A panel appointed by the central council of the Institute of Chartered Accountants of India has recommended that multinational accounting firms, including the Big Four, be prohibited from offering management consultancy services under their current names.
Ernst & Young, KPMG and PricewaterhouseCoopers will, therefore, be required to approach the Registrar of Companies with alternative names to remain in the business in India.
The group led by Jayant Gokhale, which submitted its report to the ICAI central council on Tuesday, said the accounting and auditing regulator should not allow companies offering management consultancy services to bear a name that is same or similar to that of an Indian or foreign accounting firm. E&Y and KPMG are global accounting firms that provide a wide range of services.
Acknowledging that the ICAI central council was not vested with jurisdiction over multinational accounting firms or corporate bodies, the study group suggested that the institute should make a representation to the department of company affairs on the adverse consequences of allowing the Big Four to retain their names for providing management consultancy services.
The department can then instruct the Registrar of Companies to prohibit the use of such names.
Global audit and consulting firms like KPMG, Deloitte and Touche, and Ernst & Young have local associates in Bharat S Raut, S B Billimoria and S R Batliboi, respectively.
While the local associates undertake audit work in India, the global partner provides management consulting, taxation, company law and various other services.
The group also said management consultants should not indulge in co-branding and attest functions directly or indirectly.
Attest functions include carrying out internal audits and other forms of special purpose audits like system reviews and operational audits.
According to the group, such functions should be exercised only by a practising chartered accountant.
The group said though it was desirable that the identity of an Indian chartered accountant firm and a multinational corporate entity be separated, it would not be practical to check the physical separation of their premises and infrastructure.
It has, therefore, said the members should avoid creation of a common identity with such entities. In India, several chartered accountant firms are affiliated to multinational corporate entities.
