Net Worth & Solvency Glossary · Certification
A Certificate of Practice (COP) is the certificate the Council of the Institute of Chartered Accountants of India (ICAI) issues to a member who is entitled to practise as a chartered accountant. Under section 6 of the Chartered Accountants Act 1949 a member may not practise without it, and it is renewed every year on payment of the prescribed fee.
Membership makes a person a chartered accountant; the COP is what lets that member sign certificates, audit reports and other attestation work for clients. A net worth, turnover or solvency certificate is read on the strength of the signer's standing, so the first thing to establish about any such document is whether its signer held a COP on the day it was signed.
Three things a reader can check before relying on a CA-signed certificate
A document that fails any one of the three has not been signed by a practising chartered accountant in the sense the reader expects.
Meaning
A certificate of practice authorises a member of the Institute of Chartered Accountants of India to practise as a chartered accountant. Membership alone does not. A member without a certificate of practice is qualified, but is not entitled to hold out as being in practice, to sign attestation work, or to accept the engagements reserved to practising members. The certificate is applied for separately from membership, is renewed every year, and ends when a member stops practising; a member who takes up other work must report it to ICAI and may need its permission.
Its purpose is to separate the members who may act for the public from the members who may not, so that anyone reading a chartered accountant's signature knows which kind they are dealing with. Many members in industry hold membership without a COP, entirely properly, and are not entitled to sign a certificate of the kind this glossary covers. Membership and practice are two separate permissions, and the second is the one that gives a signature its weight.
Enrolment on the Institute's register after qualifying. Every chartered accountant holds it.
Issued by the Council to a member who applies to practise. Held only by members in practice.
Why it matters
A certificate of net worth, turnover or solvency is not read for its arithmetic. It is read because a practising chartered accountant has put their standing behind it. Take the standing away and the document is a letter.
What matters is not whether the signer holds a certificate of practice today but whether they held one on the date the certificate was signed. Renewals are missed, and a member who has taken employment and given up the certificate may not appreciate that the entitlement to sign went with it. In both cases the signature fails on authority, not on content.
A document that fails this test is not corrected by the quality of the work. The figure may be right and the working papers complete, and the certificate still cannot do the job it was obtained for, because the reader was relying on the signer's standing rather than on the signer's sums.
A bank, consulate, tender committee or court holds a document that does not do what it appears to do. Institutions that receive certificates in volume increasingly check the signer before they read the figure, so the gap is found at the counter, not later.
A member who signs in practice without a certificate of practice has held out as being in practice when not entitled to. Section 22 of the Chartered Accountants Act 1949 treats the acts and omissions listed in the Act's First and Second Schedules as professional misconduct, and the member's signing is judged against those Schedules.
The work has to be done again by a practising member, usually against a deadline that has moved closer, and at the applicant's cost. The check that would have avoided it costs nothing and takes minutes, which is why it belongs before the engagement rather than after. What else governs a chartered accountant's signature, beyond the certificate of practice, is set out in ICAI guidelines for CA certificates.
Lifecycle
The certificate follows the member's practice: it is applied for when practice starts, renewed each year while it continues, and given up when it stops. The procedural detail is the Institute's and is shown here only where its text has been checked.
Pass the Institute's examinations and complete the training it requires, then enrol as a member. The member now has a membership number and the designation, and nothing more.
A member who intends to practise applies to the Council for a certificate of practice. Section 6 of the Chartered Accountants Act 1949 is the reason: without the certificate, a member may not practise.
The certificate is renewed each year on payment of the prescribed fee, due by 31 July; under Regulation 10 of the Chartered Accountants Regulations, 1988, non-payment makes the certificate liable to cancellation. A signature given without a certificate in force is a signature without authority, however sound the work.
A member who stops practising gives the certificate up. The member remains a chartered accountant and keeps the membership number; what ends is the entitlement to sign for clients.
Before relying on it
Everything a reader needs is public. The Institute's online member search, run on the membership number printed on the certificate, returns the member's status. The unique document identification number quoted on the certificate is checked on the Institute's UDIN portal, which confirms that this particular document was generated by that member; a UDIN has been required on certificates signed by practising chartered accountants from 1 February 2019. A reader who has run both checks has established that the signer exists, is entitled to sign, and issued this document. The step-by-step method, with what each screen shows and what to do when a check fails, is in how to verify a net worth certificate using UDIN.
Membership no.ICAI member search. Confirms the person and their status.UDINICAI UDIN portal. Ties this document to that member and the date it was generated.Not the same thing
Each of these is a real credential that appears on or around a certificate. None of them is the chartered accountant's certificate of practice, and none substitutes for it where a recipient has asked for a practising chartered accountant.
The number every member of the Institute holds, in practice or not. It is what the member search runs on, and it is printed on certificates beside the UDIN.
A number generated on the Institute's portal for one document. It identifies the certificate and the member who generated it; it is not a credential of the member.
Issued to a practice unit after the Institute's peer review of its quality processes. It describes the firm's systems, not an individual member's entitlement to sign.
The Institute of Company Secretaries of India issues its own certificate of practice to its members. It uses the same name and serves the same purpose within that profession.
Cost and management accountants have their own institute, membership and practice certificate, with their own reserved areas of work. Whether such a member can sign a net worth certificate is answered in can a CMA issue a net worth certificate.
A registration for a specific kind of valuation work, held on a register kept for that purpose. A chartered accountant may also be a registered valuer, but the two are separate. Valuers register with the Insolvency and Bankruptcy Board of India under section 247 of the Companies Act 2013 and the Companies (Registered Valuers and Valuation) Rules 2017, in one or more of three asset classes: land and building, plant and machinery, and securities or financial assets.
One more question
No. The membership number identifies the member and is the number the Institute's member search runs on; it stays with the member whether or not they are in practice.
Sources: the Chartered Accountants Act 1949, section 6 (India Code); ICAI's announcement making the UDIN mandatory on certificates from 1 February 2019 (ICAI); the ICAI UDIN portal. This entry describes Indian practice in general terms and is not advice on a particular certificate; check the signer's record for the document in front of you.