Chartered Accountants Can Be Consultants

Domestic audit firms will now have a chance to compete on a level playing field with foreign firms after the profession?s governing body today decided to allow Indian CA?s to head companies engaged exclusively in management consultancy. This concession will be given to Indian CA?s without stripping them to their right to carry out audit practice - a sacrifice auditor have to make today.

Indian Auditors would get the opportunity to scale up their management consultancy business when it?s carried out through a company, T N Manoharan, President of the ICAI, said today after the meeting of the governing council. Currently, auditors can offer management consultancy only through partnership or as individuals.

The ICAI?s decision has come about four years after a group of Indian auditors banded under the banner of ? Chartered Accountants Action committee for level playing field ? to act as a pressure group.

Manoharan told business standard that ICAI?s decision was unrelated to the pressure group?s agenda thought the intention may have coincided. Another member of the governing council emphasized that the pressure group?s campaign agenda of 2002 and 2003 did not influence the decisions.

S Gurumurthy, who spearheaded the pressure group then, felt the concept of allowing auditors to carry out consultancy practice was flawed because of the possibility of a conflict of interest. ? Those who have corporate consultancy should not do audit. That is the correct line to be drawn ? Gurumurthy told Business standard. He, however declined to comment on the current development till he had a chance to study the details.

The move proposed will allow Indian CA?s to compete with both foreign audit firms such as KPMG which offer consultancy services through sister concerns and regular management consultancies. A consultancy floated by an audit firm can bring domain experts into the company, something not possible under the present set of rules. ICAI?s governing council today also approved an accounting standard that would revise the accounting for property, plant and equipment ( AS 10 )


Source: Business Standard 04th August 2006