RESTRICTED
WORLD TRADE S/WPPS/W/7/Add.29
30April 1997
ORGANIZATION
(97-1868)
Working Party onProfessional Services Original: English
COMMUNICATION FROM PAKISTAN
Response tothequestionnaire ontheaccountancy sector
Thefollowing communication iscirculated attherequest ofPakistan.
________
Seriatim replies areasunder.
I. GENERAL
1. What aretheprofessional titles ofaccountants inyour country? Arethese professional
titles protected? Please specify how.
Professional letters "ACA" and"FCA". These titles areprotected asunder.
Theabove letters indicate thattheindividual isanassociate/fellow member oftheInstitute
ofChartered Accountants under Section 5oftheChartered Accountants Ordinance, 1961. Anyperson
notbeing amember oftheInstitute, represents thatheisamember oftheInstitute ispunishable with
fineuptoRs.1000 onfirstconviction andonanysubsequent conviction withimprisonment uptosix
month orfineuptoRs.5000 orwithbothunder Section 21oftheordinance.
2. How istheaccountancy sector regulated inyour country: bylaw,professional self-
regulation, acombination ofboth?
TheInstitute ofChartered Accountants ofPakistan (ICAP) wasestablished fortheregulation
ofaccountants under theChartered Accountants Ordinance, 1961 (Xof1961).
However, in1966 another Institute under thename of"Institute ofCostandManagement
Accountants ofPakistan (ICMAP)" wasalsoestablished under astatute.
3. Arethere anyprovisions toprotect company names, whether national orforeign, inyour
country?
NamesofthefirmsofCharteredAccountantsareapprovedbytheInstitute.Anexistingapproved
name already registered withtheInstitute cannot beusedbyanyother person(s).S/WPPS/W/7/Add.29
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4. What aretheprofessional bodies inyour country? Aretheyrecognised bylawasa
regulatory ordisciplinary body fortheaccountancy profession inyour country, orare
these functions fulfilled byother institutions (please specify)?
There aretwoprofessional bodies inPakistan-ICAP andICMAP. ICAP isaself-regulatory
body inmatters ofprofessional misconduct byitsmembers.
5. Howmany members dothese professional bodies have? What istheestimated proportion
ofthose:
Members occupations (ason24March 1997)
- inPublic Practice 441
- inIndustry/Commerce 1613
- inPublic Sector 4
- inEducation 4
- unoccupied (retired etc.) 12
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2074
6. What isthescope ofactivities regularly practised byaccountants inyour country?
- statutory audit
- audit ofmergers
- audit ofcontributions inkind
- public sector audit
- other audits
- accounting
- insolvency practice
- taxadvice
- taxrepresentation
- investment advice
- consulting
- expert witness inaccounting
- other
Thescope ofactivities practised bythemembers ofthisInstitute covers allthesectors, including
public sector corporations butexcluding Government Offices which fallunder thedomain ofthe
Comptroller andAuditor General ofPakistan.
7. Which ofthese activities areregulated inyour country?
All.
8. Which ofthese activities arereserved bylawtoaccountants, shared byaccountants with
other professions (please specify), orevenforbidden toaccountants inyourcountry, e.g.
byfullprohibition orbynotallowing cumulation ofcertain activities which areconsidered
incompatible ormutually exclusive?
BesidesCharteredAccountants,personsholdingdegreeinEconomicsandLawcanseekapproval
fromtheCentral Board ofRevenue torepresent clients before Income/Wealth taxauthorities. Advocates
canperform allactivities concerning legalmatters. Audit ofcompanies withCapital ofRs.3millionS/WPPS/W/7/Add.29
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ormore canbecarried outonlybyChartered Accountants holding aCertificate ofPractice granted
bytheInstitute.
II. QUALIFICATION REQUIREMENTS
9. What arethequalification requirements forthese activities inyour country interms of
university/higher education degree, practice andprofessional exam? Specify thenumber
ofyears required foreachelement, andthedifferences according totheactivities (audit,
insolvency, tax,etc.)covered bythequalification.
Thequalification required forauditofpublic limited companies andprivate limited withcapital
ofoverRs.3million isholding ofacertificate ofpractice granted bytheInstitute. Completion of
a4years satisfactory service under articles withaChartered Accountant holding acertificate ofpractice
andpassing theexaminations mentioned in10below areessential before onecanbeadmitted asan
Associate Member oftheInstitute.
