NEW DELHI: The Institute of Chartered Accountants of India is preparing guidelines for overseas networks, focusing on the consulting services offered by firms.
The aim is to establish a framework for homegrown firms to join a network and expand their global presence. The detailed norms will be discussed by the ICAI Council, the apex decision-making and rule-setting body, towards end of this month.
The institute, which regulates auditors, has already issued revised merger and demerger guidelines and those for the aggregation of limited liability partnership firms in the audit business. This is to enable them to partner with other firms and support their expansion.
However, the latest norms could become a point of contention with global audit and consulting firms, especially the Big Four, who oppose any such move as they currently operate in a regulatory vacuum. While foreign investment is not permitted, the Big Four, which includes ET, PwC, Deloitte, and KPMG, have several Indian firms that are part of their network and are used for providing audit services.
These global firms fear that the new guidelines will necessitate some form of registration, including for their overseas partners, and subject them to other norms such as a ban on advertising and sponsorships. The operation of networks controlled by overseas giants is an area on which ICAI has strong views and has argued over the years that there should be checks.
In contrast, there is hardly any large Indian firm that can operate on the scale of the Big Four. The govt and ICAI are keen to devise norms and a regulatory framework that allows large domestic firms to not only compete with foreign rivals but also establish a global presence.
Additionally, they want smaller firms, which have just one or two partners, to gain scale by offering services beyond their current city of operation. This can be achieved by allowing them to align or partner with other firms of their scale or those that are larger, thereby helping local businesses also utilise their services.
