Big four auditing firms are bending laws while providing auditing services in the country, said a committee of accounting and auditing regulator Institute of Chartered Accountants of India (ICAI).

PricewaterhouseCoopers, KPMG, Ernst & Young and Deloitte are using the permission granted for doing consultancy work but carrying out other services that they are not permitted to do, a high-powered body of the ICAI, which is probing the Satyam scam, said. The accused auditing firms operate in the country through domestic associates.

"It has been noticed that Multinational Accounting Firms (MAF), entered through automatic/FIPB route for rendering consultancy services, are transgressing the permission so granted and are rendering taxation services, auditing, accounting and book keeping services and legal services," said the committee, headed by former ICAI president Uttam Prakash Agarwal.

Price Waterhouse Bangalore, an affiliate of PricewaterhouseCoopers, had been the auditor of scam-tainted Satyam Computer. Indian firms and MAFs are defacto the same entities providing the assurance, management and related services and as such their operations are designed to circumvent the provisions of the Chartered Accountants Act, 1949, and regulations framed thereunder," the committee said.

India does not allow foreign direct investment in accounting, auditing and book keeping, taxation and legal services, the committee noted, adding that "no commitment so far has been made by India for opening of such services under the WTO/GATS (General Agreement on Trade in Services)".

Last year, ICAI sought details from 94 CA firms about their arrangement with the international accounting firms.