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Professional services firm EY is bullish about the prospects of its financial accounting advisory services in India.
The international firm plans to substantially increase the headcount of its Financial Accounting Advisory Services (FAAS) team in India in the next few years, said Kenneth Marshall, a global assurance leader.
Considering the complexity and speed of the regulatory changes in India and other markets, the India FAAS headcount will be ramped up to 600 persons in the next 4-5 years, from 100 now, Marshall told BusinessLine .
He leads Ernst & Young LLP’s FAAS practice in the Americas and is also a member of the Global FAAS leadership team, EY.
Application intensity Although India has converged with International Financial Reporting Standards (IFRS), much would depend on the “rigour” with which these standards are applied in India, he said.
“As US investors gain confidence on what is coming out of India because of the change in accounting standards and SOX like requirements (Sarbanes-Oxley Act — internal financial controls), you will see more capital flowing into India through the US capital markets,” Marshall said in response to a query on whether he expects more Indian companies to be able to raise capital from the US on account of India’s move to converge with IFRS.
Some way to go Pankaj Chadha, FAAS leader for India, said a lot of learning is required on the part of Indian accountants. It will take at least a couple of years for India to come to the level of “gold standard” in terms of its own financial reporting, which will be unconditionally accepted by investors abroad, he said.
Marshall said this is “not going to happen overnight”, while adding that within BRICS, investor confidence is higher in India.
He underscored the need for the capital market regulator to supervise financial reporting (as the Securities and Exchange Commission does in the US).
“If you don’t have a capital market regulator supervising financial reporting, you will always have an interpretation that is very narrow compared with broader, consistent application,” he said.
In India, SEBI is not testing financial reporting, but looking more at audit quality.
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