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.