The CA Institute will, on October 3, take a final call on the tricky issue of allowing foreign firms to directly offer accounting services in the Indian market.
The Corporate Affairs Ministry (MCA) had sought the CA Institute’s views on whether the government should legalise the entry of foreign firms into India for taking up accounting services.
“We (the Central council) are meeting on October 3 and most likely take a final view on that day itself,” M Devaraja Reddy, President, Institute of Chartered Accountants of India (ICAI) told
Reddy also said that the group (few central Council members) he had formed to look into this matter had submitted it's views. He however declined to go into the specifics.
The chartered accountant fraternity is divided on the aspect of allowing foreign accounting firms to directly offer their services in India.
Some point out that many foreign accounting firms have already been practising in India in a surrogate way, thanks to their networking with few Indian firms.
“What the Government is looking to do is basically legalise their entry on the pretext of expanding the scope of export of accountancy services from India,” a practising chartered accountant said.
All these years, there has been very little the government had done to enable home-grown CA firms to expand their wings abroad, it was pointed out.
As on date, no domestic CA firm can directly offer its services anywhere abroad.
The main concern for domestic CA firms is that entry of foreign accounting firms is going to upset the pricing for some of the services.
On the other hand, some feel this could be right opportunity for the CA Institute to ‘bite the foreign bullet’ and seek a better deal for its members in the global arena in the form of reciprocity, easing of visa restrictions, etc.
Size mattersGiven the significant flow of Foreign Direct Investment into India in recent years, it is but natural for the global investors to demand auditors whom they are more comfortable with.
But this is going to place the domestic firms at competitive disadvantage given that the CA Institute had all along placed restrictions on their growth.
The Indian audit firms have been operating in an environment of limits as regards the number of tax audits and statutory audits they could undertake.
Foreign investors are only comfortable with large sized firms of international repute and having existing working relationship in multiple markets.
It is also to be noted that most small domestic CA firms have not been able to benefit from the recent boom in start-ups, private equity and venture capital activity in the country in recent years.