Turning the table on the Big Four audit firms about their India plans, corporate affairs minister Salman Khurshid has asked them to spell out unambiguously if they intend to start full-fledged operations in India, and be fully accountable for their operations in the country if permits are given. Also, India would want full reciprocity–that is, permission for Indian accounting firms to carry out full-fledged operations, with the same level of freedom, in the Big Four’s home countries.
The minister told that these audit firms—KPMG, Deloitte Touche Tohmatsu, Ernst & Young and PricewaterhouseCoopers—haven’t stated clearly enough how they would roll out their operations in India.
“Have the Big Four actually pitched and said clearly that they want to come and establish full-fledged practice in India? They don’t actually say that. Their stand on the issue so far has been ambiguous,” the minister said.
Khurshid added that the foreign audit firms should also be willing to take full responsibility in the event that they are allowed to have full-fledged practice. “They say that we (foreign audit companies) have our partners here but we only have a `spiritual relationship’ with them so if something goes wrong then don’t ask us because we are not functioning here…yet allow us to function here vicariously,” said the minister.
“Reciprocity is also important. Will they allow our firms to function in their countries? Though they say Indian firms can practice but there are emigration issues which are not in our hands,” he added. According to the current regulations, a foreign audit firm cannot carry out full-time practice in India. They are mandated to tie-up with an Indian firm before they can be eligible to offer their services. “They are doing chamber practice in India. They are not signing balance sheets but giving work to others directly or indirectly,” Khurshid said.
President of the Institute of Chartered Accountants of India Amarjit Chopra echoed the minister’s views, stating that though foreign firms are very keen to carry out full-time practice in India they shy away from taking any responsibility. “Foreign audit firms are doing surrogate practice in India. They want to practice here but do not want to take any responsibility. That’s astonishing,” he said. Chopra added even ICAI would look at ways to tighten the auditing practice in India in the coming months.
It’s pleasant to have minister’s reaction on “Big Four Audit Firms” and their Surrogate Practice, their shying away from taking clear cut responsibility. I wish that he would be sincere & honest enough to express his opinion and to curb their unfair practices by all means and not a mare political gimmick.
ca gokul sureka
Managing Partner
G.K.Sureka & Co.
Chartered Accountants
Regd. Office: New Delhi
In this context, and w.r.t. the item under the heading “ICAI Report on Surrogate Practice and Opening of Multiple Firms Having Similar Names by Big 4” appearing above, it is really welcome that the Hon’ble Minister has finally taken up cudgels with the BIG FOUR despite the latitude being given for more than a decade to them even by the CAG and various Govt. agencies. The point of reciprocity, raised officially by the Govt. for the first time ever, is very crucial for the existence of the indigenous/native firms who are not recognised anywhere in the world-not even by the India arms od the foreign companies though they get registered as Indian companies under the Cos. Act. The other point raise by Mr. Chopra, the new President of the ICAI (also the first salvo to be fired by any President of the Institute), is equally important from not only from the angle of reciprocity-cum-level playing field for all players, but also-and, more importantly, from the point of SOVEREIGNTY of the Govt. of India. In fact, these issues should have been raised by the office of the CAG first and the ICAI. It is hoped that, now that a central minister has joined the issue with the BIG FOUR, the CAG and the former would take cognizance of the country’s national interest. The Hon’ble Minister and the new President of ICAI deserve thanks of a grateful nation.