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Statutory auditors may not get large companies’ non-audit operations
The government is exploring the possibility of joint audit for certain companies as part of the amendments to the Companies Act, for which a Bill is planned to be introduced during the Budget session of Parliament that reconvenes next month, sources told TOI.
The government is looking to ban statutory auditors from taking up non-audit work on “public interest” companies — which means those that are listed or are above a certain threshold — and their subsidiaries.
Besides, it is exploring the possibility of joint audit for certain companies as part of the amendments to the Companies Act, for which a Bill is planned to be introduced during the Budget session of Parliament that reconvenes next month, sources told TOI.
The ministry of corporate affairs (MCA), which will pilot the Bill, is currently engaged in consultations and is yet to decide the final details of the legislation, which will also need inter-ministerial discussion and a go-ahead from the Union Cabinet.
While both the issues — joint audit and ban on non-audit work by audit firms — have been discussed in the past, the government has been reluctant to legislate on the issue principally due to opposition from chartered accountants, a powerful interest group.
The move will come as a setback for not just the Big Four firms, including Deloitte, EY, KPMG and PricewaterhouseCoopers, that operate through a network of firms, but also for some of the large Indian players. Sources indicated that the plan is to restrict it to “public interest”: Companies will be modelled on the lines of the regime under the National Financial Reporting Agency (NFRA), which supervises the functioning of 6,820 companies and their auditors and audit firms.
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