Now, Deloitte too stops non-audit services to public interest entities in India
Mumbai: Auditing major Deloitte Haskins & Sells and its network firms in India will no longer offer non-audit services to public interest entities that they audit under the laws and regulations in India.
“We believe this would increase the public’s confidence in auditor independence and quality and will remove ambiguity in a public and business environment that demands greater clarity about our services,” said a spokesperson from Deloitte.
This comes three days after Price Waterhouse India, a part of Pricewaterhouse coopers (PwC) took a similar decision.
According to Deloitte, this voluntary action is in the spirit of self-regulation. The non-audit services as considered by Deloitte extends beyond non-audit services permissible under prevailing rules and regulations in India.
Deloitte is defining public interest entities under the norms prescribed by Institute of Chartered Accounts of India (ICAI). Which are all the listed companies, banks and insurance companies.
Deloitte is the third firm which has taken such a voluntary call. The first was taken by Grant Thornton. The firm and its affiliates had decided not take up non-attest work such as consulting and transaction advisory services from listed companies that are being audited by them from July 2019.
In the absence of clear regulatory norms prescribing which are the non-audit services and applicable to which set of companies, the audit firms are taking their own interpretations. For instance PW India has taken National Financial Regulatory Authority as a benchmark for identifying companies and non-audit services. Deloitte has taken ICAI as a standard. Grant Thornton’s universe is limited to listed companies.
This comes about 10 days after the Ministry of Corporate Affairs (MCA) released a discussion paper. In the discussion paper floated on 7 February, the MCA proposed five issues which, according to it, hinder the independence of auditors. These include providing non-audit services, fees charged by auditors, lax quality review procedures within firms, personal relationships with clients, non-rotation of audit partners and appointment of auditors being done by the companies. The paper suggested that such appointments be done by external authorities such as the Comptroller Auditor General.
According to experts such voluntary actions are good but not a substitute for clear regulatory provisions as this can be open to interpretations and different benchmarks for implementation.
“Auditors should not be permitted to render non audit services to their audit clients. There should not be any exception to this,” said Dinesh Kanabar, founder, Dhruva Advisors. The firm provides audit and consultancy services.