In what may come as a blow for the Big Four auditing firms operating in India, the Institute of Chartered Accountants of India (ICAI) is seeking details of tie-up agreements that Indian chartered accountant firms have with international entities.
A high-powered committee of ICAI has decided to write to twelve Indian chartered accountants firms having affiliation with foreign entities, asking them to submit certain papers. These papers would include the contract with the multinational entity and terms and conditions for usage of name of the entity.
A statement issued by ICAI said, ?The firms will have to provide papers which include copy of the partnership deed, income tax assessment orders for the last three years, computation of income and copies of returns.? In addition to contract papers, the 12 identified CA firms will also have to submit details of money paid and received from foreign partners and copies of letterheads and visiting cards used by the employees. At present, the Big Four, have multiple Indian affiliates through which they carry out their accounting and auditing business in the country. BSR & Co carries out the accounting and auditing business for KPMG while Lovelock & Lewes, Dalal & Shah serve as affiliates for PwC. PwC also has its own auditing division Price Waterhouse & Co. Grant Thornton too has a local firm Walker Chandiok & Co as its Indian associate. Deloitte has its own auditing arm Deloitte Haskins & Sells. Ernst & Young has SR Batliboi & Co as its affiliates.
The Big Four issue got a different dimension when the biggest corporate fraud of India was detected and Price Waterhouse?s name was dragged in the scandal. After this, ICAI again got a chance to raise its voice when KPMG was appointed as the new auditor of the scam-tainted Satyam. ICAI said what cannot be done directly should not be done indirectly. As per a resolution under the World Trade Organisation, foreign firms cannot practice auditing and assurance services in India. The institute had constituted the high powered committee in January to look into the entire gamut of financial reporting, accounting and auditing aspects with regard to Satyam fiasco. According to the serious fraud investigation office(SFIO) report, the auditors of Price Waterhouse, an affiliate of global accounting firm PricewaterhouseCoopers who had audited the accounts of Satyam audited the accounts of Satyam were also involved in this scandal.
Uttam Prakash Agarwal, president of the institute, chairs the high power committee. Apart from Agarwal, the seven member committee includes the past president of ICAI, Ved Jain, OP Vaish, KR Maheshwari and the ICAI council members ? Shanti Lal Daga, Subodh Kumar Agrawal and Akshay Kumar Gupta.