmap-YOuNg pRaCTiTiONERs

There is a high tide of hope for change in India. A young nation with 800million peopleunderage35, India isbrimmingwithoptimismandconfidence.Theyoungpeople’senergy,enthusiasmandenterpriseare India’s greatest strength. ‘Unleashing thoseattributes ismygovernment’sbiggestmission’wroteourhonourablePrimeMinisterShriNarendraModiinhisop-edpublishedintheWallStreetJournalonSeptember26,2014duringhisvisittotheUnitedStatesofAmerica.Indiaisoneoftheyoungnationsoftheworld.Theyouthofthenationisfullofuntappedpotential,freshthoughts,committedanddedicatedtoreachthepinnacleofsuccess.

WetheCCBMPofICAI,sharethealignedthinking.Wealsofeelthattherearevariousnewfrontierswhichareyettobeexploredbyouryouth.Securingbetterprofessionalopportunitiesandavenuesforourmembersinpracticeandindustry,empoweringthemwithcutting-edgetechnologythatwillenableustocreateaformidableandrobustfuturefortheprofessionaresomeareasofstrategicfocusthisyear.

IampleasedtonotethattheCommitteeforCapacityBuildingofMembersinPractice(CCBMP)oftheICAIhascomeupwithabookleti.e.‘ARoadmapforYoungMemberPractitioners’.Thepractitioner’sbookletgivesaninsightintonumerousareasofpractice.Thebookletwouldcoverhowtosetuppractice,areasofspecialization,brandingandmarketing,DocumentManagementSystem,checklistwhilepreparingpartnershipagreement.

IplaceonrecordmywholeheartedcomplimentstotheMembersoftheCommitteefortakingthisinitiativeforyoungmembers.Iamsurethattheinformationcontainedinthepractitioners’kitwillenabletheyoungmemberstoachievesuccessinalltheirprofessionalassignments.

WithKindRegards,

CA. Rajesh Sharma Chairman, CCBMP, ICAI

Theeconomyofourcountryishighlydependentuponcalibreoftheyounggeneration.TheCharteredAccountants,beingtheexperts infinance,havecrucialroletoplayinthegrowthoftheeconomybyprovidingtheirservicetothepublicatlarge.Postglobalizationandgrowthofeconomy,theopportunitiesforyoungCharteredAccountantsinpracticeareincreasingbyleapsandbounds.Itistheneedofhourtopreparethemtograsptheopportunitiesbyprovidingthem required guidance, expertise that help them to become successful professionals toefficientlyandeffectivelyperformthedutiestothepublicatlarge.

Inordertoempoweryoungmembersandtoprovidethemnecessaryguidance,theCommitteeforCapacityBuildingofMembersinPractice(CCBMP)hascomeupwithYoungMembers’Practitioners’Bookleti.e.‘A Road Map for Young Member Practitioners’.ThesaidBookletprovidestheknowledgethatayoungCharteredAccountantmustpossesswhenhechoosesanyparticularareaofspecialisation.TheyoungCharteredAccountantshavethedreamofsettinguptheirownpracticesbuttheylacktheknowledgeofthebasicinfrastructurerequiredforaCAfirm.

ThissaidBookletwillhelpthemingainingtheknowledgeofthebasicinfrastructuralfacilitiessuchaslayoutoftheoffice,furniture&fixtures,LibraryInterioretcthatwouldserveasthepre-requisitesforthesettingupofaCAfirm.TheBookletcoversvariousaspectsofpracticeforyoungmemberssuchasdocumentation,Audittools&techniquesnecessaryfordischargeoftheirdutieswithextremecareetc.

IwouldliketoextendmysincerewishestotheMemberoftheCommitteefortheirwholeheartedcontributionsforthesuccessfuldevelopmentoftheBooklet.IalsoappreciatetheeffortsputinbyDr.SambitKumarMishra,Secretary,CCBMP,ICAIandotherstaffofthesecretariatforbringingoutthissaidbooklet.

IwishthisBookletwouldcontributebetterunderstandingandimmenseusefulforyoungmembers.

WithWarmRegards,

CA. Prasanna Kumar D. Vice-Chairman, CCBMP, ICAI

Message from the Chairman, CCBMP, ICAI

Message from the Vice Chairman, CCBMP, ICAI

iii

mEssagE

1

SET UP OF PRACTICE – CHOICE OF ENTITY

1.

FROM THE MOMENT A YOUNG CHARTERED ACCOUNTANT DECIDES TO START UP A PRACTICE, HE ENCOUNTERS THE FIRST CHALLENGE OF DECIDING THE TYPE OF THE ENTITY THAT WOULD BE SUITABLE FOR HIM. THIS IN TURN IS DEPENDENT UPON HIS INDIVIDUAL DREAMS AND AMBITIONS, PERSONAL NEEDS, FINANCIAL SITUATION AND OTHER FACTORS. SOME PATHS ONE COULD FOCUS ON ARE:

1. FReelAnCinGThebigadvantagehereisthatonecantestwater,andone’sappetiteforfreelance,whilestillbeingemployed.Somefeaturesoffreelancingare:

• Onegetsupdatedindifferentareasofpractice.

• Freelanceassignmentsindifferentareasallowonetoknowthenuancesofthatspecificnatureofwork.

• Itallowstheuseofarangeofskillsonavarietyofprojects,allatthesametime.Thisisgreatforindividualswhoenjoydiversetasksandtopicsandworkbestwhentheyhavemultipleballsupintheair.

• Onecanchoosefromthelistofassignmentsasitensuresflexibilityinwork.

2. Sole PRoPRietoRShiPIt’seasytoformasoleproprietorshipsinceasingleindividualowns,managesandcontrolsthebusiness.

Some features are• TheProprietorhascompletecontroloveralltheaspectsofhisbusinessandtakesalldecisions,thoughhe

mayengagetheservicesofotherprofessionalsforday-to-dayactivities.

• Flexibilityinworking.

• Onecanearnmorethanenoughtoleadacomforta-blelifestyle.

• Benefits by converting to niche area practice, specializing in one area. For e.g., International Taxation,Business Valuation or rendering complete business solutions to specific sectors such asmanufacturing,hospitals,hospitality,franchisebusiness,conveniencestores.

• Recognitiontothesoleproprietorratherthantheorganization.

• Thesoleproprietorneeds tocreatevisibility forhispractice, throughpresentationofarticles,attendingseminars/conferencesasaspeaker/groupleader.

ForMs oF PrACtICe

sET up OF pRaCTiCE – CHOiCE OF ENTiTY

2

Roadmap-Young pRactitioneRs

• SoleProprietorneedstoprojecttheproprietorshipasanorganizationinsteadofa‘one-manshow’.

Challenges as a sole proprietor• Growthisfeasibleonlyuptoacertainlevel.Scalabilityofpracticeisextremelydifficultasonemaynotfind

thetimeandresourcestoprovidecomprehensiveservicesthattoday’sclientsexpectfromaCAfirm.

• Sincethemainpointofcontactwouldusuallybethesoleproprietor,inhisabsence,theclientwouldnotbecomfortableinteractingwithotherpersonnel.Thus,thesoleproprietorwillhavetocreateastrongsecondlineofmanagementwhichinitselfwilltaketimeandcostmoney.

• Theliabilityoftheproprietorisunlimited,i.e.itextendsbeyondthecapitalinvestedinthefirm.

• ThemultiplelawsandconstantamendmentsintheselawscreateahugechallengeforaCAremainupdated.Thisinturnmayimpactthequalityofservicesthatheoffershisclients.

• Inasoleproprietorship,continuityofservicestoaclientisabiglimitationasitislargelydependentonthelifeoftheconcernedCA.

3. PARtneRShiP FiRmTheshortcomingsofasoleproprietorshipareovercomebypartnershipfirms,wherethereisarelativecontinuityofexistenceofthebusiness,withunlimitedgrowthpotential.Itsfeaturesinclude:

• Itismultidisciplinary.

• Itisessentialthattimebeinvestedindevelopingthepartnershipagreement,withthefollowingarrange-ments,amongothers,spelledout:

* Howwillthebusinessbefinanced?

* Whowilldowhatwork?

* Whathappensifapartnerdies?

* Whathappensifoneorbothpartnerswanttodissolvethepartnership?

• Combinationof complementary skillsof twoormorepeople:widerknowledgepool, skills andcontactscouldleadtomanyareasofspecialisationandcatertomanysegments.

• Cost-effective,aseachpartnerspecialisesindifferentaspectsofthebusiness.

• Partnershipsprovidemoralsupportandwillallowcreativebrainstorming.

• Widevisibilitythroughpartners,withtheoptionofhavinghonourarypartners.

• Sincedecisionsareshared,disagreementscanoccur.Apartnershipisforthelongterm,andexpectationsandsituationscanchange,whichcanleadtodramaticandtraumaticsplitups.

The success of the partnership dependsmainly on egomanagement among the partners. There could be issuesrelatingtothesharingoffees/profits.HumanRelationshipmanagementamongpartnersshouldbegivenasmuchimportanceasthatisgiventocommercialunderstandingamongthem.Thusitisadvisableto:

• Documentasmanyworstcasescenariosaspossibleandwaystoresolvethem.

• Haveanopenmindapproachtoresolveissues.

• Bejointlyandindividuallyliablefortheactionsoftheotherpartners.

• Shareprofitswithothers.Decidehowyouvalueeachother’stimeand skills. E.g.,whathappens if onepartnercanputinlesstimeduetopersonalcircumstances?

• Bewillingtoconsultotherpartnersandnegotiatemoreasdecisionscannotbetakenindividually.

3

Amajordisadvantageofapartnershipisunlimitedliability.Generallypartnersareliablewithoutlimitforalldebtscontractedanderrorsmadebythepartnershipfirm.Forexample,ifyouownonly1percentofthepartnershipandthebusinessfails,youwillbecalledupontopay1percentofthebillsandtheotherpartnerswillbeassessedfortheir99percent.However,ifyourpartnerscannotpay,youmaybecalledupontopayallthedebtsevenifyoumustselloffallyourpossessionstodoso.Thismakespartnershipfirmtooriskyformostsituations.

Theanswerwouldbeadifferentbusinessstructurealtogether.

Checklist for a Strong Partnership AgreementThere isnosuch thingasa“simple”partnershipagree-ment. Itdoesnotmeanthat theagreementshouldbe inlegaleseordifficultforabusinesspersontounderstand.Whatitmeansisthattheissuesandcontingenciesthatneedtobeaddressedinapartnershipagreementarecomplex.Thereisnowayaroundthat.

WHY IS A GOOD PARTNERSHIPAGREEMENT ESSENTIAL?Theprocessofdoingtheagreementforcesyoutothinkandtalkthroughallthemajorscenariosyoumayfacein your partnership. This assures that you have complete and common understanding. It avoids unspokenassumptionsandresolvesmanypotentiallycontentiousissuesatthebeginningofyourrelationshipitself.

Nopartnershiplastsforever.Ifitbreaksdownorifonepartnerwantstoendit,dissolvingitshouldbedoneasquickly,fairlyandcheaplyaspossible,withoutdestroyingthevalueintheunderlyingbusiness.Yoursuccessplanisdefined. Itputsdownhowimportantmatterswillbeaddressedwhenyousucceed(e.g.distributingprofits,cashingin,etc.)

Partnership agreements are not about trust or acrimony. They are about communication and common under-standing.Theyareaboutbuildingastrongrelationship.Theyareaboutworkingonanagreementtodaythatavoidsmessyandexpensivedisputesinthefuture.

FormoreinformationontheessentialconstituentsofaPartnershipagreement,pleasereferAppendix-1.

Finally,pleaseremember:

Thebest partnership agreements areoftennever looked at againbecause the level of good communication andcommonunderstandingthattheyarebaseduponhasbeenaccomplishedintheprocessofdoingtheagreement.

4. LimitedLiabiLityPartnershiP(LLP)ThisisthefutureoffirmsinIndiaasthiscombinestheadvantagesofacompanyandapartnershipfirm

• ItisgovernedbytheLLPAct,2008.

• AnincorporatedLLPhasperpetualsuccession.Not-withstandinganychangesinitspartners,theLLPwillbeasameentitywiththesameprivileges,immunities,estatesandpossessions.

• TheLLPshall continue toexisttill it iswoundup inaccordancewith theprovisionsof the relevant law.Liabilityinthiscaseislimitedasopposedtopartner-shipfirmswhereliabilityisunlimitedandpartnersarepersonallyliable.

• TheActgivesLLPstheutmostfreedomtomanagetheirownaffairs.PartnerscandecidethewaytheywanttomanageitandstateitintheformoftermsandconditionsintheLLPAgreement.Inmostcases,theActprovidesthatsaidprovisionswillbeapplicableonlyincasenothingisprovidedintheLLPAgreement.

• Itiseasiertojoin,transferorleavethepartnershipofanLLPfirminaccordancewiththetermsoftheLLPAgreement.CeasingofoldpartnersandinductionofnewpartnerswillautomaticallyleadtochangeintheownershipofanLLP.

sET up OF pRaCTiCE – CHOiCE OF ENTiTY

4


• Inadditiontothesigningoffinancials,thereistrans-parencythroughfinancialstatements,whicharepub-licdocuments.

• Unlikeapartnership,thepartnersinanLLParenotagentsofthepartnersandtherefore,arenotliablefortheindividualactsofotherpartners.

5

ADAPTING TO A CHANGING WORLD

2.

OpportunitiesandChallengesForyoungmembersinPractice

thisarticleattemptstobrieflyexaminethose areas and offers the youngmembersanoverviewofanalternativecareerpathinPractice,whichchallengestheir ability and provides them anopportunitytoprovetheirworth.

SuRvivAl AnD SuCCeSS DePenD on SPeeD AnD imAGinAtion.

n.R. nARAYAnA muRthY

Thesewords by Shri N. R. NarayanaMurthy are apt for any professional, especially relevant in today’s scenariowhilediscussing variousprofessional opportunities forCharteredAccountants inPractice. Even thougha lothasbeenwrittenandspokenaboutonthistopic,still,discussingthissubjectwithspecificallytheyoungmembersofourProfessioninmindbringsoutawholenewdimension.

AsweareremindedoftheyoungmembersfromTier1&2cities,whosharedwithustheirviewsonvarioustopicssuchas:theprofession,ICAI,fellowprofessionalsandtheirexpectations.Wecoulddiscernahungerinthemtoexcelandtheirenthusiasmshoneforth,tinged(Wemustadd),bytheiranxiety,whichwewilladdressinduecourse.

ThereareendlessopportunitiesforayoungmemberinPractice.Wehavetriedtogrouptheseintothoseopportunitiesthathaveemergedduetotheglobalisationofeconomiesandthosethatcomeundertraditionalareasofpractice.Thelistisonlyindicativeinnatureandnotexhaustive.

Globalisation of economies 1. inteRnAtionAl tAxAtionWith the advent of globalisation and cross border transactions, transfer pricing and double taxation avoidanceagreements(DTAA)havecomeintosharpfocus.Revenueauthoritiesacrosstheglobeareverykeentoensurethattheir respective countries are not deprivedof their legitimate shareof taxes on these cross border transactions.Companiesoperatinginmultiplecountriesarenowsubjecttointensereviewsandscrutinyoftransactionswiththeir

adapTiNg TO a CHaNgiNg WORLd

6


relatedparties.This calls forcompanies tobeequippedandwellprepared toaddressanyquestions the revenueauthoritiesmayhaveintermsoftheirinternationalbusiness.YoungmemberswithdeepknowledgeandunderstandingoftheDTAA,TransferPricingregulationscanplayakeyroleinanadvisorycapacityandassistthesecompaniesinpreparationoftransferpricingreportsandotheraspectsofinternationaltaxation.ItmaybenotedthatthisisneededforallsizesofcompaniesfromSME’stolargemultinationalsandthisinvolvesadetailedanalyticalskillonpartoftheexperttounderstandandexpostulateseveralaspectsoftheexternalenvironmentinwhichtheentityoperatesanditsowninternalstructuretobeeffectivelyabletocommunicatetotheauthoritiesthejustificationsrelevantforthepostureadoptedbythecompanyinvarioustaxablejurisdictions.

2. inbounD AnD outbounD inveStmentSForeignentitiesplanningtoinvestandstarttheirbusinessoperationsinIndiaarerequiredtocomplywithahostofregulations.SimilarlyIndiancorporateswhoplantoinvestandstartbusinessoperationsoutsideIndianeedguidanceonvariousregulatoryframeworkthataffectssuchinvestments.

