The Ministry of Corporate Affairs clarified in the Lok Sabha that multinational companies are prohibited from conducting surrogate audit work in India. This is governed by Section 25 of the Chartered Accountants Act, 1949, and Section 141 of the Companies Act, 2013, which state that no company, whether domestic or foreign, is permitted to practice as chartered accountants or perform audit work in the country.
The government reported that no cases involving multinational companies conducting surrogate audits in India have been brought to its attention. As such, no actions have been taken against any such companies in this regard.
Regarding the participation of foreign companies in audit work, the Ministry emphasized that the existing legal framework restricts their involvement in statutory audits. Consequently, the government has not conducted any recent reviews of foreign companies engaging in audit activities in India, as the scenario does not arise under current regulations.
This statement reaffirms the government’s commitment to ensuring compliance with Indian laws and maintaining the integrity of the auditing profession within the country.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 1063
ANSWERED ON MONDAY, DECEMBER 2, 2024
AGRAHAYANA 11, 1946 (SAKA)
SURROGATE AUDIT WORK BY MULTINATIONAL COMPANIES
QUESTION
1063. SHRI ESWARASAMY K:
Will the Minister of CORPORATE AFFAIRS be pleased to state:
(a) whether multinational companies are doing surrogate audit work in the country;
(b) if so, the details thereof along with the cases that came to the notice of Government;
(c) the action taken on such companies;
(d) the details of foreign companies allowed to do the audit work in the country;
(e) whether the Government has reviewed their working recently; and
(f) if so, the details thereof and if not, the reasons therefor?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS AND MINISTER OF STATE IN THE MINISTRY OF ROAD, TRANSPORT AND HIGHWAYS
[SHRI HARSH MALHOTRA]
(a) to (d):- As per Section 25 of the Chartered Accountants Act, 1949, and Section 141 of the Companies Act, 2013, no Company, whether incorporated in India or elsewhere shall practice as Chartered Accountants or do audit work in India.
(e)& (f): Does not arise.
