Deloitte stops non-audit services to clients in India
MUMBAI: The Indian affiliate of Deloitte Haskins and Sells on Sunday and its network firms within the country will not offer non-audit services to “public interest entities” said the auditor as they audit in India, three days after Price Waterhouse India made an identical announcement. This is believed to be able to improve the public’s confidence during auditor independence and quality and can remove ambiguity in public and business environment that demands proper understanding about the services,” a Deloitte spokesperson said.
Deloitte is the 3rd auditor to require such a voluntary call. the primary was Grant Thornton, which said the firm and its affiliates had decided to not take up non-audit work like consulting and transaction advisory services from listed firms being audited from July 2019. As the company describes public interest entities under the norms, that prescribed by the Institute of Chartered Accounts of India (ICAI) to Deloitte which incorporates all listed companies, banks, and insurance companies.
Consistent with Deloitte, this voluntary action is within the spirit of self-regulation. As considered by Deloitte, the non-audit services shall extend beyond non-audit services permissible under prevailing rules and regulations in India.
In the negligence of transparent regulatory norms prescribing which are the non-audit services and applicable to which set of companies, audit firms are taking their own interpretations. PW India has taken for an example as the National Financial regulatory agency as a benchmark for identifying companies and non-audit services. Deloitte has taken ICAI as a typical.
As Grant Thornton’s universe is restricted to listed companies. The latest voluntary decisions follow a company affairs ministry discussion paper floated on 7 February, proposing five issues which, consistent with it, hinder the independence of auditors. Charges taken by auditors shall include providing non-audit services, with lax quality review procedures within firms, personal relationships with clients, non-rotation of audit partners and appointment of auditors by the firms. The paper suggested that such appointments be done by external authorities like the Comptroller and Auditor General. consistent with experts, such voluntary actions are good but not a substitute for clear regulatory norms
As this will be hospitable interpretations and different benchmarks for implementation. “Auditors shouldn’t be permitted to render non-audit services to their audit clients. There shouldn’t be any exception to the present,” said Dinesh Kanabar, founder, Dhruva Advisors, which provides audit and consultancy services.
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