ThecurrentstateoftheIndianEconomyhas,toanextent,impactedinattractingForeignDirectInvestments(FDI)intothecountry.However,FDIisboundtogainmomentuminthenearfutureoncethereiscertaintyandstabilityontheIndianpoliticalfront.IncasetheexpectedfurtherliberalisationintheFDIpolicymaterialises,foreigninvestorscouldtapintomanysectorsthathavecurrentlyopenedupforinvestmentwithminimumornogovernmentinference.Similarly,Indiancompanieswillcontinuetotapintoresourcesandopportunitiesavailableoverseas.

Opportunitiesinclude:

• AdvisoryservicesonFEMAregulations

• RepresentingclientsundertheFEMAregulations(ad-judicationproceedingandappeals)beforetheSpecialDirector(Appeals)

• Certificationwork:borrowingandlendinginforeignexchange,deposits,remittanceofIndianassetsbyNRIs,export/importofgoodsandservices,tonameafew

• FEMAcomplianceaudit

• Financialandlegalduediligence

• AdviseonPrivateEquityFinancingandStructuring

• AdvisoryofDebtStructuringandotherfinancialop-tions

• Advisoryandanalysisonfinancialoptions

• Regulatoryapprovalsbeforecompetentauthorities,forexampleRBI/SIA/FIPB

• SettingupofSEZ/EOU/STP

• FormationofSubsidiaryCompaniesofforeigncompa-nies,includingbranchesandliaisonoffices

• ValuationofsharesforregulatorypurposesgovernedbytheCentralBank’scirculars.

3. CRoSS boRDeR meRGeRS AnD ACquiSitionSM&A,asweknow,isastrategyadoptedbyCorporatestoexpandtheiroperationswithaviewto:a)increasetheirprofitability;b)accessnewtechnology;c)accessaskilledtalentpool;d)accesscapitalandnewmarkets;f)Diversify,andsoon.WiththeeasingofrestrictionsoncrossborderM&Avisaviscapital,thereisatremendousincrease in international investments.TheCompaniesAct,2013hasopenedupmergersof IndiancompanieswithforeigncompaniessubjecttoRBIapprovalsinspecifiedjurisdictions.


• Advisoryservices

7

• Investmentbanking


• AdviceonPrivateEquityFinancingandStructuring

• Businessvaluations

• RegulatoryapprovalsfromcompetentauthoritieslikeRBI/SIA/FIPB

4. KnOwLedgePrOCessOutsOurCing(KPOs)In the era of globalisationmany companies have undertaken outsourcing as part of their business strategies. Asmoreandmorecompaniesarejoiningtheoutsourcingbandwagon,thisphenomenonisgainingenormouscorporateattention.Recentmarketsurveysindicatethatalmost80percentofcompaniesexpecttoincreasetheirinvestmentinoutsourcing.Morerecentlyhowever,outsourcingofF&Afunctionshasbeengrowingrapidly.

KPOcallsforahighdegreeofqualityindeliverables,investmentinqualityinfrastructureandthetalentpool,enhancedriskmanagement,controlsandmaintenanceofconfidentiality.

F&Aoutsourcingisnotjustrestrictedtotransactionaccounting.Itisincreasinglycoveringcomplexandhigh-endF&Aactivities like year-endfinalisation, statutory compliance andmanagement reporting. Small tomid-sizedbusinessofferfantasticopportunitiesforoutsourcingF&A.

OtherKPOrelatedareasincludemarketanalysis,equityresearch,financialmodeuling,businessprocessreengineering,etc.

5. ShAReD CFo SeRviCeSMany small tomediumbusinesses requireCFO services to helpmanage their growingbusinesses.Howeverwithconstraintsonfinancialresources,affordabilitybecomesachallenge.SMEscannotaffordafulltimeCA,norcantheyaffordnottohaveone.YoungCAswithareasonabledegreeofexperienceandexposurewillbeabletofillthisgap.Theconceptisgrowingoflate.


• Definingentrystrategy

• IncubationsServicessuchasCompanyincorporations,officesetandinitialteamforaccounting,reportingandcompliance

• Relationshipmanagementwithinvestors,lendersandbankers

• Managinggovernmentauthorities

• Reviewandanalysisofmanagementreports

• StatutoryComplianceManagementandAdvisory

6. iFRSTheworldwideacceptanceoftheIFRShasestablishedacommonplatformgloballyforthisprofession.IthasnaturallycreatedagreatdemandforIFRSprofessionalswithknowledgeandexperienceofthesestandards.Indiatooadoptedthem,convergingthemwithourexistingaccountingstandards,andrenamingthemtheIndianAccountingStandards(IND-AS).

OPPORTUNITIES INCLUDE• OfferingindependentadvisoryservicesinIFRS,includ-ingconversionoffinancialsasperIndianGAAPto

IFRScompliantones


8


• Tieupswithlargeauditfirmsandprofessionaladvi-soryservicescompanieswhoneedIFRSprofessionals,asthesefirmssupportcompaniesinsuccessfulimple-mentationofinternationalstandardsaspartoftheaccountingstructure.

7. buSineSS vAluAtionWiththeglobalisationandliberalisationofeconomies,M&AandStrategicPartnershipshaveincreasedmanifold.TheobjectiveofBusinessValuationistodeterminethefairmarketvalueofthebusiness,i.e.thepricethebuyerandsellernegotiateatarmslength.Itisanevolvingfieldandthereareverylittledevelopeddoctrinesrelatingtotheapplicationofthespecificmethodamongstvariousvaluationmethods.Manyfactorsdrivethevaluationofthebusinesssuchasthenatureofthebusiness,specificindustryscenario,economicoutlook,thecompany’sfinancialposition,etc.Therearemanymethods to valueabusiness suchas,AssetApproach, IncomeApproachorMarketApproach. Further,valuationisrequiredundervariousstatuteslikeFEMA,theCompaniesAct2013andseveralsuchlaws.

8. CoRPoRAte GoveRnAnCeThis is generally understood as a systematic process by which companies are directed to ensure that they aremanagedtomeetstakeholderaspirationsandsocietalexpectations.Itleadstocorporategovernancephilosophiesoftrusteeship,transparency,empowermentandaccountability,andcontrolledandethicalcorporatebehavior.TheCompaniesAct,2013laysspecialemphasisoncorporategovernance.


• Designingcodeofconductgovernance

• Designingriskmanagementframeworks

• Designinginternalcontrolframeworks

• Designingwhistleblowerpolicies

• Auditofcorporategovernance

• Auditoninternalcontrolfunctions

9. extensibLebusinessrePOrtingLanguage(xbrL)TheXBRLreportingsystemhastransformedfinancialreportingandtheuseofthesereportsbyvariousstakeholders.Interactivedatahasenabledinvestorsandexternaluserstomakeinformeddecisions.ThishasenabledCAstoprepareerrorfreeaccountsastheaccountingdataisbeingmappedintoarecognised

taxonomyandhelpserrorstobeaddressedatthisstage.ThishasgivengreatflexibilitytoCAsinthepreparationofdifferenttypesofmanagementreports.TheCompaniesActrequiresacertainclassofcompaniestofiletheirfinancialstatementsinXBRL.


• Extractingfinancialstatementsfromaccountingpack-ages(Tally,ERP).

• Mappingoffinancialstatements

• Reviewofmapping

• Actualconversion

• ValidationofXBRLfiles


• End-to-endprojectimplementation,includingprepar-ingcompleteXBRLdocumentsonafullyoutsourcedbasis

9

10.COmPaniesaCt,2013Theenactmentof themuch awaitedCompaniesAct, 2013hasmarked thebeginningof a newera in the IndianCorporateWorld.TheCorporatesinthisevolvingregulatoryandeconomicenvironmentneeddependableandskillfulprofessionalswithspecializedknowledgeintheintricaciesoftheAct.

OutsourcingopportunitiesincludemaintainingofCorporateLawRecords.

11. DiReCt tAx CoDeTheGovernmentofIndiaisintheprocessofrevising,consolidatingandsimplifyingthelanguageandstructureofthedirecttaxlawsintoasinglelegislation–theDirectTaxesCode(DTC).ThenewDTCproposessubstantialchangestothecurrentdirecttaxlegislationandislikelytohavesignificantimpactonthebusinesscommunity.ItiswidelyexpectedthattheproposedDTCwouldbereferredtoaParliamentaryCommitteeforfurtherdeliberationsandtheCommitteewouldhaveonemoreroundofpublicconsultation.Itofferstremendousscopeforyoungmemberstospecialiseanddistinguishthemselvesintheprofession

12.gOOdsandserviCestax(gst)Asweareallaware,theproposedGSTaimstoreplacemultipleindirecttaxesinIndia,suchascentralexcise,additionalexcise,value-addedtaxandservicetax.TheintroductionofGSTisakeyreformmeasurethatcouldhaveimmensemacroimplicationsforIndia’sgrowthpotential.ThebiggestpositivefromtheintroductionofGSTwouldbehigherrevenueforthegovernmentthatwouldcomefrombroadeningthetaxbaseandincreasingcompliance.

Opportunitiesincludes

• Recordkeeping


• Departmentalaudit

• ExternalauditofGSTrecords

• Certificationsfortaxcreditsandspecialaudits,ifany

13. FoRenSiC ACCountinGForensic Accountants are often engaged by companies when litigation is anticipated or suspected. A ForensicAccountant often utilizes his understanding of business information & financial reporting systems, accountingstandardsandprocedurestoinvestigatesomeformofeconomiccrime.

14. otheR AReAS one CAn exPloRe• Facultyassignmentsinprofessionalinstitutions

• NomineedirectorsforforeigncompaniessettingupofficesinIndia

• Businessstructuringassignments/consulting

• Draftingandconveyance;

• Contracttendering(negotiation)areasofconsulting

• SettinguppracticeintheareasofminorActs–suchasPF/ESI/LuxuryTax/EntertainmentTax/Stampdutylaws,etc.

• TraditionalareasofPractice

• Taxation:Intraditionalareasofpractice,DirectandIndirecttaxationhavealwaysbeenamajorareaoffocusbyCAs.


10


• DirecttaxationcoversareaslikeAdvisoryServices,TaxFilings&Compliance,Appeals&Proceedings

• IndirectTaxhelpsonedevelopexpertiseinnicheareaslikeExcise&Customs,ServiceTax,VATandprovideservicesasConsultant,Taxfilings,Appeals&Proceedings,etc.

Onecanexamineanindustryspecialisationinalltheabovefields.

1. Internal Audit:Thisimportantactivityhelpsthemanagementofcompanieswithaninsightintoseveralareasofimprovement:systemsandprocesses,effectivenessofinternalcontrols,performanceandriskmanagement,statutorycompliancemanagement,reductionincosts,revenueenhancementopportunities,andmore.

Opportunitiesincludeauditsintheareasof:

• Operations

• Finance

• Compliance

• InformationSystems(IS)

• Investigation

• Management

• InternalaudithasfastbecomeanintegralpartofBoardproceedingsandauditcommitteesareexpectedtoreviewvariousfindingsandtakeadequatestepstoaddress issuesmentionedtherein.Hence internalauditorsoflistedorotherlargecompaniesnowhavehighvisibilityandlotofexpectationsrideonthem.

2. Bank Auditsincludeinventoryandreceivablesaudit,concurrentaudit,informationsystem(IS)audit,statutoryauditandrevenueaudit.

3. Insurance sectorincludesadvisory,Actuary,Broker,Surveyor/lossassessor,arbitration,concurrentauditors,certificationsrequiredunderIRDA,InsuranceinvestigationsandconsultancyinInsurancelaws.

Itmaybenoted that foreach specialisationareamentionedabove, youngpracticingmembersmayhave toundertakespecialisedcoursesposttheirqualification–eitherthroughICAIorrespectiveWorldBodies.Manyofthesecoursesareavailableonline.

ChAllenGeS thAt YounG membeRS FACeWehavetriedtohighlightafewofthemanychallengesyoungmembershavetodealwith:

• Increasedinfrastructurecostofsettingupanofficeandongoingrentsandmaintenance

• Reachingouttopotentialclients,i.e.marketingtheirservices

• Clients’ unwillingness to increaseprofessional feesdespite the increased level of compliances expectedundervariousstatutes

• Lackofeffectivecommunicationandpresentationskills

• Absence of informal networking forums such as a CA club to facilitate interaction with professional col-leaguesandhelpbuildnetworks

• Limitedaccesstoadvicefromseniorprofessionals,es-peciallyforthoseworkinginTier2cities

• Limitedaccesstoaffordabletechnologytohelpbuildconsistentstandardsacrosstheprofession,eg:audittools

• It may be noted that the Institute is seized of most of these challenges and is working steadfastly in address-ingthem.

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• Opportunities are aplenty. Challenges can be addressed andmanaged. It’s best to choose an area ofinterestoneispassionateaboutandwillingtogothatextramiletobeaspecialistin.

• WewouldliketoconcludebysharingtheadvicefromthegreatspiritualguruSwamiSivananda.

Putyourheart,mindandsoulintoevenyoursmallestacts. Thisisthesecretofsuccess.


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POINTERS TO SPECIALISATION

3.

specialisationbyaCharteredaccountant

SPECIALISATION IN ANY SUBjECT IS ACHIEVED BY A CONTINUOUS AND THOROUGH STUDY OF THE SUBjECT BEYOND THE CURRICULUM ExAMS. WHILE SPECIALISED / ExPERT kNOWLEDGE, BACkED BY A CA DEGREE, IN ANY SUBjECT IS HIGHLY USEFUL AND RECOGNISED, IN THE CASE OF TAx LITIGATION PRACTICE, qUALIFYING AS AN ADVOCATE IS AN ADDED ADVANTAGE. HOWEVER FOR A CA, THE SCOPE FOR SPECIALISATION IS VERY WIDE.

theRe ARe no ShoRtCutS to SuCCeSS.

Withdynamicallychangingstatutes,regulatorymechanisms,businessmodels,andbusinessenvironment,thereisanincreaseddemandforexpertswhocansteerthebusinessthroughsuchchangesandCAsarethepreferredchoice.

KnowleDGe oF ACCountinG: A FunDAmentAl RequiRementRegardless of the area of specialization, a strong accounting knowledge with conceptual understanding of theAccounting Standards is a fundamental requirement for professional excellence. Its practical application helpsvisualisesituationsandevenintheeraofcomputerization,suchknowledgehelpstounderstandthemodalitiesandpenetratethebarrierofcomplexitiesofsystemarchitecture.Hence,itisrecommendedthatforaperiodoftwoyearspostqualification,oneshouldpredominantlyinvolveoneselfinthefieldsofaccounting,auditandanalysis,includingMISandfinancialprojections,whichgiveapracticalinsightintothefieldoffinanceandaccounts.

Do You hAve whAt it tAKeS?Specialisation calls for a structured, focused approach to a particular subject. People who have achievedspecialisationtendtosharethefollowingtraits:

• Ananalyticalmindandthereadinesstowalkthatextramile.

• Willingnesstostudythesubjectthoroughly.

• Abilitytoadapttochanges,yetopentosuggestionsfrombothseniorsandjuniors.

• Continuousandtimelyupdatingofoneselfonthesubjectopentoopportunitiestoteachandparticipateintechnicaldiscussions,howeverpoorlypaidorburdensome.

• Asimplifiedandclearapproachtoteachingthesubject.

• Goodcommunicationskills,whetherwrittenororal,fluencyinspeech,confidentlyconveyingtheintendedmessage.

• Interestindevelopingsoftskills.

• Abilitytosay‘NO’toworkwhichdetoursfromthepathofspecialisation.

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APPRoACh to SPeCiAlizAtionOncethepracticalitiesoffinancialaccountingareclearlyunderstood,thenextstepistoidentifyanareaofspecialisation,whichwouldinvolvethefollowingsteps:

• Identifyingstudymaterialtogetanindepthunder-standingofthesubjectofspecialisation.

• Identifyinganyspecialisedcourseincludingcrashcoursesinthegivenfield.

• Lookingoutforopportunitiestoteachthechosensubjectofspecializationandstarttoteaching.

• Gettingassociatedwithafirm/organizationwhereyourchosensubjectisalreadybeingpracticed.

