1. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle Networking, MDPs, Networking, MDPs, Office Management & Practice Development Strategies for Chartered Accountants CA ATUL C. BHEDA MUMBAI Bcom, FCA, LLB(gen), DISA(ICA)

2. COMPOSITION OF PARTNERS IN CA FIRMS (AS ON July 1st 2010) PartnersWesternSouthCentralNorthEastTotalPercentage Proprietor 11337144884898645433593257070.46% Partner 22363162614431475709761616.47% Partner 384853663261527829096.29% Partner 431824221829911811952.85% Partner 5154107146200856921.49% Partner 690697892363650.78% Partner 750495184342680.57% Partner 830393658261890.40% Partner 921332049151380.29% Partner 102025132613970.20%

3. COMPOSITION OF PARTNERS IN CA FIRMS (AS ON July 1st 2010) PartnersWesternSouthCentralNorthEastTotalPercentage Partner 1113187197640.07% Partner 121175102350.02% Partner 1382413180.07% Partner 1492213170.03% Partner 1540035120.02% Partner 16 010450.01% Partner 17 101130.01% Partner 181030040.01% Partner 193101490.01% Partner 20103011150.03% Total17324724875579389470346221100.00%

4. COMPOSITION OF PRACTISING UNITS IN INDIA ( AS ON 1st July 2010) No of PartnersTotal All IndiaPercentage composition 1 ie; proprietary32570 70.47% 2 TO 411720 25.35% More than 419314.18% Total46221100.00%

5. ICAI’S INITIATIVES FOR CAPACITY BUILDING GUIDELINES FOR NETWORK RULES FOR MERGER-DEMERGER PRACTICE IN CORPORATE FORM mdPS

6. ICAI RULES ON NETWORKING MREGER DEMERGER

7. NETWORKING NAME FOR NETWORKING REGISTRATION EHICAL COMPLIANCE CONSTITUTION SCOPE BYELAWS EXIT

8. NAME FOR NETWORKING The Network may have distinct name, which should be approved by the Institute. To distinguish a “Network” from a “firm” of Chartered Accountants, the word “& Affiliates” should be used after the name of the network and the words & Co.” / “& Associates” should not be used. The prescribed format of application for approval of Name for Network is asper the Form ‘A’.

9. REGISTRATION Formal Network is required to be registered with the Institute as per the prescribed Form B The Referral Practice requires no registration

10. Ethical Compliance It will be necessary for the networked firms to comply with all applicable ethical requirements prescribed by Institute one firm of the network is the statutory auditor of an entity then the associate firm should not accept internal audit or book keeping The ceiling of charging non audit fees i.e. three times of the statutory audit fees is collectively applicable in relation to the networking firms

11. Constitution The Network can be between proprietary, partnership firms and individual members. A proprietory, partnership firms and individual members are allowed to join only one formal network. Firms having common partners shall join only one network.

12. Scope The Network itself will not carry on any business for acquisition of gain for itself and only act as a facilitator for its members/constituent Member firms to pursue their professional jobs Only one Firm/Member can apply on behalf of the network showing the collective strength Only the firm/Member of Network can sign/attest any certificate/Report.

13. Byelaws Appointment of a Managing Committee, from among the managing partners of the member firms of the network and the terms and conditions under which it should function. The minimum and maximum number of members of the Managing Committee shall also be agreed upon. Administration of the network Contribution of membership fees to meet the cost of the administration of the network.

14. BYELAWS…… Identifying a partner of any of the member firms of the network to be responsible for the assignment (engagement partner) Dispute settlement procedures through arbitration and conciliation. Development of training materials for members of the network Issue of Newsletters for staff and clients.

15. BYELAWS…. Development of software for different type of assignments. Delopment and maintenance of databases relevant for different types of assignments. Library Appointment of a technical director to whom references can be made.

16. BYELAWS……. Determining the methodology for drawing resources from each member firm. Determining compensation to member firms for resources to be drawn from them. Peer review of the member firms. There can be many other clauses, which can form the part of the byelaws.

