Brief: A petition submitted to the Institute of Chartered Accountants of India (ICAI) highlights significant systemic bottlenecks and discriminatory practices affecting small and medium-sized Chartered Accountant (CA) firms in India. The petitioners argue that current processes for professional opportunities, particularly statutory bank branch audits, are often opaque and unfair. Issues include inconsistent allotment methods by banks (some using ICAI software, others manual), leading to bias and alleged corrupt practices. The petition points out that current categorization norms for firms are not uniformly followed, and the 20 crore advances threshold for statutory audits, despite significantly reducing audited branches, has not been formally challenged by ICAI. Additionally, the existing cooling-off policy for statutory branch auditors lacks uniform application and a fair redeployment mechanism, effectively sidelining firms after their tenure. To address these, the petition proposes a centralized, transparent allotment system for bank audits, strict adherence by banks to ICAI’s categorization, real-time allotment tracking, and a fair distribution philosophy. It also suggests annual audit opportunity reports and a review of audit norms to ensure comprehensive coverage and prevent irregularities.
To
The President
The Institute of Chartered Accountants of India
ICAI Bhawan, Indraprastha Marg
New Delhi – 110002
Subject: Petition for Fair and Transparent Allotment of Professional Opportunities for small firms.
Respected Sir,
We, the undersigned Chartered Accountants and members of the Institute, respectfully submit this petition seeking your kind intervention to ensure a more transparent, centralized, and equitable system regulating the professional opportunities and existence for small and medium firms.
The Ongoing Bottlenecks:
The profession is already suffering from many bottlenecks. A timely redressal to the faulty pattern of not allotment or non-consideration is the need of the hour. Few of the major bottlenecks can be summarized as follows.
It is unlawful to discriminate on the ground of the profession, trade, occupation or calling discrimination as reasonable in some circumstances. The freedom to practice any profession or to carry on any occupation, trade or business is well defined in the Constitution of India. Article 19 (1) (g) of Constitution of India provides right to practice any profession or to carry on any occupation, trade or business to all citizens. It confers a general and vast right available to all persons to do any particular type of business of their choice. Any distinction, exclusion or preference made on the basis of category of a Chartered Accountant firm is totally uncalled and unfair to the profession. But the same is going on since long. Now it seems that it’s unbeatable and will go on without nullifying or inequality of opportunity in this profession. It is no secret that small and medium-sized CA firms have been neglected by the ICAI since long. The profession of Chartered Accountants needs the progressive dimension of running a successful Audit firm. Another truth is that in today’s national scene, it is time that with the visualization & aspiration, every individual or sole proprietor should create new avenues and be ready to successfully administer his or her practice. There are many grievances against the Alma Mater for not protecting the interest of small firms however in the recent past many outside agencies have bombarded the firms and as usual there is no definite plan to deal such situation except claiming the action as overstepped or unlawful.
1. FAIR ALLOTMENTS FOR STATUTORY BANK BRANCH AUDITS
Every year, the ICAI undertakes the noble task of inviting applications from firms for empanelment for Bank Branch Statutory Audits popularly known as MEF form. . This empanelment list, after scrutiny and categorization, is forwarded to the Reserve Bank of India (RBI), which in turn disseminates it to the respective banks. However, the current process of audit branch allotment suffers from inconsistencies, especially because:
i. Some banks follow ICAI’s software-based allocation, while others rely on manual and discretionary methods. The software provided by the ICAI has not passed to any audit trial hence even if opted then there is possibility of some bug into it as there are hundreds of firms who have not got allotments in the last 5/10 years.
ii. This human intervention often leads to bias, preferential treatment, or lack of uniformity in appointments. There is a wide spread information that members are paying a bribe to get such audits. Many of our own members are working as brokers of the process and it is widely been assumed that bank allotments cannot be secured without paying the hefty sharing of their fees.