• Attendinglecturesandseminarsonthetopic.

• Makeyourpresencefeltinvariousseminars,meetingsinthespecializedtopicbyexpressingyourpointofviewandcounteringtraditionalthinking.

• Simulationsanddiscussionwiththeexpertsandmentors.

• ContributionofarticlestoCAjournals.

• Subscribingtospecializedjournalsinthefield—bothdomesticandinternational.

• Continuouslyidentifyandadoptbestpractices.

AReAS oF SPeCiAliSAtionThereareanumberofsubjectsonecanspecialisein,bothintaxandnon-taxareas.ACAspecializingintaxlitigationwouldbeabletorepresent/appearforthecaseuptothelevelofTribunalbutwouldbeineligibletoappearbeforetheHighCourt/SupremeCourt.However,whenitcomestonon-taxareasthereareseveralotheravenueswhichaCAcanpursueandexcel,whicharealsodiscussedbelow.Here’salistofsomeofthekeyandthemorewidelyrecognizedareas,bothnon-taxandtax-related,availableforspecialisation:

DiReCt tAxeSSpecialisationindirecttaxeshastwoangles.Withincreasedcompliancerequirementsandthecomplexitythathasaccompaniedthem,specializationincomplianceofdirecttaxesisuseful.Taxplanning,taxmanagement,internationaltaxation,corporatetaxation,knowledgeoftaxprovisionsapplicabletodifferententities,conversionofonekindofentity toanother kindofentity likepartnership to LLP, LLP toa companyandviceversaarehighlyuseful to thebusinesscommunity.

inDiReCt tAxeSIndirecttaxisaveryimportantsourceofrevenuetotheGovernment,sospecializationinthissubjectthrowsgreatscopeinthepractice.Sincethisisatransactionbasedtaxation,theamountinvolvedisalwayshigherandthenumberofentitiesrequiringthisserviceisalsoquitelarge.

FemAIntheeraofglobalisation,knowledgeofFEMAishighlyessential.Whileitisrequiredtoknowsomeoftheprovisionseven forbasicaudit, a specialization in thisfield togetherwith international taxationwouldbeconsideredhighlyusefulinpractice.Ifonedecidestoconsultinthisfield,knowledgeofFEMAandvariousotherprovisionsregardingECB,FDI,outboundinvestments,etc.isneeded.

FoReiGn tRADe PoliCieSForeigntradepolicyisveryusefultotheindustry.Notonlydoesknowledgeinthisfieldhaveagoodcareerscopebutthenumbersofexpertsinthissubjectarefew.Athoroughknowledgeofimportandexportregulations,customs

pOiNTERs TO spECiaLisaTiON

14


duties,anti-dumpingregulationsandinternationaltradecanbeagreatareaforpractice,especiallywiththeuseoftechnologyineveryoffice.

CoRPoRAte FinAnCinGRaisingfinanceforbusinessincludingequityraising,preparationofconnectedpapersandnegotiationoftermsofsuchdebtsisoneofthenicheareasofpractice.Forthis,anindepthknowledgeofworkingcapitalrequirements,bankinglendingnorms,RBIpoliciesregardinglendingandalternatefinancesisrequired.

Knowledge of structured debts with equity conversion options and their implications, to the promoter and theinvestorwouldhelpclosethedeals.Thisrequiresextensivenetworkingandestablishingconnectwithpeoplefromacrossvariousbusinessverticals.

lAbouR lAw ReGulAtionS AnD ComPliAnCeS theReoFWith increased responsibilityof thedirectorsunder theCompaniesAct,2013 it is important that thecomplianceregarding labour laws isgiven importance.Specially, intheconstruction industryandothersimilar industries, thisaspectishighlyrelevant.ACAcandoaperiodicalthoroughauditoftheconstructionandcontractworksandreportthenon-compliancesorsuggestionstoensurecompliance.

tuRn out StRAteGieSThere are several reasons why companies fail in what they wanted to achieve. Studying reasons, helping themanagement to take the right decisions and advising on improvingoperational efficiencybyundertaking variouscostingandotheranalysiswouldhelpthecompanyinturningaround.Thisishighlychallengingandrewarding.Further,inthecaseoflossmakingcompanies,consultantshaveagreatchanceasthecompanydoesnotgetprofessionalsonfulltimebasis.

internaLCOntrOLs,sOxandOtheraLLiedauditserviCesInternalcontrolplacesacrucialroleinthesuccessofanybusiness.Makercheckerconcepttoadvancedtechnologiescontrolsgivesahugeopportunitytoapersonasanoutsidertoverifytheexistenceofinternalcontrolsinacomplexbusinessenvironmentandadvisethemanagement.Further,establishinginternalcontrolsandensuringthattheyarecontinuouslyfollowedisoneofthekeyresponsibilitiesofthemanagement,thusmakingthisservicespecializationmuchsoughtafterbycompanies.

SYStemS AuDit in A ComPuteRiSeD enviRonmentApartfromtraditionalaudits,areaslikeauditingthesystems,makercheckerconcepts,flowanddelegationofpowers,its potential risks,weakness inmultiple access environments, cloud computing and itsweakness, etc. pose greatopportunitiesforaCAtoanalysethesesystemsandgiveareporttothemanagement.

suPPOrtserviCesFOrsOFtwaredeveLOPment,testingand imPlementAtionA CA is capable of understanding, articulating business flows, work flows and mapping the same in a softwareenvironment.Athoroughknowledgeofinternalcontrolsisrequiredforanybusinessenvironment.Somethingthatisveryhelpfultosoftwaredevelopmentengineers.Similarly,forimplementationaCAwillbeabletobettervisualizesystemsandprocedures,internalcontrols,statutoryregulationsgoverningtransactionsandtypeofreportsrequiredtobegeneratedtomeetstatutorycompliances.

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mAnAGement oF FAmilY Run buSineSSeSInthecaseoffamilyrunbusinesses,aCAcantakeontheroleoftransitioningthemanagementfromonegenerationtothenextgeneration.SeveralfamilyrunbusinessesengagetheservicesofaCAforthesmoothtransferofknowledgeofthebusinessfromthefathertothechildren.Asaconfidantetothefamily,elderslooktotheirCAstohandholdthewholetransitionofthechangeinthemanagementtothenextgenerationandthisprocessgivesagreatopportunityforyoungsterstoexcel.

PRePARAtion FoR iPoAnycompanywhichintendstogopublictoraisefinancerequiresimprovementinseveralareasoftheiroperationsincludingfinanceandcorporateaspects.ACAcanstudyvariouslistingrequirementswhicharepublishedbySEBIfromtimetotimeandpreparethecompanytogopublic.Thisgenerallyinvolvespreparationofquarterlyfinancials,ratingthe company, updating all the statutory records, bringing discipline in various departments for smoothquarterlyclosures,integratingallthedepartmentsfromthefinanceperspective,implementingmonthlycutoffproceduresasagainstannualcutoffprocedures,etc.

PRePARAtion FoR A FinAnCiAl Due DiliGenCeWith increasedactivity inmergers&acquisitions, ithasbecome imperative foreverycompany tobe ready foraduediligence at any point of time. Though companies have various departments to ensure compliances and arereadilyavailablewithalltheinformationsoughtbyaninvestor,aprofessionalapproachgivesdifferentresults.Asaprofessional,severalinternalaspectsofthebusinesscanbequestionedtoensurethatwhentheinvestorcomes,themanagementwillbeabletoanswersuchquestionsconfidently.Thisworkrequiresaspecialapproachtoensurethatthecompanyisnotsurprisedbytheinvestor’steamovervarioussensitiveissues.Anearlydetectionofsuchsituationshelpsthemanagementinavoidingaccidents.Thiscanbeachievedthroughathoroughstudyofvariousoperationsincluding operational efficiencies and statutory compliances. Analysis of contractual obligations, debt covenants,statutoryaspects,customercommitments,warrantyobligations,payrollliabilities,etc.canbeeffectivelydonebyaCAandoveraperiodoftime,specializationinthisfieldcanbeachieved.

eSoP AnD PAYRoll RelAteD SeRviCeSEmployeecostmapping;employeeremuneration;employeeproductivityanalysis;ESOPsanditsmanagement;andpayrollserviceswillcontinuetoofferanimportantopportunityforaCA.

StRAteGY mAPPinG AnD SCoReCARDSCorporates find it difficult tomap performance to the strategies drawn. Strategymapping is a highly specializedsubject,beingtaughtintheinternationalmanagementcourses.KnowledgeofthissubjectwouldenableaCAtohelpthemanagement in strategymapping. Further, knowledge of scorecards like balanced scorecards and the abilitytochartoutbusinessspecifickeyperformanceindicators(KPI’s)canhelpaCAinadvisingthemanagementintheirperformanceanalysis.Further,knowledgeofscorecardslikebalancedscorecardsandtheabilitytochartoutbusinessspecifickeyperformanceindicators(KPI’s)canhelpaCAinadvisingthemanagementintheirperformanceanalysis.

ASSiStinG in ARbitRAtionArbitrationasanalternatedisputeresolutionisemerging,andwithanincreasingnumberofcorporatedisputes,itisimperativethatthesecasesberepresentedproperly.Often,thisisbasedoncontractsbetweenthepartiesandhenceknowledgeoftheIndianContractActwouldhelp.Further,athoroughstudyofunderstandingthefacts,helpingclientstoimprovetheirpaperwork;assistinglawyersinmakingoutabettercasebyusingfinancialandaccountingknowledgehelpsalotinresolvingthesedisputes.Further,aCAisbetterplacedtomakea“WHATIF”analysiswhichwillhelpthepartiestosettletheirendlessdisputesbyunderstandingandvisualizingvarioussituations.Oflate,quiteafewCAshavestartedhelpingtheirclientsinthisarea,whichisexpectedtoincreasesignificantlyovertime.


16


meRGeRS AnD ACquiSitionSM&A as we know is a strategy adopted by Corporates to expand their operations with a view to: a) increasetheir profitability; b) access new technology; c) access a skilled talent pool; d) access capital and newmarkets; f)Diversify,andsoon.WiththeeasingofrestrictionsoncrossborderM&Avisaviscapital,thereisatremendousincreaseininternationalinvestments.

TheCompaniesAct,2013hasopenedupmergersofIndiancompanieswithforeigncompaniessubjecttoRBIapprovalsinspecifiedjurisdictions.



• Investmentbanking


• AdviseonPrivateEquityFinancingandStructuring.

• Businessvaluations

• RegulatoryapprovalsbeforecompetentauthoritieslikeRBi/SIA/FIPB

FoRenSiC ACCountinGForensicAccountingistheapplicationofaccountingprinciples,theoriesanddisciplinetofactsorhypothesisatissuesinalegaldisputeandencompasseseverybranchofaccountingKnowledge”AICPA.

Forensic Accountants are often engaged by companies when litigation is anticipated or suspected. A ForensicAccountant often utilizes his understanding of business information & financial reporting systems, accountingstandardsandprocedurestoinvestigatesomeformofeconomiccrime.

ForensicAccountingandFraudDetectionspecialisationisinincreasingdemandconsideringincreasingincidentsofcybercrimesandfraudsdetection.Itisthepracticeofutilizingaccounting,auditing,CAATs/DataMiningTools,andinvestigativeskillstodetectfraud/mistakes.

TheInstituteofCharteredAccountantsofIndia,recognizingtheneedforForensicAccountingandFraudDetection,intheemergingeconomicscenario,haslaunchedaCertificateCourseonForensicAccountingandFraudDetection.

CARbon CReDitSInearly1980s,climatechangewasrecognisedasagreatdanger.Tocounterthisproblem,KyotoProtocolcameintoforceon16thFebruary,2005.KyotoProtocolisoneofthemostimportanttoolstoimplementmitigationmechanism.

KyotoProtocolisoneofthemostimportantmilestonestotackletheglobalchallenge,ofreductionofemissionofharmfulgases,whichcontributestothegreenhouseeffectthatcausesglobalwarming,providesforthreeinnovativemitigationmechanisms.OneofthesemechanismsistheCleanDevelopmentManagement(CDM).TheCDMProjecthasvarioussteps,whichinvariablyincludetheprocessofcalculatingemissionreductions(CER).

Webelieve that the chartered accountant, being a significantmember in the national building, could contributeextensivelyinthisprocessofmitigatingclimatechangeintermsoftrading,accounting,andverificationandvalidationaspects.

Belowaresomeofthewaysyoucangainknowledgeorlearnaparticularareaofwork:

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unDeRStAnDinG AnD SeeKinG helP FRom ChARteReDaCCOuntantsinFiCr-iCitiesOnceyouhaveaclient,youmayinitiallyhavesomepracticalissuesordifficultiesinproceedingwiththesame.Forthispurpose,youmaytakehelpfromcharteredaccountantsintier-Icitieswhohaveexperienceinthatparticulararea/field.Howtoapproachthem?E.g.ifyouwanttospecialiseinthefieldoffinancialadvisoryforinsurancecompanies,then,youcantakethehelpofaseniorcharteredaccountantwithexperience.

ApproachFindingtherightcharteredaccountantfromatierIentitywhohasgainedhandsomeknowledgeintheareayouhavechosenisveryimportant.

Knowledge SharingSeekthehelpofotherexperiencedcharteredaccountantsforsharinghisknowledgeandexperienceandfocusareasfortheparticularareawhichyouhavechosen.YoucanapproachtheseniorCAwiththekindofclientandworkyouhavegotandhewillanalyzeandworkoutthedesiredresultsforyou.

Review or check the workRevieworcheck theworkonce it isdoneby theseniorcharteredaccountant toseehowhehasapproachedtheworkings and got the results. Understand theworkings, seek clarifications and analyze how the solution can beachievedincaseofanyissuesthereon.

Sharing of FeesSharethe fees forworkdone in theagreedpercentageandratio.Whilesharing fees, it is important tonotethatcommercialbenefitorearningIncomeshouldbegiventheleastpriorityintheinitialdaysofyourPractice.

woRKinG in otheR FiRmS/ComPAnieS iS A GooD StARtAnewlyqualifiedCharteredAccountantcanopttowork intheBig4orother largefirmsfor learningandgainingexperienceinaparticularareaorfield.Workingforoneortwoyearswithexperiencedpeoplewouldhelpingainingknowledgeinthatparticulararea.Salary-wise,payshouldbegiventheleastpriorityinchoosingafirm/companyforworkingaslearningandgainingknowledgeisfarmoreimportant.E.g.:IfyouwanttospecialiseintheInsuranceSector,youcanworkinthefinancialsectorofanyinsurancecompanytounderstandmoredetailsabouttheactualworkingofthatparticularfield/sector.WorkinginaparticularIndustryforcertainyearsandgainingthespecializedknowledgemayalsohelpincaseyouwanttostartupnicheareaPracticeinaparticularfield.Overaperiodoftime,youwilleasilyexcelinthefieldofauditofInsuranceCompanies.

SeeKinG helP oF FReelAnCeR/ConSultAntNewlyqualifiedCharteredAccountantscantakethehelpofafreelancerorConsultantCharteredAccountantwithexperienceinworkingintheareasofspecialisationheisinterestedin.TheConsultantcanbepaideitherafixedfeeforeachprojectorbehiredat fee-sharingbasis initially.Earningswouldbesmallerdueto thecostofhiringofaconsultantCharteredAccountant.

ReCRuitment oF exPeRienCeD Semi quAliFieD / quAliFieD emPloYeeSYoucanalsobuildupyourPractice ina specialisedareaby recruitingpeoplewhohavealreadyworked inorareexperiencedinthatparticularfieldorindustry.


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Whilechoosingthisoption,itisimportanttoknowthattherewouldbeafinancialconstraintinitiallyasyouareastart-upentityandrecruitingexperiencedCharteredAccountantswouldbeafinancialbottleneck.But,youcanovercomethesamebyrecruitinghimonpart-timeornegotiatingafixedpay+feepercentagedeal.

GAininG SPeCiAliSeD KnowleDGe AFteR ARtiCleShiPIfyouhavealreadygainedbaseknowledgeinaparticularareaduringyourArticleship,thenyou’reofftoagoodstartinyournewpractice.E.g.:ifyouhavealreadyworkedonbusinessvaluationduringyourArticleship,youcanspecializeinthatarea.Youcanalsoboostyourexpertisebyattendingseminarsandconferences,onlinee-learningcourses,etc.,Theonlyexpenseherewouldbethatofseminarfeeorsubscriptioncostofrelatedbooks.However,thiswouldalsohelpinbuildingnetworksalongwithgainingspecializedknowledgeonpracticalareasofworking.

