KPMG doubles audit revenues to become largest audit practice in India

04 December 2018

Despite a particular focus on growing its advisory practice in recent times, global professional services firm KPMG India appears to be doing particularly well in the auditing domain, having doubled its fees over the last financial year to replace Deloitte as the country’s largest audit practice. 

KPMG has been involved in concerted efforts to develop its advisory services in India. In 2016, fellow Big Four accounting and advisory firm Deloitte dealt a strong blow to KPMG’s advisory practice, having poached approximately 20 partners and their entire teams from the latter.

Since then, KPMG has been rebuilding, the most recent indication of which has been the announcement of plans to recruit as many as 9,000 professionals over the next few years, specifically for advisory services for domestic as well as outsourced assignments.

The ability to rebuild its advisory practice has stemmed, among other factors, from the strong performance of its audit practice, which has now emerged as the largest audit practice in India. The position was formerly held by Deloitte, prior to the financial year 2017-2018.

KPMG doubles audit revenues to become largest audit practice in India

KPMG’s income from auditing fees doubled over this period, surpassing a value of Rs. 216 crore, according to statistics from research and information platform Prime Database. The second highest earning auditing practice was the third member of the Big Four – EY – which registered a 64% jump in its audit revenues.

EY earned just over Rs.186 crore over the last financial year, pushing Deloitte down to third position, while PwC rounded off the Big Four with fee earnings of Rs.114 crore. The mammoth earnings from the top firms can primarily be attributed to the large network of firms operating under their overarching brands.

According to Prime Database, however, overall fee levels appear to have dropped recently. “Though the audit fee has gone down due to competition during audit rotation, the Big Four firms have managed to corner a significant chunk of the audit market,” said Pranav Haldea, Managing Director at the firm.

Another firm that registered substantial audit revenues over the last year is accounting and advisory firm Grant Thornton, which earned just over Rs. 52 crore. As per the data, over 1,600 auditing firms in India raked in a cumulative fee revenue of Rs, 2000 crore – a 2% increase from the year before.


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EY selected to conduct audit on Jet Airways for creditors consortium

04 April 2019

As Jet Airways continues its efforts to stabilise its financial situation, creditors to the airline – led by the State Bank of India – are set to appoint global professional services firm EY as the auditors for the airline. EY was selected over Big Four rival Deloitte after careful consideration by the interim management committee.

The interim management committee itself is currently being formed, but sources have indicated to the Economic Times that Big Four accounting and advisory firm EY will be the auditor of choice once the committee is formed. The indication comes after EY was already appointed for a forensic audit in December.

Jet Airways has been struggling financially for several months now, which has had repercussions on its internal operations as well as on its value in the stock exchange, which had dipped by 2% at the start of December last year. Internally, the firm has been forced to ground flights and delay salary payments, leading to considerable backlash.

Currently, the airline has a fleet of 35 aircraft in circulation, as opposed to nearly 120 aircraft when it was operating in relative financial stability. A number of consulting firms have since ben involved in rescuing the airline’s finances. In December, Jet Airways appointed McKinsey & Company as well as BCG for support.

EY selected to conduct audit on Jet Airways for creditors consortium

While McKinsey & Company was tasked with damage control strategies to help cut down operational costs, BCG was tasked with devising new strategies to regenerate previous levels of revenue. Meanwhile, a number of external parties have been interested in offering financial aid to the airline.

Earlier this year, Eithad Airways appointed global consultancy firm Alvarez & Marsal to conduct due diligence on Jet Airways, before finalizing their intentions of increasing their ownership share beyond the current level of 24%. The conditions for this takeover would be the surrender of control by Founder and Chairman at Jet Airways Naresh Goyal.

Meanwhile, the creditors that are looking to offer financial support to the airline have also been seeking support with auditing the company. A consortium of creditors led by the State Bank of India appointed EY to conduct a forensic audit of the airline late last year, and are now looking to extend this collaboration.

The interim management committee reportedly considered a number of major consulting firms for the role of auditor, including fellow Big Four accounting and advisory firm Deloitte. Following the audits, the creditors will move to acquire a 50% ownership in the airline through the conversion of debt into equity.