The Competition Commission of Pakistan (CCP) has issued a show-cause notice to the Institute of Chartered Accountants of Pakistan (ICAP) over a directive dated 4 July 2012, issued by ICAP, advising all its members and the chartered accountancy firms to refrain from engaging trainees of other accounting bodies. In this connection, the CCP has issued a show cause notice to the ICAP here on Monday.
According to the CCP's notice, the commission has issued a notice to the ICAP on a directive issued by ICAP, advising all its members and the chartered accountancy firms to refrain from engaging trainees of other accounting bodies, particularly trainees of foreign institutes of chartered accountants or any other accounting body of similar nature such as the Association of Chartered Certified Accountants (ACCA), Institute of Chartered Accountants of England and Wales (ICAEW) and Chartered Institute of Management Accountants(CIMA) .
The show cause notice dated September 17, 2012 stated that the ICAP directive prohibits students, pursuing membership of accountancy bodies other than ICAP, from getting training from chartered accountancy firms or members of ICAP in Pakistan, thereby, prima facie, foreclosing access to such students to a large segment of the relevant market, which appears to be in violation of Section 4 (1) of the Competition Act, 2010.
The show cause notice further stated that such a foreclosure of the relevant market may further result in the creation of barriers for undertakings seeking entry in the market for provision of accountancy services in Pakistan in general, thereby preventing, restricting or reducing competition in such a market in violation of the law.
Earlier, CCP wrote to ICAP on 16 July 2012 to ascertain the rationale behind the imposition of the bar under the Directive on training of non-ICAP students, in particular, that of the foreign accountancy bodies, thus foreclosing a large segment of the market for the professional training. However, the comments received from ICAP, prima facie, failed to give any reasonable justification for the issuance of the directive and also failed to address the concerns raised by the Commission for the imposition of the bar.
ICAP has been directed to submit its written reply within seven days and appear before CCP on 24 September 2012 to explain its position. The show cause notice has been issued under Section 30 of the Competition Act. According to the reply of the ICAP, dated September 12, 2012, the ICAP only approves chartered accountant firms as 'training organisations' under the Ordinance if the same comply with and fulfil the requirements of the Ordinance and for the purpose to provide training to 'students' which are registered with ICAP. These approved training organisations can take any person for training but such person needs to be registered with ICAP as a student. Chartered accountant firms which are not approved 'training organisation' of ICAP may employ/train any person.
However, if such person performs work which is regulated by ICAP under the Ordinance, then ICAP can ask such person or the chartered accountant firm to comply with the Ordinance in order to regulate them; and If a person, including a student of a foreign accountancy body, fails to meet the eligibility criteria to work as a trainee in the 'training organisation' approved by ICAP, he cannot be equated with student of ICAP who meets the eligibility criteria. ICAP is authorised under the Ordinance to require minimum education from any person to work as trainee/student in the 'training organisation' approved by ICAP and regulated under the ordinance. Requiring minimum education to work as trainee in the training organisation' could not be taken as an 'entry barrier' for students of foreign accountancy bodies who are not qualified to be the trainees in the 'training organisations' regulated by ICAP under the Ordinance, ICAP stated.
The ICAP fully recognises its responsibilities towards the students of foreign accountancy bodies who are pursuing foreign qualification in Pakistan and desire to obtain training in ICAP's approved 'training organisations'. Considering this, ICAP does not want to shut its door for such students provided they comply with the eligible criteria prescribed under the Ordinance and the bye laws.