10. Arethere anypre-conditions tomeet tostarttheprofessional education: minimum age,
particular diploma ortitle,prior education, registration withaprofessional body, payment
ofafee,other (please specify)?
Yes: Minimum qualification: Intermediate (12years) /"A"levelorequivalent andpassing
ofFoundationexaminationoruniversitydegree(14years)afterpassingPre-entryProficiencyTest(PPT).
11. What arethesubjects tobecovered bytheeducation: accounting, audit, tax,general
law,economics, ethics, information technology, other (please specify)?
Foundation
FE-I FE-II
1. Communication and 1. Information Technology
Behavioral Studies.
2. Business Mathematics and 2. CostAccounting
Statistics
3. Mercantile Lawand 3. Company LawandTaxation
Economics
4. Financial Accounting-I 4. Auditing
5. Financial Accounting-II
Professional
PE-I PE-II
1. Advanced Auditing 1. Management Accounting
2. Advanced Financial 2. Strategic Financial
Accounting ManagementS/WPPS/W/7/Add.29
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3. Financial Reporting 3. Advanced Taxation
4. Corporate Laws and 4. Multi-Disciplinary case
Practices study (Proposed tobe
implemented)
Minimum agerequirement forbecoming amember oftheInstitute is21years.
III. TECHNICAL STANDARDS AND ETHICS
12. Inrelation towhich activities donational standards exist(audit, accounting, insolvency,
other)? Please specify their main policy objectives.
TheInstitute hasadopted theaccounting andauditing standards issued bytheInternational
AccountingStandardsCommittee(IASC)andInternationalFederationofAccountants(IFAC)intotality.
Nostandard exists forinsolvency.
13. Which body orinstitution develops these standards andmonitors their implementation?
What aretheconsequences ofabreach ofthestandards (fortheprofessional, forclients,
etc.)?
TheInstitute ofChartered Accountants ofPakistan initiates disciplinary proceedings against
itsmembers intheevent ofnon-compliance ofstandards issued byIASC andIFAC. Noaction is
provided against clients intheevent ofnon-compliance ofvarious standards andobligations. However,
theymaybesuedinCourts under theCivil andCriminal Laws.
14. Aretheinternational standards developed byIFAC (International Education Standards
andGuidelines, International Standards onAuditing) andIASC (International Accounting
Standards) recognised orusedinyourcountry? Ifyes,please explain how. Ifno,please
explain why.
TheStandards issued byIASC andIFAC areadopted, generally, intheirtotality through issue
ofdirectives toitsmembers bytheInstitute. Non-compliance ofthese directives entail disciplinary
action against them.
15. Inrelation towhich activities does aparticular ethical code exist (audit, accounting,
insolvency, other)? Please specify itsmain policy objectives.
Theethical codeformembers oftheinstitute islargely derived fromtheIFAC Code ofEthics,
which encompass allaspects ofaudit, accounting andother general conduct ofthemembers.
16. Which body orinstitution develops thiscode andmonitors itsimplementation? What
aretheconsequences incaseofbreach oftheethical codebyaprofessional orafirm?
Theethical codehasbeenformulated bytheInstitute ofChartered Accountants ofPakistan
which alsomonitors itsimplementation. TheInstitute hasastanding committee forinvestigation into
themisconduct ofthemembers. Depending uponthegravity ofthemisconduct, action against members
include reference totheHigh Courts, removal ofname from members register, etc.S/WPPS/W/7/Add.29
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17. Arethere restrictions onmarketing, solicitation, advertising?
Yes,theethical rules prohibit themembers from marketing, soliciting andadvertising for
business.
18. Arethere restrictions onfee-setting (minimum/maximum levels imposed, indicative scale,
etc.)?
No.TheInstitute ofChartered Accountants ofPakistan hassetnominimum/maximum level
offeeorindicative scale, etc.However, theInstitute, from timetotime, advises, thecorehourly
ratesforpartner, qualified manager, senior andjunior trainees forguidance ofitsmembers.
IV. LICENSING REQUIREMENTS AND PROCEDURES
19. Apart from thequalification requirements, what arethelicensing requirements for
individuals inyour country?
