News

Big Four audit firms barred from practising law, offering legal services

K.R. Srivats New Delhi | Updated on May 03, 2019 Published on May 03, 2019

Bar Council of Delhi acts on charges of surrogate law practice by auditing MNCs

Acting on charges of surrogate law practice, the Bar Council of Delhi has directed the Big Four global audit firms — KPMG, PwC, EY and Deloitte — to refrain from providing legal services with immediate effect until further orders.

The firms have also been asked to furnish a list of all the advocates who have been engaged by them, in any capacity, in any of their offices at any place.

These directions have been passed by the Delhi Bar Council following a complaint filed by Lalit Bhasin, President of the Society of Indian Law Firms, a representative body of over 100 law firms in the country. The matter will be heard next by the Bar Council of Delhi on July 12.

The Bar Council’s move is a step in the right direction, Bhasin told BusinessLine.

Legal violation

In 2015, he had complained to the Bar Council — the regulator for the legal profession — that the Big Four firms were resorting to “unauthorised practice of law” (providing legal services) in violation of the Advocates Act.

He had complained that these firms were employing law graduates and providing legal advice, besides drafting joint venture and other agreements for clients, without registering themselves with the Bar Council of India.

Bhasin’s main contention was that the Big Four audit firms were also engaged in law practice, which is not legally permissible in India.

There is no justification for accounting and audit firms to enter legal practice and offer non-litigation services, it was submitted.

Former CA Institute President Naveen ND Gupta had a different take on the issue and the Delhi Bar Council’s directions. “One needs to see whether the Bar Council has the power to pass such directions to CA firms. I feel this is an encroachment into ICAI’s (Institute of Chartered Accountants of India) jurisdiction. The Big Four multinational accountancy firms’ existence is governed by ICAI regulations and code...as such, why should a CA firm follow the Bar Council’s order? Such guidance should come from the ICAI Council,” Gupta told BusinessLine here on Friday.

ICAI to blame?

Aseem Chawla, Managing Partner at law firm ASC Legal, said the decision itself reflects the inability — and, somewhere, the lack of willingness — of the ICAI to regulate the activities of auditing MNCs. “It is time for the leadership of ICAI to realise that it has been ineffective in being able to discharge this solemn function,” he said.

 

Published on May 03, 2019
This article is closed for comments.
Please Email the Editor