1.’MDP CAs in Practice’ is an abbreviation of the term ‘Multi-disciplinary Partnership Firm of Chartered Accountants in Practice’.
The provisions of the Chartered Accountants Act, 1949 and the Chartered Accountants Regulations 1988 amended way back and permit the members of the Institute of Chartered Accountants of India to form multi-disciplinary partnership firms with specified professionals.
ICAI Council with the approval of the Central Government, issued guidelines and notified Chartered Accountants (Amendments) Regulation 2021 vide notification No. 1-CA (7)/197/2021 dated 08 July 2021.
ICAI council revised Form 18 to include the details of partners such as Chartered Accountant (CA), Cost & Accountant & Company Secretary holding a certificate of practice, and the partners having professional qualifications other than CA, CMA & CS.
2. CA (Amendments) Regulation 2021 & Revised Form 18 is applicable from 08 July 2021.
3. SPECIFIED PROFESSIONALS: Regulations 53B prescribes following specified professionals’ who can become a partner under MDP provisions: –
(a) Company Secretary, member, The Institute of Company Secretaries of India, established under the Company Secretaries Act, 1980;
(b) Cost Accountant, MemberThe Institute of Cost and Works Accountants of India was established under the Cost and Works Accountants Act, 1959;
(c) Advocate, Member Bar Council of India established under the Advocates Act, 1961
(d) Engineer, Member The Institution of Engineers, or Engineering from a University established by law or an institution recognized by law;
(e) Architect, Member The Indian Institute of Architects established under the Architects Act, 1972;
(f) Actuary, Member The Institute of Actuaries of India, established under The Actuaries Act, 2006.
4. RECIPROCAL PROVISIONS IN OTHER SPECIFIC PROFESSIONALS ACTS: The ICAI has taken the first step to allow MDP Firm with other specialized professionals. The reciprocal provisions in other specific professional Acts are as tabulated below:
|Particulars||Company Secretary||Cost Accountant||Advocate||Engineer||Architect||Actuary|
|Right to practice||Sec 2(2)||Sec (2)||Sec (1)(a)||Clause 48||2(a)||2(2)|
|Allowing Provision||Regulation 168(B)||Regulation 111(C)||Not Allowed||–
|Conclusion||Permitted||Permitted||Not Permitted||Permitted||Permitted||Permitted only with member who is not in practice|
*The Institute of Cost & Management Accountants and The Institute of Company Secretary of India has issued advisory to its members, restricting them to join MDP till further notification.
5. OTHER PROFESSIONAL BODIES: The Members of any other professional bodies or persons having prescribed qualifications shall not be admitted into partnership as on date.
For example, MBA, Approved valuer, Approved Insolvency Professional or Information Technology Professional shall not be admitted as a partner in MDP Firms.
6. MODE OF FORMATION MDP Firm can be constituted as a partnership firm as per the Indian Partnership Act, 1932, or as a limited liability partnership firm as per the Limited Liability Partnership Act, 2008.
7. MDP CANNOT BE FORMED AS A COMPANY: As per Section 25 of the Chartered Accountants Act, 1949, no company, whether incorporated in India or elsewhere, shall practice as chartered accountants. Hence, MDP cannot be formed as a company.
8. REGISTRATION: Registration of MDP with the Institute is mandatory. The registration number of MDP shall contain the abbreviation “MDP” to distinguish it from the registration number of other firms of chartered accountants.
9. NAME OF THE FIRMTo distinguish MDP Firm from other firms of Chartered Accountants, the suffix “multi-disciplinary partnership firm of chartered accountants in practice” shall be used after the name of MDP Firm.
MDP Firm shall submit the details prescribed in Revised Form 18 as prescribed under Regulation 190 of the Regulations.
The application for the approval of its trade name or firm name in Form 117, as prescribed under Regulation 190 is required to be submitted to the Council. MDP CAs in Practice shall have a distinct name which shall be approved by the Institute.
10. VERIFICATION OF PARTNERS MDP Firm must submit the documentary evidence in case of partners who are not members of the Institute of Chartered Accountants of India
Such documentary evidence needs to be attested by a Chartered Accountant in practice who is not related to the MDP Firm to check the following:
(a) Truth and validity of the certificate of membership of the prescribed professional bodies or the degree of the recognized University in case of engineering graduate.
(b) The members of other professional bodies are having valid membership with the prescribed professional body on the date of entering into a multi-disciplinary partnership firm of chartered accountants in practice.
11. BRANCH OFFICES Only Chartered Accountants are permitted to be in charge of the Branch Offices of MDP Firm.
However, the Council of ICAI has the power to grant exemption from the aforesaid requirement in suitable cases.
12. FUNCTIONS OF MDP FIRM &PARTNERS: The Partner of MDP Firm can perform the following functions: –
(a) A Partner of MDP Firm is permitted to render all the services as prescribed under ICAI Act & Regulations.
(b) The CA Act 1949 read with the Regulations, 1988 does not prohibit a partner of MDP Firm to practice in his name. It is the discretion of MDP Firm to permit its partners to practice in their individual capacity.
(c) A Chartered Accountant partner of MDP Firm can become partners in other firms or engage in other occupations as agreed among the partners as per their partnership deed.
(d) MDP Firm can accept other engagement like Bank Audit, audit of Co-operative society
(e) MDP Firm can undertake Tax Audit assignments.