iii. The existing categorization norms prescribed by ICAI are not uniformly followed by banks during the allotment process. Many proprietary firms get the heavy branches with the help of corrupt practices and the eligible firms get the small branches for audit.
iv. While it is acknowledged that the number of bank branches available for statutory audit may be fewer than the number of aspiring and eligible audit firms, it is imperative that every eligible firm is granted a fair and transparent opportunity. At present, the allotment of audits is largely controlled by individual banks, based on a percentage of advances. This method, however, is both impractical and susceptible to manipulation, as banks can easily structure or shield branch data to stay below the qualifying threshold.
v. Unfortunately, the ICAI has neither raised any formal objection to this arbitrary criterion nor made any effective representation before the Government or the Reserve Bank of India to seek a revision of this flawed parameter. This silence compromises the interests of the broader audit fraternity and undermines the principles of fairness, transparency, and equitable professional opportunity.
vi. There is currently no well-defined or uniformly enforced cooling-off policy governing the appointment of statutory branch auditors (SBAs). Previously, certain metropolitan-based firms were subjected to cooling norms, which were originally introduced to safeguard the interests of smaller audit firms across the country and ensure more equitable audit distribution. However, in the present scenario, there is a lack of clarity and consistency in the application of such norms.
vii. Moreover, an additional condition now mandates that if an auditor has completed four consecutive years as SBA for a particular bank, then a minimum of four years must elapse before the same firm is reappointed as SBA for that bank. While this rule appears to support audit rotation, it is not complemented by a fair redeployment mechanism. The names of such firms, after completing their tenure and entering the cooling period, are not being forwarded for empanelment with other public sector banks, effectively sidelining them from the audit process altogether.This selective and opaque application of cooling norms defeats the very objective of rotation and equitable opportunity and disproportionately disadvantages many competent audit firms.
Given the above, we humbly propose the following suggestions:
A. Centralized Allotment System
Allotment of statutory must be carried out through a centralized system managed either by RBI, ICAI, or CAG, using secure and transparent technology platforms to eliminate human interference.
B. Uniform Adoption of ICAI’s Categorization Norms
Banks must be mandated to strictly follow the ICAI categorization norms and guidelines for allotting bank branches. This will uphold the sanctity of the system developed after years of consultation and expertise.
C. Real-Time Allotment Tracking and Grievance Redressal
A common audit portal should be developed to enable real-time tracking of allotments, and allow aggrieved members to register complaints or report discrepancies.
D. Fair Distribution Philosophy
While it may not be feasible to allot branches to each CA firm due to limited availability, rotation and equitable distribution policies can be implemented to ensure every eligible firm gets a chance periodically. Every firm marked by ICAI as eligible should not be left in the hands of brokers or greedy officials . The allotment should be in transparent way and there should be a equal distribution.
E. Annual Audit Opportunity Reports
ICAI, in collaboration with RBI, may consider publishing an annual report detailing the number of firms empanelled, the number of audits allotted, and other relevant data to foster transparency and accountability. The categorization mechanism is also need reforms as members are using it for the gains only hammering the quality work, which is required from the CA firm. Every kind of accommodation just to fetch the professional opportunity be dealt with firm hand by ICAI.
F. Challenge Audit Norms
The RBI has scrapped the old policy requiring statutory branch audits only for branches with advances above ₹20 crore. This decision has significantly reduce the number of branches under audit, raising concerns among members. Many professionals had reasonably demanded that branches with advances below ₹20 crore be audited at least once every three years, instead of the current five-year cycle, as longer intervals may encourage irregularities. However, the ICAI Council has failed to address these concerns.
G. Reservation of work for Small Firms
To safeguard public funds and improve audit coverage, it is suggested that statutory audits be made compulsory for all bank branches, regardless of the level of advances or deposits. The three-year eligibility criteria for firms should be removed, and a weighted system based on experience should be introduced to ensure fairness. At least 70% of audit work should be reserved for individual and sole proprietor firms, and the previous provision mandating 40% of audit work for sole proprietors should be reinstated. Furthermore, the audit allotment process should be based on the combined exposure of advances and deposits, as auditors are responsible for verifying both.