Membership ofthisInstitute isprerequisite forobtaining Certificate ofPractice anaChartered
Accountant. They canalsopractise asManagement Consultants.
20. Arethere anyconditions imposed tobeeligible formembership oftherelevant professional
body(ies)? Please specify.
Themembers ofrecognised foreign Institutes ofChartered Accountants arerequired topass
twopapers ofProfessional Examination onPakistan Taxation andCorporate Laws/Secretarial Practice.
21. Arethere specific licensing requirements forprofessional firms?
There isnominimum capital requirement. Also, there isnorequirement ontheminimum
number ofpartners andthere areamember ofsingle member firms. Presently, onlynumbers ofthe
Institutes specified against serial No.25canbecome members oftheInstitute. However, members
oftheabove Institutes whoqualified afterDecember 1983 arerequired topasstwopapers oneon
Pakistan Taxation andtheother oncompany LawandSecretarial Practices before theycanbeissued
acertificate topractice inPakistan. Registration withtheInstitute ofChartered Accountants ofPakistan
isnecessary forissueacertificate ofpractice. Currently, thereisnoprovision forprofessional indemnity
insurance. Thecertificate isissued onlytonatural person butpractice inthefirmname isallowed
where allthepartners inthefirmareChartered Accountants. Inconsultancy business carried inthe
nameofalimitedcompanymayhaveshareholders/directorswhoarenotCharteredAccountantsprovided
theyundertake tobebound bytheCode ofEthics oftheInstitute regarding non-soliciting andadvertising
forbusiness etc.Eachindividual office ofaC.A. firmisrequired tobeunder thecharge ofaseparate
Chartered Accountant ordinarily resident inthatcity.
22. Cananapplication forlicensing befiledatanytimeoftheyearorarethere specific dates
torespect? Howlongdoesittaketocomplete thewhole licensing procedure? Please specify
incaseofdifferences between individuals andfirms.
Theapplication forpractice Certificate canbemade atanytimeoftheyear. Thepermission
isnormally granted inabout twoweeks time.S/WPPS/W/7/Add.29
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23. Arethere differences interms oflicensing requirements and/or procedures, according
totheactivities covered bythelicence (audit, insolvency, etc.)? Please specify. What
kindofdocumentation isnecessary/accepted? Aredocuments issued inother countries
acceptable? Please specify.
Only audit ofPublic Limited Companies andPrivate Limited Companies withcapital of
Rs.3million ormore arecompulsorily required tobecarried outbyamember oftheInstitute holding
acertificate ofpractice. Besides members oftheInstitute, Advocates andpersons holding acertificate
granted bytheCentral Board ofRevenue areauthorised torepresent clients before income/Wealth
Taxauthorities. Other services normally served byAccountants does notrequire anyspecific
qualification orlicense butgenerally suffers from itsnon-acceptance byconcerned persons. The
Certificate ofPractice issued byanyauthority/Country except thisInstitute isnotvalid inPakistan.
24. What happens when thelicensing conditions arenolonger respected bytheindividual
orthefirm?
TheCertificate ofPractice isissued onanannual basisandisliable tocancellation/non-renewal
incaseofproven misconduct.
V. RECOGNITION OFQUALIFICATIONS
25. Arethere anypossibilities fortaking account ofqualifications acquired byforeign
professionals inanother country? Arethere bilateral agreements withother countries
inthisrespect?
Though there arenobilateral agreements butthetraining andexaminations ofthefollowing
accounting bodies havebeenrecognised asequivalent tothetraining andexaminations ofthisInstitute:
1. Institute ofChartered Accountants inEngland andWales
2. Institute ofChartered Accountants ofScotland
3. Institute ofChartered Accountants inIreland
4. Institute ofChartered Accountants inAustralia.
5. Canadian Institute ofChartered Accountants.
6. Institute ofChartered Accountants inIndia (under review).
26. Arethere anyautomatic recognition ormutual recognition agreements between your
professional bodies andtheir counterparts inother countries? Ifso,please specify the
main characteristics ofsuchagreements; ifnot,please explain why.
There isnoformal agreement withanycountry.
27. Where possibilities oftaking account offoreign qualifications exist, isafulllocal
examination oralocaltraining exceeding 12months required? Please specify. Isalocal
licence always necessary topractice aregulated accountancy activity? Please specify when
thisisnotthecase.
