Corporate Form of Practice - Chartered Accountants

A Chartered Accountant in practice is also entitled to practice in corporate form while adhering to certain rules and guidelines. In this article, we review the different types of service allowed in corporate form of practice by a practicing Chartered Accountant.

Benefits of Corporate Form of Practice

The following are the benefits of adhering to guidelines regarding corporate form of practice:

The member can hold full time Certificate of Practice besides being appointed the Managing Director/Whole-time Director/Manager of Management Consultancy Company.
The member shall be entitled to train articled/audit assistant(s).
There will be no restrictions on the quantum of the equity holding of the member, either individually and/or along with his relatives in the company.

Management Consultancy

With reference to corporate form of practice it shall not include the function of legal or periodical audit, taxation - direct taxes and indirect taxes, representation or advice relevant to tax matters or acting as liquidator, trustee, executor, administrator, arbitrator or receiver. However, corporate form of practice shall comprise the following:

Financial management planning in addition to financial policy determination
Capital structure planning in addition to advice regarding raising finance
Working capital management
Preparing project reports in addition to feasibility studies
Preparing cash budget, cash flow statements, profitability statements, statements of sources and application of funds
Budgeting inclusive of capital budgets and revenue budgets
Inventory management, material handling in addition to storage
Market research in addition to demand studies
Price-fixation and various other management decision making plans
Management accounting systems, cost control in addition to value analysis
Control methods, management information in addition to reporting
Personnel recruitment in addition to selection
Setting up executive incentive plans, wage incentive plans and so on
Management in addition to operational audits
Valuation of shares and business and advice with reference to amalgamation, merger and acquisition
Business Policy, corporate planning, organization development, growth in addition to diversification
Organization structure and behavior, development of human resources inclusive of design and conduct of training programs, work study, job-description, job evaluation in addition to evaluation of workloads

Ethical Compliance Requirement

Once a Management Consultancy Company is registered with the Institute according to the guidelines, it will be compulsory for such a company to comply with the following requirement:

If the individual practitioner or sole-proprietorship firm or partnership firm is the legal auditor of an entity then the Management Consultancy Company shall not accept the internal audit or book-keeping or any other professional assignments which are considered prohibited for the statutory auditor firm.

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Frequently Asked Questions

Common questions about Corporate Practice for Chartered Accountants.

A corporate form of practice allows a Chartered Accountant to practice their profession through a company, subject to certain rules and guidelines prescribed by the Institute of Chartered Accountants of India (ICAI). This form of practice offers benefits such as the ability to hold a full-time Certificate of Practice while being appointed as a Managing Director/Whole-time Director/Manager of the Management Consultancy Company.

As per the guidelines, a Chartered Accountant can offer various management consultancy services through a corporate form of practice, including financial management planning, capital structure planning, working capital management, preparing project reports and feasibility studies, budgeting, inventory management, market research, price-fixation, management accounting systems, cost control, personnel recruitment, executive incentive plans, management audits, valuation of shares and businesses, and business policy and corporate planning.

Yes, there are certain restrictions. A corporate form of practice cannot include functions such as legal or periodical audit, taxation (direct and indirect taxes), representation or advice relevant to tax matters, or acting as a liquidator, trustee, executor, administrator, arbitrator, or receiver.

Yes, a Chartered Accountant practicing through a corporate form is entitled to train articled or audit assistants.

No, there are no restrictions on the quantum of equity holding by a Chartered Accountant, either individually or along with their relatives, in the Management Consultancy Company.

No, if the individual practitioner, sole-proprietorship firm, or partnership firm is the legal auditor of an entity, the Management Consultancy Company cannot accept internal audit, book-keeping, or any other professional assignments considered prohibited for the statutory auditor firm.

Some benefits of practicing through a corporate form include the ability to hold a full-time Certificate of Practice, the ability to train articled or audit assistants, and no restrictions on the quantum of equity holding in the Management Consultancy Company.

No, a corporate form of practice cannot include functions related to taxation, such as direct taxes, indirect taxes, or representation or advice relevant to tax matters.

A Chartered Accountant can offer services like financial management planning, capital structure planning, working capital management, project reports and feasibility studies, budgeting, inventory management, market research, price-fixation, management accounting systems, cost control, personnel recruitment, executive incentive plans, management audits, valuation of shares and businesses, and business policy and corporate planning.

Yes, if the individual practitioner, sole-proprietorship firm, or partnership firm is the legal auditor of an entity, the Management Consultancy Company cannot accept internal audit, book-keeping, or any other professional assignments considered prohibited for the statutory auditor firm.