CA – Scale of Fees for Work Done

A Chartered Accountant is a highly qualified and skilled finance professional possessing high numerical and accounting proficiency, strong analytical skills, expert knowledge on taxation and corporate laws, and most importantly, has an authority to perform financial statement audit which gives him a virtual monopoly in the area of the audit. He is an expert on a range of topics such as accounting, financial management, audit, taxation, capital markets, advisory and consulting services, valuation fundamentals, which are sought by individuals and all types and sizes of businesses – SMEs, public-sector enterprises, as well as large corporate houses.

For Chartered Accountants, it is not always easy to quote suitable fees for their services though they carry the vast and specialized capabilities. The problem is bigger for the small and mid-sized firms which mostly have individuals and SMEs as their clients, and face tough competition within the profession as well as from other professionals/non-professionals providing similar services (non-qualified accountants providing accounting services and lawyers providing taxation services) for lower charges. The standalone Chartered Accountant or a small partnership firm is having a continuing tough task convincing their clients of the immense value attached to taking services from a CA. Their clients are small enterprises and entrepreneurs. Clients are unwilling to pay more and stiff competition between the other CAs and even other professionals is another prominent reason that compels members to compromise on the fee charged.

1. Small Firms Found It Difficult To Quote The Fee To The Client

Big CA firms are free to quote the fee to the client whereas sole proprietors or small partnership firms always found it difficult to quote the fee to the client. Considering the nature of services rendered by CA firms there is no decline in fees that is expected in future. Although for some time due to demonetization there is a slight slowdown in revenue generation but implementation of GST has not only made them busy round the clock but helped in generating the additional revenue on account of multiple jobs of GST. However, there are many known self-made constraints in the profession which controls the CA to quote the fee. There is always afraid of losing clients, hesitation of being a fresher, competition and undercutting also plays prominent role. Generally clients from small towns don’t pay and some clients take service for granted and don’t realize the quality of service further there is no standard base, so difficult to justify why a certain fee is quoted. Clients are hesitant to pay for advice taken by communication or during informal meets.

2. Large Firm Specialization Generates More Revenue

Large CA firms which have an established name and place in the market usually are better placed in this context. They find it easier to command hefty fees for their services based on their reputation. Besides, their clientele mostly comprises of large corporate and MNCs for whom allocating funds for professional charges is not an issue of concern. In general, the more experienced firms/CAs due to their large clientele and reputation coupled with the specialization that they have acquired over the years, witness more revenues than the new ones on an average. The well-established firms also command greater negotiating power with respect to their fees, etc. due to old relations and their position in the profession. Also, the fact that some of these firms usually provide a range of services including taxation, auditing, accounting, consultancy, etc., it helps them gain stability in their revenue growth besides getting new clients. The new ones start with specialization in a lesser number of areas and take some time to come up with the full suite of services.

3. Factors of Chartered Accountants Fee

Due to ever increasing demand for compliance and regulatory issues, the demand for Chartered Accountants in practice has been on the rise. The corporatization and increasing government regulations have resulted in more professionals demand in the recent years which have indeed resulted in the increase in the gross receipts or the fee charges by CA. Due to the very nature of the services rendered by Chartered accountants coupled with the growth in the economy, there has been an increase in the income of CA firms in the recent past. In recent past growth in all sectors resulted in a spurt in the revenues for most of the audit firms.

4. Common Insight That CA’s Under Charge/Is Under Paid

Chartered accountants charge lessen fee than the other professionals. Most often, there is a failure to demonstrate to clients the value addition provided/efforts to put in. The lower fee serves no purpose. The low paid client takes more time in comparison to a client who pays more. Low standard of fees results in a vicious circle of many ills – less time for family — stress — low morale, etc. Compliance under laws have increased tremendously in the last few years ¬GST, TDS, Auditing Standards, and Accounting Standard, In comparison to old days, the staffing of trained and skilled people has become extremely difficult. Staffing and other costs have gone up manifold still the clients are reluctant to pay the good fee to a Chartered Accountant.

4. Raising The Fees Has Become Inevitable

Raising the standard of fees cannot be achieved overnight. Hence a gradual firm and collective approach are required. As far as possible, when raising a bill, break up all services rendered and mention each service separately. The bill should be exhaustive detailing all services rendered so as to make. The client must realize the efforts put in by the office of a chartered accountant. Further, don’t delay in raising the bill. There should be the issuance of Bill immediately on completion of work. This quick step realizes the value of service when rendered, as thereafter the significance may be lost. Be firm with billing and as far as possible do not settle for a lower amount. There should be constant watch over the firm’s revenue leakages. One such work is the certification work of the client which has every possibility to skip from the revenue. Summons of the departments is another grey area which is yet to be addressed.

