Page 412 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

guarantee or provided any security in connection with the indebtedness of any third person to the concern, for
limits fixed in the statute and in other cases for amount exceeding ₹ 100,000/-
Chapter XI : Directions in case of unjustified removal of auditors
Compliance: Institute members must adhere to the instructions provided by the Council or an appropriate
Committee on behalf of any of them.
Don’t Accept: The Council or Committee may instruct incoming auditors not to accept the appointment if the
previous auditor(s) were unjustly removed. The decision to prevent the incoming auditor(s) from accepting the
appointment is based on the circumstances surrounding the removal of the earlier auditor(s).
Chapter XIII : Guidelines on Tenders (Already covered under clause 6)
Members of the Institute in practice are generally not allowed to respond to tenders for professional services that
are exclusively reserved for chartered accountants, such as audit and attestation services. However, this restriction
does not apply if the minimum fee for the assignment is specified in the tender document itself or if the service
areas are open to other professionals in addition to Chartered Accountants.
Chapter XIV : Unique Document Identification Number (UDIN) Guidelines
Purpose: The implementation of the Unique Document Identification Number (UDIN) is aimed at preventing
malpractice and the use of unauthorized certificates. A unique number is generated for each document to ensure
its uniqueness and authenticity.
Applicability: The UDIN is required for all certificates, GST and Tax Audit Reports, and other attest functions.
Chapter XV: Guidelines for Networking
Larger structures: Firms often form larger structures with other firms and entities to enhance their professional
services.
Network: A larger structure that involves cooperation, sharing of a common brand name, quality control system,
or significant professional resources is considered a network.
No need of legal distinctiveness: The determination of whether these larger structures form a network depends
on specific facts and circumstances, not on the legal distinctiveness of the firms and entities.
Third Party Test: The judgment of whether a larger structure is a network is based on the perception of a
reasonable and informed third party, considering all specific facts and circumstances.
Deemed Network:
• Ownership: Larger structures aimed at cooperation and sharing common ownership, control, or
management are deemed network. This can be achieved through contracts or other means.
• Profit or cost sharing: A structure aimed at profit or cost sharing among entities is deemed a network but
sharing of immaterial costs or costs related only to the development of audit methodologies, manuals, or
training courses does not create a network.
• Strategy: A larger structure is considered a network if the entities within it share a common business
strategy, which involves agreeing to achieve common strategic objectives.
• Branding: If entities within a larger structure share a common brand name, including common initials or a
common name, the structure is deemed a network. This includes the use of the common brand name in the
firm name or in the signing of an audit report.
A firm may give the appearance of being part of a network through references in stationery or promotional
materials, even if it doesn't belong to a network or use a common brand name. Care must be taken in
describing such memberships to avoid creating the perception of being part of a network.
• Resource Sharing: If a larger structure is aimed at cooperation and the entities within it share a significant
part of professional resources, it is considered a network.
Resources: Professional resources include common systems for exchanging information, partners and staff,
technical departments for consulting on specific issues, audit methodology or manuals, and training courses
and facilities.
Significance: The determination of whether the shared professional resources are significant is based on the
relevant facts and circumstances.

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