Price Waterhouse Network of Firms in India (PW India), the Indian champions of accounting giant PwC, declared on Thursday it will no longer offer non-audit solutions to Indian audit customers regulated by the National Financial Reporting Authority. These are services like tax consulting and advisory.
“Given the significant role that auditing plays at the Indian market, everybody relying on audit ought to possess exactly the exact same high degree of assurance in auditor’s independence, objectivity and effectiveness,” said Subramanian Vivek, partner at Price Waterhouse.
Deciding if an auditor is independent under present laws, say experts, is tough as audit companies provide services across authorities as part of a common network. Because of this, the identical system may be supplying both audit and non-audit solutions to the exact same customer, which may result in a conflict of interest and also influence the sanctity of this audit exercise.
In some time when auditors are facing the warmth in high profile corporate frauds, some companies like Grant Thornton India decided last year to not take up non-audit work for listed firms supplied by them.
A recent consultation paper floated from the corporate affairs ministry known for hints about raising the listing of non-audit providers and amending existing legislation to boost independence and liability.
“…that the auditors could be enticed to remove specific audit processes to reduce expenses, take on riskier clients, acquiesce to administration’s requirements, or aggressively expand their riskier non-audit providers under the banner of a trustworthy audit company manufacturer, which might only raise the continued high rates of audit deficiencies,” the consultation paper stated.
In 2018, the Securities and Exchange Board of India (Sebi) barred PW India along with also a few different companies from auditing listed firms in the nation for a couple of years above their function at the Satyam case. The ban comes to an end this season.
Most audit companies operate as programs and also have a new licensing pact with the Big Four, which aren’t permitted to undertake audit action in India.
MCA’s 5 Significant worries
Self-interest: Reliance of auditor on commission from customer harms self-interest
Self-review: Auditing their particular work like other non-audit services can hit liberty
Advocacy: Acting as advocate on behalf of their Customer in resolving disputes with 3rd parties
Familiarity: Close connection with a customer could impact objectivity
Intimidation: A Customer’s bid to exercise undue impact on auditor
Source: MCA’s appointment paper