The rule of ICAI states that a CA in practice and CA in service has professional differences. A CA doing independent practice face professional misconduct if he serves as a member of a company board. A chartered accountant in practice should get general and special permission for different events in his professional journey. The blog explains the meaning of director simpliciter and circumferences to get permission from the council.
Director Simpliciter:
ICAI, the ethical standards board, decided in 2011 with a meeting that the CA in practice is referred to as director simpliciter. This role of director simpliciter includes the responsibilities of an independent director. The ethical standards board explains that the director simpliciter is the person who stays in India for at least 182 days and attends the board meetings. He does not receive remuneration. He is paid for attending the board meeting. A CA in practice is a director simpliciter and not a whole-time director. If the chartered accountant gets money from the company as a nature of employee and employer relationship, they are violating the nature of the position director simpliciter. The director simpliciter should not audit the accounts. The objective of the company is not considered proof to employ a director simpliciter for auditing the accounts.
When chartered accountants get permission from the council?
The chartered accountant seeks permission in general and special cases. Chartered accountants should get permission from the council in the following matters:
• If the chartered accountant wants to do business other than the accountancy profession, he should get permission through regulation 190A.
• The notice regarding another job should be informed within thirty days of joining.
• A chartered accountant should submit a confirmation letter for joining a CA firm.
• In the case of the family business, the positions suitable are proprietor or partner of a proprietary or partnership firm. The member should produce the evidence to prove that the affair is not out of his creation. The declaration regarding the details is given in the prescribed format.
• The chartered accountant should get permission for involving in the tutorship business.
• If the chartered accountant writes a book he needs to take permission.
• If the chartered accountant receives a commission from a life insurance agency, he should inform the council.
• If a chartered accountant opens an office for providing duties as an MLA, MP and MLC, he should inform the council.
• If a chartered accountant work in a charitable institution, he needs to get permission.
• If a chartered accountant writes any examination, he needs to get permission from the council.
• Chartered accountants also work as notary public or special executive magistrates. In performing this service also needs to get permission.
• If the chartered accountant corrects the answer papers, he needs to inform the council.
• If the chartered accountant work as a surveyor, permission is needed.
• The chartered accountant should get special permission if he works as a full-time director.
• The chartered accountant should have special permission if he manages an educational institution.
• Interest in agricultural activity also falls out of the profession. The chartered accountant needs to get permission for this.
A recent announcement from ICAI:
In a case of confusion between independent directors and director simpliciter, the ICAI mentioned that a member need not get permission for the post of director simpliciter. The council further explained that a member need not get permission for working as a promoter or signatory to the memorandum and articles of association of a company. In a recent case, CA Girish Ravindra Amonker worked as a CA in practice and also served as a director. The tenure of service is from 2014 to 2018. The long service without the permission of ICAI raised questions about the challenges of CA in practice. The concerned person was asked to produce evidence regarding the service. The document states that there was a mistake in the mention of the position of director. Instead of mentioning his name as an independent director, the company recorded his name as an executive director. Regulation 190A of chartered accountants regulation, 1988 states that the CA involved in practice needs to refrain from other businesses or occupations. If the council passed a resolution and gave permission, then CA in practice, has the right to do business or non-accounting occupation. The rule also says that a member doing practice can work as a promoter, director simpliciter, or subscriber to MOA and AOA.
Final Words:
ICAI changed the rule to get permission from the council. The council permitted consideration of responsibility and monetary benefit. A chartered accountant holding director simpliciter position is not earning much and is not auditing the accounts also. So, for professional commitment, organised service is essential. For part-time work, there is no necessity to seek permission from the council. Independent directors take care of company accounts. The chartered accountants working as independent directors have more responsibility. They follow professional ethics. So, no need to get permission for a job with full involvement.
