So You Want To Do Articleship?

The Chartered Accountancy Course is a very demanding and interesting course. Not only that the course content is tough, it even requires three years of rigorous training under practicing Chartered Accountant to gain practical experience in the various fields relating to accountancy. This can be in the areas of accountancy, statutory audit, internal audit, tax audit, taxation, management consultancy etc. One can also in the third year do industrial training in some organisation under a CA working in that organisation.

Initial Experience

I had cleared the first group of inter, and after the exams for the second group, I started to search for articleship. And here the most interesting part of my sojourn to the world of articleship began. I went to meet a CA whom I had known for some time. When I mentioned that I wanted to know about where I should do articleship, I was confronted with the question – “Tell me you want to do articlesihp or what?” The question was really very confounding and quite strange. I had asked where I should do articleship, and I was asked back “you want to do articleship or what?”. I said, “yes I want to do articleship thats why I have come to you for guidance”. So that well intentioned CA again quizzically asked – “So, you mean to say, you want to work?”. I wouldn’t go into detail of that conversation, but suffice it to say, that for getting a proper firm to do articleship, I visited handful of firms and spoke to CAs from young ones to elderly ones, and in most of the places, I was asked, “Are you sure you want to do articleship?”.

Coming from a non-CA backgroud, that question was a bit difficult to understand in the beginning, but gradually as I explored the exotic world of CAs, the things became clearer and clearer. So, without going into details, I would rather put the things in some perspective.

Articleship Scheme

The CA course requires that the CA student work as an Articled Clerk under a practicing CA, or if s/he is already working in some CA firm for over a year, then s/he can enrol as an Audit Clerk, and the duration in this case is four years. Needless to say, no one enrols as an Audit Clerk, and everyone goes for Articleship. In one of newspaper article I recently read, as it said, – the Audit Clerk was obsolete. So, needless to say, those who clear the inter/ pe2, and want to pursue the CA course to the full, enrol for articleship.

Is CA cheap? The Stipend

For articleship, the institute prescribes a certain amount as stipend for the first, second and third year of articleship. Though it never says that such stipend is fixed or it is a minimum base, most of the CAs would prefer to hire the articles at the stipend stipulated by the institute. One can see it in many ways.

The CAs would prefer to see it as a cheap source of semi-trained manpower. The institute perhaps sees it as an opportunity that is being given to the student to gain practical training and also get some pocket money. From the students point of view, it is nothing less than cheap labour, as one is doing all the things and getting notional payback. Another way to look at it is that the CA course is quite cheap compared to other courses like MBA. However when one becomes CA, the payback becomes quite good. So in some way the money / labour that one expends that in a way subsidize the firms, despite of the notional stipend, goes to add to the cost of CA course. That way it makes the CA course equally expensive as the other professional courses.

Only a handful of audit firms pay proper stipend, that may range from Rs. five thousand to over ten thousand, depending on ones location and the firm. If one is doing articleship in one of the audit firms linked to the big four consultancies, then one can hope to get good stipend. Some bigger audit firms not having links to the big four also pay good stipend. During industrial training, if one gets into some big company then one can get a good stipend that might be at par of remuneration, and may not really rank as stipend.

Update Sept 2010: The official minimum stipend is to be doubled by ICAI.

Dummy Articleship

Coming to the main question, many of the CA students would prefer to enrol in articleship only in name, without actually doing the articleship – ie. as the street name goes – they prefer to do dummy articleship. There are various reasons why a student might want to indulge in such malpractice. I knew a guy, whose brother after clearing inter, was working in some metro, while doing dummyship being registered with some rural chartered accountant. Not just that, even I was told by a well established Chartered Accountant, that I could enrol as an article with him, while I might work with some organisation, provided I did not sign any report there! As he said – “I will not have any problem, as I could easily get out of that, but if you get caught, you would be in deep trouble”!

One should remember quite clearly that articleship entails cost in various ways, and also entails lots of time doing outstation audit and related works. This leads to tremendous paucity of time for studies. Most of the student therefore find the easy way out. Apart from the pressure of the peer group, when ones friends are earning well, and one is earning pittance as an article, there are individuals who might think in terms of dummyship.