IMPORTANTClub any of these options together initially for gaining knowledge. Though you might have basic knowledge from doing your Articleship, you can take the help of experienced Chartered Accountants for specific areas of specialisation.

tier-iiPraCtitiOnersCanbreaK

the bARRieR tooHowcanaCharteredAccountantpracticinginaTier-IIcitydonicheareapractice,i.e.,specialiseinaparticulararealikebusinessvaluation,FEMA,mergersandacquisitions,indirecttaxes,internationaltaxation,insurancesector,etc.?

1) Research:Properresearchoranalysisisveryimportantbeforedecidingwhichareayouwanttospecializein.TheInternet, InstituteJournalsandothermediacanbeusedtoresearchthemajorfieldswhichareboomingforpractice.Yourareaofinterestshouldalsobetakenintoaccount.Themorechallengingandspecializedtheareayouchoose,thelesserthecompetition.

2) Taketimetomaketherightchoice:Itisveryimportanttoinvestsometimetoplan,analyseandtaketherightsteptowardsthefieldorareayouwanttospecializein,viz.,FEMA,Valuation,M&A,theInsuranceSector,ServiceTax,etc.Thelocationofyourpracticealsomatters.Theareaofpracticeshouldco-relatewiththeexistingclientbaseormoreinthatsurroundingplaces.Eg.youcansetupanauditfirmfortea/coffeeestatesinCoorgornearbyareas.

3) Choosing precedence and start up: Decide which takes the precedence? Investment, time or client?Youhavetochoosewhetheryouneedtogetaclientfirstandtheninvestininfrastructureandtimeinunderstandingnewconcepts,orwhethergainingknowledgetakesprecedenceovergettingaclient forsuchrelatedtasks.Youmaystartwithbuyingbooksonthetopicandgainmoretheoreticalknowledgebeforepracticallysteppingin.ThiscanalsobedonethroughattendingvarioustrainingsessionsconductedbytheInstituteandothers.

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THE IMPORTANCE OF A FUNCTIONAL, YET PRODUCTIVE WORK PLACE

4.

Functional,PleasantspacesareProductiveworkPlaces

gonearethedayswhenitwasjustCaswhowouldvisittheclient’sofficetocarryouttheirbusiness.growingtrendsintheeconomy, both in india and across theglobe,hasforcedtherecognitionoftheCaprofessionandtheimmensevaluetotheirservicebrings.today,itistheclientthatvisitstheCa’sofficefordiscussions,reviews, submissionofdocuments,andevencasualmeetings.

You’ll never get a second chance to make a first impression.

PhYSiCAl lAYoutErgonomicsmeansthestudyofwork(Ergo=Work,Nomics=Studyof).Itsimplydefineshowpeopleinteractwiththeirequipment.Thiscanrangefromthedesignofachairtothelayoutofthecockpitforamodernjetfighter.Aredesks,benchesandchairssuitableforthepeopleusingthemandforthetaskstheyareperforming?Poorlydesignedchairswhichcannotbeadjustedforheightandtosupportthelowerbackcancausebackpain.Deskswhicharenotergonomicallydesignedcanalsocausediscomfortandincreasetheriskofotherinjuries.

Theofficeisthefirstimpressionthatyouwillmakeinthemindofyourclientandstaff.Aneatandclean,wellorganisedofficewillmakeamuchbetterimpactthanamessy,unorganisedone.Abright,airyspace,withmodernfittingsandabusiness-likeatmosphere,inagoodlocationwouldaddvaluetoyourbrandandgiveconfidencetoyourclients.

Beloware somebroadguidelines thatwouldbeuseful for the settingupof anoffice. Inmany instanceswhat isdescribedbelow is the ideal scenario forofficesetup.Aprofessionalwho is just startingoutmaynotbeable toimplementalltheseattheverystart.However,ifoneisawareofthepossibilities,itwouldhelponetoplanthegrowthofthepracticefromthestart.

THE impORTaNCE OF a FuNCTiONaL, YET pROduCTiVE WORK pLaCE

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INFrAstrUCtUre sHoULD Be sMArt Yet seNsIBLe oFFiCe lAYoutStrictlyinphysicalterms,thelayoutofaCharteredAccountantsofficeisnotverydifferentfromanyotherprofessional’soffice.Workplacelayoutanddesignisnotsomethingthatonlyneedstobeconsideredwhenaworkplaceisbuilt,orwhenanewprocessorpieceofequipmentisintroduced.Itneedsongoingattentiontodealwiththeinadequacieswhichbecomeevidentduringwork,andtodealwithchangesinthetypeofwork,orthemannerinwhichitisbeingdone.Considernotonlythephysicallayoutofyourworkplace,butalsolighting,temperatureandventilation.Alsoimportantare:

1. Location,and

2. Accessibilityofthefirm

Thefloor area shouldbe segregated intoworkstations, conference room,pantry andpartners’ cabins. In caseofmorethanonepartner,eachpartnercanbeallottedaportionofspacesegregatedbypartitionstoaccommodatetheworkstation,cupboard,chairsandtable.

Whiledesigningtheofficelayout,keepinmind

1. Whereverpossiblehavealayoutinwhichworkspaceisnotvisibletovisitors.Thiswillcreateasecureenvi-ronmentfortheteam.Thevisitor’sareacanbekeptmorestylish.

2. ConsidermeetingroomsfordiscussionswithclientsratherthanmeetingtheminthePartnerschambers.

3. Round tables in meeting rooms create a feeling of equality between you and the client, which easesdiscussions.Inachamberstylemeetingclientsmightfeelsintimidatedbytheprofessionalsittinginhislarg-erchairanddeskascomparedtothevisitor’schair.Basedontheclientsstatusandsituationoneshouldbeabletodecidewherethemeetingshouldbeheld.

4. Toiletsshouldbeeasilyaccessibletobothteamandvisitors.

5. Awell-placedpainting,afewplantsormaybeanaquarium,canmakeyourofficespacepleasantandinviting.Remembertokeepthedecorunderstatedsotheatmosphereisrelaxed,yetprofessional.

SeAtinGProperseatingshouldbearrangedforeachandeverypersonintheofficeincludingtheofficeassistantsandofficeboys.Thisensuresthecommitmentandinvolvementofeveryonetothecauseoftheorganization.

FortheCA,itisimportantthattheclientmeetingroomsshouldbesecludedandsoundproof.Asecludedambiencenotonlygivestheclientmoreconfidence,italsopreventsdistractions.

FuRnituReStandardsized30”tablesandstudy,ergonomicallydesignedchairsthatsupportthebodyandpreventposturalpain,causedduetowrongseatingposture.

ConsideringtheamountofpaperworkaCAhastodealwith,thedesksizeshouldbelargerthanlife,withdrawersandcupboardswithlockstostoreconfidentialandimportantdocuments.

Computersystemsandotherperipherals

• Everystaffmembershouldbeequippedwithacom-putersystem,toenablefasterworkcompletionandindependentaccesstothesystem

• Laptopscanbemadeavailabletoallowforportabilityofwork

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• Deviceslikeprinters,scanners,photocopymachinesandfaxmachinehelpinthedailyoperationsoftheCAoffice

Updatedversionsofnecessarybusinesssoftwaretoconductitsbusiness.E.g.,-SARALIncomeTax/TDS/VAT,TALLYERP,VATInfo,Winman,MSOffice

1. investinaserverrightfromthestart,ratherthanusingahighenddesktopasafileserver.Oncethefirmstartsgrowing,migratingandreconfiguringdatafromadesktoptoaserverwillcostyoubothtimeandpro-ductivity

2. ascloudcomputinggainsacceptance,considerusingvirtualserversratherthaninvestinginone.Thiswouldallowyoutoscaleuptheserversizeasthefirmgrows.Hostedserverswillalsogivebenefitsofloweroperat-ingsystemlicensingcost,datastoragecapacityscala-bility,managedbackupservice,managedpowerbackup,reducedcostonhardwaremaintenance,easyac-cessfromanywhereintheworld,workfromhomefacility,etc.Thoughtheinitialcapitalcostisminimal,theservicecostpaidoveraperiodcanbecumulativelyvery large.Thismaybeoffsetwith the fasterobso- lescenceof technology thesedays.Thepitfall ismi-gratingdataandlicensesfromoneserviceprovidertotheother.Oneneedstodoagooddiligenceonthecloudcomputingserviceprovidertoassesshisabilitytocontinueinthebusinessforalongerduration,hisfinancialstrength,reputation,controlsystems,etc.Anydefaultorbreakdowninservicewillceasethefirmsoperations.

3. Openofficesubscriptionbasedapplications:Choosecarefully.Whilemostopenofficeapplicationsdonothaveanacquisitioncostoraperiodicusagecost,itcostsintermsofhiringtheservicesofanITprofessionalforconfiguring theapplicationto thefirm’s requirements.Theavailabilityofvendorswhoknowhowtoconfiguretheseorunderstandhowitwaspreviouslyconfiguredisquiteachallenge.Incaseofsubscriptionbasedsoftwaretechnicalsupportisprovidedbythesoftwarevendorand,ifoneisusingwindowsbasedapplications,configurationscanbedonebyin-houseITserviceproviders.

4. antivirus/firewalls/fileshareaccesscontrol,etc:ACAfirmhaslargeconfidentialandcriticaldata.Itisimportantthatthedatabeprotectedfrombothexternalandinternalaccess.Onlyauthorizedpersonsshouldhaveanaccesstotheirrespectivefiles.ThereshouldbeanaudittrailavailableonusageofITresourcesandfilesthatcanbetrackedtoanindividual.Thiswillavoidfilesbeingdeleted,draggedanddroppedinwrongfolders,etc.ThereshouldberestrictionsonusageofUSBports,writableCDs,emailattachments,etctoprotectdatatheft.Thereshouldberestrictionsonnetusageandmonitoringofbandwidthusagebyvariouspersons.ThiscanbeachievedbyinstallingActiveDirectoryinWindowsserverstoauthorizeaccess,installfirewalls(opensourceorpaid)tomonitorinternetusage,band-withoptimisation,etc.

5. workflowmanagementtools:ACAfirmhastodelivermultipletasksformultipleclientsonmultipleduedates,fewgenericandfewclientspecifics,movingteammembers(ifandwhenrequired).CertainworkflowmanagementtoolssuchasPapilioandothershavesmartfeatureslikeCreationofClientlist,creatingclientspecificservices,allocatingtaskstoteammembers,updatingofdeadlines,remindersforraisinginvoices,structuringflowofworkpatternsforaparticularservice,structuredtemplateswithchecklistsfordesigningworkflowforrepeatedworks,storageoffilesandclientcommunicationssegregatedservicewise,online24/7access,etc.Thesewillhelpstreamlinetheprocessusedforservicedelivery.

6. robustbackupsystem:DatainaCAfirmisaverycrit-icalarea.CAsworklonghoursoncreatingeachfileandany lossorcorruptionofsuchfilewouldmeanredoingthewholeexercise,whichcanbevery,verycumbersome.Thusarobustbackupsystemisessen-tial.Adoptanincrementalbackupstrategywithre-tentionoffilesfor5to10versionsandretentionofdeletedfilesfor365days.Thebackupsystemwouldbeagoodoneifitcangiveyouadailyreportonbackupstatisticstowarnofanyunusualactivity,etc.Thebackupshouldbeeasyandfasttorestoreasandwhenrequired.Itshouldberemotelymaintainedapartfromtheofficeitself.Remotebackupservicesarealsoavailablesooneneedn’tinvestonacomplexbackupinfrastructure.

7. Capexvs.leaseonitassets:Startuppracticesarenormallybootstrapstartups.Theirabilitytoinvestonhighendservers,ITinfrastructure,software,etcislow.Insuchascenarioonecanusetheleasemodel,


22


whereyoutakeonaleaseratherthanbuyingtheasset.Thisalsoensuresthatyouarenotstuckwithanolderversionof the IThardware,as thescaleofobsolescence isnow less than24months.However, insomecaseslongerleasesarenotcosteffectiveasthecumulativeleasepaidismorethanthecapex.Aleaseagreementwithanoptiontobuyatendofleaseperiodisalsoanoption.

StoRAGeACA’sprofessionmakes itmandatoryforhimtokeepclients’records for long periods of time. Further, when an audit isbeing conducted at theCA’s ownpremises, thewhole recordoftheclientisbroughttotheCA’soffice.EveryCAalsokeepsarecordofrelevantpublicationsoftheinstituteorofvariouscasehistories.

This,ofcourse,addsuptoawholeloadofpaperwork.Thus,itisagoodideatospeciallydesignatestoragespacebyprovidingshelves, cabinets, cupboards for archives, current folders andotherdocuments.

Attemptsshouldbemadetostoredatadigitally.Goodscanningdevicesareavailabletoday,whichcandobulkandfastscanning.Digitaldatacanbestoredoncloudwitheasyaccesstoboththe

CAandtheclient.Withagooddocumentmanagementsoftwareintegratedaspartoftheofficeworkflow,retrievalofdocumentsisalsomucheasierandfasterascomparedtophysicalstoringandretrieval.

libRARYKeepspaceforaninbuiltlibrarywithbooksonaccounting,incometax,indirecttaxes,companylaw,accountingstandards,manuals,guides,handbooks,ICAImaterials,referencebooksbasedontheareaofpractice.Ifthedataisreadilyavailableandorganizedinasystematicmanneratthelibrary,theCA/AuditAssistant/Clerkscanaccessthelibraryandgettherequiredinformation.Equipthelibrarywithchairs,tables,andcomputersystemssothatapersoncanspendaqualitytimeinthelibrary.

Apart fromphysical books consider a collectionof e-books. Thiswouldsavealotofphysicalspace,withtheadditionaladvantageoflibraryaccessrightatthereader’sownmonitorscreen.

ConFeRenCe RoomA conference room provides a platform for interactive discussion.HeremeetingsbetweenclientsandtheCAorbetweentheCAandhisstafftakeplace.Conversationsintheconferenceroomaresecuredandnodisturbanceiscausedtootherpeopleintheoffice.Withtheadvancedtechnology,accessibilitytoapersonisveryeasy.Incaseofhighprofiledclientswhoareabroadoratafurtherdistance,theCAcanhaveavideoconferencingorateleconferencingwiththeclientintheconferenceroom.

AiR AnD temPeRAtuReIstheworkplacekeptatacomfortabletemperature?Thermalstress

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associated with heat, inadequate airflow or cold conditions can increase the risk of health problems occurring.Dependingonthecity’sclimaticcondition,makeaproperchoiceofequipment.Forexample,inhumidclimatelikeMumbai,water-basedaircoolerscanneverbeused.However,indrynon-coastalcities,thesamecoolerscouldbeveryuseful.Badlydesignedair-conditioning,suchasthosewithventspositionedaboveworkstations,cancreatedraughtsandcausediscomfort.Properventilationshouldbeprovidedtoensurecirculationoffreshair,andmaintenanceofpleasingworkingtemperature.

noiSeIs noisy equipmentenclosedor locatedaway fromwherepeople areworking?Noisyequipmentnotonly affectsconcentration,itcanalsocausepermanenthearingloss.Tocontrolnoiseinanofficeenvironment:

Usealayoutwhichseparatesnoisegeneratingactivitiesorequipmentfromtasksrequiringconcentration

Usesound-absorbentmaterials,includingsuitablefloor

coverings,wallpanels,ceilingpanelsanddivingscreens

Lowerthevolumesettingonatelephone.Thisisasimple

waytoreduceexistingnoiselevels

Adopt administrative controls such as encouraging employees to use meeting areas away from work areas forconversations

ColouRChoiceof colourscandetermine themoodofanenvironmentand the levelof reflection fromasurface.Ceilingsshouldhavehighreflectance(reflectingaround80%oflight)andshouldbewhiteoroff-white.Wallsshouldhave50-70% reflectance (subdued cool colors) anda glossor semi-glossfinish. Floors shouldhave low (less than20%reflectance)andthereforeshouldbedarkerandnotglossy.Theuseofcolorfulpostersornon-reflectivepaintingscanrelievemonotonyandprovidevisualrelief.