Sir, this matter not only affects the livelihood and dignity of thousands of practicing members, especially sole proprietors and small firms, but also strikes at the heart of fairness and equity that ICAI has always stood for. We sincerely hope that the Council, under your leadership, will take this matter into earnest consideration and initiate dialogue with RBI and other stakeholders to standardize and democratize the process of audit branch allotments.
2. DISCRIMINATION OF SOLE PROPRIETOR FOR PSU AUDITS
At present, Sole Proprietor Chartered Accountant firms in India, even with a full-time FCA, face systemic discrimination in empanelment for audits of Public Sector Undertakings (PSUs). As per current norms, such firms are barred for the first five years from being considered for PSU audit allotments—an arbitrary restriction that lacks logical or performance-based justification.Further, after completing five years, eligibility remains elusive. The selection criteria correlate audit allotment to a “point score” based on firm size, number of partners, and other structural parameters—all inherently biased against sole proprietors. Even if a sole proprietor has consistently delivered high-quality audit work, the system gives undue advantage to even the smallest partnership firms, purely on account of the number of partners. This is neither equitable nor reflective of professional competence.
To make matters worse, a profit threshold condition also applies: ₹3,60,000 for metro cities and ₹1,80,000 for non-metros. Sole proprietors who, despite best efforts and compliance, fall marginally short of this threshold due to market size or pricing limitations are declared ineligible, regardless of their commitment or capability. This structure blocks growth, discourages talent, and undermines the entrepreneurial spirit of individual Chartered Accountants. It is deeply disappointing that these provisions are endorsed by the ICAI, which is expected to uphold the dignity and interests of all its members, not just large firms.
We urge a complete rethink of the five-year blocking period and call for the introduction of a separate, fair, and independent evaluation framework for sole proprietors. Such a framework should assess the quality, consistency, and professional conduct of audit work rather than merely the number of partners or years of registration. The current system, which favors firm size over substance, must be replaced with a model that recognizes merit, integrity, and quality. Counting firms as “eligible” or “non-eligible” based solely on structural composition is outdated. What matters most is the trust placed in Chartered Accountants by the public, and the quality of their work not the size of their firm.
3. END DISCRIMINATION FOR CONCURRENT AUDITS
The RBI Guidelines on Concurrent Audit, clearly stipulate that Chartered Accountant firms should be appointed with gradation based on the size of the branch. While this framework was intended to ensure quality and efficiency, its implementation has systematically excluded sole proprietor firms, despite their competence, commitment, and grassroots availability.
Although a few banks still continue to engage sole proprietors for concurrent audits, it is evident that such instances are now rare and fading fast. This trend is not only demoralizing for small practitioners but also contradicts the RBI’s own guiding principle of inclusive financial supervision. Instead of marginalizing sole proprietors, regulators should support them, especially for local branch audits where their proximity and practical understanding provide unmatched value.
We propose that the current restrictions on sole proprietors be scrapped, and that a certain percentage of branches—especially those within defined advance/deposit thresholds—be mandatorily reserved for local sole proprietors. Such a move would promote fair participation and strengthen the audit process by tapping into diverse, regionally grounded expertise.
A major issue lies in the bulk allotment of concurrent audits to large firms, which continues unchecked. This practice concentrates audit power in a few hands, undermining the spirit of equitable opportunity. Astonishingly, the ICAI—the custodian of professional fairness—has never objected to or protested this practice, leaving small firms at the mercy of favoritism and opacity.
The “movable partner” loophole, where firms temporarily show partner presence in a particular location to gain eligibility, further distorts the system. These firms, by virtue of their numbers and strategy, are monopolizing the audit landscape, crowding out genuinely local and deserving sole proprietors.
