Page 391 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

Fee Structure: Clause (10) regulates the fee structure for professional employment. It addresses the charges or
offers to charge, as well as the acceptance or offers to accept such fees.
Profit-Based Fees: The clause specifically targets fees that are based on a percentage of profits. This means that
professionals cannot charge or accept fees that are directly proportional to the profits made.
Contingent Fees: The clause also restricts fees that are contingent upon the findings or results of the
employment. This means that the fee cannot be determined by the outcome of the professional's work.
Regulatory Exceptions: Despite these restrictions, there are exceptions as permitted under regulations made
under this Act. This means that in certain circumstances, as defined by the Act's regulations, profit-based or
contingent fees may be allowed.
Rationale:
Profession vs Business: A profession is not solely driven by profit motive, unlike a business. Personal gain is a
part, but not the primary or only objective.
Payment Structure: Professional opinion discourages payment methods that depend on results. This is because
a professional receiving payment proportional to client benefit might exaggerate service advantages or adopt
unethical means.
Integrity and Independence: Such payment structures can undermine a professional's integrity and
independence.
Fees by Court or Public Authorities: Fees are not considered contingent if they are fixed by a court or other
public authority.
Regulation 192: The Council of the Institute has framed Regulation 192, which exempts members from the
operation of this clause in certain professional services.

192. Restriction on fees
Following are the Exceptions Provided.
Shortcut in the form of story

Akshay Kumar took certain Management consultancy service.
Then he registers co-operate society
Then he raised money through certain financial services
After starting production, took cost optimization services.
After sales he took debt recovery services
After earning profits, for taxes he got asset valued under direct tax and duties
After some years, he suffered huge losses, took service of liquidation and receiver for realization of assets
Akshay is ready to take any other services as prescribed by council

Recently council prescribed following service
Acting as insolvency professional
Non assurance service to non-audit client (other than services as specified above)

(CNO-PE.1280) CLAUSE 11
Clause (11) Engages in any business or occupation other than the profession of chartered accountant unless
permitted by the Council so to engage.
Provided that nothing contained herein shall disentitle a chartered accountant from being a director of a
company (Not being managing director or a whole time director) unless he or any of his partners is interested
in such company as an auditor.
Analysis.
Profession Restriction: Chartered accountants are only allowed to practice their profession and cannot engage
in any other business or occupation unless they have explicit permission from the Council.

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