Control Mechanism

It seems that the institute does not have any control mechanism to check such practices. However, if such thing is found out later, even the registration may get cancelled. (In 2010, ICAI derecognised the training period of certain articles that it found were dummy) So beware before one even thinks of indulging in such malpractices. However, if the student indulges in such practices, it is the students who are the loser. Those students who indulge in such practices, even after doing CA in the end are left with just another degree and the always looming threat of cancellation of registration. CA is about the professional exposure and experience that one gains during articleship. Without that the CA is just another degree.

So, invariably my answer to “Are you sure you want to do articleship?” was always a resounding Yes!

All the experiences mentioned result from my meeting people/ CAs at Asansol, Kolkata and Jabalpur. Below I write compilation of some of the additional information / experiences in my search for articleship –

Notes for serious aspirants

1. The big four…

The big four are the consultancy firms that have worldwide presence and have the highest revenue from fees based consultancies. These includes KPMG, E&Y (Ernst & Young), Delloitt, and PwC (Price Waterhouse Coopers). Technically these are consultancy firms and therefore one cannot do articleship in these. However one can do articleship in the audit firms that are linked to these firms. These audit firms include: for KPMG: BSR & Co (previously Bharat S Raut & Co) etc; for E&Y : SR Batliboi & Co, for Delloitt: AF Ferguson & Co, C.C.Chokshi & Co., Fraser & Ross, P. C. Hansotia & Co. and S.B.Billimoria & Co; and for PwC: Price Waterhouse, and Lovelock & Lewis. Here one must remember that while the consultancies are private limited companies, the audit firms are partnerships. This is because that unlike any other company, the auditors doing statutory audits cannot have limited liabilities. The stipend in Big 4 firms for first year can range from 4000 to 6000+ depending on the firm and the city. This would go upto 8000 to 10000+ in the final year of articleship (2008). The good thing is one gets good exposure to work methods of Big Companies (most of which are listed companies). The flip side is one should be ready to travel and do onsite audit – someone working on audit would be doing say 15 to 20+ days of travel a month on average. Even otherwise, the work schedule can be hectic and there can be problems in taking leave.

2. Other bigger Indian firms…

While the audit firms that are linked to the big four are the biggest audit firms in India, there are many other big sized professional CA firms firms, some of them have foreign link up as well. These includes Lodha & Co (link with BDO), KS Aiyar & Co (linked with Baker Tilly), RSM & Co, Ajay Sethi & Associates (ASA), Haribhakti etc. Many of these firms also have their own consultany companies or consultancies linked with some international brand. These firms may also have overseas works related to internal audit and consultancy. Of course, there may be many additions to this list – from different parts of the country. However, the question that one should always ask is whether the firm is being run professionally or like any business shop! For example, at one of the mid size CA firms that I went to and met its managing partner; while the elderly gentleman definitely seemed to have made a big business through audit and tax consultancy – as he told me – “come, work here for two three weeks, and then decide whether you would like to do articlship here, we can always get your form submitted back dated”!. While the offer seemed quite innocuous, as if putting the ball in my court – I only thanked him for his offer and never again went there, as I believe that a CA should be professional in his conduct under whom one is offering oneself for training.

3. Why is that the information on these so limited…

The Chartered Accountants and their firms are prohibited by law to advertise themselves. Whatever publicity occurs, it is often by word of mouth due to reputation that one has in the line or if some of them are active in the seminar circuits. The CAs cannot also put their firm names when they are authoring any book or publishing any article having wide circulation. There are even rules for CA firms putting up their firm websites. All these adds up to the situation where the aspiring CAs are left with little information regarding the field of CA except for what is published by the institute. CAs who are auditors are ‘backroom boys’ and do not get the limelight that the entrepreneur or a CA in employment as a CFO might get. Adding to the paucity of information, even some of the big four audit firms may not have a website!

