The ICAI's proposal to restrain foreign firms from joining hands with Indian auditing companies has brought some relief to local chartered accountants. They observe that this proposal will put an end to the monopoly of the big four (Ernst and Young, Pricewaterhouse, KPMG and Deloitte) which has been a matter of concern to them for over a decade now.
"Whenever a company grows and seeks foreign investment, they are forced to get their books audited by the big four. This compulsion is unwanted and needs to end," says a Hyderabad-based CA. This apart, city CAs feel that this move could also mean more business for local firms that have lost several clients to the big four over the years.
While they are glad that the Institute of Chartered Accountants has finally woken up to this issue, they feel this move was long overdue. "It took a Satyam for ICAI to get up and take notice of this nexus of the big four. Though in 2002 the body, in its journal, had called this a `circumvention of law in the land' it did nothing to address the matter," said M R Ventakesh, a Chennai-based CA adding that he fears that the proposal might not get regularized considering the big four's significant presence in the ICAI council.
While some, opposing the ICAI move, observe that the international brands have added great value to auditing standards in India, others rubbish this claim completely. They say that it is just the "brand image" of these firms that has helped them land lucrative contracts and not their quality. They argue that the workforce of all these firms is largely local and, therefore, the CAs working for them are as good or bad as the others practising with domestic auditing groups. "Sitting in a building with only a brand name cannot make you any superior or inferior than the rest. The quality of work done by a CA will remain the same irrespective of who the person is working for," adds Venkatesh who has been practising for over 18 years now.
Moreover, CAs observe that with all auditing firms across the country bound by uniform rules and standards set by ICAI, there cannot be much difference in the way these firms (with international tie-ups) work. "There might be some difference in their documentation, but that is all. The procedures followed everyone is much the same," says a city-based CA, pleading anonymity. He adds that the difference in documentation can in no way assure high quality auditing and that it is evident from the Global Trust Bank and the Satyam fiascos.
Not denying negligence on the auditors part in both these cases, G R Kumar, director with RSM Astute Consulting Pvt Ltd, says that it is the local CA population who will be the losers if ICAI's proposal is finally implemented. "The people who have done wrong should be brought to book but keeping away foreign firms from tying up with India companies is not the solution to this," says Kumar who believes that these brands have also helped in enhancing the standard of auditing of local CAs. He also adds that these firms only cater to a certain group of clients and are, therefore, no threat to domestic firms who complain of losing business to the big four.
However, dismissing this argument Ananta Padmanabhan Rao says that in his 25 years of practice he has seen clients switch over to these firms for brand image that his firm failed to provide.