Audit cos can’t have ‘one-size fits all’ approach: Injeti Srinivas

Amid persisting concerns that foreign audit companies might be circumventing the country’s legal provisions, he further said there has to be a method where network firms are also registered with the ICAI, which is the frontline regulator. “Today, ICAI is registering individual members but is not registering firms. So, there are gaps and those also need to be addressed,” he said.

The ICAI is the apex body of chartered accountants. Overseas audit entities operate in the country through network firms model. The corporate affairs ministry’s efforts to bolster regulatory framework for audit industry assumes significance against the backdrop of many auditing entities and auditors coming under the regulatory scanner in connection with various corporate misdoings in recent times.

Recently, the ministry came out with a consultation paper covering various aspects related to auditing practices and would be finalising its view after taking into consideration suggestions from stakeholders.

“The entire controversy with respect to Big Four or Big Six is that foreign companies are circumventing our legal provisions and giving audit services here. We have clearly taken a stand before the Supreme Court that there is no such issue at all.

“These are network firms and they are Indian LLPs (Limited Liability Partnerships). The partners are Indian partners, who are members of the ICAI. They are part of global networking arrangements for getting the advantage of quality standards etc...,” Srinivas said.

On the current domestic situation, he said “Audit industry’s structure is complex. We will not be able to implement a ‘one-size fits all’ approach. There has to be some nuanced approach. Else, it may not be equitable. We will look at it. One thing is clear. The potential of conflict of interest has to be addressed.”

Deloitte, PwC, EY and KPMG are referred to as the Big Four audit firms.