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The Institute of Chartered Accountants in India (ICAI) has come down heavily on multinational audit firms in India. ICAI says audit firms are violating the law by using foreign brand names and the accounting regulator has asked for an MCA and RBI inquiry into their accounts, reports CNBC-TV18's Payaswini Upadhyay.
Last year, in the first post-Satyam report the ICAI has asked the ministry for powers to go after not just the audit firms, but also the auditors. The second report submitted now to the ministry last week will not bode well for all those audit firms who are functioning under the foreign brand names.
The institute has essentially made three key charges against multinational network accounting firms. Firstly, the firms are violating the Chartered Accountants Act by using foreign brand names. Secondly, many of these firms were originally meant to provide just management consultancy services but are now providing all kinds of services like accounting, taxation, audit and book keeping.
Despite ICAI's several requests, the firms have not furnished complete details regarding their contracts with the multinational audit firms. Though ICAI has not really mentioned any names per se in the report but they point in the direction of local firms working under the big four brands— Deloitte, EY, PWC and KPMG.
“If any firm is violating the Chartered Accountants Act under the guise of some other name, if the Chartered Accountants are involved in it, ICAI will take regulatory measures,” G Ramaswamy, president of ICAI said.
Further, he said, a joint working group can be constituted between government as well as ICAI, to bring out larger area of recommendation and implement through Chartered Accountants Act.
The report is likely to generate considerable debate amongst accounting fraternity and accentuate really the already sharp divide between Indian and foreign firms. (moneycontrol.com)
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