We strongly urge the implementation of a “One Concurrent Audit per Member” policy, without delay. This simple reform will immediately democratize audit assignments and ensure a level playing field.
It is high time the ICAI Council intervenes decisively. As our regulatory alma mater, it must act with integrity and urgency to eliminate discrimination among its members. The concurrent audit ecosystem should reflect fairness, competence, and equitable access, not firm size or tactical maneuvers.
4. UNJUST EXCLUSION FROM RRB STATUTORY AUDITS
It is deeply concerning that NABARD guidelines for the appointment of statutory auditors for Regional Rural Banks (RRBs) explicitly exclude Sole Proprietor firms, despite them constituting nearly 70% of the total CA firms in India. As per the current framework, auditors for RRBs are to be drawn from Category II and III firms, and only in cases of non-availability may Category IV firms be considered—but even then, sole proprietors are categorically disqualified.
This exclusion is not only arbitrary but also grossly unfair, especially when viewed in light of the modest size and audit remuneration of RRBs. The scale of operations and complexity of RRBs make them ideally suited for audit by experienced sole proprietors and mid-sized firms—not large audit firms whose cost structures and priorities are more aligned with PSUs and commercial banks.
Shockingly, even Category-IV firms and sole proprietors with 20–25 years of audit experience are not being considered for statutory audits of even the smallest RRB branches. This rigid policy fails to differentiate between a PSU Statutory Bank Audit (SBA) and an RRB audit, despite the stark contrast in scope, complexity, and public impact.
Adding insult to injury, the audit fees offered by RRBs are barely 5% of those paid by PSUs for similar assignments, yet the eligibility norms are disproportionately stringent. This reflects not just an unreasonable standard, but a deep-rooted structural discrimination against smaller firms—particularly sole proprietors who have sustained the profession at the grassroots level.
Such policies undermine the principles of fairness, decentralization, and professional inclusivity. There is no justification for denying audit opportunities to competent professionals on the basis of firm size alone, especially when they possess decades of audit experience and domain knowledge.
We urge NABARD and the concerned regulatory bodies to immediately revisit these eligibility norms and introduce a rational, inclusive framework that reserves statutory RRB audits for sole proprietors and mid-sized firms, in keeping with the scale and needs of these institutions.
Discrimination in the name of categorization must end. Professional merit, experience, and local availability—not the number of partners—should determine eligibility. The ICAI must stand firmly with its small and mid-sized members and act as a guardian of equitable opportunity for all.
5. TENDERING – A MENACE THAT UNDERMINES THE INTEGRITY
The unchecked practice of tendering for audit and assurance services has become a serious menace to the Chartered Accountancy profession. It reduces professional work to a matter of commercial underbidding, often at the cost of quality, independence, and dignity. Such a practice not only violates the ethical fabric of the profession but also leads to unhealthy competition, erosion of professional fees, and compromised audit standards.
To address this growing threat, we propose that any audit work secured through a tendering process must first undergo a cost sheet evaluation, certified and approved by the ICAI before the member is allowed to accept the engagement. This cost sheet should reflect a realistic and professional benchmark for the scope of work. If the ICAI finds the cost sheet to be unviable or under-quoted, the member should be barred from proceeding with the assignment. This approval mechanism must be enforced with the same seriousness as the mandatory communication with the previous auditor, as prescribed under the Code of Ethics.
Moreover, all tender notices issued by authorities must be free from discriminatory eligibility criteria that unfairly emphasize the size, turnover, or net worth of CA firms. Such conditions have no logical connection to the professional capability required for audit work and systematically exclude small and mid-sized firms, particularly sole proprietors. This directly contradicts the spirit of Clause (6) of Part I of the First Schedule of the Chartered Accountants Act, 1949, which aims to protect the profession from such unfair practices.
Although ICAI has formally established a mechanism to regulate tendering, it is disheartening to note that this framework has remained largely ineffective and academic in nature. On the ground, ICAI has failed to enforce meaningful checks or offer any protection to its members who are caught in the pressure of irrationally low bidding.