5. ICAI Recommended Scale of Fees Is Too Far From Reality

The Committee for Capacity Building of Members in Practice (CCBMP) does revise the prescribed Minimum Recommended Scale of Fees from time to time for the professional assignments done by the members of ICAI. The recommendation is about the fee to be charged as per the work performed for various professional assignments and the amount quoted under respective heads of professional work. The fee has been recommended separately for Class A and Class B Cities. The Recommended Scale of Fees is in the interest of members and the profession at large. Hence, members should try and adhere to it. But it is yet to see the light of the day. Reality is that the Recommended Scale of Fees is based on the general volume of work as commonly understood and it is far from the ground reality. The recommended fee is unrealistic therefore failed to enforceable. Every committee revises the fee and enhances the fee in the air. As per committee, fees to be charged depending on the complexity and the time spent on the particular assignment. The fee table states re-commendatory minimum scale of fees works out by taking into account the average time required to complete such assignments. However, members are free to charge varying rates depending upon nature and complexity of assignment and time involved in completing the same. Office time spent on traveling & out-of-pocket expenses would be chargeable. The committee issues for general information the above-recommended scale of fees which it considers reasonable under present conditions. It will be appreciated that the actual fees charged in individual cases are a matter of agreement between the member and the client.

6. Client Assignment & Time Sheet

The office of the Chartered accountant serves their clients on many levels. The attending persons to clients are proprietor/partner of the firm, CA finalist, senior articles, junior articles and supporting staff. The assignment details should be worked out. The man hours of the various levels are prepared and should be made documented while billing a client. There should be constant monitoring of time spent and create linkages between billing and time spent at all levels especially by qualified persons. The uppermost tasks are to monitor outstanding bills and try and recover bills in shortest possible time. A thumb rule of the profession is that a satisfied client honor bills with pleasure.

7. Detailed Billing of Work Done – Scrutiny Assessment U/S. 143

Is it possible to decide the fee on the detailing of the work performed by a firm? The committee has also suggested the same while recommending the minimum fee. Generally Chartered Accountants don’t bother about the number of services rendered by them. There is no categorization of services being offered by them. As an example, while billing a service of a scrutiny assessment, there should be a detailed billing for fees towards services rendered for scrutiny assessment u/s.143. Such as

• Going through the notice issued u/s. 142 (2)
• Identifying critical issues involved
• Guiding and directing concerned company staff for preparation of various details called for from time to time
• Review of the details prepared and suggesting changes wherever necessary
• Examining relevant decision or judgments of ITAT, High Courts & Supreme Courts for issues raised
• Reply in writing to the aforesaid issues
• Attending before the concerned Assessing Officer and ACIT/DCIT/ JCIT/ADIT in respect to the aforesaid scrutiny number of times
• On receipt of the assessment order passed u/s. 143(3), critically going through the same and advising on future course of action
• Reviewing Assessment Order
• Verifying tax calculations
• Checking of interest charged u/s 234B on assessed income
• Preparing statement of facts for additions made/disallowance made/deduction not allowed, etc. in the Order
• Preparing Grounds of appeal
• Filing appeal before CIT(A)
• Reviewing Department Appeal and Filing Cross Objection
• Reviewing CIT Appeal order
• Preparing Paper book and submissions
• Reviewing case laws
• Filing application to ITAT
• Appearing before ITAT, arguing appeal and Concluding hearing .

Hence for the members in practice, remuneration varies with size and reputation of the firm, expanse and quality of services offered, type of clientele, etc. Remuneration is also greatly impacted by competition among the firms, particularly small and mid-sized firms serving individuals and SMEs. Large-sized firms and firms with established brand in the market usually receive attractive remuneration for their services in context of time devoted and type of services provided. Diversification into other service areas where the competition is less, such as consultancy, M&A, capital markets etc. also strengthen the remuneration of firms.

(About the Author– Author was Member of ICAI- Capacity Building Committee 2010-11 and ICAI- Committee For Direct Taxes 2011-12 and can be reached at email amresh_vashisht@yahoo.com or on phone Phone: 0121-2661946. Cell: 9837515432 having office at 115, Chappel Street, Meerut Cantt, UP, INDIA)