ICAI asks big four accountings not to buy out Indian firms
February, 08th 2011
Amid concerns of alleged surrogate practices of the big four accounting firms, Institute of Chartered Accountants of India (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 accounting profession. So thats what we have suggested them (the 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 give its third report on the Satyam scam to the Ministry of Corporate Affairs. The 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 the 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 PriceWaterhouse, Bangalore, were allegedly found negligent in auditing of Satyam.