17. Exit A constituent Member firm/Member of a Network can exit from the network by sending the declaration in Form ‘C’ to the Institute and also to each and every constituent of the network. The concurrence/acceptance of the same by other firms forming part of the network firm shall not be required.

18. MERGER DEMERGER RULES Merger agreement in prescribed form to be filed with Institute FORM E The existing names of the merging firms frozen in the Institute’s records for 3 years Seniority granted to the new firm from the date of establishment of the firm under whose name the merged entity operates New name for merged firm possible without losing seniority Demerger possible within 5 years of merger FORM F

19. STATUS OF MERGED/DEMERGED FIRMS (May, 2010) RegionTotal No. of Mergers taken place Total No. of Partners after Merger Number of Firms involved in Merger Number of firms demerged PartnersSole Proprietary PartnersSole Proprietary Western3648501012281121 Southern15447063 88312 Eastern179511411141022 Central3851045863061551 Northern47013511073221847 Total15524227398105857 153

20. STATUS OF Management consultancy companies (MCC) Region MCC Names Approved MCCs Registered with the Institute Total No. of CAs in the Registered MCCs ERO327 NRO25914 WRO311 SRO1412 CRO11714 Total562038

21. DETERRENTS IN CAPACITY BUILDING (A) NETWORK Prohibition on acquiring business in name of Network. No additional economic advantage due to non- recognition of Network by C&AG, RBI, Corporate world etc. Lack of benefit of Network over referral practice. Loss of name & identity of other affiliates as work is assigned to one firm showing collective strength of the Network.

22. DETERRENTS IN CAPACITY BUILDING (contd.) (A) NETWORK Prohibition on advertisement of Network. Bar on accepting internal audit of an entity by other affiliates of the Network if one affiliate is the statutory auditor of the entity. Clash of egos/conflict of interests on issues concerning allocation of cost and sharing of revenue &manpower. Loss of control over quality of work when delivered by other affiliates of the Network.

23. DETERRENTS IN CAPACITY BUILDING (contd.) (B) MERGER-DEMERGER Post merger, there is loss of revenue during cooling period, in case of empanelment of C&AG, RBI etc. Post integration problems like positioning of partners in the merged firm, fear of domination, loss of identity & name, conflict of interest, loss of independence, confidentiality issues etc. Monetary benefits not commensurate with costs.

24. DETERRENTS IN CAPACITY BUILDING (contd.) (B) MERGER-DEMERGER Anticipation of reduction in control over operations of the merged firm. Lack of clarity in issues concerning allocation of cost & sharing of revenue between erstwhile merging firms. Difficulty in opting for Demerger when erstwhile merging firms are constituted of 2 or 3 partners.

25. DETERRENTS IN CAPACITY BUILDING (contd.) (c) CORPORATE FORM OF PRACTICE Difficulty in getting name approval of the MCC due to the condition of mentioning areas of ‘Management Consultancy & other Services’ offered. Prohibition on advertisement by Management Consultancy Company. Lack of clarity regarding Directorship of non- Chartered Accountants & persons from other disciplines.

26. (A) Ethical ISSUES Issues emerging out of the scope of the concept of ‘larger structure’ defined in IFAC Code of Ethics. Examining applicability of Advertisement Guidelines to Network & MCC. Reviewing the bar on accepting internal audit/other professional assignments of an entity if any constituent of Network/MCC is the statutory auditor of that entity.

27. (A) Ethical ISSUES (contd.) Reviewing the use & scope of the term ‘entity’ for ethical compliance norms of Network & MCC. Issues relating to removal of bar on commercial presence of foreign MAFs in India. Expanding the scope of persons who may become Director in MCC so as to include non CAs & persons of other discipline.

28. (B) Corporate issues Allowing Network to function as LLP. Feasibility of Merger of CA firms with firms of other disciplines to engage in Multi-Disciplinary Practice.