4. Is big beautiful…

It depends on you. Big can be beautiful or ugly depending on ones preferences. If you are entrepreneur like, and do not like the corporate culture and aim to open your own firm, then a middle size firm for articleship should do good for you. Small sized firms or new firms dont have enough work available for the exposure that is needed to do articleship. Many of the new firms or smaller firms do the work of other bigger firms that they get on sub contract from the bigger firms. Apart from this, there is also the variety of work that is important. I met an HR executive of a big Four firm, and wanted to know about the variety of works for articleship purpose, and looking at my qualification, the HR executive was a bit amazed, saying that I was overqualified and there was no problem for my articleship; however the executive, somewhat disdainfully added – “…the articles do only statutory audit, and hardly would an articled trainee be put on any other assignment!” In contrast, in a well known (top ten) big firm (where I had been selected after interview – though later I did not join it), I was told, that since I had an MBA, I would be engaged in management consultancy works as well – apart from the statutory and internal audits.

5. Stipend

ICAI prescribes a minimum amount as stipend per month. For first year it ranges from Rs. 500 to 1000 per month, and with prescribed annual increment of Rs. 250 reaching upto Rs. 1000 to 1500 per month in final year of articleship. (Update Sept 2010: The official minimum stipend is to be doubled by ICAI.) It is strange, that on one side, ICAI as per deed of articles considers the article to be full time employee – but for stipend purpose, one is still a student! This stipend is less than even the minimum wages (and I have read somewhere that at one time ICAI even shot down government proposal for implementing Minimum Wage Act for its articles saying that Govt was interfering with the Autonomous Regulatory Body)! Most of the small and medium CA Firms would prefer to pay their trainees at these minimum rates only – some may add a few hundred more to bring in parity between their other employees and the articles. Though, in Metros and Mini Metros, one may expect a ‘bit’ more. Only the Big Four and the very few other big firms pay reasonable stipend.

Details on Stipend during Leave

6. The process of inducting articles…

The standard process is the interview. I have not heard of any written test taken by any firm. But no one is barred from that. Usually one needs to apply to the firm, and appear in the interview. Some bigger firms may also take two interviews – one the standard interview and the second the partner level interview. In the end, one is doing articleship not under the firm, but under a CA. If you have been associated with the firm, or know the CA, you may not even need to appear for the formal interview. In one of the firm (top ten), that I contacted, the first level interview was taken by one of the partner, and the second level interview was taken by the managing partner heading eastern region – and the questions ranged from accounting entries, to audit issues like company audit, to risk analysis, among others.

7. Articleship, hard work and time…

Yes, articleship entails hard work. As regards time, though the institute prescribes certain norms (working hours, holidays etc), no firm really adheres to such stipulations, and the articled trainee would have to follow the rules of the firm (and if he is unlucky, the whims of the partner) in this regard. If one has to do works relating to statutory audits and internal audits, then one may need to travel to distant places – it can be city where the offices of the company is situated or even a factory site in remote places.

Areas of Articleship Training

8. The best place…

CAs deal mostly with audit of financial transactions and taxation matters. Wherever there are large amount of financial transactions, the audit work would be required. In India, the best place perhaps is Mumbai, which is considered the financial capital of the country. Then there are the four – five metro cities where the bigger firms are concentrated. This is also because the head offices and decision making centers of the companies are also situated in these metro cities. Next to metros, there are also some other cities that are financially important like Kanpur, Indore, Coimbator etc. Place of articleship is perhaps less important compared to the nature of exposure to work that one is getting and also the variety of work that one gets to do. Moreover, as regards audit work – whether statutory or internal audits, the articled trainee may have to travel to distant places. Such outstation tours may be for a month or even more. These places can be remote areas where factories or mines or any such manufacturing establishments are located.

9. Does one get stuck…Transfer Rules

No. The articled trainee can change his principal (with mutual agreement) under whom s/he is undergoing training. However one should give at least a six month shot (perhaps at least a year), before thinking of changing bosses. It goes without saying, that unless there is something terribly wrong, or the newer opportunity are too alluring, or there are compelling situations, one should not change. Usually the longer one stays, one gets better assignments, more responsibilities and gets more involved in the work of the firm. In such decision of change, the institute plays no role. The articleship deed is exclusively between the articled trainee and the CA.

[Update: From April 2009, ICAI has made provisions of transfer very difficult. It has prescribed few specific circumstances / conditions and only on fulfilling that the Article is permitted to take transfer.]

