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The CA Institute has set up a group to explore the feasibility of networking Indian audit firms with foreign firms, including non-audit services, said Nihar Jambusaria, President, Institute of Chartered Accountants of India (ICAI).
This group, which has been tasked to give its report within three months, willspecifically see whether Indian firms can provide non-audit services through networking with foreign firms even in countries where India does not have a mutual recognition agreement (MRA) for the professional qualification.
“In the Chartered Accountants Act, there is restriction that unless there is reciprocity.. this networking should not be done. This reciprocipity should be in form of MRA. So, very few countries qualify .This group will study whether in situations where there is no MRA, whether non audit services can be provided via networking with foreign firms,” Jambusaria told BusinessLine.
Changes to CA law
Based on the recommendations of this group, which is headed by Babu Abraham, Chairman of Professional Development Committee, the CA Institute will take a call on approaching the Corporate Affairs Ministry for necessary changes in regulations or the CA law.
Critics, however, see this move as a bit futile and late in the day, given that most Indian audit firms are yet to make a mark in the domestic market for non-audit services, which is already dominated by big four and international firms. To encourage pure-play Indian audit firms to leverage networking with foreign firms at this juncture to offer non-audit services in markets abroad is not going to be of much help, they said.
Meanwhile, the CA Institute plans to write again to the Reserve Bank of India (RBI) on the April 27 circular of the central bank as regards appointment of statutory auditors in public sector banks, urban cooperative banks and NBFCs.
Its earlier letter had, among other things, suggested that the RBI should take the responsibility of appointment of statutory auditors of public sector banks and not leave it to bank managements. This was, however, not acted upon, but ICAI will again request the RBI to consider this suggestion, said Jambusaria. Indications are that ICAI will write to the RBI once its July edition of examinations get over next month.
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