New rules for aggregation of domestic CA firms in three months: ICAI

The new guidelines for aggregation of domestic chartered accountant (CA) firms, to make them competitive with global firms like the Big Four, will be introduced in the next three months, Ranjeet Kumar Agarwal, president of The Institute of Chartered Accountants of India (ICAI) said on Wednesday.

In an interview with Business Standard, Agarwal said that some guidelines on aggregation exist but they are being revisited.

The new rules would, for the first time, include international networking guidelines for domestic firms that would allow them to collaborate with overseas companies.

“We have set a target that in the next two to three months, all guidelines will be framed, approved in the council and implemented,” he said.
 

Earlier this year, ICAI had set up a Committee for Aggregation of CA Firms (CACAF) to review and revise the existing guidelines. On Wednesday, Agarwal said that the new guidelines will include rules on mergers and demergers, multidisciplinary partnerships and advertisement of CAs.

“The overall aim is to provide ease of growing practice and facilitate the Indian CA firms grow bigger,” he said.

Agarwal also said that the Gujarat International Finance Tec-City International Financial Services Centre (GIFT IFSC) would be a “game-changer” for Indian CAs.

The International Financial Services Centres Authority (IFSCA) had formed an expert committee under the chairmanship of the ICAI President to come up with suggestions to establish GIFT IFSC as a “Global Finance and Accounting Hub”.

The expert committee’s report was submitted to IFSCA on March 26. It was then opened for public comments till April 12.

“We have received various suggestions and the same was submitted for consideration of IFSCA on April 16,” Agarwal said, adding that the authority is likely to release final guidelines by the end of this month or next month.

The expert committee has recommended a new law for bookkeeping, accounting, tax and financial crime compliance services. It would define these services, restrict how companies can be set up in the region and qualification of key personnel of these entities.

ICAI has also signed a memorandum of understanding with IFSCA to establish a Centre of Excellence in GIFT City to train and skill the CAs to meet the standards of work there.  

“Many CAs are not in the outsourcing work as of today. After GIFT City, where domestic firms are allowed to open their branches, they will endeavour to get work from outside India,” he said. “It will be a game-changer”.

Notably, companies in GIFT IFSC enjoy a 10-year income tax holiday.

The committee has also recommended that the branches of a company and Limited Liability Partnerships may be permitted in the area if they are regulated by any of the three bodies: ICAI, the Institute of Company Secretaries of India or The Institute of Cost Accountants of India.  

“If India can be a leader in the pharmaceuticals industry and software exports, why not in accounting?” Agarwal said, highlighting that last month, the number of CAs in India crossed 400,000. Including 900,000 CA students, ICAI has become the world’s largest accounting body.

He also said that for every $1 trillion India adds to its gross domestic product (GDP), there arises a need for 100,000 more CAs. So by 2047, India would need 3 million working CAs to cater to the demand of its economy.
 

“From roadmap to training, everything needs to be designed in that way,” he said.