The Institute of Chartered Accountants of India (ICAI) has asked 12 domestic chartered accountant (CA) firms to provide details of their informal tie-ups with overseas auditing firms, the accounting regulator said in a statement.
The move is aimed at understanding the operational details of the Indian CA firms, which have entered into contracts with international accounting majors, such as PricewaterhouseCoopers (PwC), KPMG, Ernst & Young and Deloitte, an ICAI official said on condition of anonymity. The accounting regulator is taking precaution to avoid any Satyam kind of scam.
As per the initiative that was taken by a high powered committee of the institute chaired by its president Uttam Prakash Agarwal, ICAI has sought copies of contracts between the domestic audit firms and their multinational partners.
In addition to their contract papers, the 12 identified CA firms will also have to submit details of money paid and received from foreign partners and also show copies of letterheads and visiting cards used by their employees, the institute said in a release. ICAI, however, officially did not name the CA firms that have been sent the notices.
Regulations of World Trade Organisation (WTO) do not allow multi-national accounting firms to do audit work in India. For this reason, firms, such as KPMG, E&Y, PwC and Deloitte, have tied up with Indian CA firms. KPMG in India has an association with BSR & Co for doing financial audit of domestic companies, while SR Batliboi & Co has a similar tie-up with E&Y.