Since training isanecessary element ofChartered Accountancy education allovertheworld,
themembers oftherecognised institutes arenotrequired toundergo further training.
Membership ofthisInstitute iscompulsory forthepractice ofChartered Accountancy andfor
theuseofdesignation ofChartered Accountant.S/WPPS/W/7/Add.29
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28. What aretheaccreditation/licensing requirements imposed onforeign professionals
authorised topractice intheirhome country? Maycertain (regulated) activities becarried
outonthebasis ofaforeign licence?
Themembers offoreign recognised Institutes ofChartered Accountants qualifying after
December 1983 arerequired topasstheprescribed papers onPakistan Taxation andCorporate Laws
andPractices oftheProfessional Examination tobecome eligible forgrant ofPractice Certificate.
VI. REGULATIONS GOVERNING THE ESTABLISHMENT OFACOMMERCIAL
PRESENCE
29. Arethere anyrestrictions ontheform under which onecanestablish (partnership,
incorporation, other)? Please specify.
Themembers arenotpermitted toformcompanies oflimited liability forpractice ofChartered
Accountancy. They can,however, formsuchacompany forthepractice ofmanagement consultancy
business only.
30. Arethere restrictions onforeign direct investment andownership, including restrictions
applying tonotlocally qualified individuals orfirms? Please specify.
No,exceptthateachofficeestablishedinPakistanmustbeunderthechargeofaseparatemember
oftheInstitute whomaybeeither apartner inthefirmorapaidemployee.
31. Isthere arequirement ofaminimum number orpercentage oflocaldirectors, managers
orstaff(please specify)?
No.
32. Arethere restrictions ontheability oflocally established firms todevelop international
relations (membership ofaninternational network, association withforeign firms, etc.)?
Please specify.
Thefirms ofChartered Accountants areallowed toobtain membership ofinternational firms
ofChartered Accountants andarealsoallowed tomention suchassociation ontheirstationery.
33. Istheuseofinternational orforeign names restricted forfirms?
No,except thatthename ofafirmshould beafterthename ofthemembers inpractice in
caseofasoleproprietorship orinthename ornames ofthepartners inthecaseofafirm. This
restriction doesnotapply inthecaseofasuccession, inwhich casethecontinuation ofthename of
theprevious firmispermissible.
VII. REGULATIONSGOVERNINGTHEENTRYANDTEMPORARYSTAYOFNATURAL
PERSONS FOR THE PURPOSE OFSUPPLYING ACCOUNTANCY SERVICES
34. Istheentry andstayofprofessionals subject tolabour market tests oranyother
restrictions? Please specify.
No.S/WPPS/W/7/Add.29
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35. Isthere anyprocedure facilitating thetemporary entry andstayofprofessionals tosupply
accountancy services? Please explain.
No,buttheycannot perform statutory auditfunction ofalimited company ifitscapital exceeds
Rs3million. Also, torepresent aclient before aIncome/Wealth TaxAuthority, theywillhaveto
obtain theapproval oftheCentral Board ofRevenue.
36. Arethere anyrestrictions onhiring oflocal professionals byforeign firms and
professionals? Please explain.
No.
VIII. NATIONALITY/RESIDENCY REQUIREMENTS
37. Isacondition ofnationality/citizenship imposed topractice certain activities, tostartan
education, toobtain alicence, tobecome member ofaprofessional body, etc.? Please
specify.
Themembersofforeignrecognisedbodies,otherthanPakistanis,arerequiredastayof180days
toqualify forenrolment asamember oftheInstitute.
38. Isacondition ofestablishment, prior residency orresidency imposed topractice certain
activities, toobtain alicence, tobecome member ofaprofessional body, etc.? Please specify
theconditions andthedefinition ofestablishment, residency, etc.when relevant. Isit
possible tohave aprofessional establishment inmore thanonecountry?
Aperson notacitizen ofPakistan needs aresidency of180daysinPakistan besides the
requirement ofpassing thetwopapers onPakistan Taxation andCorporate Laws andPractices before
hecanbeallowed toactasanauditor ofalimited company withacapital ofRs.3million. Onecan
haveanestablishment inasmany number ofcountries asonedesires subject tothecondition thateach
office inPakistan ismustthecharge ofaseparate member oftheinstitute whomaybeeither apartner
inthefirmorapaidemployee.