Govt draws plan to open audit sector

Govt draws plan to open audit sector

30th May, 2005

Govt draws plan to open audit sector. Local firms against move.

India is likely to offer opening up of audit and accounting services in the second round of offers to be submitted for the services negotiations at the World Trade Organisation.

The proposal is part of the note which would be taken up by the cabinet committee on WTO shortly.

"It is for the cabinet to decide. We have suggested it," said a senior commerce department source.

India's plan will focus on offering concessions on mode 3 (commercial presence) in return for other modes.

The move is expected to benefit multinational audit and accounting firms which have already entered India to offer consulting services.

Indian chartered accountants opposed the entry of bid firms in the audit market.

Foreign firms should not be allowed to take up statutory and other (non-voluntary) audit assignments,? said Kamlesh S Vikamsey, President, Institute of Chartered Accountants of India.

He said that foreign firms were not regulated by the ICAI and it would be difficult to fix responsibility on them when they are allowed into the statutory accounting business in India.

ICAI is also of the opinion that the government should insist on signing mutual recognition agreements among all WTO member countries if it were to open up the accounting business.

"It is important that there is reciprocity and there are no non-trade barriers like visa, residency or capital norms from other countries," Vikamsey said.

Besides, he added that there was a need to undertake steps to strengthen the Indian accounting and audit firms.

The number of members should be increased from 20, multi-disciplinary activities should be allowed and firms should have a limited liability, Vikamsey said.