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ICAI: Big 4 must not take over small audit cos
September, 14th 2010

Accounting regulator ICAI has asked the Big Four auditing and consulting firms KPMG, E&Y, Deloitte and PwC to share any information sought by various committees of the institute and has asked them not to engage in shopping for small firms.

There are a lot of issues in which the information is sought from various firms. But, though Indian firms are sharing the information, the Big Four have avoided doing the same. We understand the sensitive nature of a lot of the information sought. So, we have asked them to at least show us the documents and not necessarily submit them, ICAI president Amarjit Chopra told Media.

The Institute of Chartered Accountants of India (ICAI) had a meeting with the Big Four recently where it said though it does not want these firms to share very confidential information because of its sensitive nature, it has been conveyed in no uncertain terms that the information should be shown to the committees whenever called for, sources said.

The Big Four, it is learnt, have said they will cooperate with the institute in future.

The meeting assumes importance as a High Powered Committee of the ICAI, entrusted with the task of preparing a report on surrogate practices of auditing by multinational firms, has completed its report and it will be taken up by the ICAI in the next council meeting.

They are under the impression that we are after them. This is not the case, he said, adding that there was agreement on most of the issues and the institute has been assured that it will enjoy the cooperation of the big four.

Chopra, in the meeting, also said these firms are shopping for small but strong local auditing firms and this is not desirable. Let the Indian firms grow. You can do the hand holding but you should not be taking them over. That is not desirable. They (the Big Four) have agreed with us on this, he added.

Another issue taken up in the meeting was regarding the appointment of internal auditors. The president said wherever an audit committee has a member of these firms, he/she tries to pursue the interest of their respective parent firms while appointing internal auditors.

Whenever your (Big Four) people are on the audit committee, they try to push their people as internal auditors. So how can you check the veracity of their work and how can you monitor the work? You can have statutory auditors and people on the audit committee but for an objective audit, the internal auditor should not be from the same group... the entire logic of monitoring fails if he is from the same group, Chopra pointed.

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