It is time for the ICAI to translate its intent into firm action. We urge the Council to formulate a binding policy that no work secured through tenders shall be undertaken without prior ICAI approval of the financial viability of the assignment. Further, a centralized tender monitoring committee must be established to scrutinize all tender notifications and proactively intervene wherever professional dignity and viability are at risk.
Only by assertively confronting the misuse of tenders can ICAI preserve the independence, integrity, and sustainability of the Chartered Accountancy profession.
6. REVAMP OF NETWORKING -PROPOSAL FOR ASSOCIATE FIRMS
The current networking framework prescribed by the ICAI has, over time, proven to be largely ineffective, outdated, and non-functional. Despite its original intention to enable smaller firms to collaborate and expand their reach, the present mechanism has failed to achieve any meaningful integration or operational synergy. It remains largely dormant, with little real-world impact on empowering smaller firms to compete with large, multi-partner entities.
In light of this, we propose a progressive shift towards a more practical and dynamic model—“Associate Firms.” Under this model, independent CA firms can formally associate for specific assignments or projects while retaining their individual legal identity. These associations can be based on mutual strengths such as combined turnover, aggregate manpower, collective experience, and multi-location presence—all of which should be recognized and counted in eligibility criteria for government audits, PSU assignments, and large-scale consultancy work.
This new structure should also include a transparent and ICAI-validated sharing mechanism, ensuring clear accountability and equitable distribution of responsibilities and remuneration among associate firms. Such a policy would provide a level playing field, enabling small and mid-sized firms to collaborate effectively and competitively in a landscape currently dominated by large firms.
The core objective of this proposal is to elevate the stature of small firms through collective strength, allowing them to stand shoulder-to-shoulder with bigger firms in bidding for high-value assignments. By embracing the Associate Firms model, ICAI can foster inclusiveness, innovation, and capacity building within the profession.
We strongly urge the ICAI Council to abandon the outdated networking guidelines and adopt a modern, operationally viable policy for Associate Firms, enabling true collaboration among practicing Chartered Accountants and enhancing the reach, recognition, and revenue potential of smaller firms across India.
7. NEED FOR EFFECTIVE DISCOUNTED ARRANGEMENTS
The ICAI, from time to time, enters into subsidized online arrangements with various service providers, offering discounted pricing on software tools and professional utilities. While the intent behind such initiatives is commendable, the actual benefits to members remain negligible, as these deals often prioritize the service provider’s commercial interests over member welfare.
A clear example of this was seen in 2010, during the tenure of CA Sanjay Agarwal, when ICAI partnered with TAZMANN to offer an online facility to members at a significantly reduced rate of ₹3,000 per annum. The response from the members was overwhelming, with thousands opting in. However, in subsequent years, no effort was made by the DTC (Direct Taxes Committee) or other concerned bodies to renegotiate or renew such subsidised arrangements. Today, similar services are being offered at market rates exceeding ₹15,000, making them inaccessible for small and mid-sized firms, particularly in Tier 2 and Tier 3 cities.
It is evident that many such companies leverage the member base of ICAI for bulk on boarding, yet provide little to no real-time assistance or added value to individual Chartered Accountants. This defeats the purpose of such affiliations and reflects poorly on the institute’s role as a protector and promoter of member interests.
We strongly urge ICAI to restructure its approach by:
1. Negotiating sustained, long-term discounted pricing based on the collective strength of its over 3 lakh members.
2. Monitoring and reviewing service quality of the providers to ensure they genuinely support and add value to the members’ professional practice.
3. Expanding such arrangements to include multiple providers, across domains such as accounting software, audit tools, tax platforms, compliance automation, etc., with clear terms ensuring cost transparency and technical support.
4. Including mandatory footnotes or disclaimers that protect members from one-sided or exploitative commercial clauses.
These steps would go a long way in supporting small and mid-sized firms, helping them access essential tools at affordable prices and thereby strengthening the professional ecosystem nationwide.
