Global auditing firms may come under greater scrutiny for any wrong-doing as regulators mull ways to make them more accountable, with the role of such auditors — especially the Big Four — coming under the lens in various corporate misdoings.

The move is expected to give a fillip to Indian audit firms and is designed to fill the gaps the big four have allegedly misused, a top regulatory official said.

Prime Minister Narendra Modi has also talked of the need for Indian audit firms growing to join the ranks of global giants.

PwC, Deloitte, Ernst and Young and KPMG are generally referred to as the Big Four.

A big area of concern pertains to the big guns seeking to wash of their hands whenever their names crop up in any accounting wrong-doing while their delaying tactics in the name of jurisdiction have also been noticed, the official said.

“They generally delay probe by appeals and jurisdiction related challenges at various forums and once there is a substantial time lapse, they tend to settle the probe by arguing the time-bar clauses,” he said asking not to be named without identifying the global audit companies as several cases are under probe.

While the existing legal framework provides for stringent provisions for auditing activities, there is no specific system in place when it comes to overseas audit firms.

There have been various instances where the role of global auditing firms, including PricewaterhouseCoopers (PwC), was in the regulatory crosshairs for alleged lapses.

Markets regulator SEBI has been probing the role of PwC for alleged negligence and lapses in a nearly decade-old corporate fraud case involving Satyam Computer Services.

“Besides stricter norms, the government has to play an important role and take measures to create such an environment in our country so that big business houses start engaging Indian CA firms,” chartered accountant (CA) Vijay Kumar Gupta, Central Council Member, ICAI, observed. He is of the view that in the recent past, the government machinery has become more active in this direction.

Audit quality

Gupta feels that Indian firms are much better in terms of audit quality as they depend more on personal analytical skills, physical involvement and updated knowledge of laws in practical terms rather than chiefly doing system-driven techno-based audit functions as done by the Big Four in India.

While discussions on having tighter regulations for foreign audit firms are going on, the Ministry is already examining the recommendations of the three-member expert panel on various issues related to audit firms amid concerns over certain practices of circumventing regulations.