Page 413 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

Limitations: If the shared resources are limited to common audit methodology or manuals, with no
exchange of personnel or client or market information, it is unlikely that the shared resources would be
considered significant.
Exchange: If the shared resources involve the exchange of people or information, such as staff from a
shared pool or a common technical department providing mandatory technical advice, it is more likely that
a reasonable and informed third party would consider the shared resources significant.
• Quality Control: If entities within a larger structure share common quality control policies and procedures,
the structure is deemed a network. These policies and procedures are designed, implemented, and
monitored across the structure.
Forms of the Network:
Mutual Entity: A network can act as a mutual entity that facilitates its constituents without carrying out any
professional practice. (Association)
Partnership: A network can be formed as a partnership firm, provided the total number of partners does not
exceed twenty.
LLP: A network can be constituted as a Limited Liability Partnership, subject to the provisions of the Chartered
Accountant Act and Rules and other applicable laws.
Company: A network can be constituted as a company, subject to the guidelines prescribed by the Institute for
corporate form of practice and formation of management consultancy services company.
Who can join: Network firms can consist of sole practitioners, partnerships, or any such entity of professional
accountants as permitted by the Act.
Only one network: A firm is allowed to join only one network, and firms with common partners must also join
only one network.

Approval of Name of Network amongst firms registered with Institute.
Naming: A network may have a distinct name approved by the Institute. To distinguish a network from a firm
of Chartered Accountants, the words "& Affiliates" should be used, not "& Co." or "& Associates".
Regulations: The provisions of Regulation 190 of the Chartered Accountants Regulations, 1988 apply to the
name of the network. If a name is found to be undesirable, even after approval, it can be withdrawn by the
Institute.
Approval: The Institute will approve or reject the network's name and inform the network within 30 days of
receiving the application. Approval of the network's name does not entitle the network to carry on practice under
that name.
Registration of Network with entities in India.

Reserve the name: Once the name of a network is approved, the Institute will reserve the name for a period of
three months from the date of approval. Registration of the network with the Institute is mandatory.
Registration: The network must register with the Institute within the three-month period using Form B, or the
assigned name will be cancelled.
Common Multinational Accounting Firm: If different Indian firms are networked with a common
Multinational Accounting Firm, they are considered part of the network.

Listing of Network with entities outside India
Declaration: The authorized representative(s) of the Indian Member firm(s) constituting the Network with
entities outside India must file a declaration with the Institute in Form 'D' within 30 days of entering into the
Network arrangement.
Join only one network: Proprietary/individual members, partnership firms, members in LLP, or any other
entity of members permitted by the Act can join such a network with entities outside India. However, they are
allowed to join only one network, and firms with common partners must also join only one such network.

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