SC asks ICAI to file status report on action against errant MNC accounting comapnies

New Delhi, July 4: The Supreme Court on Monday asked the Institute of Chartered Accountants of India (ICAI), the regulatory body for chartered accountants in India, to file a status report as to what action it has taken against top foreign multinational accounting firms which, in the guise of providing management consultancy services, have expanded to other fields such as accounting, auditing, book-keeping and taxation. Such operations cannot be undertaken by non-Indian entities.

A bench headed by Justice Dipak Misra also sought response from the Centre on an appeal filed by Bengalurubased tax consultant S Sukumar, alleging violation by various accounting firms like Price water house Coopers, KPMG, Deloitte, Haskins & Sells, and Ernst and Young.

While lawyers representing the top firms denied any wrongdoing, counsel Prashant Bhushan alleged that some MNCs are providing auditing services in India through“surrogate companies ”, thus violating the Chartered Accountants Act.

The ICAI told the court that it has already initiated action against 170 entities in In di a.Su kumar has sought direction to the I CA I to probe the functioning of these Indian firms that have tie-ups with foreign firms for breach of Code of Professional Conduct prescribed in the Chartered Accountants Act, 1949.

Referring to the 2009 Sat yams cam, Bhushan pointedout that P wC has been found guilty of fabricating the accounts-of Satyam and the same firm is the auditor for Kingfisher Airlines. He demanded an inquiry into the firm’s alleged financial malpractices and fudging of accounts.

According to the PIL filed by CPIL, PwC and its network fir ms indulged in activities in breach of various statutes and policies.