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Mr S. Gurumurthy (right), Advisor, and Mr G. Narayanaswamy, Convenor, Chartered Accountants' Action Committee, at a press conference in Chennai on Tuesday.

CHENNAI, Aug. 27

YEARS before the services sector was even brought for discussions in the World Trade Organisation (WTO), India opened its doors for foreign accounting firms. Though these firms were technically allowed to offer consultancy services, they made a "stealthy and surreptitious entry" into the domestic financial market, doing audit work, "using local surrogates, which is totally illegal".

This is the view of a group of chartered accountants, headed by Mr S. Gurumurthy (of Swadeshi Jagran Manch), which has named itself "Chartered Accountants' Action Committee". This group is holding a convention here on September 1, to sensitise the entire, 100,000-strong chartered accountants fraternity in the country as well as the public, about the side-effects produced by the entry of the foreign accounting firms.

At a conference here, Mr Gurumurthy made two points — first, by allowing the foreign firms to operate in India, the country has lost a negotiating point, as otherwise, India could have got "something in return". Secondly, the conduct of the foreign firms is something that makes "a mockery of the law and the regulations of the Government".

The multinational accounting firms, using their interface with global finance, which dominates the domestic financial sector also, have invaded and marginalised the domestic CA firms, Mr Gurumurthy said.

He said that at least now the Government should demand opening up of other countries to Indian accounting firms, so that Indian professionals get opportunities to work abroad.

Observing that there was a clash of cultures when multinational accounting firms were allowed to freely operate in India, Mr Gurumurthy pointed out that domestic chartered accountants never advertised their services, whereas the MNCs did.

In India, if a chartered accountant signs a document, say, a balance sheet, he is personally liable even if he had quit the CA firm. However, a different practice is followed in the US. Although, the members of an accounting firm are called "partners", they are not personally liable in case of a foul practice — it is only the firm that is liable.

Mr Gurumurthy said that this trend could vitiate the professional culture in India. He said that often MNC firms, which were allowed only to offer consultancy services, engage local firms as surrogates. (Only two firms, Lovelock and Lewis and Arthur Andersen, are allowed to practise in India).

A professional from the local firm sometimes signs under the name of the Indian firm and sometimes under the name of the foreign firm. This happened a couple of times. However, when the Institute of Chartered Accountants of India (ICAI) took the matter up with the foreign firm, the firm did not even bother to reply, Mr Gurumurthy said.

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