The ICAI Code of Ethics requires a firm that is part of a network — a larger structure aimed at cooperation, sharing resources, common quality control policies, common branding or significant professional resources — to register that network with ICAI, to disclose network membership in specified circumstances, and to treat the network's independence, not just the signing firm's own, as relevant when evaluating independence for a specific engagement, because a close relationship with a client at one network firm can create a threat to independence for another firm in the same network.
What qualifies as a 'network' under the Code
- A structure aimed at cooperation among firms, where the structure is clearly aimed at profit or cost sharing, or shares common ownership, control or management
- Firms that share a common quality control system across the participating firms
- Firms that share a common business strategy, brand name, or a significant part of professional resources
- A loose referral arrangement with no shared control, branding or resources generally does not, on its own, meet the Code's definition of a network
What has to be disclosed, and when
- 01Register the network with ICAI where the arrangement meets the definitionFirms describing themselves as networked, or using a common name across firms, need the arrangement on record.
- 02Disclose network membership in tenders and specific communications where requiredSo that a client or third party evaluating the firm's independence or scale understands the full network relationship, not just the signing entity.
- 03Evaluate independence across the whole network before accepting an engagementIf another firm in the network has a relationship with the prospective client — an equity interest, another assurance engagement, a close business relationship — that has to be factored into whether THIS firm can accept the engagement independently.
Branch office norms
| Requirement | What it means in practice |
|---|---|
| A branch needs a member in charge | A qualified member of the Institute has to be in charge of each branch office, not run entirely by non-member staff with occasional partner visits |
| Firm name and registration consistency | Branch offices operate under the same firm registration and name — they are not separate firms issuing reports independently of the main firm's quality control |
| Signing authority | Reports and certificates issued from a branch still have to be signed in accordance with the firm's own authorisation and quality control policies, including review requirements under SA 220 |
Describing a loose referral or informal association as a 'network' in marketing material, correspondence or tenders without actually registering it, or without applying the independence evaluation the Code requires across it, is itself a Code of Ethics exposure — the obligations attach based on the substance of the arrangement, not on what it's called internally.
This is practical guidance written for audit teams, not an authoritative statement of any standard or statute. Standards, forms and timelines change. Check the current text issued by the ICAI and the relevant authority before relying on anything here in an audit file.
Related resources
- Audit documentationEngagement letters: what SA 210 requiresWhat an engagement letter must establish, when it needs renewing, and the gaps most often found on file inspection — undated letters and stale scope.
- Audit workflow & automationSA 220: quality control responsibilities on an individual audit engagementSQC 1 builds the firm's quality system. SA 220 is what the engagement partner has to personally do with it on this specific file, this specific year.
- CARO & Companies ActSecretarial compliance checklist for a statutory auditorBoard meeting frequency, statutory registers and ROC filing timeliness, read as evidence of compliance culture rather than a secretarial checklist in its own right.
- Audit workflow & automationSQC 1: what the firm-level quality control standard actually requires a CA firm to buildSA 220 tells a partner what to do on one file. SQC 1 is what the firm has to have in place before that partner can do it consistently across every file.
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