Empanelment Guidelines for Chartered Accountant Firms in India

Empanelment of Chartered Accountant Firms

Chartered Accountant (CA) firms in India with at least one full-time Fellow Chartered Accountant (FCA), either as a partner or sole proprietor, may apply for empanelment to secure audits of Public Sector Undertakings (PSUs). The criteria for empanelment and the selection process for statutory auditors have been established after careful consultation with the Institute of Chartered Accountants of India.

Selection Criteria for CA Firms

Audits with Fees Up to Rs 1.50 Lakh

The selection of CA firms for statutory auditor appointments for audits with fees up to Rs 1.50 lakh is based on a point scoring system. This system correlates the score received by each firm with the size of the audit fee. Points are calculated considering various factors such as the firm's experience, the number of partners, their association with the firm, and the number of CA employees.

Point Allocation

1. Experience of the Firm

   • 0.5 points for each calendar year, up to a maximum of 15 points.
   • Calculated from the firm's constitution date with one full-time FCA or from the date of the longest-serving partner joining.

2. Full-Time FCA Partners

   • 5 points for each of the first five partners.
   • 2.5 points for each partner from the sixth onwards.

3. Full-Time ACA Partners

   • 3 points each for the first five partners (including FCA partners).
   • 1.5 points each for partners from the sixth onwards.

4. Points for Long Association

   • 5 points for partners with over 25 years.
   • 4 points for partners with over 20 years.
   • 3 points for partners with over 15 years.
   • 2 points for partners with over 10 years.
   • 1 point for partners with more than 5 years but less than 10 years.

5. Full-Time CA Employees

   • 1 point each for the first 20 CA employees, with a maximum of 20 points.

6. CISA/ISA Qualified Partners

   • 2 points each for up to three partners, with a maximum of 6 points.

7. CISA/ISA Qualified Employees

   • 1 point each for up to three employees, with a maximum of 3 points.

Audits with Fees Above Rs 1.50 Lakh (Major Audits)

For major audits, several additional criteria apply:

1. Eligibility Requirements

   • The firm should employ at least six CAs, including five full-time partners, with one being a full-time paid CA employee.
   • At least one partner must have been with the firm for 10 years or more, while at least three partners should have been with the firm for at least five years, and the remaining two for one year or more.
   • The firm must have been established for at least 10 years.

2. Factors Influencing Allotment

   • The allotment is determined by the firm's size, including partner count and their tenure, CA employee count, and the firm's geographical location.
   • Additional considerations include sectoral experience, service tax compliance on assurance services, past audit performance, and the firm's capability to handle major audits.

Important Notes

Note 1: Definition of Full-Time Partner

A full-time partner does not include individuals who are:

• Partners in other firms.
• Employed full-time or part-time elsewhere, practicing under their name, or engaged in activities deemed to be practice under Section 2(2) of the Chartered Accountants Act, 1949.
• Partners earning below specified compensation limits, which vary by city and partner type.

Note 2: Point Eligibility

All members (sole proprietors, partners, and CA employees) are awarded points if they were exclusively associated with the firm throughout the calendar year before empanelment.

Note 3: Merger Considerations

In the event of a merger, points for the partners will be awarded after one year post-merger, while points for association will be considered after five years from the merger date.

By adhering to these guidelines, Chartered Accountant firms can effectively navigate the empanelment process for statutory audits of Public Sector Undertakings.