29. (C) Issues relating to PDC Promotion of Network in corporate sector, government sector, banking sector etc. Giving weightage to Network for empanelment purposes. Reviewing cooling period norms to facilitate Merger & Demerger.

30. (D) Other related issues Issues emerging out of change in definition of ‘Network’ & ‘Network firm’ in IFAC Code of Ethics. Lack of apparent advantages in Networking. Taxation of Network in case of change in its existing structure. Addressing mindset problems of members regarding various capacity building measures. Addressing the procedural difficulties in Networking, Merger-Demerger & Corporate Form of Practice.

31. MDPS (Multi-disciplinary Partnership) The Chartered Accountants Act, 1949 [as amended by the Chartered Accountants (Amendment) Act, 2006] provided for, for the first time, a multi-disciplinary partnership. The relevant enabling provision (i.e., Item 4 of Part I of the First Schedule to the Chartered Accountants Act, 1949)

32. “A chartered accountant in practice shall be deemed to be guilty of professional misconduct, if he − x x x x x (4) enters into partnership, in or outside India, with any person other than a chartered accountant in practice or such other person who is a member of any other professional body having such qualifications as may be prescribed, including a resident who but for his residence abroad would be entitled to be registered as a member under clause (v) of sub-section (1) of section 4 or whose qualifications are recognised by the Central Government or the Council for the purpose of permitting such partnerships.” The said enabling provision came into force w.e.f. 17th November, 2006. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle

33. The consequential enabling provision required to be prescribed/made in the Chartered Accountants Regulations came into force w.e.f. 25th September, 2008. The relevant persons can be : (a) Company Secretary (b) Cost Accountant (c) Advocate (d) Engineer (e) Architect (f) Actuary (g) MBA

34. Professional bodies or institutions outside India whose qualifications relating to accountancy are recognised by the Council under sub-section (2) of section 29 of the Act.”

35. Issues CA Act 2. (1) X X X X X X (2) A member of the Institute shall be deemed “to be in practice”, when individually or in partnership with chartered accountants in practice, he, in consideration of remuneration received or to be received—

36. Issues… Qualification and disqualification of auditors. (Companies Act) 226.(1) A person shall not be qualified for appointment as auditor of a company unless he is a chartered accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949): Provided that a firm whereof all the partners pracitising in India are qualified for appointment as aforesaid may be appointed by its firm name to be auditor of a company, in which case any partner so practicing may act in the name of the firm.

37. Issues… No definition of firm in CA Act What should be the proportion of CAs in constitution of MDPs Which Institute will have control Disciplinary Actions Other specialized jobs like CS etc Signing of reports

38. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle Lessons in MANAGEMENT - THE LAGAAN Way -

39. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle THINK OF CHALLENGES AS OPPORTUNITIES: Captain Russell’s challenge to Bhuvan to play the cricket match was taken up by Bhuvan as an opportunity to bring happiness into the lives of his village folk.

40. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle BE DETERMINED IN FACE OF OPPOSITION: Right from the start when the entire village opposes Bhuvan’s having taken up the challenge to the time when the rest of his team refuses to play because he wants to take in an untouchable in the team. We face this situation many times in our organisations. Many a time, we give up and accept what we feel is perhaps a lesser decision. It is at times like these that we need to speak up- as long as we know we are fighting for the right issue, and not against an individual.

41. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle GIVE EXAMPLES TO ENHANCE UNDERSTANDING: Bhuvan simplified the challenge of learning cricket by portraying it as something similar to gilli-danda. Analogies have that effect and can be powerful in helping tame the seemingly difficult. As managers and leaders, we too have this task of motivating the team members to take up challenges in the projects.

42. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle MAKE A BEGINNING: Bhuvan did not wait to start. He did not see around. He made bat and a ball, got the kid interested and started. Only when we close the door behind us, we will see the doors in front start opening.

43. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle SMALL VICTORIES ARE IMPORTANT AT THE START Bhuvan hitting the ball for the first time in full public view and inculcating a feeling of participation among them. When starting any project it is important to have small wins at the start to motivate the team.

44. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle BUILDING THE TEAM: Building the team is like recruitment. One needs to select the right people and motivate them. He understands the pressures and the soft points of people, and uses this knowledge to make them part of his team. Each one of his team members is treated as special, as being different.

45. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle ALLOCATING ROLES: Bhuvan also assigns responsibilities to each of his people. Just getting the people in the team is not good enough. They have to be told what the goal is. A team consists of different individuals. The objective is to make them all work together like a fist, like a team.

46. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle SUPPORT THE TEAM MEMBERS: Bhuvan backs his team members to the hilt, even when they make mistakes. It is indeed important in any team that the captain backs the right person, at the right time, for the right job.

47. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle Lead From The Front: Never Give Up… that was Bhuvan’s winning mantra. This attitude of his also enabled him to give his best shot even at the last ball and thus win the match. In sport, in business and in life…..always be alert, because you never know when opportunity may knock on your door.

48. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle DEFINE THE ENEMY: To the British it was just a game but for Bhuvan it was fight against the British oppressors and a win against them would bring 3 years of ‘TAXFREE’ life for his village folk. For Bhuvan the enemy was defined as bad, oppressors and merciless British overlords. This clear definition helped him to fight towards a specific goal. In any case, having a clearly defined enemy works as a rallying point for the team.

49. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle OVERCONFIDENCE DESTROYS: Captain Russel and his team members thought that the match would be a cake walk for them because they were a lot of good experienced. But was here that they committed a mistake, they were overconfident and overlooked the ability of the enemy and this is what made them lose the match. Anyone can take a lesson from here, to never OVERESTIMATE oneself and UNDERESTIMATE others.

50. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle TRAIN and PRACTICE: There are no shortcuts for physical and mental fitness. Bhuvan and his team strongly believed it and never compromised on it. There is only one mantra: To be well trained and have good enough practice…. which is HARD WORK!

51. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle NEVER GIVE UP: Even the last ball of the match was played with hope. 5 runs to win out of 1 ball, but Bhuvan played it great expectations as though it could win the match for the team and that is exactly what happened. He never gave up on his ability and this is what made him win the match. In sport, in life or in business always be alert and keep giving your best to situations, because you never know when opportunity strikes.

52. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle Make the best of Limited Resources: Bhuvan made the best out of his limited resources. The tools for the game were all made by the village folk and were made out of the best that they could lay their hands on. As entrepreneurs we too must be innovative. The focus should be on getting the work done and not on the availability of resources.

53. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle Take the unexpected in your stride: One after the other all the good batsmen in Bhuvan’s team fell, but he did not lose heart, he played on his best shot and gave the team its victory. Similarly one should not look at defeats on the path as setbacks. One has to learn to take the unexpected in one’s stride and move on.

54. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle Its about Team Spirit: No matter how well Bhuvan played in the match, nothing would have been possible if all the team members did not put in their efforts Bhuvan showed how an average team filled with team spirit can overcome a group of talented, experienced but under-motivated individuals.

55. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle Its about People : The film ‘Lagaan’ is all about how ordinary people can do extraordinary deeds. Its about bringing out something from within us. Something which has been hidden and long forgotten. Something whose existence we didn’t know. As we go about our lives, we should remember that each one of us matters, that each one of us has it within us to make a difference.

56. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle CHALLENGES COMPETITIVE CHALLENGES REGULATORY CHALLENGES TECHNOLOGICAL CHALLENGES INTERNAL CHALLENGES

57. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle COMPETITIVE CHALLENGES Too many CAs in practice Undercutting of fees MNC Accounting firms, big and medium MNC Management consulting firms Professionals from other professional bodies.

58. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle REGULATORY CHALLENGES Indian Accounting Standards Financial Performance Reporting (SEBI, NSE, RBI etc.) US /UK GAAP, IFRS Standards on Auditing. Quality Control. Peer Review. Company Law/ Indirect Tax & Direct Tax

59. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle TECHNOLOGICAL CHALLENGES Use of CAATs, Spread Sheets etc. Too much dependence of I.T. resources Pirated Software Virus Rapid Hardware Up gradation

60. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle INTERNAL CHALLENGES Maintaining Fees Staff Productivity Maintain Clients Compliance on due dates Trained Employees Liquidity

61. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle AREAS OF MANAGEMENT PERSONNEL MANAGEMENT TIME MANAGEMENT SPACE MANAGEMENT CLIENT MANAGEMENT FINANCE MANAGEMENT COMMUNICATE & SYSTEMS MANAGEMENT KNOWLEDGE MANAGEMENT

62. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle PERSONNEL MANAGEMENT DELEGATION STANDARD INSTRUCTION SHEETS TRAINING TIME SHEETS MEETINGS

63. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle TIME (SELF) OFFICE TIMING SYSTEM OF APPOINTMENTS TIME AT DEPARTMENT TABLE CLEARENCE TIME FOR CREATIVE THINKING TIME FOR PHYSICAL FITNESS TIME FOR FAMILY

64. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle SPACE PLACEMENT OF ASSETS PLACEMENT OF STAFF STORAGE OF RECORDS

65. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle CLIENTS SERVICE EDUCATING CLIENTS 80:20 PARATO’S THEORY EVALUATION OF SERVICES RENDERED CLIENT RELATIONSHIP PROSPECTIVE CLIENTS

66. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle FINANCE BILL PREPARATION/RAISING BILL TIMING BILL COLLECTION FOLLOW UP EXPENSES

67. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle COMMUNICATION TELEPHONE LETTERHEAD CARDS COVERS/ENVELOPS REPLY/FEEDBACKS MESSAGE SYSTEMS

68. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle O nce upon a time a tortoise and a hare had an argument about who was faster. They decided to settle the argument with a race. They agreed on a route and started off the race.

69. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle

70. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle The moral of the story is that slow and steady wins the race.

71. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle T he hare was disappointed at losing the race and he did some Root Cause Analysis (RCA). He realised that he'd lost the race only because he had been overconfident, careless and lax.

72. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle The moral of the story : “ Fast and Consistent will always Beat the Slow and Steady “

73. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle B ut the story doesn't end here. The tortoise did some thinking(RCA) this time, and realised that there's no way he can beat the hare in a race the way it was currently formatted.

74. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle T he moral of the story ? “ First identify your core competency and then change the playing field to suit your core competency “

75. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle T he moral of the story ? It's good to be Individually Brilliant and to have strong Core Competencies; but unless you're able to Work in a Team and Harness each other's Core Competencies, you'll always Perform below par because there will always be situations at which you'll do poorly and someone else does well.

76. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle T here are more lessons to be learnt from this story………

77. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle N ote that neither the hare nor the tortoise gave up after Failures. The hare decided to work Harder and put in More Effort after his Failure.

78. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle T he tortoise changed his Strategy because he was already Working as Hard as he could. In life, when faced with Failure, sometimes it is appropriate to Work Harder and put in More Effort.

79. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle S ometimes it is appropriate to Change Strategy and Try something different. And sometimes it is appropriate to do both.

80. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle T he hare and the tortoise also Learnt another vital Lesson : “ When we stop Competing against a rival and instead start Competing against the Situation, we Perform far Better “

81. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle T o sum up, the story of the hare and tortoise teaches us many things; Chief among them are : - Fast and Consistent will always beat slow and steady. - Work to your Competencies. - Pooling resources and working as a team will always beat individual performers. - Never give up when faced with failure; and finally, - Compete against the situation NOT against a rival.

82. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle

83. 11 January 2016 BY CA ATUL BHEDA Mumbai For Malad Goregaon CPE Study Circle