In a relief to EY affiliate firms S.R. Batliboi & Co (SRBC) and others, the Delhi High Court has stayed the order of Institute of Chartered Accountants of India (ICAI) against the audit firms. The stay order has come a week after the ICAI’s disciplinary committee issued a report highlighting the violation of certain provisions of Chartered Accountants Act 1949 by SRBC and its network firms. The ICAI committee had also penalised a retired partner for professional misconduct.
Following the stay order, an SRBC spokesperson said that as an Indian audit firm, it has always respected the rules and applicable laws.
Meanwhile, ICAI has removed the order from its official website. The ICAI has thus far maintained that being part of a global network affects the independence of domestic affiliates and results in fee sharing with the international network which is against the Chartered Accountants Act 1949. As per ICAI, the Supreme Court, in its 2018 judgement on the matter, has found that the CA firms were trying to bypass the provisions of Section 25 and Section 29 of the CA Act.
In order to counter the growing dominance of Big Four, the ICAI is simultaneously working on the guidelines for the aggregation of domestic CA firms. It may be noted that the domestic affiliates of Big Four firms have obtained stay orders from different High Courts against the disciplinary action from ICAI.