India considers audits by foreign accounting firms

The Indian government is considering allowing foreign accounting firms to conduct audits in India, a privilege that has so far been reserved for accountants or partnerships registered with the Institute of Chartered Accountants of India.

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It is consulting Indian business on the idea, which could be written into a formal offer to liberalise the country’s services sectors through the World Trade Organisation’s (WTO) Doha Development Round. This must be issued by May 31 under the negotiations’ timetable to update the WTO’s General Agreement on the Trade in Services (GATS).

India’s Business Standard newspaper has reported that the country’s commerce and industry ministry is circulating a revised draft of its existing WTO offer. Until now, India had been prepared to offer foreign companies the right to offer book-keeping and accounting services in India, but not auditing. But India and other developing countries have come under intense pressure at the WTO from western governments to free up access to their services sectors, in return better access to rich countries’ food and drink markets. A change to the auditing rules would require amending the Indian Companies Act. Western accounting giants such as PricewaterhouseCoopers, Ernst & Young and KPMG already work in India, but as consultants with Indian partners.