Multi­na­tional au­dit firm tag for Big 4 a mis­nomer: Panel

Business Standard - - FRONT PAGE - VEENA MANI

An ex­pert panel has noted that the “multi­na­tional” tag for the Big 4 au­dit­ing firms is a mis­nomer, since th­ese are In­dian firms. The com­mit­tee was formed dur­ing the hear­ing of a case on al­leged FDI vi­o­la­tions by PwC. VEENA MANI writes

An ex­pert com­mit­tee, formed af­ter direc­tions of the Supreme Court, has noted that the “multi­na­tional” tag for the Big 4 au­dit­ing firms is a mis­nomer, since th­ese are In­dian firms.

The com­mit­tee, formed dur­ing the hear­ing of a case on al­leged FDI vi­o­la­tions and mal­prac­tices by UK-based au­dit firm Price wa­ter house Coop­ers (PwC) and its as­so­ci­ated com­pa­nies, said an im­pres­sion has been cre­ated that the In­dian au­dit firms, which are af­fil­i­ated with in­ter­na­tional net­works, con­sti­tute Multi­na­tional Ac­count­ing Firms (MAFs).

How­ever, on closer scru­tiny, it turned out that th­ese In­dian au­dit firms are set up as part­ner­ships or Lim­ited Li­a­bil­ity Part­ner­ships (LLPs) un­der In­dian laws and their part­ners are mem­bers of the In­sti­tute of Char­tered Ac­coun­tants of In­dia (ICAI).

“As such, th­ese firms do not con­tra­vene pro­vi­sions of Char­tered Ac­coun­tants Act, 1949, which bar mem­bers of the coun­tries not al­low­ing In­di­ans to prac­tice ac­coun­tancy in their ju­ris­dic­tion to be­come char­tered ac­coun­tants in In­dia,” said the com­mit­tee, headed by Anurag Agar­wal, a joint sec­re­tary in the Min­istry of Cor­po­rate Af­fairs.

The panel said such In­dian au­dit firms can­not be equated with multi-na­tional cor­po­ra­tions. “Con­se­quently, the term MAF is a mis­nomer,” it said.

As far as al­le­ga­tions of vi­o­la­tion of FDI norms are con­cerned, should re­visit the cap on nonau­dit the com­mit­tee said it fees of au­di­tors who are is not a ques­tion of vi­o­la­tion mem­bers of the in­ter­na­tional or en­force­ment of FEMA per net­work. At present, the se since the firm has claimed restric­tion is that this fee can­not that the funds have been ex­ceed the au­dit fee. The re­ceived by it as grant and not com­mit­tee rec­om­mended that cap­i­tal. it should be capped at 50 per

It said only the home min­istry cent of the au­dit fee. can ver­ify the verac­ity of The com­mit­tee also wanted this claim of the au­dit firm. the gov­ern­ment to re­visit the

The com­mit­tee noted that list of non-au­dit ser­vices that such au­dit firms ad­mit­tedly au­di­tors are pro­hib­ited from fol­low var­i­ous in­ter­nal pro­cesses, un­der­tak­ing. The Sec­tion 144 poli­cies and method­ol­ogy of the Com­pa­nies Act pro­hibits adopted by their re­spec­tive the statu­tory au­di­tors from net­works in­ter­na­tion­ally. car­ry­ing out cer­tain ser­vices

This is aimed at main­tain­ing such as ac­count­ing and book con­sis­tent stan­dards in keep­ing, in­ter­nal au­dit, de­sign au­dit qual­ity glob­ally within a and im­ple­men­ta­tion of any net­work. While such net­works fi­nan­cial in­for­ma­tion sys­tem, bring bet­ter busi­ness op­por­tu­ni­ties ac­tu­ar­ial ser­vices, in­vest­ment in a global econ­omy, ad­vi­sory ser­vices, in­vest­ment they should be sub­ject to nec­es­sary bank­ing ser­vices, out­sourced checks and bal­ances, fi­nan­cial ser­vices. the panel noted. such, the panel rec­om­mended that the gov­ern­ment

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