We are reproducing below letter written by CA Unmesh Narvekar to Hon’ble President, ICAI , New Delhi by which he brought to the notice of Hon’ble President Covid-19 situation in India and the difficulties faced by CA fraternity especially SMPs (Small & Medium Practitioners) with Appeal and Suggestions.
The Hon’ble President, ICAI , New Delhi.
Sub:- Humble Appeal cum Suggestions for your kind consideration.
Ref:- Covid-19 situation in India and the difficulties faced by CA fraternity especially SMPs (Small & Medium Practitioners).
Background for this Appeal cum Suggestions:
I pen down this with very deep pain and sense of agony in my mind after receiving calls and hearing from various practicing CAs that, day by day the situation of the Corona virus pandemic is taking serious shape and this is making the economic condition of the small and medium practicing CAs more critical day by day.
These SMPs have found themselves in a forced trapped condition, as they are neither big enough to sustain the NO RECEIPTS/NO EARNINGS situation for a long term nor in a position to close down and do something else to sustain at this unusual eventuality.
At one end, there are mounting outgoings of the day to day domestic expenses due to short supply of daily necessities, along with fixed liabilities of various EMIs and over and above the sizable amount of committed liabilities of the office overheads which are not in operation and may not be in operation in next few months.
The expert analyst across the country are of the opinion that this corona virus pandemic will take at least further 6 months or more time to come under control. Whereas the pre-covid-19 normal conditions cannot be expected even by the end of year 2020. Your goodselves are also well aware that the worst affected 12 Red zones like Mumbai, Ahmadabad; Delhi etc. will take maximum time for recovery.
Facts about SMPs/Individual CAs
Presently as per the ICAI statistics and as heard from the speeches of our past presidents in various webinars, almost 72% plus practicing members are SMPs which nearly count 90,000 to 1,00,000 or even more CAs across India. It is also learnt that their gross receipts are in the range of 10.00 Lakhs to 15.00 Lakhs per annum approximately. This fact cannot be denied that for whatsoever reasons that these SMPs are not able to increase their earnings beyond certain limits in spite of having extraordinary knowledge and managerial skills.
Today at this juncture all these SMPs are in distress situation as being from a glorified profession of CA they can neither beg nor borrow nor can have immediate professional opportunities in near future. They are facing the worst liquidity crisis because the entire client base viz. Individuals, proprietors, Partnership, or SMEs to whom they serve are not functioning and are not in a position to pay them their outstanding fees or fees for present work that is to be done.
This unprecedented situation was not anticipated by any one of us and hence SMPs where never in a position to automate their office and therefore are not in a position to work from home and earn the revenue. Even those few who updated themselves have no such source or such a cliental like the big corporates to whom they would provide services to earn.
Rather it is a fact that the professional opportunities are unequally distributed among the practicing CAs, wherein 80% of opportunities and revenue is earned by 20% practicing CAs and a mere 20% opportunities and revenue is shared by 80% SMPs in the country. This is quite unjust to all SMPs and the ICAI as regulators of the profession may also not justify such a scenario.
Today we proudly say that we are 3.00 Lakhs plus CAs and 8.00 Lakhs plus CA students totaling to an army of 10.00 Lakhs plus intellectuals, apart from the Lakhs of students who left the course in between but the real fact is that the average Per Capita Per Month gross earnings of these SMPs are not even Rs.1.00 Lac.
In one hand the fresh CAs in the industry are earning at least Rs.50,000/- to Rs.1,00,000/- per month (NET IN HAND) at starting payout wherein the SMPs having 15-20 years’ of experience are finding it difficult even to maintain similar Gross Earnings. Over and above that the practicing CAs are bounded by the rigid code of conduct of the institute.
We always advice our members in seminars and through various platforms, that they have to change their mindset to cope-up with the “CHANGE”, then why is it that our 70 years old institute has not undergone the profound/comprehensive “CHANGE” in the changing environment of globalization.
The role of institute is far more than conducting exams and awarding certificates and organising CPE seminars, but apart from the Regulator of the profession, in my opinion it should also act as FACILITATOR and as a HANDHOLDING to the SMPs who are the real face of the profession.