(f) Empanelment with various Agencies is permissible to MDP Firms
(g) MDP Firm can do Networking, subject to conditions prescribed in Guidelines the Networking issued by Council
13. PARTNERSHIP GUIDELINES: MDP Firm is required to comply with the provisions of the CA Act, CA Regulations, and Rules framed thereunder. There is no need to obtain the permission of other Professional Bodies. Partnership Deed of MDP Firm can prescribe the followings: –
(a) The extent of Profit-Sharing & Fee Sharing.
(b) Responsibility to supply information at the time of Registration and required time to time.
(c) Whether partners need to consult each other or can work independently.
(d) Appointment of staff of partner’s choice.
14. MEMBERS’ RATION IN MDP FIRM: There is no ratio prescribed under the CA Act for different partners of MDP CAs in practice. However, at least one partner should be a CA holding Certificate of Practice. Only for Statutory Audit, the majority of the partner shall be Chartered Accountants
15. STATUTORY AUDIT As per Section 141(2) of the Companies Act, 2013: Where a firm including a limited liability partnership is appointed as an auditor of a company, only the partners who are chartered accountants shall be authorized to act and sign on behalf of the firm.
Section 141(1) of the Companies Act, 2013: A person shall be eligible for appointment as an auditor of a company only if he is a chartered accountant, Provided that a firm whereof majority of partners practicing in India are qualified for appointment as aforesaid may be appointed by its firm name to be the auditor of a company
MDP CAs in Practice are not eligible for statutory audit under the Companies Act 2013 in case majority of its partners are non-CAs.
Majority Criteria’ for computing eligibility of MDP CAs in Practice shall be calculated both based on the number of partners as well as their aggregate share of profits in MDP CAs in Practice.
It is the responsibility of MDP CAs in Practice to ensure that majority of its partners are chartered accountants, failing which, necessary disciplinary action as per the Act and the Regulations will be taken on all the partners who are chartered accountants.
16. DISPUTES & RESPONSIBILITY FOR MISCONDUCT
Disputes among the partners will be settled as agreed upon in the partnership deed
Provisions of Partnership Act 1932 or LLP Act 2008, as may be applicable, will apply.
In case of misconduct of partner, it would be subject to the disciplinary mechanism of the respective professional body.
MDP Firm and other partners would not be responsible for the misconduct of a partner.
17. MDP FIRM – PROS
Client’s Perspective: India is emerging as the most sought-after global destination in the service sector. MDP is the best way to address complex client requirements.
One Roof SolutionThe client need not run from pillar to post to get a wide range of services as the experts of many disciplines to come together as partners in MDP. All the needs of a client organization in promoting and establishing an entity; getting a license and launching a venture or project; mobilizing funds in the market across the globe; restructuring, mergers, acquisitions, and amalgamations; business process re-engineering and the task of complying with the plethora of requirements prescribed under various statutes can all be effectively handled under one roof by the MDP.
Multifarious professional services A business entity invariably approaches multiple agencies for different services, for which they are qualified or considered proficient. The multidisciplinary partnership is one of the best mechanisms to provide diversified services to its clients.
Brand Name: After the implementation of the MDP concept, chartered accountants and other domain experts will be able to join hands and offer multi-discipline professional services under a single brand name.
Expanded HorizonThe need of the hour is for domestic firms to come together. The MDP guidelines will help Indian firms to become Global Players,” A firm needs to expand by mergers or otherwise and focus on growth bringing a wider spectrum of services within the ambit of its functioning. these can be better accomplished through the status of an MDP.
The pool of Talents A stronger framework for pooling of resources. Interaction among team members enhances performance, refines skills, streamlines the process for not only more efficient but higher quality advice
Cost-Effective MDPs deliver tangible benefits. Collaboration saves money and time. it’s an extremely efficient mechanism.
Avert Risk Through Diversification MDT provides the checks and balances to avert risk by addressing each aspect of the individual’s details with targeted and collaborated expertise
The extensive network of experienced professionals: MDP get benefits and is supported by an extensive network of experienced professionals in lots of distinct disciplines, in many industries
Empowerment to undertake work of greater magnitude and challenges: The professionals will be able to offer services not only his domain expertise but in the collaborative approach of others as well. will help them to develop an ecosystem; which in line with the medical profession, professionals will be able to offer a bouquet of services to their national and multinational clients and will get a competitive landscape.
Jurisdiction regarding disciplinary action The most important challenge could be in exercising the jurisdiction regarding disciplinary action and in terms of fixing up responsibility regarding a particular professional among the partners of an MDP. all regulations related to eligibility to conduct Audit and Code of Ethics of respective professional bodies will continue to apply to their members.
An introduction of the Super Regulatory Body of MDP will help to overcome this challenge of MDPs
Conflict in Interest: There could be a problem when there is passing of the buck from one professional to another professional of different discipline and the nature of work is such that both could have done it.
The onus of Work & Liability: It is possible that due to the negligence of some partner(s) in a certain type of work, the civil liability on the firm in the form of damages or compensation could be heavy. This aspect may also enhance the cost of professional indemnity policy regarding an MDP
19. CONCLUSION: The globalized scenario is presenting attractive opportunities to Indian Accounting firms. It is inevitable for Indian firms to get empowered with adequate manpower, skill sets, database, and good infrastructure. All these can be better accomplished through the status of an MDP.
The Author can be approached at [email protected]