8. MULTIDISCIPLINARY FIRMS – A VISION WITHOUT EXECUTION
While the ICAI has commendably introduced the concept of Multidisciplinary Firms (MDFs), allowing Chartered Accountants to form professional partnerships with members of other regulated professions (such as advocates, company secretaries, cost accountants, etc.), it is deeply regrettable that no meaningful support mechanisms have been put in place to make this initiative functionally effective.
Although ICAI permits its members to form firms with advocates, the Bar Council regulations presently prohibit advocates from entering into partnerships with Chartered Accountants. This results in a regulatory deadlock, where ICAI’s forward-looking provisions are rendered inoperative due to the lack of reciprocal permissions from counterpart regulatory bodies.
Moreover, despite multiple degrees and professional qualifications being recognized by ICAI for MDFs, in the absence of mutual declarations and coordinated guidelines from other governing councils (e.g., Bar Council of India, ICSI, ICMAI), the entire initiative remains ineffective in practical terms.
To address this, we urge ICAI to:
i. Actively pursue inter-regulatory dialogues and sign formal reciprocity agreements with allied professional bodies, ensuring that the formation of MDFs is legally valid and mutually acknowledged.
ii. Collect and publish data on the number of registered Multidisciplinary Firms and share success stories or working models of such collaborations, if any, to inspire and guide other professionals.
iii. Facilitate knowledge-sharing platforms, training modules, and legal guidance for members interested in forming MDFs—particularly to navigate ethical codes, ownership structures, and compliance frameworks.
iv. Clearly address and resolve interpretational ambiguities related to profit-sharing, liability, branding, and scope of work among cross-professional partners.
The ICAI’s vision for Multidisciplinary Firms has the potential to elevate the stature and capabilities of Chartered Accountants, making them competitive in an increasingly integrated advisory environment. However, without structural support and regulatory alignment, this initiative risks becoming yet another policy on paper without real-world impact.
It is time the ICAI demonstrates proactive leadership to transform MDFs from a stalled concept into a vibrant reality, aligned with global practices and the evolving needs of Indian professionals.
9. A COLLECTIVE APPEAL FOR REFORM AND EQUITY
We, the undersigned members of the Institute of Chartered Accountants of India, representing hundreds of small and mid-sized Chartered Accountant firms across the country, respectfully submit this collective appeal to your esteemed office.
It is our firm belief that small and sole proprietor firms form the backbone of the profession, serving the length and breadth of this nation with integrity, dedication, and grassroots-level outreach. However, in recent years, a series of structural, policy, and implementation gaps have led to increasing marginalization of such firms despite their undeniable contributions to the profession and the economy.
We urge you, Hon’ble President Sir, to take corrective, inclusive, and visionary measures to:
- End discriminatory eligibility norms and arbitrary restrictions that disproportionately affect small and sole proprietor firms.
- Ensure fair audit allotments, both statutory and concurrent, through transparent and equitable mechanisms.
- Curb unhealthy tendering practices and protect the dignity and independence of the profession.
- Promote functional models like Associate Firms and truly operationalize the vision of Multidisciplinary Firms.
- Protect the professional viability of small firms through subsidized services, regulatory support, and equal access to opportunities.
The time for change is now. We request the ICAI Council under your leadership to act decisively and inclusively, upholding the core values of our noble profession equity, integrity, and opportunity for all.
With hope, trust, and professional commitment,
CA. AMRESH VASHISHT
With utmost respect and hope for positive action,
Yours sincerely,
[Your Name]
FCA/ACA
[Membership No.]
[Firm Name & FRN (if applicable)]
[Contact Address]
[Email and Mobile Number]
Author Bio
Come as it does it willl be no more than a cry in the wilderness.We should face all odds and bash on regardless.The article is very appropriate and awakens the collective conscience of anyone who cares to read.