The Covid-19 have given an opportunity to all to RESET and RESTART a fresh for evryone and hence I feel that even the ICAI should not loose this opportunity to undergo a complete makeover and redesign/reshape/reconstitute commensurate to the present global trends.
In this direction I am humbly submitting my few thoughts/suggestions, and appeal for your kind consideration, if found suitable for implementation.
My Appeal and Suggestions to ICAI and to all the CCMs & RCMs
1. The Memorandum/Objectives/Articles of ICAI or rather the ICAI ACT to be revisited in the changed environment and to be redrafted wherever necessary, to suit the new era.
2. The present Role of ICAI should not just be a Regulator of the Profession but also to be as a Facilitator to its practicing members and more particularly to act as a Fair Distributor of the Professional opportunities amongst its practicing members.
3. The ICAI can act as an AGGREGATOR of the professional opportunities across the globe, and those should be fairly distributed amongst its practicing member.
4. ICAI can create an e-Platform for encouraging new CAs to enter into the profession and by empaneling them, the various professional opportunities can be provided to them.
5. The e-platform or Virtual Office and Digital Platform are not easy for SMPs to establish by themselves but as an institute, same is possible through the Through which it can disseminate various professional opportunities to SMPs in India.
6. Since the new members and SMPs are not in position to have their own fully equipped offices due to huge cost of commercial premises, I would like to suggest that the Institute should create its own well equipped Business Centres in its owned infrastructures across the country and make it available at a reasonable cost to its members to run their profession.
7. To avoid large outstanding fees of SMPs from their clients which is a normal scenario across the country, these e-platforms can be on Pre-paid Model as per the ICAI Recommended Scale of Fees and empanelled SMPs can take benefit of these opportunities subject to certain capping for its fair distribution. (Like OLA, UBER, AMAZON etc.)
8. Presently it is seen that only 30% SMPs get assignments of Statutory Bank Branch Audits and mostly 3 branches are allotted to each Instead of that let at least one Statutory Bank Branch Audit be allotted to all SMPs. Even same applies to the Central Statutory Audits also. All the banks should be instructed to do so, for a fair distribution and best outcome of audit. As per my knowledge even at this time also the ICAI software for bank branch audit allotment has not been adopted by banks. This shows the value of our institute in the eyes of other regulators.
9. The post covid-19 future seems to be very dark but even today the Big and Mid-size CA firms which are flooded with professional opportunities; therefore these firms can or should be instructed to opt for outsourcing the various jobs to the SMPs after retaining their share so that these SMPs would get work for survival.
10. Since SMPs do not have the capacity and strength to garner corporate opportunities inspite of having knowledge and intelligence the same can be tapped by the ICAI and disseminated through e-platform or it should be made mandatory for the BIG and Midsize firms to outsource them to SMPs at the recommended scale of fees.
11. Today though all CAs are at home, the SMPs are struggling for work and desperate with the serious thoughts of survival, whereas Big and Mid-size firms are serving their big corporate clients by working from home and are able to generate revenue. In such cases the institute can act as a facilitator and through talking to Ministry/Industrial Associations/Big Corporate clients these small/big professional opportunities can be distributed among the SMPs so that they can get some earnings for their survival.
12. Since the SMPs could never able to fulfill the criteria (50.00 Lakhs Gross Receipts, 4-5 partners, conducted assignment of Big Corporate) for applying for tendering opportunities of GOVT & Large Corporates assignments, they are at the mercy of the ICAI for their growth and therefore they need proper support and handholding.
13. Here also ICAI can act as a facilitator and ask the firms who have got the tenders to mandatorily get 50% -60% of the job done from SMPs either on retainer/ referral or outsource model whichever is permitted by adopting the new guidelines.
14. It’s time to remove various rigid 70 years old restrictions (like, not to do even basic advertisement, not to highlight professional achievements publicly, not to solicit works and many more) on the CAs and especially on SMPs who are trying to survive the cut throat competition from within the profession and outside the profession. Only few need based and practically reasonable restriction should be Continued.
