CA Amresh Vashisht
Thank you tax guru for carrying the sentiments of CA fraternity & congratulation for supporting a move to eliminate tenders, which are reality now. Considering our suggestions ICAI has come with a Mechanism to curb the Menace of Tendering. ICAI has now mandated that Its member responding to a tender are required to furnish to ICAI at the designated e-mail address email@example.com with estimated hours to be devoted by the partner/proprietor, paid CAs, other staff and the fees quoted in the tender.
ICAI Further requires members successful in securing tenders to also furnish the actual hours devoted by the partner/proprietor, paid CAs and the staff within two months of completion of the assignment. Related ICAI Press Release Dated 20.07.2015 is as follows :-
ANNOUNCEMENT – MECHANISM TO MONITOR TENDERING 20-07- 2015 With a view to contain the tendering system for attest functions, the Council at its special (338th) meeting considered the report of the Group constituted under the convenorship of CA. Tarun Jamnadas Ghia, Member, Central Council and decided as under:
1. Tendering has been prohibited in the exclusive areas of practice of chartered accountants like audit and attestation services. i.e. those areas where the assignments can be performed only by chartered accountants. In those areas, where along with chartered accountants, the other professionals can also apply for the tender, there is no restriction for the chartered accountants to respond to the tenders floated by authorities from time to time.
2. Members are advised to adhere to the recommended scale of fees prescribed by ICAI in the context of various professional assignments. To ensure such adherence, a member responding to a tender should be required to furnish to ICAI at the designated e-mail address firstname.lastname@example.org with estimated hours to be devoted by the partner/proprietor, paid CAs, other staff and the fees quoted in the tender. Such details will be furnished by the member within a period of fifteen days of his responding to the tender. If the member is successful in securing the tendered assignment, then the member will also furnish the actual hours devoted by the partner/proprietor, paid CAs and the staff within two months of completion of the assignment.
3. Members are required to maintain cost sheet in the given format while submitting any tender/bid. The format of the same can be viewed athttp://220.127.116.11/38366pdc28039.pdf
4. Members are required to maintain the cost sheet compulsorily and submit a soft copy of the bid submitted by them in response to any tender within 15 days to ICAI. The office can check whether recommended scale of fees has been followed or not in those bids, to ensure adherence to quality standards.
Now see the following subject matter over Tender of CA services were published by TAXGURU.
ARTICLE ‘TENDERING AUDIT SERVICES IS A MENACE TO CA FRATERNITY‘ DATED-14-03-2015 PUBLISHED BY TAXGURU AUTHORED BY CA AMRESH VASHISHT carried the following:
Ethical Standard Board should develop suitable guidelines to curb all the ills of this practice and while framing guidelines, the following may be considered:
a. Wherever any tender violates or compels a chartered accountants to violate the Code of Ethics, chartered accountant should not only abstain from doing so but should also report the same to the Institute for taking further necessary action.
b. Some way may be devised to ensure implementation of engagement and Standard on Quality Control and Code of Ethics in conduct of various assignments.
c. While formulating the approved guidelines, the recommendatory scale of fees may also be kept in view and it should be emphasized that the chartered accountants and firms thereof may be motivated / inspired to follow the recommendatory scale of fees while quoting for various tenders, advertisements and circulars, etc.
d. The President had also directed that Ethical Standards Board may propose guidelines with a view to streamline the prevalent practice while responding to tenders etc. and enhance the image of the profession. Nothing came out from the assurances of the council.
TENDERING OF CA SERVICES
Tendering abuse shall be dealt strongly. In case of tender acceptance by any authority, a cost sheet by a CA be approved by ICAI before taking up the audits. If ICAI rejects the cost sheet, the members shall not be eligible for initiating any work awarded through such tender. ICAI approval over cost sheet shall be dealt with the same spirit as Communication with previous auditor. Tendering offers must be free from emphasis to the size or the turnover or net-worth of the Chartered Accountant Firms and no such minimum criteria need to be specified in their minimum eligibility requirements to serve them. Regulator should formulate the guidelines to regulate the tendering process under Clause (6) of Part I of first schedule.
CORRECTIVE MEASURES REQUIRE TO STRENGTHEN MID SIZE CA FIRMS
The sufferings for MID sized firms i.e Up to 5 partners are also on the same line of sole proprietors. These mid sized firms are the most suffers for Tendering abuse, which require be dealt strongly without any failure. Sole proprietors are not eligible for tendering in most of the cases, but the work designated in this section of midsized firm is being swallowed by a few firms.
As suggested earlier, In case of tender acceptance by any authority, a cost sheet by a CA be approved by ICAI before taking up the audits. If ICAI rejects the cost sheet, the members shall not be eligible for initiating any work awarded through such tender. The government, authorities and other stakeholders are required to be effectively communicated that they need not give over emphasis on the size of the turnover or net-worth of the Chartered Accountant Firms, and no such minimum criteria need to be specified in their minimum eligibility requirements to serve them. The Government, RBI and other regulators may issue guidelines on regulators persuasion that Midsized CA Firms are only considered for Government sponsored jobs and assignments for any organization receiving Government Grant.
(About the Author- Author was Member of ICAI- Regional Research Committee 2013-14 and ICAI- Committee For Direct Taxes 2011-12 and can be reached at email email@example.com or on phone Phone: 0 1 2 1-2 6 6 1 9 4 6. Cell: 9 8 3 7 5 1 5 4 3 2 having office at 1 1 5, Chappel Street, Meerut Cantt, UP, INDIA)