THE INSTITUTE OF CHARTERED ACCOUNTANTS OF NIGERIA
DRAFT REPORT OF THE JOINT SUB-COMMITTEE OF
PROFESSIONAL PRACTICE MONITORING COMMITTEE AND
MEMBERSHIP AFFAIRS COMMITTEE ON THE ISSUE AND RENEWAL
OF LICENCE TO PRACTISE
PREAMBLE:
There have been incessant negative reports of the abuse of the Institute’s Licence to
Practise or Practising Licence by members who were issued with these Licences but
were not in full time Practice. Some of these reports include:
1. Accepting jobs at fees that are below the cost of doing the jobs because such
members do not have offices, neither do they maintain staff;
2. Doing shoddy jobs thereby bringing the profession and the jobs of those in
practice to disrepute;
3. Giving out their Seals to unqualified persons to use in signing accounts for
clients.
The Council of the Institute having considered the above had taken steps to review the
process for the issuance and practice licence so as to bring the Institute’s process up to
World Standard.
The Membership Affairs and the Professional Practice Monitoring Committees were
mandated to form a Joint Sub-Committee to review the current practice and recommend
a new process to Council for consideration and approval.
SCOPE OF WORK:
The terms of reference of the Joint Sub-Committee included:
1. To develop new procedures for the issuance of Practising Licences;
2. To develop new procedures for the renewal of Practising Licences;
3. To design a new Practising Licence and Seal for the use of members in Practice;
4. To fix an expiry date for the existing Practising Licenses;
5. To propose the modalities for the dissemination of the information to members.
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WORK DONE:
The Joint Sub-Committee had a total of five (5) meetings during which members
deliberated on existing procedure, the ACCA approach and members’ experiences
before making their recommendations which are compiled below:
RECOMMENDATIONS:
A.
EXISTING SEALS AND LICENCES TO PRACTISE
The current Seals and Licences to Practise should expire on September 30, 2010
The existing Seals and Licences to Practise should be returned to the Institute on or
before October 1, 2010. In order to avoid any possible misinterpretation by the public
and the consequent damaging effects to both the Institute and the members, the
proposed advertisement in the newspapers of the notice of expiration of Practising
Licences and Seals should be suspended and an alternative medium directed at
members only should be used to disseminate the information.
Two stages of communication are recommended as follows:
STAGE 1: Use of the following media:
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District Societies
ICAN Programmes
ICAN Journal
Interaction sessions with district societies to be facilitated by PPMC
ICAN website
Direct communication to all the firms and members that hold Licences to
Practise through letters, e-mail and text messages.
STAGE 2: Newspaper Publication of a new list of all licensed firms.
B. INDIVIDUAL MEMBERS
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A member who has served in an audit firm licensed by the Institute for not
less than 36 months shall be regarded as a qualified member for this
purpose.
On application, a qualified individual member shall be issued with Practising
Certificates and NOT Licence to Practise.
The Practising Certificates will not qualify a member to set up a firm.
The Practising Certificate shall not be renewable.
Members will no longer be issued Seals as individuals.
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CONDITIONS FOR ISSUANCE OF PRACTISING CERTIFICATE
For a member to be granted a Practising Certificate, he or she must:
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be a professionally qualified member of the Institute.
have acquired a minimum of 36 months practical experience, either before
or after qualifying as a Chartered Accountant, in a firm licensed by the
Institute to practice as a firm of Chartered Accountants
have paid his/her subscriptions and dues up to date
have paid the application fee of N10, 000.00 subject to review by the
Institute. Holders of existing practising licences are entitled to practising
certificates without payment of fees
have obtained minimum credit hours through attendance of MCPE and other
Institute’s activities
have filled and returned the application form for issuance of Practice
certificate (Appendix 1)
have satisfied any other condition(s) that might from time to time be
stipulated by the Institute
C. ISSUANCE OF LICENCE TO PRACTISE
Procedures for issuance of Licence to Practise
Only firms and NOT individuals should be issued with Licences to Practise.
Conditions for issuance of Licence to Practise
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The promoter must submit the proposed firm’s name to ICAN for clearance
or validation along with the proposed partners’ certificate(s)
The promoter or sponsor or principal must be a professionally qualified
member of the Institute with a Practising certificate
Each partner (in the case of partnership) must hold a Practising Certificate
The principal must complete the relevant application form for the issuance
of Licence to Practise (Appendix 2)
In the case of Partnership, the firm must have an enforceable partnership
agreement.
In the case of sole Partner Firm, the promoter must ensure that an
arrangement, is put in place to ensure continuity of the practice in case of
an eventuality.
The firm must pay the appropriate licensing fees. The fees recommended
for different categories of firms are as follows:
(i) Sole Practitioner (1 Partner) N25, 000.00
(ii) Small firm (2-4 Partners) –
N60, 000.00
(iii) Medium firm (5 – 9 Partners) –
N350, 000.00
(iv) Large firm (10 Partners and above) – N1, 000,000.00
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NOTE: Payment of any of the above fees entitles the firm to the following:
(i)
(ii)
(iii)
(iv)
(v)
Application form for licence
Licence
Seal
10 units of stamps
Listing in the year book
The above fees are however subject to review from time to time by the Institute
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A member should not be a partner in more than one firm
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The firm must have satisfied any other condition(s) that might be
stipulated by the Institute from time to time
D. RENEWAL OF EXISTING LICENCES TO PRACTISE (CUT-OVER FROM
EXISTING TO NEW REGIME)
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Existing Licences to Practise can only be renewed in the name of a firm and
NOT that of an individual
The firm must complete the Renewal of Licence form (Appendix 3)
A new seal shall be designed to be purchased by firms and not individuals
The new seal shall be customized and shall have the name of the firm, ICAN
Registration Number of the firm and also ICAN logo
Each firm is expected to return its current seal to the Institute at the point of
collecting the new one.