(yellowgenerally)informoftablelamps.Thisensureslessstressoneyesevenwithcontinuousworking.However,generalilluminationintheofficeshallbeperfectlywhitelight,sothatdifferentcoloursaredistinguished.Economiclightinge.g.,CompactFluorescentLamps(CFLs),arerecommendedingeneralareasforenergypreservation.

buSineSS CentReSAbusinesscentreprovidesofficefacilitiesandservices.ACAfirmcanuseabusinesscentrewherethereisareceptiontohandlequeries,somestafftoworkonandthemeetingroomtoconductmeetingswiththeclientandtheCA.Thiswouldbesimilartohavingone’sownoffice.BusinessCentresareestablishedtogetafootholdinadditiontotheirregularoffice.

Abusinesscentrecanbeusefulfor

1. Astartuppractice:Itmightmakebetterbusinesssensetorunanoutfitfromabusinesscentreratherthaninvestinginafull-fledgedofficespace(infactmanystartupsusecoffeeshopswhereWIFIisavaila-bleastheirofficesforclientmeetings

2. IfaCAdecidestoworkfromaresidentialorsubur-banarea,totakeadvantageoflowerrents,thenforspecificclientmeetingshe/shecanuseabusinesscenters.Thesevirtualofficescanbepositionedasthecityofficetoclientsandthefull-fledgedofficeasthedeliverycenter.

Onecannotthinkwell,workwell,lovewell,sleepwell,ifonehasnotdinedwell.VIRGINIAWOLF


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PAntRYOnespendsmostofthedayinanoffice.Apantryfacilityforthestaffandotherswillbemostwelcome.Abreak

Are lighting levels suitable for the tasksbeingperformed?Lightingproblems suchasflickering lights, glareandalackofnatural light, can causeeyestrainandvisionproblems. Proper illumination should be ensuredonworking surfaces.Natural lightsarepreferred inalmostall theoriesof interiordesigning,however ifnatural light is not available, proper artificial lightshouldbearranged.Outofsomanytypesofartificiallighting available commercially preference shall begiventoincandescentforcoffee,teaoralunchandsnacksatthepantry,accompaniedbysomeinformalchat can provide a lightermoment.This facilitywillalso help tomaintain cleanerworkstationswithoutmessyfoodstuff.

Common AReASWithincreasingpressureonCAfirmstodeliver,ifanofficeallocatesspaceforthestaffforarecreationalfacility,orsimplytorelaxforawhile,itwouldreducetheworkstressandenergisethestaff.

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BRANDING & MARKETING

5.

(subjecttotheiCairegulations)*

marketingandbrandingstrategieshelpafirmberecognised.itcanbeusedveryeffectivelyby young Cas to create customer loyalty and increase revenue. in today’s competitiveenvironmentwhereeconomicuncertaintyisneverfarahead,andcompetitionistight, itisimportanttopromoteyourservicesinawaythatyourpracticestandsoutandisseen.

uSe SoCiAl meDiA• Setupawebsite,withdetailsofservicesof-fered

• SharecontentinCArelatedLinkedIngroups,askquestionsandengageinnotablediscus-sions

PrandnetwOrKing(subJeCttOCaCOdeOFethiCs)Intoday’sworld,managingpublicrelationsandnetworkingwithpeoplearevitaltoanyonewhowishestogainvisibilityandgrow.SomeareaswhereinformationtechnologycrossespathswithPRandnetworkingarehighlightedbelow:

yourFirmswebsite

askyourself:• Doyouhaveawebsite?

• Whatdoesthewebsitesayaboutyou?

• Doyouknowhowwellitperforms?

• HaveyoupaidattentiontoSEO?

• Haveyouconsideredredesigningit?

• Couldyouuseitforsourcingstaff?

whatdoesawebstrategyreallyinvolve?• ObtainingTraffic:Turningbrowsersintousers

• Converting:UsersintoCustomers

• Satisfy&Retain:TurningCustomersintoClients

• Monitor & Improve: Increase traffic, conversionsandcustomers

BRaNdiNg & maRKETiNg

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whilecreatingthewebsite,consider• Whatquestionsdothebrowsers/clientsneedan-swered?

• Whattasksaretheytryingtoaccomplish?

• Whatmotivatesthem?

don’tforget.everypageneeds• Afocusandacalltoaction

• SocialValidation

Finally,remember,lessismore!

e-newsletters• Firms usually send out external and internal e-newsletters, which contain partners insights (editorial

notes),relevantacademicupdatesandquizzestoeducate,inspireandengagetheemployeesandclients

• Sendinge-newslettersratherthanpapernewslettersisconvenient,lessexpensiveandeco-friendly

Social mediaSocial media is a type of onlinemedia that expedites conversation as opposed to traditionalmedia, whichdeliverscontentbutdoesn’tallowreaders/viewers/listenerstoparticipateinthecreationordevelopmentofthecontent.BeactiveinSocialMedia.

netwoRK to inCReASe net woRth• DevelopassociateswithotherCAs

• Attendforums/seminars/conferences

• Collaboratewithlike-mindedprofessionalsforrender-ingdifferenttypesofservicestoprospectiveclients

• Providemultidisciplinaryservices

• Empanelwithvariousauthorities

• DevelopassociateswithpracticingCAsinothercities/towns,thusmutuallyexpandingexistingpracticeandincreasingprofessionalassistanceinplaceswhereyoudon’thaveexposure

• DecideonaLeadAssociateinothercities,incaseofmultipleassociates.Thiswillyouco-ordinatebetweentheotherCAsinthatcity,andalsoprovidethenecessaryinfrastructuresupporttomeetclientsanddevelopbusiness.

ConStAnt innovAtion AnD evolution• Empanelwithvariousauthorities

• Findways andmeans of working together and in- creasing revenue: pool resources, with some takingresponsibilityfordevelopingthemandsomeforin-creasingtheknowledgebase.Thiswillallowustotakeonlargerassignmentsinthecorporatesector.

• Attuneyourselvestothechangingeconomyandbusi-nessstructure

• Collaboratewithlike-mindedprofessionalsandevolveaworkingrelationshipwhichcansustaininlongrun

• Developabiggerbrand

*HTTP://WWW.ICAI.ORG/RESOURCE_FILE/20238CODE_OF_ETHICS-2009.PDF

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CLIENT RELATIONSHIPS

6.

thoughmarketingandbrandinggivesone’spracticeadistinctedgeoverthecompetition,developingtrustthroughpersonalinteractionisevenmoreimportant

Acustomerbecomesaclientonlyifheissatisfiedconsistently.Tomakeanyclienthappy,itisimportanttotaketheirfeedbackandsuggestionswhichwillhelpinidentifyingstrengthsandareaswhereimprovementisrequiredandatthesametimeprovidesanopportunitytoseekclarifications.

Fromaclient’spointofview,whatmakesanorganizationdifferentfromitscompetitorsisitsXfactor.Hence,clientsshould be given some relevant value addition apart from the services provided to them that are unique to theorganization.Thefeelingthattheygetwhentheygettheirmoney’sworth and receivea littlemore fromus iswhatmakes them come back to us or recommend us amongtheirnetwork.

Communication and dealings with clients is the mostcrucial partof client relationship. Sensitive clients shouldbehandledwithtactandcareanditisalsoagoodideatosendatokenofappreciationtothelong-lastingclientslikeadiaryorcalendaronNewYear’sDay.

Sincetheclientmaynotbeawareofthelatestupdatesinfieldslikeaccounts,taxandaudititwillprovehelpfulifwesendhandbillswiththelatestupdatestotheclients.

ChAllenGeS oF CA-Client RelAtionShiPS

• Everchangingneedsofclients

• Increasingdemandforspecializedservices

• Newemphasisonpricingandvalue

• Clientshavemoreoptionsthanevertochosefrom

• Increasinglybeingprospectedbyotherfirms

CLiENT RELaTiONsHips

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whAt Do ClientS wAnt?• OVERALLEXPERTISEOFTHECAFIRM

• Deliveryasperpromise

• Responsivepartnersandstaffwhoareeasytoreach

• Helptoenabletheirbusinesstosucceed

• Understandtheirbusinessandtheirindustry

• Understandtheirperspective,listentothem

• Becollaborativeandhonestatthesametime

• Understandtheircurrentsituation—includingtheirissuesandgoals

• Experienceofhelpingclientsovercomesimilarproblemsorachievesimilargoals

• Proactiverelationship

• Ongoingnewinsightasagainststrictlyacommodity-typeservice

• Accurateandauthoritativeinformation

• Toseetheteam’sleaderoften

• Teamstability

• Scalabilityofoperations

• Timingofserviceasperclientconvenience

• Abilitytoserveatmultiplegeographies

• Abilitytoprovidecrossfunctionalservice

• Leveragingtechnologyusage

• Increasedproductivityandefficiency

• Visibilityintheprofession,updatedwithlatesthappenings

• Relevantandtimelyupdatestoclients

how ClientS SeleCt A FiRmAttRibuteS whAt we neeD to Do• Easilyaccessible,responsivepartners/staff • Demonstrateknowledgeandexperience–specific

toclientandnotgeneric• Timelinesaremet • Providereasonablefee• Efficiency • Investinstaff• Availabilityofaccurate,authoritativeinformation • Equipstaffwiththerighttoolstoperformwork• Firmactiveintheprofession,intunewithchanging

regulations• Deliverefficient&quickserviceIntegrate

technologyintopractice• Confidencethatthefirmwillbeabletodeliver

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STAFFING AND HR MANAGEMENT

7.

acrossallsizesoffirms,findingandretainingtalentisatopissue.Firmsarelookingforwaystofindsmartprofessionals,recruitthemandutilisetheirskillseffectively.Competitionforthebest talent istight.thedifficulty infindingand recruitingnewprofessionals furtherhighlightstheimportanceofmakingthemostofyourexistingstaffintermsofproductivityandefficiency.

Common StAFFinG ChAllenGeSCAfirmsfacesomeuniquestaffingchallengescomparedtootherprofessionalservicesindustries.Intaxfirms,demandforservicesishighlyseasonalandsoistheneedforadditionalstaff.Firmsaremeetingthechallengeforseasonalstaffinginseveralways.Somefirmsfocusontakingontemporarystaffduringtaxseason.Thesetypesofprofessionalsreally value flexibility and work/life balance. Letting the seasonalstaffmemberssettheirownschedulesandlettingthemworkfromhomearetwoperksthatcanmakeyourfirmespeciallyattractivetotemporary,seasonalorpart-timeaccountingprofessionals.

In the light of seasonality, you need to be able to take a look atexactlywhatyouwillneedinstaffing,soyoucanplanforgaps.Forexample, it’sgoodtobeableto lookoutovermonthsorayeartomakeinformedstaffingdecisionsandplanforwhenyourfirmmightneedtostaffuporstaffdown.

Forecasting tools can be used to anticipate staffing needs andempowertheemployees.

human resources are like natural resources; they’re often burieddeep.

youhavetogolookingforthem,they’renot just lyingaroundonthe surface. you have to createthe circumstances where theyshowthemselves.

StAFF RequiReD At A CA oFFiCe

Staff

CAArticle

AssistantAudit

Assistant Others

sTaFFiNg aNd HR maNagEmENT

30


ChARteReD ACCountAntBasedonthesizeofthefirmandtheworkload,afirmcanemploytherequirednumberofCharteredAccountants.Theywouldprovideprofessionalexpertiseandskillstothefirm.TheyalsoactasaguidetotheArticleAssistantsandhelpthemincarryingontheirworkandtrainthemonvariousaspects.

ARtiCle ASSiStAntACAcanhaveanArticleAssistantworkingunderhimaspertheRegulationNo43ofCharteredAccountantsRegulations,1988.StaffingofArticleAssistantisanintegralpartinaCAFirm.TheArticleAssistantsarebeingtrainedinthefieldofAudit,Accounts&Tax.SuchtraininginaCAfirmwillactasanexperienceandprovideapracticalexposureinvariousfieldstotheArticleAssistant.UpontraininganArticleAssistant,aFirm(Partner/CA)providesapotentialcandidatetotheCAfraternity.

AuDit ASSiStAntTheyareemployedinaCAfirmas“Assistants”andareemployeesofthefirm.Inmostofthecases,personswhohavecompletedtheirB.Com/M.Com/LLBorpersonswhoarefromthecommercebackgroundorpersonshavinganinterestinthefieldoftaxesorCertificateHolderswhohavecompletedcertifiedcourseslikeAccountingTechnicianCourse,CFT-CharteredFinancialPlannerorpersonspursuingprofessionalqualificationcanbecomepotentialAuditAssistantsinaCAFirm.Theytakepartinthedaytodayconductoffirm.TheyworkparallelwiththeArticleAssistantsandtheCAs.

otheRSThiscategoryincludestheReceptionist,OfficeBoy,ClerkandFileAdministrator.Theysupportthefirmandseetothemaintenanceofthefirm,helpinmiscellaneousworkandcarryonthefirm’scorrespondence,bankwork,etc.

EveryCAFirmisrequiredtoassignaseparate‘FileAdministrator’whoisresponsibleforthesystematicorganizationofthefilesandthedocuments.Mostofthefirmsdonotoptforafileadministratorasitinvolvesthecostofemployingan additional person and the resource remains idle once thework is completed. These days the role of the FileadministratorhasbeenclubbedwiththereceptionistortheofficeboyandattimestheArticleAssistantsthemselvesareinvolvedincreatingFilesandDocuments.Thissegregatestheresponsibilityamongstvariouspersonsandnoonepersoncanbeheldliableincaseofmisplacementorlossofdocuments.

31

humAn ReSouRCe mAnAGementHumanresourcesarethemostvaluableassetsofanyorganisation.Therefore,theroleofhumanresourcemanagementinthegrowthofanentityiscrucial.

Recruitment – SourcingIn addition to traditional methods of recruitment, use job portals for finding the best people for the job.Registeringasanemployeron thesewebsitesnotonly increases theoptionsavailable,butalsoexpands thegeographicalreachandvisibilityinthemarket.

employeerecordsandLeavemanagementTofacilitatemaintenanceofemployeerecordsandleavemanagement,anonlineHRportalcanbecreated.Itcanbeusedinthefollowingways:

attendancerecords• Other than the conventional attendance register where manual entry by each employee is required,

biometricsystemscanbeusedtotrackattendance–eachtimetheyenterorleavetheofficepremises.

• Benefitsofthebiometricsystem:

• Notinkeringpossible

• Accurate

• ConnectedtothePCsoMISreportscanbegenerated

• Connectedtopayrollsystems

• Thiscouldbelinkedtoacentralisedonlinetimesheet,wheretheemployeeisrequiredtoaccountforthetimespentatwork–tasksallottedversustimetaken

• Further,thenumberofhoursworkedcanbeusedtoidentifyover-workedandunder-workedemployeessothatworkcanbereallocatedappropriately

• Asefficiencycanbejudged,managerialdecisionmakingwillbefacilitated

LeavemanagementApplicationsforleavecanbemadethroughthefirmsHRPortaltoobtaintherequisiteapproval.Thiswillefficientlytracktheamountofleavetakenbyeachemployee.

Otheremployeerecords• Employeescankeeptrackoftheirsalarieshere,andincaseofanyreimbursements,billscanbeuploadedto

claimthem

• Alistofapprovedholidayscouldalsobeprovidedontheportal,enablingemployeestoplanandmanageleave.

woRKinG FRom homeTherearetimeswhenitbecomesinevitabletoworkfromhome.Insuchsituations,thefollowingstepscanbetakentoenableemployeestodothesame:

• Remoteaccess to thefirmsserver (VirtualPrivateNetworkConnectivity)canbegiven toemployees forspecificperiodsoftime,whenrequired

• Applications like Dropbox and Google Drive can be used for transferring documents and information,whenemailsystemscan’tsupportthesame.TeamViewerandSkypecanhelpinbetterunderstandingandcommunication,despitethephysicaldistancebetweenpeople.


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otheR KeY ASPeCtS RelAtinG to humAn ReSouRCeS in A FiRmItisimportantthantherightstaffisallocatedtotherightJob.Thiswillincreasetheproductivityandefficiencyinwork.

