How Underpriced Audits Weaken Anti-Corruption Controls

Summary: Audits are a quiet but essential safeguard for bank deposits, investments, provident funds, companies and cooperative societies. However, the effectiveness of this safeguard is being weakened by declining real audit fees, market concentration and inadequate time for completing complex assignments. Between FY2018 and FY2023, the market value of Nifty 500 companies reportedly increased by about 92%, while their audit fees rose by only 28%. At the same time, six large audit networks handle around two-thirds of Nifty 500 companies, concentrating both influence and systemic risk. The problem is even sharper in cooperative societies, rural branches and local bodies, where auditors may have only a few days to examine cash-heavy, paper-based records. Professional restrictions also affect smaller practitioners: chartered accountants are generally restricted from undertaking business activities without ICAI permission, while the revised tax-audit ceiling treats assignments of widely different sizes as one audit each. Strengthening audit as an anti-corruption mechanism requires disclosure of the actual time available for an audit, scrutiny of abnormally low fees, development of capable mid-sized firms, risk- and complexity-based audit ceilings, and fair remuneration and timelines for rural and cooperative audits. Higher fees alone cannot guarantee quality, but persistent underpricing, rushed work, market concentration and conflicted incentives can collectively weaken independence and reduce the depth of scrutiny.

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The Underpriced Watchman

Why fixing audit is one of the simplest ways to fight corruption — from an auditor’s chair

Your salary lands in a bank. Your savings sit in a fixed deposit, a mutual fund, maybe a cooperative society your family has trusted for years. Your provident fund is invested in companies you have never heard of. The company you work for reports its numbers every year, and your job depends on those numbers being true.

Every one of these places is checked, once a year, by someone you will never meet. The auditor.

That one check is the reason a bank can lend, an investor can invest, a tax officer can trust a return, and a regulator can sleep at night. It is the quietest guard your money has.

When we talk about fighting corruption, we think of the loud tools — investigation agencies, vigilance bodies, raids, chargesheets. All of them act after the money has already gone. The audit is the one tool that works before. It runs every year, in every company, as routine.

And we have slowly weakened it. Not through any scandal, but through three things: price, concentration, and time. Each one is a number.

The Price Keeps Falling Below the Value It Protects

Between FY2018 and FY2023, the market value of India’s Nifty 500 companies rose by about 92%, according to PRIME Database. The fees paid to audit them rose by only 28%.

The thing being checked nearly doubled. The fee for checking it barely moved.

India is now one of the lowest audit-fee markets in the world. Over a similar period, audit fees for large UK companies rose about 75%. In India, just 28%.

Put simply: you get more assurance on a ₹5 lakh car — insurance, warranty, a service record — than the market often gets on accounts a thousand times bigger.

A Cheap Audit Is Not a Billing Problem—It Is a Corruption Problem

Two things push the fee down, and both weaken the check.

First, the lowest bid wins. When an audit is bought like any other commodity, the winning quote is often the one that promises the least work — fewer hours, lighter checking, fewer hard questions. Inspections by the National Financial Reporting Authority (NFRA) of India’s biggest audit firms have repeatedly found gaps in independence, in the checking of related-party deals, and in taking on non-audit work for the same clients. In its inspection reports released in March 2026, NFRA raised concerns about the independence of six partners at one Big 4 affiliate, and asked another to tighten its rules on accepting non-audit work from companies it had recently audited. And many have long argued that a fee set too low is, by itself, a warning sign for quality and independence.

Second, the auditor is paid by the very company they are meant to check — and needs that company to reappoint them. The pressure not to rock the boat is not about weak character. It is built into the system. When an audit is bought as cheaply as possible, what is often really bought is the look of a check, not a real one.

A properly paid, properly staffed audit is not a cost. It is prevention. Every rupee cut from it is a rupee taken from the first line of defence.

To be clear, paying auditors more will not, by itself, end corruption. A higher fee alone does not make a better audit. But underpricing, too little time, concentration, and conflicted incentives, taken together, weaken the audit as a control — and that is the argument here.

Where the Risk Is Biggest, the Choice Is Smallest

Now look at concentration.

Six firms — the Big 4 plus Grant Thornton and BDO, working through their Indian arms — audit about 330 of the Nifty 500 companies. That is two out of every three, per PRIME Database. By market value, these six cover about 61% of the whole listed market.

Now look lower down. Across all of India’s 2,400-plus listed companies, the same six firms hold only about a third of the work. So the big firms are packed at the top, there is a thin middle, and a long tail of small firms at the bottom.

This matters because the biggest failures happen where the biggest numbers are — at large companies, not small ones. So influence and risk gather in the same few hands.

