In July 2017, Modi had said, "People talk of the Big 4 accounting firms. Sadly, there is no Indian firm there. By 2022, let us have a Big 8, where four firms are Indian."
Since long Indian auditors have been demanding a level-playing field for themselves against the Big 4 global audit firms. There have been accusations hurled by them against these multinational audit firms that they have circumvented the laws of the country to benefit their businesses for long. Still, a right ecosystem couldn’t ever be created for their growth. But, as the capital market regulator Sebi imposed a 2-year ban on the Price Waterhouse for its dubious role in Satyam Computer Services scam, hopes appear to rise once again for the Indian auditors. Even Prime Minister Narendra Modi had once called for the creation of four large Indian accounting companies by 2022. At the Foundation Day of the ICAI (Institute of Chartered Accountants in India) in July 2017, Modi had said, “People talk of the Big 4 accounting firms. Sadly, there is no Indian firm there. By 2022, let us have a Big 8, where four firms are Indian.” He was referring to Deloitte, PwC, E&Y, and KPMG – globally termed as the ‘Big 4.’
On Wednesday, the government came out with key changes in the FDI policy regarding the audit of Indian investee companies, which seek to provide more market opportunity to local audit firms, by partnering with the foreign firms. “It has been decided to provide in the FDI policy that wherever the foreign investor wishes to specify a particular auditor or audit firm having international network for the Indian investee company, then audit of such investee companies should be carried out as joint audit wherein one of the auditors should not be part of the same network,” the press statement said.
While there would be no direct impact, SEBI’s ruling may brighten business prospects of local chartered accountant firms. With Price Waterhouse getting banned for 2 years, scores of listed companies will soon have to scout for new auditors. A major player in the auditing space, Price Waterhouse has a total of 11 network firms and employs around 2,500 people in India.
These companies would soon be required to look for new auditors in the wake of the SEBI order even though the regulator has made it clear that the ruling would not impact audit assignments relating to the financial year 2017-18 undertaken by the Price Waterhouse network firms.