15. In this cash crunch situation let our CA benevolent fund and other surplus fund with the ICAI, be utilized for the survival of the SMPs either by providing them with interest free or soft loans with at least 1 year moratorium and additionally even making a certain amount as monthly cash compensation for 1 year, to be repaid by members thereafter over specific period of time if the institute expect the In this critical situation, the ICAI should come forward and help the needy members by utilizing the contribution of members for the benefit of members only. Let the ICAI play its real role of Mother for its members.
16. As a proactive measures and to enhance the strength of SMPs to deal in the change environment, I suggest that the ICAI should do strategic tie ups with major techno firms for providing various scalable suitable software’s (Office Management Software’s, Audit Tools, Various Audit Documents Formats and Templates) at a concessional price. Even these necessary software’s and practice tools can be preloaded in customized Laptops and are readily provided to each new practicing member from the very beginning.
17. As regards the students, the entire study material, last 10 years exam papers and guideline/suggested answers, RTPs can be provided on LAPTOPS/PALMTOPS and same can be updated by student through the ICAI website as and when changes take place.
18. In last one and half month every member has attended many webinars but can just claim only 10 unstructured CPE hrs. This needs to be revised and in the new digital and technological era structured CPE hours needs to be allotted to webinars also and these webinars has to be held at no extra cost as there is hardly any expenses incurred by the ICAI.
19. It is seen that the cost of various post qualification courses is very high and even years after acquiring these additional qualifications, members get hardly any professional opportunities in that filed. In spite of having various opportunities in different fields just because the SMPs do not have the reach/ connect or reference the SMPs fails to get it. Here I suggest that the ICAI should act as an Aggregator and Facilitator for these SMPs. The fees of these courses should be reduced by almost 50% to 60% considering the conditions of members across India.
20. As regards , During and Post COVID-19 professional guidelines, there are many queries in the minds of SMPs and even other CA firms such as;
i. What is to be done for payment of salary to staff for this lockdown period?
ii. How to pay to staff when there is no work and no receipt in these days?
iii. What happens if the employees are not paid?
iv. Will it have any legal consequences or professional misconduct if employees make complaint regarding non-payment of salary, inspite of genuine difficulty?
v. If we pay to staff and staff does not join afterwards then how to bear the loss and survive?
vi. When to open the office and what are the necessary precautions or safeguards to be taken as employer in post-covid-19 period to save ourselves and our staff from unwanted risks?
vii. What are the member’s responsibilities and liabilities as an employer in regards to the Article Staff who is already on leave and may not come to office till further 7-8 months due to changed exam schedule?, and many more such related issues there to be addressed by the
I humbly request for a detailed guideline or advisory from the ICAI on urgent basis on covid-19 related queries of members.
21. Until now the ICAI has undertaken various measures for the betterment of its members, but there are further many more aspects for which detailed analysis needs to be done and suitable positive implementations should be processed at the earliest.
Sir, our experienced torch bearers of the profession have suggested all members to be positive and to have patience in various recent seminars and yes, I do agree with the same but that is true when one speaks as an individual, but as an institute we have to give a concrete vision and a firm roadmap with assurance to our fraternity about their future else their confidence will be shaken and the frustration will overpower their minds. This will invite a big problem to our professional fraternity.
Hence I humbly urge and appeal to your goodselves to kindly take note of my above points and I expect an immediate action under your leadership.
This is an earnest urge from my heart and soul and for the betterment of our fraternity to the best of my knowledge and experience in the profession, since I have served for more than 10 years in various capacities at the Vasai Branch of ICAI including its chairman, and myself being a SMP, I am well connected and aware of the ground realities of the members in this area and other parts of the country.
Kindly do not take this as a criticism or any publicity stunt or to gain needless popularity, your goodselves are most welcome to correct me if at any point I may be wrong, but while reading, like our seniors say, you also BE POSITIVE!
TAKE CARE OF YOURSELF AND STAY SAFE !
1. Hon’ble Vice President of ICAI.
2. Hon’ble Past Presidents of ICAI.
3. Respected CCMs of ICAI.
4. Respected Chairman of WIRC.
5. Respected RCMs of all Regional Councils of ICAI.