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Representation against Discrimination among st Firms/ Members in MEF Application 2020-21
The Institute of Chartered Accountants of India
Indraprastha Marg,New Delhi- 110002
Sub:- Discrimination among st Firms/ Members in MEF Application 2020-21
As per Regulation 186 of the CA Regulations 1988, the Council may require members to supply Such information as it considers relevant as well as additional information which may be required For statistical purposes. The concerned member shall be deemed to be guilty of professional Misconduct under Clause 2 of Part II of the First Schedule if the concerned member does not Supply the information called for or does not comply with the requirements asked for by ICAI,Council or any of its Committees, Director (Discipline), BOD, DC, QRB or the appellate, Authority.
Hence submission of any details as sought for by ICAI through its MEF is within the Parameters of the law and hence a welcome Step by the ICAI. This year for the purpose of filling up the MEF for the year 2020-21, financial documents of the applicant firms and their partners were required to be filed as per the advisory issued by the Professional Development Committee (PDC) in September, 2020 fixing the last date for submission of the same as 12th October, 2020.
On 9th October 2020, the last date for submission was extended to 23rd October 2020 and an additional feature was made available in the MEF which reads as follows:-
“regarding presumptive taxation scheme, an option has been included in the financial documents tab in MEF for the members to select while submitting financial documents. There is no requirement for submitting the financial statements, i.e. Balance Sheets and Income and Expenditure Account for the applicants who have opted for the Presumptive Taxation Scheme u/s 44ADA of Income Tax Act 1961 and have filed their ITR accordingly for the financial year 2018-19”.
By this announcement the Institute has exempted a category of applicants from filing their Balance Sheet and Income and Expenditure Account which was not the case as per the 1st Advisory. I would like to humbly state that the CA Act and Regulations are applicable uniformly to all members and the rules of the game cannot be changed while the game is on. Further you cannot have different yardstick for members/ Firms having Same Rights responsibilities, duties under CA Act 19949. Further discrimination among st members/ firms who are having same right, duties, responsibilities as per The Chartered Accountants ACT 1949 is totally unconstitutional.
Hence exempting a class of professionals who have declared profits more than 50% of their gross receipts u/s 44ADA from professionals who have declared less than 50% of their gross receipts and got their accounts tax audited, will be a miscarriage of justice and fair play in the profession.
Please refer to Chapter V of the Council Guidelines 2008 “Maintenance of Books of Account” as amended from time to time states as follows :-
A member of the Institute in practice or the firm of Chartered accountants of which he is a partner, shall maintain and keep in respect of his/its professional practice, proper books of account including the following-
(i) A cashbook
(ii) A ledger
A Case Study has been discussed in Page 20.103 falling under Group 1 Paper 3, CA Final New Syllabus (Advanced Auditing & Professional Ethics) which is as follows-
Mr L, a Chartered Accountant did not maintain Books of Account for his professional earningson the ground that his income is less than the limits prescribed u/s 44AA of the Income Tax Act 1961.
Maintenance of Books of Account:
As per the Council General Guidelines 2008, under chapter 5, on maintenance of books of Accounts, it is specified that if a CA in practice or the firm of CAs of which he is a partner fails To maintain and keep in respect of his/its professional practice, proper books of account including the cashbook and ledger, he is deemed to be guilty of professional misconduct. Accordingly, it does not matter whether Section 44AA of the Income Tax Act 1961 applies or not.Conclusion – Hence Mr L is guilty of professional misconduct.
From the above it is clear that no exemption is required to be given for Section 44ADA cases from submission of financial statements. It is also to be noted that such firms also produce their financial statements before CAG at the time of their emplacement with them. Now Question arise when 44ADA assesses were Granted Exemption from submission of Financial Statements Why others firms were not extended the same benefit. An EOI dated 29th October 2020 was issued by ICAI for audit of financial documents submitted by MEF 2020-21 applicants where the fees were fixed at Rs 30,000/- to scrutinize 300 applications at an average rate of Rs 100/- per application, with the assignment to be completed within 10 days.
As per the revised recommended scale of fees issued by Committee for Members in Practice of ICAI dated 11th February 2020, even in class C cities, principal, qualified, semi- qualified and other assistants are to be remunerated @ of Rs 8000, 5000, 3000 and 1000 respectively per day. With deployment of a qualified and other assistant for 8 hours a day for 10 days, the minimum fees works out to be many fold of the amount offered, and hence ICAI is not Complying with its own announcement on recommended scale of fees and offered a fees which is Nearly equivalent to wages offered to workers working Under MGNREGA .
It is pertinent to note that Point no. 2(o) of Part B of questionnaire for Peer Review states as follows:-
Has the PU (Practice Unit) at any point of time received fees from a client below minimum scale of fees recommended for audit assignments by the ICAI. If yes, specify reasons with names of the entities and year in which rendered. In other words, if the PU receives below the fees Recommended by ICAI, then the Peer Reviewer will have to report about the same and the PRB may be reluctant to issue the Peer Review Certificate.
In conclusion, you are requested to call for financial statements from all applicants of MEF 2020-21 by reopening MEF window and either withdraw the EOI dated 29th October 2020
Enhance the fess offered for the work in line with recommended scale of fess by your good office.
Kindly Note that if you discriminate among st members/ Firms having same Rights,
Responsibilities, Duties your action of discrimination will be challenged before competent Court of Law.
CA Ram Nath Singh Date:-05/11/2020
CC:- (1) All Central Council Members
(2) All Regional Council Members