[Another Update: In July 2010, ICAI announced that transfer of articleship would be available without restrictions in the first year of articleship. The updated transfer rules can be downloaded from the webpage footer ICAI files for students links.]

Details of Transfer Procedure

10. Articleship Under Whom ?

A student can take up articleship under a CA in Practice (ie. holding Certificate of Practice: CoP for short) or under a Qualified CA who is in employment under a CA holding CoP. ICAI places restrictions on number of articles that a CA can take under him based on (a) Number of years of holding CoP, and (b) If qualified CA in service under a CA in practice – then size of organisation.

For a CA holding CoP

For a Qualified CA in service under a CA holding CoP / or in service in a Firm of Chartered Accountants

Generally, students do articleship under a CA in practice (Proprietor or Partner of Firm). However, provision relating to training under CA employee applies in case of Big CA firms where the partners may not have enough time to devote to training.

(Here it is pertinent to note that it is only the Proprietor / Partner of a CA Firm who are eligible to sign audit reports under various statutes. CA in employment cannot sign such audit reports)

11. Industrial Training

Industrial Training can be done in the last year of articleship training. Only students of CA Final are eligible for Industrial training. This training can range from not less than nine months to not more than one year. Such training gives good exposure to the article to the working of the organization. Usually the CAs who have done industrial training are preferred by employers – as they have exposure to the working of particular sector. Good Industrial training opportunities are always there – eg. Industrial Training by NHPC. However such vacancies are not advertised widely. ICAI has a publicly accessible list of companies that is registered with it to provide industrial training. Industrial Training can also be done abroad. More details relating to industrial training in this comment

Also, one can do industrial training from Big4. In such case one does the industrial training from the Private Ltd Company that does the Consultancy works – and these are eligible under the ICAI rules to provide for industrial training.

Details of Industrial Training as per ICAI FAQ:

23. What is the maximum and minimum period of industrial training?

A student of Final Course can undergo industrial training for a maximum period of one year and minimum period of 9 months, i.e. the period may range between 9 months and 1 year.

24. Who is eligible to provide industrial training to an articled assistant and which are the required forms to be filled up?

An articled assistant can take industrial training under a member of the Institute. An associate who has been a member for a continuous period of at least 3 years shall be entitled to train one industrial trainee at a time and a Fellow member shall be entitled to train two industrial trainees at a time. There should be an agreement of industrial training in Form No.104 which will be submitted to the concerned decentralised office within 30 days of the commencement of training. On satisfactory completion of industrial training by an articled / audit assistant, the Associate / Fellow member under whom the industrial training is received shall issue a certificate in Form No.105 in respect of the training undergone and to be submitted to the concerned decentralised office within 30 days of the completion of training. It is required to maintain details of work undertaken and training received in the prescribed format.

25. Whether a student can join any financial, commercial, industrial undertakings of his choice?

Yes, but such an organization must be duly approved by the Institute of Chartered Accountants of India.

26. Which industrial undertaking is eligible for providing industrial training and where such an organization can apply?

Any financial, commercial, industrial undertakings with minimum fixed assets of Rs.1 crore; or minimum total turnover or minimum paid–up share capital or such other institutions or organization as may be approved by the Council. Such organizations may apply alongwith copies of Annual Report, balance sheets etc. to the decentralized Regional Office depending upon the jurisdiction of the Office. After scrutiny of relevant documents, the regional head may approve the name of such an organization to be included in the list of industries being maintained by the decentralized regional offices.

12. Articleship Abroad

As per April 2008 issue of the CA Journal, the ICAI Council has approved guidelines for permitting students to do their articleship outside India. This can be done in the overseas centers of ICAI. As per the new guidelines, a student may get himself or herself registered with a member of the Institute settled abroad and who is in full time practice there, provided such member has a professional address in India. The rules relating to working hours etc. would remain the same and the training would be regulated under same rules as are applicable to articleship training in India. This means that the full period of articleship can be done abroad. Also full prescribed period of Industrial Training can be done abroad – if one wishes to undergo such training.

Similar provisions for Secondment and Industrial Training would also be available to articled assistants abroad. Members working as Qualified/Paid Assistants in firms of Chartered Accountants would be eligible to train one articled assistant, on the same lines as in India.