PlanningSomefirmsassignprojectsrandomlybasedontheavailabilityofstaff,theydonotconsiderthebackgroundortheknowledgerequiredtocompleteaparticularproject.Thismakesworktedious,complexanditresultsinasub-standardqualityofwork.Theworkinthefirmhastobeassignedonthebasisofanorganizedplanningwithrespecttotheirstaffandtheircapabilities.Thiscanavoidduplicationofwork.

staffworkflowdocumentEachemployeeattheofficeis involvedinvariouskindsofwork.AStaffDocumentprovidesatrackrecordoftheworkdonebyeachstaffanddetailscanbeupdatedbythemonadailybasis.Thisdocumentalsoservesasarecordforworkdonebythestaffandthepartnerscanreviewthisdocumentatregularintervalsoftime.Forthesaidpurpose,thedocumentcanbemaintainedinaformofexcelspreadsheetorasoftwarecanbeused.

Discussions and trainingForabetterunderstanding,clarityandresponsibilityamongstthestaff,timelymeetingscanbeconductedwheretheycanbeupdatedwithnewinformationandhappeningsintheoffice,aswellasairtheiropinions.Trainingsessionsandseminarswouldprovideaknowledgesessiontostaff.

the greater the loyalty of a group toward the group, the greater is themotivationamongthememberstoachievethegoalsofthegroup,andthegreatertheprobabilitythatthegroupwillachieveitsgoals.

RenSiS liKeRt

incentivesandmotivationApartfrompayingamonthlysalary/stipend,anincentiveintheformofcashorkindcankeepthestaffloyaltothefirmandmotivatethemtoputinanextraefforttowardstheworkingofthefirm.

neverdoubtthatasmallgroupofthoughtful,committedpeoplecanchangetheworld.indeed.itistheonlythingthateverhas.

mARGARet meAD

oveRAll SKillS RequiReD FoRhumAn ReSouRCeS in A CA FiRm

• Goodoralandwrittencommunicationskills

• Interpersonalskillsandprofessionalappearance

• Rationalandlogicalthinking

• Organizedandstrategicplanner

• Extendedmathknowledge

• Teamworker

• Resultsoriented

• Abilitytoanalyseandinterpretdata

• Computerskills

• Multitasking

• Proactiveattitude

• Businessawareness

• Stressmanagement

• Abilitytoworkwithdeadlinesandwithoutclosesupervision

• Knowledgeaboutaccountingprinciples,practicesandmethods

33

To conclude, effective leadership is necessary in anyfirm. If youwant yourhuman resources tooperate at peakefficiency,youneedtoshowstrongleadershipyourself.Itisyourleadershipthatsetsupanexamplethattrulymakesthedifferenceinday-to-dayoperations.

“individualcommitmenttoagroupeffort-thatiswhatmakesateamwork,acompanywork,asocietywork,acivilizationwork.”


34

REVENUE MANAGEMENT

8.

notonlyisitimportanttogeneraterevenue,butmanagementforthesameisalsocrucial.

time Sheet AnD billinGThetimesheetfilledbytheemployeesonthefirmsHRportalcanbeusedasabasisforbilling.Bylinkingthenumberofhoursspentoneachserviceprovidedtotheclient,tothebillraised,accountabilitycanbeestablished,

AnAlYSinG billinG AnD ColleCtionTokeeptrackofbillingandcollection,accountingsoftwareinwhichtransactionshavebeenrecorded,canbeusedtogenerateMISreports.Further,pivottablescanbecreatedtofindClient-wise/Partner-wise/Function-wisebillingtoidentifyareasofhigh/lowrevenues,andtakestrategicdecisionstoenhancerevenue.

Client SAtiSFACtionAcustomerbecomesaclientonly ifhe is satisfiedconsistently.Tomakeanyclienthappy, it is important to takefeedback and suggestions from him. This will help in identifying the strengths and areaswhere improvement isrequired.

35

WORK FLOW MANAGEMENT

9.

theprocessesthatarepartofatypicalCaofficeneedstobemanagedsoastoeffectivelyexecuteassignmentstakenwithefficientutilizationoftimeandhumanresources.aprocess,manualorautomated,isrequiredtobesetupto:

• Maintainclientdetailsinoneplace

• Assignworktotherelevantresources

• Trackduedatesofworkassigned/assignment

• Timesheetsystemtotrackandmonitortimeandeffortsoftheresources.

• Trackthecompletionthereof

• Raiseinvoicesforeachcompletedbillableevent

• Trackpendingamountforworkcompletedbeforetakingonfreshassignments

• Retrievalofdocumentsinrespectofrepeatedassignments

• Identifyandtracksimilarassignmentshandledearlierbytheoffice

• Tracktheteamwhoexecutedtheassignmentorasimilaroneanytimeearlier

• Sharefileswithintheteamassignedtoexecutethework

• Trackthestatusofcompletionofworkassignedtoeachoftheteammembers

• Create/compilerepetitiveprocessesintheformoftemplatestoenableeasyandeffectiveexecutionofarepetitiveorsimilarassignmentThesemeasureswillensurethatresourcesareutilizedoptimally.

WORK FLOW maNagEmENT

36

DOCUMENT MANAGEMENT PROCESS

10.

Filingandrecordmaintenance-theworkflowandrecord/file/documentmanagementProcessofaCharteredaccountantFirm,playsavitalroleinitssuccess.

Thisisespeciallytrueofprofessionalsconductingattestfunctionswithobviousresponsibilityandaccountabilitybeinginherentinthoseactivities.Further,ever-increasingcorporatefrauds,smallandbig,necessitateproperandefficientdocumentation.

Effective documentation helps Chartered Accountants to substantiate withcertainty,inrespectofassignmentsundertaken,theprocessadopted,proceduresinvolved,andrepresentationsandrecordsconsidered,inarrivingattheconclusion.Italsoensurestransparencysothatourprofessionisalwaysrespectedandlookeduponforitsintegrity,transparencyandprofessionalism.

Client File : mAnAGement AnD Retention

Objective:Whyisrecord/file/documentmanagementimportant?

• Statutorycompliancerequirement

• Auditingandassurancestandards

• Peerreview

• It’stheCAfirm’sresponsibilitytoprotectrecordsintheircustody

• Improvesaccesstoinformation

• Helpsmanageincreasedclienteleandgrowthaswellasoptimisestoragespace.

• Reducesoperatingcosts

• Minimisesdocumentlossrisks

• Safeguardscriticalandconfidentialinformation

• Preservesclienthistory

Therulesandregulationslaiddownbyvariouslawsarebecomingmoreandmorestringent/cumbersomeandtheCAshavetokeeppacewiththelatestdevelopments.ConceptslikePeerReviewisawelcomedevelopment.

Predominantly, documentation in a CA office refers toworking papers prepared or obtained by the auditor andretainedbyhim,inconnectionwiththeperformanceofhisaudit,Taxrepresentationmatters,etc.

Whatarecurrentandpermanentauditfiles?

Incasesofrecurringaudits,therecanbetwotypesoffiles,permanentauditfileandcurrentauditfiles.Someworkingpaperfilesmaybeclassifiedaspermanentauditfiles,whichareupdatedregularlywiththeinformationofcontinuingimportancetosucceedingaudits,asdistinctfromcurrentauditfileswhichcontaininformationrelatingprimarilytotheauditofasingleperiod.

takecareofthelittlethingsthebigthingswilltakecareofthemselves

37

apermanentfileisapotentialtoolthataidsin:• Planningthecourseofyoursubsequentyear’saudit,therebyeliminatingthenecessityandpainofhavingto

maintainthesamerecordstwice.Youalsoavoidseekingrepetitiveinformationofapermanentnaturefromtheclient

• Trainingoftheauditteamsoastomaketheauditcosteffective,timeboundandobjective

apermanentauditfilenormallyincludes:• Informationconcerningthelegalandorganizationalstructureoftheentity.Inthecaseofacompany,this

includestheMemorandumandArticlesofAssociation.Inthecaseofastatutorycorporation,thisincludestheActandRegulationsunderwhichthecorporationfunctions.

• Extractsorcopiesofimportantlegaldocuments,agreementsandminutesrelevanttotheaudit.

• Arecordof thestudyandtheevaluationof the internalcontrols relatedto theaccountingsystem.Thismightbeintheformofnarrativedescriptions,questionnaires,flowcharts,orsomecombinationthereof.

• Copiesofauditedfinancialstatementsforpreviousyears.

• Analysisofsignificantratiosandtrends.

• Copies ofmanagement letters issuedby the auditor, if any. Recordof communicationwith the retiringauditor,ifany,beforeacceptanceoftheappointmentasauditor.

• Notesregardingsignificantaccountingpolicies.

• Significantauditobservationsofearlieryears.

Thecurrentfilefacilitatestherecordingoftheplanningprocess,proceduresperformed,evidenceobtained,evaluationthereofandconclusionsreached,withrespecttoassertionsmadeinthefinancialstatement,soastodemonstratethattheworkwasinfactperformed.Thisnormallyincludes:

• Correspondencerelatingtotheacceptanceofannualreappointment.

• ExtractsofimportantmattersintheminutesofBoardMeetingsandGeneralMeetingsthatarerelevanttotheaudit.

• Evidenceoftheplanningprocessoftheauditandauditprogram.

• Analysisoftransactionsandbalances.

• A record of the nature, timing and extent of auditing procedures performed, and the results of suchprocedures.

• Evidencethattheworkperformedbyassistantswassupervisedandreviewed.

• Copiesofcommunicationswithotherauditors,expertsandotherthirdparties.

• Lettersofrepresentationorconfirmationreceivedfromtheclient.

• Conclusions reachedby theauditor concerning significantaspectsof theaudit, including themanner inwhich exceptions and unusual matters, if any, disclosed by the auditor’s procedures were resolved ortreated.

• Copiesoffinancialinformationreportedonandtherelatedauditreports.

tacklethechallengeoffilingwitheaseFilingdocumentsforfastandconvenientretrievalandusetakesalotoftime.Addtothatthetimespentonbrowsingthroughfilesforaparticulardocumentorinformationandmostofthetimeisgone.

ACA’sprofessionispredominantlyconsideredtobepaper-intensive.Ifnothandledefficiently,thepaperworkwilltakeoveranyfilingsystem.Softwareapplicationssuchaswordprocessingapplications,documentmanagersetc.,

dOCumENT maNagEmENT pROCEss

38


providesolutionstokeeptabsoneffectivefilinganddigitalizingdocumentswhichcontributestoanefficientmannerinmanagingrecordsanddocumentsandsavessignificanttimeinsearchingandlocatingthemwhenneeded.Manualorautomatedfilinganddocumentationsystemwillworkbestonlyifsupportedbydefinedfilingprocedures,consistentfilingpracticesandmostimportantly,compliancewiththoseprocedures.

Aplaceforeverythingandeverythinginitsplace.

Ensureappropriatepreservationandidentificationoffilestomeetstatutoryorothercontingencies.Putintoplaceapropermethodoflabelingclientfiles,continuousfilingandreturningofdocumentstofilesandfilestotheirproperlocation to ensure efficient retrieval, when required, of the relevant file and documents contained therein. Anindicativefilemanagementplancanbe:

1) Physicalfilingi) Filingshouldbeconsistent

ii) Filesshouldbenamedconsistentlybyname,numberoracombinationofboth

iii) Labellingshouldbeconsistentforallfilesintheoffice–fore.g.,aspecificlabelingsystemas-signmentwiseorareawise

iv) All files shouldbe setup to includevarious folders for thedifferent typesofdocumentsmain- tainedtherein,i.e.:

• Clientinformation

• Briefabouttheassignment

• Records

• Correspondence

• Discussionnotes

• Invoices

• Otherinformation

Documents,notesandother correspondence thatbelong to thefirmand thatarenot reasonably required tobereturnedtotheclientattheendoftheassignment/representationshouldbefiledinaseparatefolderoftheclientfileasagainstthosethatarepotentiallyrequiredtobereturneduponcompletionoftheassignment.

2) electronicfile/folderEnsurethesameconsistencyintheelectronicfiling(saving)ofdocumentswithinthefirm’sWordprocessingsystem.Thefirmshoulddiscussandagreeuponastandardprotocolforsavingdocumentssothattheycanbeeasilyaccessedbyalloftheusersinthefirm.Toillustrate,asimpleprotocolforaletterdraftedtobefiledwiththeIncomeTaxmaybenamedthus:“(AuditManagers/Partner/In-charge’s)name/client/assignmentname(ornumber)/correspondence/letter,date.doc”

Youmightchooseotherprotocolswhichmaystartwiththeclient’snameorthedocumentnameortype.Youmayalsocreateafileforforms/documentsthatcanbereusedinvariousmatters.Regardlessoftheprotocol,itisimportantthatallusersunderstandtheprotocolandconsistentlyname(save)theirdocumentsaccordingly.

Itwouldalsohelptoplacethefilenameatthebottomofyourdocuments.Thishelpsinretrievingdocuments;further,itwouldspeedupfiling(particularlywhenyouarehandlingmorethanoneassignmentofthesameclient).

3) Concurrentfiling• Filedocumentsassoonasataskiscompleted,oratleastbytheendoftheday

• Documentsshouldbefiledinreverse-chronologicalorder

39

• Alldocumentsorfilesthatarereadyforre-filingshouldbeplacedinaprescribedlocation–centralizedordecentralized(e.g.,workstations,manager’sdesk,etc.)

• Considerscanningincomingdocumentsintotheconcernedclient’scomputerizedfile,asthisallowsforacompleteelectronicversionoftheclient’sfileandreducestheneedtopulloutthephysicalfiletoreviewadocumentorfilestatus.

4) FilelocationMaintenanceofallactivefilesinaseparatelocationisrecommended,howeverthesamemaynotbepracticableduetolackofspace.Irrespectiveoffilescentrallylocatedorlocateddivision/assignmentwiseafilecheck-outsystem(similartothatmaintainedinlibraries)shouldbeinplacesothatfilescanbeeasilylocated.Theuseofacheck-outcardindicatesthatthefilewasremovedintentionallybyaspecificperson,departmentordivision.

5) FilestatuschecklistUseanOpeningChecklistand/oranotesheetineachofthefiletoenablethepartner/manager/executorofthetasktoquicklyascertainthebriefoftheassignmentandthestatusthereof.

• Thechecklistmaybeimprovisedtoindicateallcriticaldatesassociatedwiththefile

• Tasks,activitiesoreventsidentifiedatfileopeningwhicharerequiredto“work”thefiletocompletionandtheirassociatedduedatesmayalsobeindicatedinthechecklist

• Thechecklistformshouldhaveaplacewherethetaskscanbecheckedoffashavingbeencompletedandbywhom

• Correspondencessuchasrequestsforrecords,theirreceipt,meetingswiththeclientandanyotherpertinentinformationcanalsobelisted

• Thenotesheetorchecklistsheetcanbecolorcodedforeasyaccess

6) document/clientconfidentialityItisthedutyoftheCAfirmtoprotecttheconfidentialityoftheclientandthesameextendstothemanagementoftheclient’sdocumentsandrecords.

Thestaffmaynotalwaysrealisethatanofficeenvironmentwithfilesanddocumentsstrewnaroundnotonlyindicatesinefficiencybutalsoexposesthefirmtotheriskofcompromisingclientconfidentiality.Inordertoensurethatclient’sconfidentialityisnotcompromised:

a) Filedaily

b) Replacefilesnotbeingworkedinthedesignatedcabinets–permanentand/orcurrent

c) Don’teverleaveclientfilesordocumentsinpublicareasormeetingrooms

d) Personsnotassociatedwiththefirmshouldnotbeallowedintomeetingorconferenceroomsortheworkdeskuntilunrelatedfileshavebeenremovedtothedesignatedlocation

7) ClientfileretentionTherearetwoaspectstofileretention–returningfilestoclients;andlengthoftimetoretainfilesoncetheassignmentiscomplete.Therearebothethicalandstatutoryconsiderations.

Thefirmshouldhaveaclearfileretentionpolicythatshouldaddressandinstructstaffthecircumstancesunderwhichclientfilesorinformationcanbereturnedtotheclient.Suchapolicyshouldincludethefollowing:

a) Clientfilesshouldbeturnedoverpromptlyattheclient’srequest.

b) Authorisationtoturnthefileovershouldbeobtained(ifpossible)fromthepartnerpriortoreturningthefile.

dOCumENT maNagEmENT pROCEss

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c) Thefileshouldbeorganisedsothatdocumentationornotesbelongingtothefirmcanbeeasilyremoved.

d) Acopyoftheclientfile,forthefirm’srecords,shouldbemadepriortoreturningittotheclient.

e) Originaldocumentsshouldbereturnedtotheclient.

f) Beforereturningthefile,areceiptlistingthefilesanditscontentsshouldbesignedbytheclientandretainedbythefirm.