It should be noted that both the seal and the Licence to Practise are the
property of the Institute
The partner or partners in the case of partnership must have paid all their
subscriptions and dues up to date
The firm must have adequate professional indemnity cover.
The firm must have a minimum infrastructure in place
In the case of sole Partner Firm, the promoter must ensure that an
arrangement is put in place to ensure continuity of the practice in case of an
eventuality.
The firm must have paid the appropriate renewal fees. The renewal fees
recommended for different categories of firms are as follows:
(i)
(ii)
(iii)
(iv)
Sole Practitioner - N20,000.00
Small firm
- N45,000.00
Medium firm
- N300,000.00
Large firm
- N750,000.00
NOTE: Payment of renewal fee entitles the firm to the following:
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(i) Application form for licence renewal
(ii)
Licence
(iii)
Seal
(iv)
10 units of stamps
(v)
Listing in the year book
E. RENEWAL OF NEW LICENCES TO PRACTISE
The new Licence to Practise which must be conspicuously displayed at the
firms’ offices shall have a lifespan of three years after which it shall be
renewed. Where a firm has more than one office, photocopy of its Practising
licence should be displayed at each of the branch offices.
The following are the conditions for the renewal of Licences to Practise by
firms:
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The firm must have completed the application form for the renewal of Licence
to Practise
The partner or partners in the case of partnership must have paid all their
subscriptions and dues up to date
The firm must have obtained a certificate of Practice review issued by PPMC
or any other record indicating that the firm is complying or has complied with
the requirements of practice monitoring review
The firm must have adequate professional indemnity cover.
The firm must have paid the appropriate renewal fees. The renewal fees
recommended for different categories of firms are as follows:
(i)
(ii)
(iii)
(iv)
Sole Practitioner - N20,000.00
Small firm
- N45,000.00
Medium firm
- N300,000.00
Large firm
- N750,000.00
NOTE: Payment of renewal fee entitles the firm to the following:
(i)
(ii)
(iii)
(iv)
(v)
Application form for licence renewal
Licence
Seal
10 units of stamps
Listing in the year book
The above fees are however subject to review by the Institute from time to
time.
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The firm must have put in place the following minimum infrastructure
requirements for setting up a firm:
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(i)
(ii)
(iii)
(iv)
(v)
Office accommodation that has at least two rooms to ensure
that the partner’s office is separate from that of the other staff.
A personal Computer (i.e. a laptop or Desktop)
A printer
A library containing minimum of the following: Manuals,
Accounting Standards, Auditing Standards, and relevant
professional textbooks.
A secretary/office Assistant
The above minimum infrastructure requirements are subject to review by the
institute from time to time.
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The firm must have satisfied any other condition(s) that might be stipulated by
the Institute from time to time.
F. CHANGE OF NAME AND REPLACEMENT OF SEAL
Section 9.1.8 of the ICAN Professional Code of Conduct and Guide for Members
states thus: “save where the name of a firm is based on the names of past or
present members of the firm itself or of a firm with which it has merged or
amalgamated, when a new firm is to be set up and when it is desired to change
the name of an existing firm, members are advised, as a means of ensuring
compliance with these rules, to consult the Institute as to the propriety of the
proposed name”.
Whenever a firm changes its name the seal of the firm automatically changes.
The fee payable for change of name and replacement of seal is N15, 000.00
(Fifteen thousand naira) subject to review by the Institute from time to time.
There are four main possible scenarios namely;
1. Change of name without change in the number of partners
2. Change of name with change in the number of partners
3. Change of name due to local or foreign affiliation
4. Change of name due to merger
G. FIRM’S NAME AND STRUCTURE
The Committee frowned at the varieties of names which members use in
registering their firms. They opined that the structures of most of these names are
not in line with the Institute’s Professional Code of Conduct and Guide.
In line with Paragraph 9.1.5 (b) of the 2009 ICAN Professional Code of Conduct
and Guide for Members, a firm should use the words “Chartered Accountants” in
its general description without any addition e.g.
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XYZ & CO.
(Chartered Accountants)
However, on its notepaper or letterhead, the firm can underneath the general
description, list out its specialties, e.g.
Audit, Tax Practitioners, Insolvency
Section 9.1.1 of the Code of Conduct provides that a member in public practice should
refrain from practising in or under a name which does not comprise proper name(s)
only, such name(s) being that or those of one or more of the current or former
proprietor(s) and/or partner(s) of the firm.
This means that the Code of Conduct restricts accounting firms from using names which
are not proper names. Proper names are names of partners or former partners e.g.
Okeke, Ogundipe & Co.
The Committee therefore advises accounting firms to use the names of the owners or
partners in their practice as directed in the Professional Code of Conduct and Guide for
Members.
CONCLUSION:
The Committee also recommends that after the initial exercise of issuance of new Seals
and Licenses to Practice to firms, the Institute should do the following:
 organize free seminars on professional code of ethics for members at the
various zones of the country. The content of the seminar should be far more
elaborate than the courses on ethics usually organised by the Institute for
newly qualified members during their induction
 organize similar seminars for subsequent applicants for new Seals and
Licenses to Practice
 inform the Corporate Affairs Commission (CAC), Federal Inland Revenue
Service (FIRS), States Boards of Internal Revenue and other relevant
regulatory authorities of the list of duly registered and approved audit firms.
This visit should be regularly carried out from time to time in order to clear
other relevant issues aimed at checking quackery in the profession.
* PLEASE NOTE THAT THE ATTACHED FORMS ARE PART OF THIS REPORT
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