Increased scrutiny has levelled the playing in India's auditing sector
As the auditing and advisory sector comes under increasing scrutiny in India, Grant Thornton’s India CEO Vishesh Chandiok has welcomed the new focus on clean and accountable practice in the profession. He expects the auditing landscape in India to undergo significant changes imminently.
Chandiok’s comments are drawn from an interview with Livemint, at a time when the Grant Thornton is looking to minimise risk of malpractice in its own operations, after declaring that it would not offer non-attest services to its audit clients in India. The tightened grip is reflective of a broader trend, not only in India but across the globe.
Auditing firms – particularly the Big Four – have been implicated in a number of incidents across the globe in recent years. According to Chandiok, a shift in perception of the profession has been just as strong a factor as any other in these implications, given that the sector has come under the scanner.
Where auditing firms were previously trusted entities, perceptions of the industry have come to take on a more discerning character in recent years, exposing a number of questionable practices. Chandiok welcomes this increased scrutiny, despite the risk that it might go too far and hinder the sector.
Another shift that Chandiok anticipates is the leveling of the playing field within the auditing profession. By his characterisation, several auditing and advisory firms exist in India that can match the Big Four in quality and capacity, but fail to enter the game due to the reputation that the Big Four command.
The trust deficit brought about by the recent implication of two of the Big Four in the IL&FS case appears to have burst this bubble to some extent, and might present an opportunity for other accounting and advisory firms in the country, including Grant Thornton.
“I think the audit profession has a unique opportunity and some imminent threats. There is a huge opportunity for auditors to step up and provide the assurance investors and capital markets are looking for in these times of enhanced uncertainty because of shortened business life cycles and sometimes poor governance,” said Chandiok to Livemint.
“There is no issue with capacity to fill up the gap of any number of firms not being available for whatever reason. If there is demand, firms will produce the supply. We ought to stop being “Big 4" obsessed and realise audit quality is not the purview of only the big firms. There are at least 20 quality Indian firms who are waiting for the opportunity,” he added.
