Dear Members,
Please read the news in Business Standard at following link.
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The bill has been passed in the Lok Sabha and there is hectic activity in the capital's power corridors as lobbying picks up ahead of the tabling of the bill in Rajya Sabha. The Upper House is likely to take up the bill for passage in the upcoming Budget session. Statutory audit of top listed companies is dominated by top firms such as KPMG, PricewaterhouseCoopers, Deloitte and Ernst & Young and their affiliates. According to informal estimates, these enjoy a 55% market shares in the audit of listed companies business. One of these entities commonly known as 'Big Four' in audit circles has even written to the ministry saying that capping of number of firms will cause confusion as there are not enough qualified auditors to handle volumes. "They have also been talking to members of parliament, ministers and are expressing their concerns on this move," said an official closely associated with the matter. In a recent conference in Delhi on the companies bill, Price Waterhouse partner Harinderjit Singh also expressed his reservations against the move and its potential impact on quality of audits. "It is not a Big four vs Little four issue. The limited point that is being made is that private limited companies should be excluded from the calculation of 20 companies. The earlier law excluded private limited companies. If you include the private companies, then just putting an arithmetic limit won't work. Then there should be a financial limit," said N Venkatram, partner, Deloitte Haskins & Sells. However, auditors running smaller firms say the move will create more opportunities for chartered accountants and help them earn better fees. "Today, I pay Rs 3,000 for audit of my company. Once the supply gets restricted, price curve shifts upwards. It may become Rs 20,000," said a managing director of a small company. Another issue pointed out by Big four is the fact that several large companies have numerous subsidiaries. For example, if the 20 company rule is applied directly, then a firm may not be even able to cover more than one large company and its subsidiaries. "Say a company has 400 subsidiaries, why does the same audit firm have to audit all of them. 20 different small firms can do the audit for subsidiaries and the big firm can consolidate. I don't see any problem in this," said a managing director of a boutique consultancy. There is enough talent in India to cover the demand several times over. The auditors point out the data on Ministry of Corporate Affairs (MCA) annual report said that there are about 1.06 million companies registered in India. Of these, 705,699 companies were active. If the 20 company rule is applied, over 35000 auditors will be required. Supporters of the bill provisions point out that there are about 98,863 practicing chartered accountants, providing a coverage of 2.8 times to the bill requirements. "We are not talking about sole proprietorships, Do we have enough number of firms who can handle large audits. We may not have more than 300 such firms," Venkatram said. Amarjit Chopra, chartered accountant and former president of ICAI said the changes in company law are in the right direction, "Nowhere in the world there are rules which are against the local practitioners. It is unfortunate that whenever there is a foreign collaborator, they want one of the big four to be the auditor. Such clauses are restrictive." Chopra also points out that even some public financial institutions have started asking for a "Big four" auditor. "How will the local talent grow under such restrictive environment?" he asked. Pavan Kumar Vijay, managing director, Corporate Professionals said, "The new companies bill provisions provide a golden opportunity for Indian chartered accountants. They have to learn the art of building mega firms with specialists to provide different solutions." | ||||||||||||
I request all Central Council members to do all possible efforts to ensure this change.
Regards,
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CA.C.V.PAWARPATIL DAWARE GIRASE PAWAR & ASSOCIATES
CA.C.V.PAWARPATIL DAWARE GIRASE PAWAR & ASSOCIATES
CHARTERED ACCOUNTANTS
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INDIAN CA - NURTURED IN INDIA, GROOMED FOR THE WORLD
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INDIAN CA - NURTURED IN INDIA, GROOMED FOR THE WORLD
For latest Updates visit Blogspot : http://canews1.blogspot.in
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