4.1 Query:           

Issues related to restriction on minimum fees.

1.            The institute has, vide Notification dated 25^th May, 1987, prescribed minimum fees limits for accepting audit work.

2.            The querist has referred the following issues for the opinion of the Expert Advisory Committee:

(a)        Whether the restriction in the said Notification in respect of acceptance of ‘audit work’ would also apply to certification work, whether statutorily required or not?

(b)        Presuming that the aforesaid Notification covers certification work, whether certification work can be done without charging any fee for such work?

(c)        Whether the aforesaid Notification applies to certificates issued under rule 9A of Schedule III to the Wealth-tax Act, 1957? At the time, the said notification was issued; there was no requirement of any certificate from Chartered Accountant under the Wealth-tax Act.

(d)        Whether the exception mentioned in item (iv) of the Notification regarding attestation work carried out by the statutory auditor would cover cases where uch attestation work is carried out by the statutory auditor although not statutorily required to be carried out only by the statutory auditor, e.g., certificate regarding allocable surplus under the Payment of Bonus Act, 1965?

 Opinion                                                                    November 26, 1990

1.            The Committee notes the Notification dated 25^th May 1987 which is given as Annexure to this opinion.

            2.            The Committee is of the following opinion in respect of the issues raised in para 2 of the query:

(a) The restriction in the said Notification will not apply to certification work, whether statutorily required or not.

(b) Since the certification work is not covered by the aforesaid Notification, query raised in para 2(b) need not be answered.

(c) The notification shall not apply to the certificates issued under the Wealth-tax Act, 1957.

(d) The exception mentioned in item (iv) of the Notification shall apply to attestation work carried out by the statutory auditor though the attestation work may not be statutorily required to be carried out only by the statutory auditor.

ANNEXURE

Notification No. 1-CA (7)/158/87

dated 25th May, 1987

In exercise of the powers conferred by clause (ii) of part II of the Second Schedule to the Chartered Accountants Act, 1949, the Council of the Iinstitute of Chartered Accountants of India hereby specifies that a member of the institute in practice shall be deemed to be guilty of professional misconduct, if he on behalf of the firm of chartered accountants in which he is a partner (a) consisting of 4 or more partners but less than 8 partners with at least one partner holding a certificate of practice for five years or more; or (b) consisting of 8 or more partners with at least one partner holding a certificate of practice for five years or more; accepts or carries out any audit work involving receipt of audit fees (excluding reimbursement of expenses, if any,) for such work of an amount below what is specified hereunder:

Provided that such restriction shall not apply in respect of the following:

(i)         Audit of accounts of charitable institutions, clubs, provident funds, etc. where the appointment is honorary, i.e., without any fee;

(ii)            Statutory audit of branches of banks including regional rural banks;

(iii)       Audit of newly formed concerns relating to two accounting years from the date of commencement of their operations; and

(iv)       Certification or audit under Income-tax Act or other attestation work carried out by the Statutory Auditor.