41

AUDIT TECHNIQUES AND TOOLS

11.

Changeistheonlyconstantinthisexistence. togrow,changewemust.

ThePracticescenariolookeddifferentin1990sthanitdidin1980s.ACAofficeof1990swasquitedifferentfromaCAofficeoftoday.Ledgerbooks,calculators,colourpencilshavegivenwaytocomputers.HardboundITRbooksarereplacedwith sleekCDs. Information technology is changing notonlyhowweworkbutalsowhereweworkandwhenwework.‘Workfromhome’isorderofthedayinmanyITcompanies.Leveragingtimingdifference,anAmericanmultinationalhaving itsbranch inIndiaworksliterally24hoursaday.Disruptivetechnologieshavemadeproductsandservicesobsolete inashortspanoftime.Doyourememberwhenyoulastusedanalarmclocktosetwake-upcall?Howoftendowevisitpostofficetodropahandwrittenletterinaredpostbox?

Thatwhichdoesnotchangedoesnotgrow;thatwhichdoesnotgrowdies.Therefore,changeisimperative.Letuschange…notforthesakeofchangebutwithadefinitepurpose.

Auditreportformatshaveundergoneasignificantchangeinthecurrentyear.Wearerequiredtodoriskassessmentofmaterialmisstatementinthefinancialstatements,whetherduetofraudorerror.Ononehandtheexpectationsofboth,theregulatorsandthegeneralpublic,fromCAshavechangedsubstantially.Ontheotherhandthequantumof transactions constituting the subjectmatterof anaudit has increased significantly, creatingapandemic called‘inobesity’–aconditionwhereorganizations(likehumanbeings)arebloatedwithdata,yetstarvedforactionableinsights.ForaCAsigningfinancialstatementsofaninfo,obeseorganizationiscertainlyriskyasthetracesoffraudanderrorareconcealedinbloateddata.Whensomuchhaschangedaroundaudit,thequestionthatweshouldaskourselvesisthatwhetherwehavechangedourapproachtoauditorithasremainedthesame?

Ifauditexpectationshavechanged,itisobviousthatauditapproachhastochange.Doingsamethingandexpectingnewresultswouldbeinsanity.Ifwehavetoassesstheriskoffraud,weneedtoverify100%ofthetransactions.Inaconventionalaudit it is impossibletoverify100%ofthetransactionsinlargeorganizationswithinalimitedtimespan. Fortunately, technology comes to the rescue.Data analytics tools areuniquely powerful, and can examinelargevolumesoftransactionstodetectfraudsanderrors.Youcanrelyonthemtodischargeyourattestingfunctions,providing insights intowhatwentwrong,what is goingwrong andmore importantlywhat is likely to gowrong.Thus it provides hindsight, insight and foresight from thedata and generates actionable items, creating value toclientsandcontributingtotheirgrowth.TraditionallyanalyticaltoolswerereservedonlyfordataAnalystswithintheorganization.Nowtheyarereadilyavailableforeveryone.

Clients are becoming tech savvy and seek information. Coupled with this the regulators and general public aredemandingmoreaccountabilityfromthe

CA fraternity.We are, therefore, required to providemore andmore information from the available data. DataAnalyticstools/audittoolscanhelpusbringinthedesiredchangeinourauditapproach.Itmaybeasmallchangetointegratedataanalyticsintoauditbutinthelongrun,theeffectofthischangewillbemonumental.

• Audit toolsareused for independentdataextractionandanalysis for thedetectionand investigationoffraudsinacomputerizedenvironment.Ascorporatetransactions’datagrowastronomicallyamountingtoterabytesofdata,theaudittoolisessentialtoanalyzesuchvoluminousdataanddetectexceptions.

toimproveistochange;tobeperfectistochangeoften.

winSton ChuRChill

audiT TECHNiQuEs aNd TOOLs

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• These cost-effective tools are used to view, explore, and analyze data efficiently. With them CAs caneffectivelyconductavarietyofanalysesonsystems,includingpayroll,employeeexpenseaccounts,accountspayable,andaccountsreceivable.Theyalsoenableauditteamstominelargevolumesofdataanddrawconclusionsthatnevercouldhavebeenreachedthroughtraditionalmanualapproaches

• Theyallowanalyzing100%ofdata,guaranteedataintegrityandprovideeasyanalysis

• They allow you to quickly import an infinite amount of records from practically any source, includingspreadsheet anddatabase software,mid- rangeaccountingprograms, ERP systems, legacymainframes,telecomswitches,travelandexpensesapplications,flatandprintedfilessuchasPDFs,plaintext(.txt),andprint-report(.prn)files.

43

AUDIT PROGRAMS

12.

12.1 GeneRAl AuDitThefollowingStandardsissuedbytheAuditingandAssuranceStandardsBoardundertheauthorityoftheCouncilarecollectivelyknownastheEngagementStandards:

a) StandardsonAuditing(SAs),tobeappliedintheau-ditofhistoricalfinancialinformation.

b) StandardsonReviewEngagements(SREs),tobeap-pliedinthereviewofhistoricalfinancialinformation.

c) StandardsonAssuranceEngagements(SAEs),tobeappliedinassuranceengagements,otherthanauditsandreviewsofhistoricalfinancialinformation.

d) StandardsonRelatedServices(SRSs),tobeappliedtoengagementsinvolvingapplicationofagreed-up-onprocedurestoinformation,compilationengage-ments,andotherrelatedservicesengagements,asmaybespecifiedbytheICAI.

AuditdocumentationthatmeetstherequirementsoftheSAonAuditDocumentationandthespecificdocumentationrequirementsofotherrelevantSAsprovides:

Evidenceoftheauditor’sbasisforaconclusionabouttheachievementoftheoverallobjectivesoftheauditor,andEvidence that the auditwas planned and performed in accordancewith SAs and applicable legal and regulatoryrequirements.

Auditdocumentationservesanumberofadditionalpurposes,includingthefollowing:

• Assistingtheengagementteamtoplanandperformtheaudit

• Assistingmembersoftheengagementteamrespon-sibleforsupervisiontodirectandsupervisetheauditwork,andtodischargetheirreviewresponsibilitiesinaccordancewithSA220(Revised)

• Enablingtheengagementteamtobeaccountableforitswork

• Retainingarecordofmattersofcontinuingsignifi-cancetofutureaudits

• EnablingtheconductofqualitycontrolreviewsandinspectionsinaccordancewithSQC

PleasefindvideAppendix2anAuditProgrammechecklistwhichshouldserveasminimumrequirementforauditdocumentation.

12.2 bAnK AuDitThereare2keyrisksassociatedwithBankAudits.One,theAuditriskthatamaterialmisstatementcouldgoundetectedandtwo,aprofessionalriskwhichmayariseduetothenon-performanceofappropriateandrelevantauditproceduresormaintenanceofworkingpaperstodemonstratetheworkdone.ThisStandardtemplateofworkpaperdocumentwillminimise,ifnoteliminatesuchrisks.

AmodelworkingpaperonAuditplanning,AuditProgramandatemplateofaWorkingPaperDocumentfilehasbeendesignedtoassistSmallandMediumPractitionersintheperformanceanddocumentationofourBankBranchauditengagementsandtoenablePeerreviewprocesses.

audiT pROgRams

44


ThisisintendedtoensureprocessstandardizationthatwillassureabaselinequalityintheworkwedoaswellasCommonMinimumStandardthatwewillbeabletodisplayasaprofessiontomitigatetheaboverisks.This isanindicativedocumentthathelpsustoapproachtheworkwedoonatopdownbasisaswellastoensurethatwecomprehensivelycoveranddocumenttheengagementcorrectlyandconsistently.Userdiscretionisrecommendedtomodifythisdocumenttosuittheneedstotheentityyouareauditing.

ThereisatremendousamountofpublisheddataonBankBranchAuditsandwehavemerelyattemptedtoconsolidateandcompile someof this intoan integrated template.Thismaynotnecessarily reflectallBestPractices inAuditPlanningandWorkPaperManagementthatareuniquetoeverypracticingprofessional.

ThisdocumentwillalsoenableanacceptablelevelofdocumentationforPeerReviewswhosekeyexpectationinaBankAuditPeerreviewprocesswouldbetheabilityoftheworkingpaperstodemonstrateadequateworkdonetoensure:

• Financialstatementsbeingtrueandfairandfreefrommaterialmisrepresentations

• CompliancewithRBInormsincludingmasterandothercirculars

• CompliancewithrelevantAccountingStandardsasrelevanttoBankBranches

• CompliancewithAudit,ReviewandOtherStandardsoftheICAIasrelevant

OneofthekeychangesinreportingascomparedtothepreviousyearistheintroductionofanewreportingformatinlinewithSA700,SA705andSA706.InadditiontothiswearerequiredtoprovidedataonthenumberandvalueofMemorandumofChangesproposedbyusonthefaceoftheMainAuditReport,ameasurableoutputofthebranchauditexercise.

PleasefindvideAppendix3theBankAuditProgrammechecklistwhichshouldserveasminimumrequirementforauditdocumentation.Theentiredocumentmaybeprintedattheendoftheauditandworkingpapersbeorganizedandcrossreferencedintherespectivesectionsforuserandreviewerconvenience.

45

BEST PRACTICES —Mapping with other Global Accounting Bodies

13.

1. Uselicensedsoftware.HavereliableITConsultantstotakecareofyourITrequirements.

2. Takeduecareofsecurityrisks.Usegoodantivirussoft-wareandfirewalls.

3. UseDatabaseManagementSystemstoorganizethefilesandretrievethemeasily.

4. UseTemplatesforstandardcorrespondence–Submis-sionstotheIncomeTaxauthorities,MinistryofCor-porateAffairs,RegistrarofCompaniesandanyotherauthorities.Savethemastemplatesforfutureuse.

5. DataBackupandRecovery:SinceCAfirmsdealwithlargeamountsofdata,backupandrecoveryarecru-cial.Back-upscanbetakenonaregularbasis,de-pendingontherateatwhichdataisadded,alteredordeletedfromthedatabase.It’simportanttoauto-matesuchback-upssotheycanbetakenatscheduledtimes,withouthumanintervention.Thedatabackedupshouldbestoredcorrectlytoprotectfromcorrup-tion.Ifthedataback-upstrategyisefficient,recoverybecomeseasier.It’simportanttohaveadatarecoveryplanorstrategytoavoiddisruptionofwork,intheeventofcatastrophes.

6. Research: In theCAprofession,clientscannotbead-visedappropriatelyanddecisionscannotbetakenun-lessaprofessionalisuptodateandhasknowledgeofthelatestlawsandprovisions.Keepupdatedwithrecentdevelopmentsinthelaws.Traditionally,were-fertobooks,journalsandmagazinestofindrelevantinformation.Withtheadventofthetechnology,infor-mationisnowavailableonwebsitesandCDs.Inpar-ticular,researchforcaselaws,financialinformationofcompanies,latestfinancialandmarkettrendscanbedoneusingavarietyofCDs.SincetheseCDscaneas-ilybeusedbyjuniorassistants,onlyrelevantfilteredinformationcanbeprovidedtothedecisionmakers,therebysavingtime.

7. E-Library:AsCAfirmshavemanyreferencebooks,journalsandmagazines,E-librarysoftwarecanbeusedtokeeptrackofthecollectionofbooksandhelpinfindingthemwithease.

BEsT pRaCTiCEs —mapping with other global accounting Bodies

46

APPENDIX I

14.

14.1 CheCKliSt while PRePARinG A PARtneRShiP AGReement1. Corepartnersmaybegivenauthoritytodeterminehowoftentheymeet,quorum,howtheirdecisionsare

madeandothermattersrelatingto,e.g.thecon-ductoftheirmeetings;alternatively,allthepartnersmaywishtodeterminethesemattersthemselvesattheoutsetoftheventure.

2. All the partners shouldaddressattheoutsettheextentofspecificpartners’powers;partnersmaywishtoreservecertainimportantmatterstoaunanimousdecisionofallPartners.Thesereservedmattersmaycover,forexample:

2.1 Companyborrowingsortransactionsgenerallyinexcessofaparticularlimit

2.2 Jointventureswithothercompanies

2.3 AnychangesinthescopeornatureoftheCompany’sbusiness

2.4 Bringinginnewpartnersoranychangeinitscapitalorprofitstructure

2.5 Choiceofauditors

2.6 Thecommencementorsettlementoflitigation

3. transfer of sharesinfirmassetsandprofitsinterseamongstpartnersornewpartnersandhowitcanbedealtwith

4. Financing,whichshoulddiscuss:

a) Howfurthercapitalrequirementsaretobeprovided,i.e.bythepartnersthemselvesorthroughloansfromthirdparties.

b) If by partners inwhat proportion and if a particular partner can’t bring such funds, how itwill beaddressed.

c) Whethersecurityforloanswillbegrantedandifso,thetypeofsecuritythatwillbeprovided,e.g.bywayofchargesoverassets,orPartners’guarantees.

5. ProfitDistributionwhichwouldinclude:

a) Themeansofcalculatingnetprofits

b) Percentageofthenetprofitsthatmustbedistributed/withdrawnannually

c) Anyrestrictionsondistributionofnetprofits-e.g.nodistributionuntilcertainloanshavebeenrepaid

6. Confidentiality

Partnersmaywishtoimposedutiesoneachothernottodisclosetothirdpartiestheirownand/ortheFirm’sconfidentialinformation;thisobligationisusu-allyexpressedtoendureforaperiodoftimeaftertheterminationoftheventureortheexitbyaparticularPartner.

7. ManagementDisputes

When, inrelationtocertainspecificissuesof impor-tance,thePartnerscannotagree,anda“deadlock”oc-curs,itisoftenagreedbythePartnersattheoutsetwhatshouldbedone.Asolutionoftenadoptedis

47

foraPartnertooffertosell itssharesorpurchasetheotherPartners’sharesataparticularprice.Thesesolu-tionsaresometimesknownasthe“RussianRoulette”or“TexasShootout”provision.

8. DisputeResolutionAndGoverningLaw

ItisusualtoagreetoamethodofresolvingdisputesbetweenPartnersthatariseoutoftheAgreement.Partnersmaywish tohavedisputes resolvedbyar-bitration,or leave it to the courts. Sometimes theymayhavedisputesreferredtomediationordisputesonaparticulartopic-e.g.financialmatters-tobedeterminedbyanindependentexpert.Itisalsousu-altoselectthesystemoflawbyreferencetowhichtheagreementwillbeconsideredandthejurisdictioninwhichthedisputewillbeheard,ifnoarbitrationclauseisincorporatedintheagreement.

Someimportantquestionsthatcanbeansweredkeepingtheaboveinmind:

the PRoFeSSion• Whatisthenatureofprofession?

• Isitexistingorastart-up?

• Ifexisting,whathaseachpartnercontributedsofar?Havetheybeenfairlyrewarded?Doestheexistingsharestructurefairlyreflectthosecontributions?

• Whatadjustmentsneedtobemade?

• Whatvisiondoyouhaveforitsfuture?

• Whatarethekeyissuesrelatedtooperatingandbuildingthebusiness?

• Howorwhatwilleachpartnercontributetothevi-sion,operationsandbuilding?

• How is thebusiness going tomakemoney for thepartners?Giving them jobs?Paying themprofits an-nually?Buildingavaluablebusinessthatcanbesoldatalaterdate?

• Howlongdothepartnersplantobeinvolvedinthebusinessoperationally?

• Howlongdothepartnersplantobeinvolvedinthebusinessasinvestingpartners?

• Willthepartnersultimatelysellthebusiness?When?Towhom?

• Orwilltheysimplywindup?Orpassthebusinessontotheirchildrenorotherfamilymembers?

• Isthereabusinessplan?Ifnot,why?Whenwilltherebeone?

• Whatmustthepartnershipagreementdotosupportthebusinessvision/plansetoutabove?

the CoRe teAmTheremustbeatleasttwotothreeCorePartners(suchasdirectors).TheTeam,electedbythepartners,directstheaffairsofthebusiness.Theyalsohire/appoint/fire/replacetheofficersofthecompany.

the oFFiCeRSOfficersmanagethedaytodaybusinessofthecompany:

• Howmany?Whataretheirtitles?

