Financial Daily from THE HINDU group of publications
Saturday, Jan 31, 2004
Financial Daily from THE HINDU group of publications Saturday, Jan 31, 2004 |
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Corporate
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Accounting Standards ICAI to write to FIPB on `surrogate auditing' issue K.R. Srivats
New Delhi , Jan. 30 THE Institute of Chartered Accountants (ICAI) plans to write to the Foreign Investment Promotion Board (FIPB) seeking the latter's intervention on what is now popularly known as "surrogate auditing" being allegedly practiced by certain foreign-owned entities in the country. The regulator for the chartered accountancy profession is keen to ascertain as to whether such entities are complying with the stipulations made by FIPB while sanctioning their foreign investment proposals. ICAI has in the recent months been facing criticism from a section of its members for its inability to regulate or put an end to the auditing or assurance work being undertaken by some of the foreign-owned consulting entities in the country. "We will be writing to FIPB on this matter. There are certain conditions under which the foreign firms have been allowed entry into India. "It has to be seen as to whether these stipulations are being complied with or not. It is FIPB that would know the exact stipulations under which their entry has been allowed," the ICAI President, Mr R. Bupathy, told Business Line here. The ICAI Council had constituted a study group under Mr Jayant Gokhale to thoroughly look into the activities of the foreign firms and recommend measures to it. The report of the study group has been submitted to the Council. The study group had, in fact, recommended that ICAI should follow up with the FIPB to ascertain whether the grievances of the members about "surrogate auditing" are valid or not. "It would not be proper for ICAI to sit in judgement as to whether the consulting firms that have entered India for undertaking certain activities are doing other activities. The appropriate authority for this is FIPB as it would know the entry norms under which such firms have been allowed to function in India," sources said. The Department of Company Affairs (DCA) has been taking a position that any allegation of "surrogate auditing" has to be substantiated and that the council of ICAI should be convinced of the same before regulatory changes can be considered. While ICAI exercises strict regulatory oversight on its member firms, it has very little say in the regulation of consulting firms in the country.
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