Page 359 - CA Final PARAM Digital Book.

Part 1- Introduction

Sec 2 --MCS (Portfolio Management Services) Old Course – (M06E, N08R, M12R, M12M, M13R,
QNO
TITANIUM CNO – PE.790 N15E, SM17, PM17, M18M, N18R, M20, SM21)
654.000
New Course – (SM23,)
P, a Chartered Accountant in practice provides management consultancy and other services to his
clients. During 2015, looking to the growing needs of his clients to invest in the stock markets, he also
advised them on Portfolio Management Services whereby he managed portfolios of some of his clients.
OR
Mr. Sam, a Chartered Accountant in practice, provides guidance on post -issue activities to his clients
e.g., follow up steps which include listing of instruments, dispatch of certificates and refunds etc. with the
various agencies connected with the work. During the year 2017-18, looking to the growing needs of his
clients to invest in the stock markets, he also started advising them on Portfolio Management Services
whereby he managed portfolios of some of his clients.
Answer Part I -- Relevant Standards & Laws
▪ Section 2(2)(iv) of the Chartered Accountants Act, 1949
Part II -- Requirements of Relevant Standards & Laws
➢ The Council of the Institute of Chartered Accountants of India (ICAI) pursuant to Section 2(2)(iv) of
the Chartered Accountants Act, 1949 has passed a resolution permitting “Management Consultancy
and other Services” by a Chartered Accountant in practice.

A clause of the aforesaid resolution allows Chartered Accountants in practice to act as advisor or
consultant to an issue of securities including such matters as drafting of prospectus, filing of
documents with SEBI, preparation of publicity budgets, advice regarding selection of brokers, etc.

It is, however, specifically stated that Chartered Accountants in practice are not permitted to
undertake the activities of broking, underwriting and portfolio management services. Thus, a
chartered accountant in practice is not permitted to manage portfolios of his clients.

Part III – Case Discussion
➢ A Chartered Accountant in practice provides management consultancy and other services to his
clients. He also advised them on Portfolio Management Services whereby he managed portfolios of
some of his clients

Part IV – Conclusion
➢ In view of this, P would be guilty of misconduct under the Chartered Accountants Act, 1949.

QNO Sec 2 --MCS (Recruitment Services) Old Course – (N07E, M11R, M15E, PM17)
655.000 TITANIUM CNO - PE.790 New Course – (SM23)
Mr. A, a practicing Chartered Accountant agreed to select and recruit personnel, conduct training
programmes for and on behalf of a client.

Answer Part I -- Relevant Standards & Laws
▪ Section 2(2)(iv) of the Chartered Accountants Act, 1949
Part II -- Requirements of Relevant Standards & Laws
➢ Under Section 2(2)(iv) of the Chartered Accountants Act, 1949, 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 renders such other services
as, in the opinion of the Council, are or may be rendered by a Chartered Accountant in practice.

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