Grant Thornton to curb consultancy services to audit clients in India
As an increasing number of professional services firms in India come under fire for conflicts of interest, Grant Thornton has taken action by announcing that it will no longer conduct non-attest services for clients that they are engaged with in an audit capacity. The move is effective from 1st July this year.
The umbrella of non-attest services incorporates offerings such as consulting, transaction advisory and valuation services. As a result, the move is expected to come at a substantial cost to Grant Thornton, given that the consulting firm will have to shun a number of lucrative opportunities.
Nevertheless, members of the Big Four accounting and advisory firms have come under fire in India recently for their allegedly ineffective auditing activities with respect to the Infrastructure Leasing & Financial Services. As a result, affiliates of Deloitte and KPMG are facing a potential five-year ban in India.
According to Grant Thornton, the cost of passing up non-attest opportunities is reasonable to ensure that there is no compromise in their auditing practices. Grant Thornton’s audits in India are conducted by its Walker Chandiok affiliate company, an entity that has been fighting in a highly competitive audit market across India.
Alongside the Big Four, a number of global professional services firms have swooped in to the Indian market to offer audit and advisory services, motivated by the volume of the market and the rapid rate of growth. However, the audit space in the country appears to be suffering from a trust deficit.
Grant Thornton executives state that they have been considering trust building initiatives for a while, and the current climate has provided the ideal scenario for their development. The firm has emphasised that the move has come of their own volition.
Commenting on the move, David Jones, a Partner at Walker & Chandiok said, “We, at Walker Chandiok & Co believe that audit in India is not wholly broken, its reputation is certainly tarnished and it is up to us as responsible members of the profession to help rebuild confidence in audit.”
“We believe that it is up to us as professionals to go beyond the call of regulation in order to demonstrate our commitment to rebuilding trust in the audit profession, and hence this decision. With over 100 listed audit clients, we expect to forego a lot many opportunities which will have significant monetary impact in the short term. However, we do believe that in the medium to long term, this decision will be beneficial, not only to our firm, but for the audit profession and our clients, as a whole,” he added.