The overseas centers of ICAI are situated at: Abu Dhabi, Bahrain, Doha (Qatar), Dubai, Jeddah, Riyadh (Saudi Arabia), Kuwait, Muscat (Oman), Lusaka (Zambia), Botswana, Nairobi (Kenya), Lagos (Nigeria), Port Moresby (Papua New Guinea), Jakarta (Indonesia), London (UK), Toronto (Canada), Melbourne and Sydney (Australia), New York (USA). Apart from this the CA course can also be pursued from one residing in SAARC countries.

The latest updated (Nov 2010) guidelines relating to articleship abroad is at http://www.icai.org/new_post.html?post_id=6610&c_id=219

13. CA: One Course but Many Differentials

Eventhough CA is having one syllabus for all – it is articleship that sets the criteria of evaluation. If you are in metro and did training under Big4/Other Big Firms – your competencies would be much different than articleship in a smaller city. The simple reason is – in Bigger Firms one gets to do audit of listed companies and exposure to different aspects of finance. However, those students who have done training in smaller cities after qualifying may join sectors / functions where they get domain / functional expertise – then their initial handicaps get evened out. So if its service one is aiming at, then articleship matters a lot – more than if one is aiming practice. At Practice, one is sort of an entrepreneur – and the skill set required are pretty different than that of service. All these despite the fact that the theoretical knowledge base remains the same for all students.

14) CA without Graduation?

CA is a Statutory Charter and also a Post Graduate degree that legally entitles one to do even PhD from different universities of India. Previously there was requirement of having university degree. However from the time of PCE and IPCE there is no need to have any graduation degree of any university to become CA. More details on CA without graduation degree.

Please Suggest Firm to do Articleship

Simple answer is that there is no yardstick to measure suitability of firm. All firms are good – it is a question of adjusting oneself to the firm. However, as a general rule, one should firstly explore a few firms by meeting the proprietor / partner and checking out the office. The things to see are:

1) Temperament and Reputation of the CA under whom one wishes to do articleship
2) Timing of Office – whether the time is adhered to – or how often one has to work late
3) Distance of Office of Firm from residence
4) Whether the Office has adequate infrastructure like Computers, proper sitting arrangements for Articles etc.
5) Stipend offered
6) Whether there is rotation of work ie. exposure is given to audit, tax, company law, consultancy etc areas or the Article is engaged only in one field.
7) How often one has to go for outstation audits
8 ) Whether one is given allowance/Out of Pocket Expenses for outstation audits
9) Whether the CA runs any side business and engages articles in works of that business (Principals should not engage Articles in such manner)
10) Whether one would get adequate leave for appearing in Exams
11) Whether Articles are allowed to attend Seminars / Conference held by ICAI from time to time
12) If there is valid reason, whether the CA would agree for transfer

One may not find answers to all these question – however as a general rule, one should undertake articleship under a CA who is also a ‘good person’. Often such things can be found from friends who are doing Articleship or from Coaching classes or from employees who are working in that firm. Big firms have standard way of working, and there may not be much to expect with regard to flexibility. In very big firms, one may not even meet his Principal on regular basis, but only be working under the Officer in charge of training. Generally diverse exposure is found in a mid-size firm. By mid-size firm is meant a firm with three to five partners, and the firm itself being around ten years old. Smaller firms may not have adequate work to keep its Articles engaged.

Also, as most of the Articles are going to have first time experience of ‘office’, the experience can seem to be pretty frustrating in the initial few weeks. Often there is a clear divide between aspiration and the actual practical situation – often this is a major reason of frustration. The real thing is that the work of CA is not ‘exciting’ but ‘mundane’ and ‘tedious’ (some may even term it ‘boring’), so if any Article Trainee comes for articleship for ‘thrill’ and ‘glamorous work’ – then they are for a big shock. In fact, articleship work often entails long hours of sitting and checking, and making sense from number and papers – the same may even be automated in organisations – but in such case – one would be spending hours and hours in front of computer checking numbers and figures, reconciling items, working with tally and (long) excel sheets. So articleship is ‘real’ ‘hard’ work.

But a List is Still Required…

Then read: CA Articleship: How to Search for Firms for Training

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5. Articleship Training: The Areas of Training