Consultations underway at MCA for expansion of audit firms in India

The Ministry of Corporate Affairs has been engaging with officials from several audit firms over the past two months to streamline the process for the expansion of audit firms in the country, according to sources familiar with the matter.

These discussions have involved representatives from notable firms who have independently submitted their recommendations to the ministry. It includes some officials from the Indian affiliates of the renowned "Big Four".  

According to documents reviewed by Business Standard, audit firms have proposed adjustments to domestic networking guidelines, addressing concerns such as the preservation of legacy and accreditation.

They have advocated for permitting Indian chartered accountants (CAs) and firms to establish networks with global counterparts, and vice versa. Presently, no provision exists to facilitate such arrangements. Letters to the ministry have also underscored the importance of enabling multi-disciplinary partnerships (MDPs) between Chartered Accountants and professionals from other fields such as IT and law.

The ministry did not respond to Business Standard's questionnaire.

The government has been calling upon Indian CA firms to establish a domestic equivalent of the global Big Four, which comprises Deloitte, EY, KPMG, and PwC.

Earlier this week, at an Institute of Chartered Accountants of India (ICAI) event in Patna, Finance Minister Nirmala Sitharaman asked the institute to set up an Indian auditing firm that will grow to feature among the Big Four and seek global clients.

Kaushal Kishore, a partner with BSR & Co., LLP, Chartered Accountants, said that such discussions are "necessary and positive steps in the overall interest of the profession".

"It is great to see conversations on this subject aimed towards fulfilling the Prime Minister's vision," added Madhuri Shahapure, Partner, Walker Chandiok & Co LLP.

Kishore said that at present, the CA profession is highly fragmented with 73 per cent of all firms operating as proprietorships.

"Capacity building is an evolving and continuing process, and it takes significant time and efforts, besides investments," he added.

"Sizeable 'Indian Big4' firms can be achieved if there is a clear definition of the term and an enabling regulatory environment, that is supported by all regulators of the profession," said Shahapure.