There is one more layer. The same firms that audit these giants often also sell them tax, advisory and consulting work — and that non-audit fee can be as large as the audit fee itself. The checker and the paid adviser wear the same badge. This does not make the work bad. It means independence is tested hardest exactly where the stakes are highest.

Where the Money Is Messiest, the Check Is Thinnest

Now move away from the big listed companies, to where a lot of India’s cash economy still sits — cooperative societies, rural bank branches, local bodies.

Somewhere in rural India, an auditor is checking a full year of cash entries in a place where UPI still doesn’t work, because there is no mobile signal. No digital trail. No instant matching. Every entry checked by hand, on paper, on the spot.

Now add how the work is handed out. One firm may be given hundreds of these small, scattered audits, all to finish in a few months. At the branch, the time allowed on site is often under a week — sometimes far less — no matter how much cash has passed through. The deadline is fixed before anyone has opened a single ledger. The depth of checking is not set by the risk. It is set by the hours left after the work is divided.

And here is the strange part. A government official reviewing a department may be given years to do it — sometimes more than a decade — while the auditor of a cash-heavy branch is given days. The same act of checking is treated as endless in one place and urgent in another.

So we have built a system that pays the most, and gives the most time, where the numbers are cleanest — and pays the least, in the biggest hurry, where they are messiest and matter most to ordinary people. The audit that protects a member of a village cooperative deserves at least the time given to the one that protects a shareholder in a large company.

The Person Who Is Held Back

There is one more thing worth saying plainly, because it sits underneath all of this.

A chartered accountant in practice spends his working life advising others on how to build and run businesses. Yet the rules of the profession largely keep him from running one of his own — most business activity needs the Institute’s permission, and much of it is simply off-limits. It is worth asking why the framework asks a professional to guide entrepreneurs while holding him back from being one.

Add to that the ceiling on tax audits: sixty in a year, under ICAI’s revised limit. That ceiling counts every audit as one — whether it is a huge company or a ₹1 crore kirana store. Someone must audit the small store, and that fee will always be small. So the CA at the base does the work that has to be done, on fees that stay low, under a cap that treats a corner shop and a giant as the same. The base is asked to hold the system up — and quietly kept from growing.

An Auditor’s Prescription

If the audit is a tool against corruption, then making it stronger is anti-corruption work — and it costs the government almost nothing next to what leaks away. A few changes, from the simplest upward.

Show the Runway: Publish Two Dates

Make every company disclose two dates: when it handed over its final, locked accounts, and when the audit report was signed. Let everyone see how many days the check actually had. A nine-day audit and a ninety-day audit should not look the same from outside — today they do. This is the cheapest fix, and quietly the strongest.

Put a Floor Under the Fee

If a fee set too low is a warning sign, then audit committees should have to explain how they fixed the fee, and regulators should treat unusually low fees as something to look into — not ignore. An audit bought at the lowest bid is an audit bought to fail.

Widen the Middle

A market where all the risk sits with six firms is fragile. Building real capacity below the top — so that “capable” doesn’t only mean “one of six” — makes the whole system stronger and more independent.

Count the Ceiling by Size, Not by Number

A cap that treats a ₹1 crore store and a multi-thousand-crore company as the same “one audit” punishes the CA doing the small, hard, low-paid work. If the cap is about quality, it should follow the size and complexity of the audit — not treat a shop and a corporation as equal.

Give the Messiest Audits Fair Time and Fair Fees

The rural, cooperative and local-body audits, where the trail is hardest to follow, need proper timelines and proper pay. That is not a favour to auditors. It is protection for the people whose money is hardest to trace.

The Cheapest Anti-Corruption Spend There Is

We keep hunting for corruption in the places that make the news. The steadier defence has been sitting in plain sight all along — a routine second check, done every year, that the whole financial system leans on without noticing.

It is being underpaid, over-concentrated, and rushed. Not by any scandal, but by a hundred small decisions that each looked like a saving.

Strengthen this check, and you stop wrongdoing before it ever needs investigating. That is a bargain the country has, so far, chosen not to take.

This is not an auditor’s problem. It is yours. Every rupee you have saved, invested, or earned sits somewhere you cannot personally check. It rests on someone else having looked properly.

A country that runs on trust in numbers cannot keep buying that trust at the lowest price. The audit is the cheapest guard against corruption we have.

The views expressed in this article are entirely my own, written in my personal and individual capacity. They do not represent the views of any firm, client, institution, or professional body I am associated with. This is shared in good faith to add to a public discussion, and is not professional advice.

— CA Nikhil Tekariwal

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