ICAI Releases Exposure Draft on Overseas Network Guidelines for Public Comments

The CACAF was set up in the year 2024–25 to examine and revise various existing guidelines pertaining to the structure and operations of CA firms. The draft proposal, considered at ICAI’s 442nd Council meeting, is now open for feedback from stakeholders, experts, and the public.

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Objective of the Guidelines

The draft Guidelines for Overseas Network are intended to enable Indian CA firms to collaborate with foreign firms while ensuring that such partnerships remain compliant with Indian laws and ethical standards. According to the preamble, the guidelines seek to:

• Promote the formation and registration of professional networks between Indian and overseas entities.
• Ensure ethical compliance, transparency, and regulatory oversight in cross-border operations.
• Foster capacity building and access to global best practices, tools, and technologies for domestic firms.

These guidelines aim to establish a level playing field and enhance the global positioning of Indian CAs by allowing them to participate in international alliances under a regulated structure.

Key Provisions

Under the proposed framework:

• Registration of Overseas Networks with ICAIwill be mandatory for all such alliances involving domestic entities.
• A designated Nodal Officer, who must be a member of ICAI in good standing, will be responsible for compliance and communication with the Institute.
• Specific permitted and prohibited services are defined to avoid conflict of interest and maintain audit independence as per Section 144 of the Companies Act, 2013.
• Annual reporting by the Nodal Officer will be required using Form DO, including details of capital structure, fee sharing, and professional collaboration.
• Violation of these guidelines can lead to disciplinary action under the Chartered Accountants Act, 1949.

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Ethical and Legal Safeguards

The guidelines emphasize that firms in an overseas network:

• Must not share profits or fees with overseas entities unless permitted.
• Must comply with data protection laws, and
• Must submit detailed documentation about the structure, agreements, and operations of the network within prescribed timelines.

The framework includes a provision for reciprocity, encouraging dialogue between ICAI and overseas regulators for mutual recognition of qualifications and standards.

Background and Significance

The move comes in light of recommendations made following the Supreme Court’s 2018 judgment in S. Sukumar v. ICAI, which stressed the need to regulate the activities of multinational accounting firms (MAFs) and their Indian affiliates. The draft guidelines are also seen as a response to increasing globalization in the profession and the need for transparency, accountability, and audit quality assurance.

How to Comment

Stakeholders can submit their views by:

• Filling out a form online: https://forms.gle/aNbDXFYJJWZ11Q8K7
• Sending an email to: cacaf[at]icai[dot]in
• Sending by post to:
  Secretary, Committee for Aggregation of CA Firms,
  The Institute of Chartered Accountants of India,
  ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi – 110002

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ICAI encourages all comments to be clear, specific, and reasoned, particularly those that suggest improvements or raise concerns about implementation.

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