CODE OF ETHICS, Volume II, (Revised 2020)

CHAPTER 2 - THE CHARTERED ACCOUNTANTS ACT, 1949

2.14 The First Schedule

2.14.1 Part I of First Schedule – Professional Misconduct in relation to Chartered Accountants in Practice

2.14.1.6(iv) Some forms of soliciting work which the Council has prohibited, are discussed below:

C. Responding to Tenders, Advertisements and Circulars

It is not prohibited to the members to respond to tenders and requests made by users of professional work. This is however subject to conditions that may be issued by the Council from time to time. The Council has issued Guidelines No.1-CA(7)/03/2016 dated 7th April, 2016 which stipulate that a member of the Institute in practice shall not respond to any tender issued by an organization or user of professional services in areas of services which are exclusively reserved for Chartered Accountants, such as audit and attestation services. However, such restriction shall not be applicable where minimum fee of the assignment is prescribed in the tender document itself or where the areas are open to other professionals along with the Chartered Accountants. The “minimum fee” for the purpose should be such that it commensurates with size, value, volume, manpower requirement and nature of work (as decided by Council at its 388th Meeting held on 6th and 7th February, 2020).

The clarifications on the various issues pertaining to practical situations on the applicability of above Notification are mentioned hereunder:-

1. All tenders issued on or after 7th April, 2016 will be covered under this notification/ guideline.
2. The notification is effective for all tenders issued/ hosted on or after 7th April, 2016. Therefore, a member of the Institute in practice can accept such assignment where advertisement of tender was issued prior to 7th April, 2016.
3. A member of the Institute in practice shall not respond to any tender in areas of services which are exclusively reserved for Chartered Accountants by statute viz. Audit and Attestation Services such as Audit under Companies Act 2013, Income Tax Act 1961, etc. In any State under the local statute if audit and attestation services are exclusively meant for Chartered Accountants only, the member will not be allowed to respond to such tender. However, a member may respond to tenders as mentioned above wherever the minimum fee of the assignment is prescribed in the tender document itself. The fees quoted by the member shall not be less than the minimum fee mentioned in the tender.
4. A member can respond to tenders which are open to other Professionals apart from CAs; even though in the tender document, only CAs may have been invited to respond.
5. A member can respond to assignments where quotations have been called for from practicing members/ firms through individual letters.
6. A member can respond to tenders where only technical bid has been asked for, followed by financial quotations request from the shortlisted members through individual letters.
7. Non-adherence to these guidelines could lead to disciplinary action as this is a Council decision.
8. The Institute can call for any papers/ documents related to bid submitted by members in response to respective tender.

EMD/ Security Deposit

The Council is of the view that while interference with the practices prevailing for requirement of EMD/ Deposit is not required, however, on having received compliant/ instance of exorbitant EMD/ Deposit, the Ethical Standards Board may look into the matter on case to case basis.

A cost sheet be maintained by members of the Institute responding to tenders, incorporating details of the costs being incurred therein having regard to number of persons involved, hours to be spent, etc., so that the same may be called for by the Institute for perusal.