ICAI asks Big Four audit firms not to buy out Indian cos

Vivek (CA ) (2368 Points)

07 February 2011  


ICAI asks Big Four audit firms not to buy out Indian cos

NEW DELHI: Amid concerns of alleged 'surrogate practices' of 'Big Four' accounting firms,regulator ICAI has asked PriceWaterhouseCoopers, KPMG , Ernst & Young and Deloitte to desist from acquiring Indian audit outfits.

"Worldwide, there is a talk that there should be decongestion of the accounting profession...So that's what we have suggested them (Big Four)... instead of acquiring firms please provide work to small and medium practitioners and go in for quality control," ICAI President Amarjit Chopra said.

Chopra made these comments days before the regulator is set to submit its third report on the Satyam scam to the Ministry of Corporate Affairs. This report pertains to the alleged 'surrogate practice' of the global auditing firms in India.

Chopra, who is about to demit office on February 11, recently met representatives of the Big Four.

"We advised them that rather than acquisition of Indian firms, go in for hand holding. It means they identify firms in each region and do the quality control," he said.

Foreign accounting firms are not allowed to practice accounting in India, as Foreign Direct Investment (FDI) in accounting, auditing and book keeping, taxation and legal services is not permitted.

However, the foreign firms are known for establishing presence in India through local partners firms, lending them their names through non-transparent arrangements.

These accounting and consultancy firms have been under public eye after the Rs. 14,000-crore accounting fraud at Satyam Computer Services came to light in January 2009.

Two of the partners of Price Waterhouse, Bangalore, were allegedly found negligent in auditing of Satyam.