Page 360 - CA Final PARAM Digital Book.
P. 360
Pursuant to Section 2(2)(iv) above, the Council has passed a resolution permitting a Chartered
Accountant in practice to render entire range of “Management Consultancy and other Services”.
The definition of the expression “Management Consultancy and other Services” includes Personnel
recruitment and selection. Personnel Recruitment and selection includes, development of human
resources including designing and conduct of training programmes, work study, job description, job
evaluation and evaluations of workloads.
Part III – Case Discussion
➢ Mr. A, a practicing Chartered Accountant has agreed to select and recruit personnel, conduct
training programmes for and on behalf of a client.
Part IV – Conclusion
➢ So, Mr. A is not guilty of professional misconduct.
QNO Sec 2 --MCS (Advisor to issue and underwriting) Old Course – (M19E)
655.050 TITANIUM CNO – PE.790
CA Natraj, in practice, accepted an assignment as advisor and consultant to the public issue of shares
by his client M/s Super Ltd.
Besides helping the company as an advisor, he also underwrote the public issue of the company to the
extent of 25% at a commission of 1%. Remaining shares were underwritten by banks and other financial
institutions at the same rate of commission. He contends that above assignments are part of
management consultancy work permitted by the council of the Institute. Do you agree with the view
of CA Natraj ? Decide in the light of applicable code of conduct.
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 (advisor to the issue) and
Underwriting Services to the client.
Part IV – Conclusion
➢ In view of this, CA Natraj would be guilty of misconduct under the Chartered Accountants Act, 1949
since providing Underwriting Services to the client is not permitted.
QNO Sec 6 --Certificate Issued Without COP by CA Old Course – (N16M, PM17, M18R, M19R)
655.100 TITANIUM CNO – PE.700
The manager of ZedEx (P) Ltd. approached CA. Vineet in the need of a certificate in respect of a
consumption statement of raw material. Without having certificate of practice (CoP), CA. Vineet issued
the certificate to the manager of the company, acting as a CA in practice and applied for the CoP to
the Institute on very next day to avoid any dispute.
Answer Part I -- Relevant Standards & Laws
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