Monday, June 6, 2011

IT’S TIME TO CHANGE…..

find given below, a mail from a Chartered Accountant friend.

This mail is worth reading.............. Go ahead!


All of us should NORMALLY be overwhelmed to see the REVISED MINIMUM FEESrecommended by ICAI, thanks to our Hon. President and his team. Finally after advising and helping the bankers, business houses, government to control inflation, we have thought for helping ourselves for fighting the devil (INFLATION) which have created major holes not only our practice and our pockets, but even profession. It would not be exaggeration of matter if I say that now-a-days it has become difficult to retain the good talents in our office, as we are not good pay-masters. But does revising the minimum fees level a sufficient step to give impetus to practicing CA and attract fresh CA’s to practice that are more inclined towards industry, or shall we REVISIT the basis of charging of fees.

The real problem is implementation of these Minimum Fees basis by all the professionals. ICAI, as a regulator have recommended minimum fees but it does not have any feasible mechanism to vouch for its implementation. It makes even more difficult for members to implement these fees structure when they are competing with Tax Practitioners, more so in non-metros and smaller towns. Further the work estimation can not be judged and ICAI provides only the recommended minimum fees structure with no upper cap, meaning thereby that one can charge as per the cost involved, expertise required, geographic demographics, etc. However this leads to wide range of disparities resulting in competition and un-controlled under-cutting in fees, the direct beneficiaries being our service recipient. There are no comparables and our clientele take undue advantage of this at times. In all its whole a Chartered Accountant is losing to another losing Chartered Accountant - apparently this may sound weird, but one who accepts assignment at lower amount is also a loser to some extent.

All these factors call for better option for charging of fees by a professional Chartered Accountant. We feel time has come asking for paradigm shift in basis for charging by CAs. In order to reduce disparities we should switch over to charging of the fees onPERCENTAGE BASIS. Today almost all professionals like Architects, Interior Designers, Engineers, Valuers, even carpenters do charge their fees on Percentage Basis. If one charges fee for instant on basis of percentage of Balance Sheet totals, or Turnover, or working capital as is done in case of Co-operative Banks in Maharashtra, there would equality in the fees charged by members.

We very well understand that immediate argument to this would be with reference to clause 10 of Part I of The First Schedule to The Chartered Accountants Act, 1949. The clause reads as – A CA in practice shall be deemed to be guilty of professional misconduct, if he charges or offers to charge, accepts or offers to accept in respect of any professional employment, fees which are based on a percentage of profits or which are contingent upon the findings, or results of such employment, except as permitted under any regulation made under this Act.

However one may find / suggest ways and means to charge percentage like on Balance Sheet totals, Turnover etc. Or we leave it to all expert professional friends to suggest ways or means for this and if require go for amendment in the Act which is creating undue competition amongst its professional members and hampering the growth of the members. Few of the suggestive methods can –

  1. Percentage of Turnover, Balance Sheet totals, or working capital basis
  2. Percentage of Capital generated or capital build up
  3. Percentage fees with Minimum Fixed Fees and there-after staggered slab wise percentage
  4. Percentage or minimum fixed fees can differ for businessmen and professional
  5. For representation or consulting matter where percentage mechanism is not possible alternate method can be worked out.

We appeal to members to provide thoughts on working this proposal of charging of professional fees on Percentage Basis. We do respect each and every member being CA but in this discussion we would request you NOT to reply on any other basis of charging of fees or how percentage basis is wrong, but restrict your contributions on ways and means of giving effect to the concept “Professional Fees on Percentage Basis” only. This change can bring a revolutionary change in the profession and our personal life, if we DARE to think and think for a change.

Thanking you & looking forward to positive inputs for taking the matter ahead and lead this noble profession to new regime where it can sustain itself as Noble Professionrather than degrading itself and its members by undercutting.

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