• Howaretheyselected?

• Whoarethey?Esp.ChairmanandCEO?

• Fullnamesandhomeaddresses?

appENdiX i

48


FinAnCinG the ComPAnY• Howisthecompanygoingtobefinanced?

• Whatarethepartnersputtingin?

• Isthattobeloansorequity?

• Aretheloansgoingtobearinterest?

• Aretheygoingtobesecured?

• Whataretherepaymentterms?

• Whatthirdpartyfinancingisgoingtobeused?

• Whatifmoremoneyisneeded?

• Howwillfuturefundingbeproposed?

PeRSonAl Commitment• Whatdopartnerscontributeotherthanmoney?

• Whoisworkinginthebusiness?

• Onwhatbasis?

• Howaretheresponsibilitiesbeingdivided?

• Howarethepartners’salariesgoingtobeset?

• Whatkindof special covenantsapplywhileyouareaPartner?E.g.noncompetition, companyownsallinventions

• What kind of special covenants will apply after you cease being a Partner? E.g. non-solicitation, non-competition

DeCiSion mAKinG: StRAteGiC AnD oPeRAtionAlHowwilldecisionsbemade?Willtherebedifferentkindsofdecisionsthatgetmadeindifferentways?AretherethingsthatcoulddeadlockthePartners?Considerbothstrategicissues(e.g.newpartners,buyingnewbusinesses,sellingthebusiness)andoperational(e.g.signingauthoritiesoncontractsandbankaccounts,abilitytomakebindingcommitmentsonbehalfofthecompany,hiringandfiring,purchasing,selling,etc.).

• Whowillmakedecisions?

• Howwillvotingrightsbehandled?

• Whatwillconstituteaquorumofdecisionmakers?

• Anygeneralprinciplesformakingdecisionsalreadydiscussedamongstyou?

• Isthegeneralruleasimplemajorityvote?Orsomethingelse?

• Aretherethingsthatrequireunanimousapproval?

• Ofthese,arethereanythatyouwouldbewillingtohaveresolvedbyarbitration,etc.toavoidhavingadeadlock?

• Ofthingsthatinvolveaunanimousagreement,aretherecertaindecisionsyouwouldbewillingtoresolvebysomekindofsupermajority(e.g.75%)toavoidadeadlock?

• Whicharethethingsthatrequireaunanimousagreement,withnocompromise?

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DiStRibutinG PRoFitS• Whowilldecidewhentodistributeprofitstopartners,andhowmuch?

• Whatiftheycan’tagree?Arbitration?Deadlock?

• Areprofitsdistributedbasisprofit%only,orsomethingelsetoo?

• Whatifyoucan’tagreeonsplittingprofits?Arbitration?Deadlock?

ReSolvinG DeADloCKS• Howwilldeadlocksberesolved,iftheyarise?

• Arbitrationonsomeissues?Ifyes,whichones?

• Secondvotebysupermajority?Ifyes,whichones?

• Shotgunbuy/sell?

• SaleofwholebusinesswithanyPartner/Groupentitledtomatchgoodfaiththirdpartyoffer?(Detailstobeworkedout)

• Windingupofcompany?

voluntARY withDRAwAl• CanaPartnerwithdrawfromthedealifhe/shewantstoexit?

• Ifyes,how?Ifnot,whatdoyoudowithsuchaPartner?Considerwhatif:theyarerelocating,thedealisnotgoingthewaytheyplanned,ortheysimplywanttocashin?

• Othersforcedtobuy?

• Saleofwholebusinesswithanypartnerentitledtomatchgoodfaiththirdpartyoffer?(Detailstobeworkedout)

• Windingupoffirm?

• Partnerscanselltothirdparty,withothershavingrightoffirstrefusal?

• Somecombinationofabove?

• Howwillthesharesbevalued?

• Howwillthepurchasepricebedetermined?

• Whatwillbethepaymentterms?

• Anyrestrictionsongoingthisway?E.g.withdrawalwithinfirsttwoyearsofstartingoutnotallowed?

involuntARY withDRAwAl• Whatiftheotherpartnerswanttoforceoutapartner?

• Othersforcedtobuy?

• Saleofwholebusinesswithanypartnerentitledtomatchgoodfaiththirdpartyoffer?(Detailstobeworkedout)

• Windingupoffirm?

• Somecombinationofabove?

• Howwillthesharesbevalued?

appENdiX i

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• Howwillthepurchasepricebedetermined?

• Whatwillbethepaymentterms?

• Anyrestrictions?E.g.can’tbeforcedoutwithinfirsttwoyearsofstartingoutunlessindefault?

otheR SPeCiAl ConSiDeRAtionS• Canmajoritypartnersforcetheminoritytoselltothem?

• Ifyes,whatconditions,terms,etc.Seeaboveforsampleissuestobeconsidered

• Canamajorityforcethesaleofthewholefirm?

• Wouldthatincludeacarryalongprovision,wherebytheminoritywouldbeforcedtosellonthesametermsthemajorityissellingon?

• What about apiggybackprovision,whereby theminority can forceanybuyerwho is buying amajorityinteresttobuytheminorityinterestatthesameterms?

how to mAnAGe A PARtneR in DeFAult?• WhatdowedoifaPartnerdefaultsontheirobligationsunderthisagreement?

• Howdoesitaffecttheirprofits?

• Howdowegetthemoutofthecompany?Whathappenstotheirprofits?

• HowdoesthiscomparetotheInvoluntaryBuyoutprovisionsabove?

DiSAbilitY oF A PARtneR• Whatifapartnerbecomessickordisabledforanextendedperiodoftime?

• Howlongbeforewequestionwhethertheycanstayinvolvedinthefirm?

• Howwillwedealwiththeirsalary?Profitshare?Shareholdings?

DeAth oF A PARtneR• Thisisacomplexareathatmayrequireinputfromalifeinsurancerepresentative.

• Generalprinciples:

• Dotheyhavetobeboughtout?

• Dotheotherpartnersbuythemout,ordoesthefirmpayout?

• Howarethesharesvalued?

• Howispurchasepricecalculated?

• Whatarethepaymentterms?

• Doweminimizetaxconsequencesforestateofdeceasedpartner?

uSe oF inSuRAnCe• Dowefundthiswithinsurance?

• Howmuchinsurance,andhowisthatupdated?

• Whoownstheinsurance?

51

• Whopaysthepremiums?

• Howdothefundsflow?

• Dowesetthepriceattheamountofinsuranceinplace,irrespectiveofvalue?

• Whatdowedoifashareholderisnotinsurable?

• Whatiftheinsuranceisexpensive?

• Howdowedeterminewhatistooexpensiveandthereforewon’tbuytheinsurance?

AnY otheR ConSiDeRAtionS thAt You woulD liKe

Addressed in Your Agreement.

14.2 enRolment oF ChARteReD ACCountAnt AS A PRACtiSinG ChARteReD ACCountAnt

membership:MembersoftheInstituteareknownasCharteredAccountants.Becomingamemberrequirespassingtheprescribedexaminations, three years of practical training and meeting other requirements under the Act and Regulations.Amemberof ICAIcanuse thetitleCAbeforehisname.Amemberof ICAImayeitherbeanAssociateCharteredAccountant (A.C.A.)oraFellowCharteredAccountant (F.C.A.)basedonhisexperience.FurtherbasedonholdingCertificateofPractice,theymayalsobeclassifiedaspracticingandnon-practicingCharteredAccountants.

associatesandfellows:AnypersonwhoisgrantedmembershipoftheInstitutebecomesanAssociateCharteredAccountantandisentitledtousethelettersA.C.A.afterhisname.Generally,associatesaremembersoftheInstitutewithlessthan5yearsofmembershipafterwhichtheybecomeentitledtoapplyforbeingafellowmember.AnassociatememberwhohasbeenincontinuouspracticeinIndiaorhasworkedforacommercialorgovernmentorganisationforatleastfiveyearsandmeetsotherconditionsasprescribedcanapplytotheInstitutetogetdesignatedasa“Fellow”.AfellowCharteredAccountantisentitledtousethelettersFCA.afterhisname.

PRACtiSinG ChARteReD ACCountAntS:AnymemberwantingtoengageinpublicpracticehastofirstapplyforandobtainaCertificateofPracticefromtheCouncilof ICAI.OnlymembersholdingaCertificateofPracticemayactasauditorsorcertifydocumentsrequiredby various tax and financial regulatory authorities in India. Once amember obtains a Certificate of Practice, hisresponsibilitytothesocietyincreasesmanifold.TheethicalprinciplesapplicabletoapracticingCAprovidedinfirstandsecondscheduleof theCharteredAccountantsAct,1949aremorerigorousthantheonesapplicabletonon-practicingCAsorboth.

In India an individual Chartered Accountant or a firm of Chartered Accountants can practice the profession ofChartered Accountancy. Corporation, companies and other bodies corporate are prohibited from practicing asCharteredAccountantsinIndia.

CeRtiFiCAte oF PRACtiCe :

eligibility:1. AsAssociate/FellowmemberoftheInstitutecanapplyforgrantofCertificateofPracticeintheprescribed

Form‘6’togetherwithrequisitefee.

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2. Amemberengagedinthecategoriesofbusiness/oc-cupationasdefinedinAppendix(9)underRegulation190AiseligibletoapplyforCertificateofPractice.

RequiRementS :1. ThememberisrequiredtoapplyforCertificateofPracticeinForm6.TheFormcompleteinallrespectand

signedisrequiredtobesubmitted.

2. AnaccountpayeeCheque/DemandDraftfor`2,000/-w.e.f.1.4.2011alongwithannualmember-shipfeeoftherelevantyearshouldbesubmitted.

3. Ifthememberisengagedinotherbusiness/occupation,heisrequiredtoapplyforpermissionoftheCouncil,bysubmittingapplicationintheprescribedForm.

AFteR obtAininG CeRtiFiCAte oF PRACtiCe1. MembersholdingCertificateofPracticeandintendingtopracticeunderatrade/firmname,arerequiredto

makeapplicationforapprovalofthetrade/firmnameinForm117.ThemembercanseekapprovalofthefirmnamewhileapplyingformembershipoftheInsti-tuteinForm2.

2. Practice inOwnname : An associate and a fellowmember holding Certificate of Practice is eligible topracticeinhisownname.Heisnotrequiredtoapplyforapproval.HoweverintimationtothateffectmaybesenttotheconcernedDecentralisedoffice.Practic-ingtheprofessionofcharteredaccountancyinownnameissubjecttoholdingCertificateofPractice.Theentryofpersonalnameofthememberisnotpub-lishedintheListofFirms.

3. Practiceasapartnerofafirm:ThedetailsregardingchangeinparticularsofthefirminForm18arere-quiredtobesubmittedtotheInstitute’sofficewithin30daysfromthedateofsuchchange.

Notes:notes:

Notes:notes:

Notes:notes:

Notes:notes:

COMMITTEE FOR CAPACITY BUILDING OF MEMBERS IN PRACTICE (CCBMP)

PROFILE

The Committee for Capacity Building of Members in Practice (CCBMP) is a non-standing Committee of the

Institute of Chartered Accountants of India formed under regulatory provisions of Chartered Accountants Act,

1949. This Committee was formed in the month of February, 2010 under nomenclature ‘Committee for

Capacity Building of CA Firms and Small & Medium Practitioners’ (CCBCAF & SMP) by combining previously

formed Committees, Committee for Capacity Building of CA Firms and Committee for Small & Medium

Practitioners. Initially, this Committee was thought to establish for facilitating consolidation and capacity

building of CA firms in order to address various problems faced by CA firms and to conceptualize and

implement various means for strengthening their capacity as well as providing comprehensive guidelines for

consolidation of CA firms. Similarly, Committee for Small & Medium Practitioners was formed in 2009 to

empower Small & Medium Practitioners to assimilate and apply ways for carrying out their profession in

efficient manner. Thus the ultimate objective of the Committee is to strengthen CA firms as well as Small &

Medium Practitioners to rejuvenate their practice portfolio.

Bearing above objective, the prime duty of the Committee is to create awareness amongst CA firms on

capacity building through consolidation by networking, merger & setting up management consultancy

services firm and popularizing the concept of union through arranging workshops, symposia and summit on

the benefits of consolidation and endurance to better accounting, auditing and ethical standards. The

Committee assists Small & Medium Practitioners in improving their visibility amongst the business community

and also attempts to create additional professional opportunities for them.

In tune to vision of ICAI which is ‘The Indian Chartered Accountancy Profession’ will be the valued trustees of

world class financial competencies, good governance and competitors, the committee has its motto for

Capacity Building of Indian CA firms through consolidation and empowering small & medium practitioners by

developing and upgradation of their professional competence. Accordingly, the Committee has following

issues to deal with;

• Preparation of code for consolidation of CA firms.

• Identifying means and ways for empowering SMPs.

• Upgrading and updating the knowledge and skills set on standard practice.

• Developing practice areas for SMPs.

• Identifying Role of SMPs in emerging areas.

• Developing technical material to facilitate practice in new areas of profession.

• Facilitation on IT savvy office management and audit tools for CA firms & SMPs.

• Re-engineering of profession and establishment of CA Firms with sound infrastructure and finance.

• Arrangement of social security & insurance protection for Practitioners & CA Firms

OVERVIEW

For Further Detail Please Contact at:Dr. Sambit Kumar MishraSecretary, Committee for Capacity Building of Members in Practice (CCBMP), ICAIICAI Bhawan, A-29, First Floor, Administrative Building,Sector – 62 Noida -201309, UP , IndiaPh: 0120-3045994; E-mail : [email protected]

CA. Rajesh SharmaChairman, CCBMP, ICAI

CA. Prasanna Kumar D.Vice Chairman, CCBMP, ICAI

The Institute of Chartered Accountants of India(Set up by an Act of Parliament)

An Initiative by:

Committee for Capacity Building of

Members in Practice (CCBMP) of ICAI

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA(Setup by an Act of Parliament)

COMMITTEE FOR CAPACITY BUILDING FOR MEMBERS IN PRACTICE of ICAI 2019-20

CA. Prasanna Kumar D.Central Council Member and Vice-Chairman,

Committee for Capacity Building for Members in Practice (CCBMP) of ICAI

CA. Prafulla P. ChhajedPresident, ICAI

CA. Atul Kumar GuptaVice President, ICAI

CA. Rajesh SharmaCentral Council Member and Chairman,

Committee for Capacity Building for Members inPractice (CCBMP) of ICAI

Members of Committee

CA. Anil Satyanarayan Bhandari Central Council Member Mumbai CA. Dheeraj Kumar Khandelwal Central Council Member MumbaiCA Shriniwas Yeshwant Joshi Central Council Member Mumbai CA. Durgesh Kumar Kabra Central Council Member MumbaiCA. Dayaniwas Sharma Central Council Member HyderabadCA. Sushil Kumar Goyal Central Council Member KolkataCA. Pramod Kumar Boob Central Council Member JaipurCA. Manu Agrawal Central Council Member KanpurCA. Anuj Goyal Central Council Member Ghaziabad CA. Prakash Sharma Central Council Member JaipurCA. Kemisha Soni Central Council Member IndoreCA. Satish Kumar Gupta Central Council Member Jaipur CA. Pramod Jain Central Council Member New DelhiCA. Sanjeev Kumar Singhal Central Council Member Delhi CA. Charanjot Singh Nanda Central Council Member New DelhiMrs. Ritika Bhatia Central Council Member New DelhiDr. Ravi Gupta Central Council Member New Delhi

Co-Opted Member of CommitteeCA. Pramod Nahar Ratlam CA. Shishir Bajpai VaranasiCA. Anilkumar Inderchand Kothari MumbaiCA. Charmi Shah MumbaiCA. Kirti Rakesh Agrawal NagpurCA. Vijay M Jain ThaneCA. Vikram Rameshchandra Golechha AkolaSecretary, Committee for Capacity Building of Members in Practice (CCBMP), ICAI : Dr. Sambit Kumar Mishra

Dr. Sambit Kumar Mishra, Secretary, Committee for Capacity Building of Members in Practice (CCBMP), ICAIICAI Bhawan, A-29, First Floor, Administrative Building, Sector – 62 Noida -201309, UP, IndiaPh: 0120-3045994; E-mail : [email protected]

Roadmap-Young Practitioners