To Take On MNCs, ICAI Pressing Govt For CA Firms' Aggregation

They argue that large Indian firms are required in the national interest to protect the financial data of the government and corporations, which is at risk. Currently, CA firms are bound by the Ethical Code of Conduct and ICAI guidelines, which prevent them from promoting themselves, partnering with foreign firms and operating overseas. The proposed blueprint is expected to create a level playing field for local firms.

The move comes after Prime Minister Narendra Modi’s suggestion to create large Indian consulting firms, following which, Sanjeev Sanyal, a member of the Prime Minister’s Economic Advisory Council (PMEAC), initiated efforts to encourage the aggregation of CA firms.

In June this year, ICAI released the guidelines for aggregation and a draft of overseas networking guidelines. Last week in Mumbai, the CACAF met the partners of prominent CA firms to encourage them to come together to compete with global firms within India and abroad.

Meetings are also planned in various cities across the nation, following which, the committee will submit a representation to ICAI to allow domestic CA firms to aggregate and become large. The guidelines will come into force once approved by the ICAI and the Ministry of Corporate Affairs (MCA). 

Speaking with The Secretariat, Arpit Kabra, CA, a central council member of ICAI and a member of CACAF, said the body is working to liberalise prevalent regulations related to advertising by CA firms, and their joining overseas networks, which so far have put them at a disadvantage compared to multilateral giants. The current government contracts are also designed to favour such large MNCs, elbowing out domestic firms.

“Foreign MNCs advise state and central governments to formulate policies and audit data of large Indian corporates. This is sensitive data that also relates to national security. These firms are headquartered abroad; hence, the real control is not within India. This can be detrimental to the interests of our country. So, it is necessary to have large Indian consulting firms, and ICAI is working to ensure a level playing field for all domestic firms,” said Kabra. 

Indian CAs say many tenders, contracts, and foreign funds equity investments in India are structured in a manner that mandates audit of accounts only by the large MNC firms. Their global scale is such that local firms can't compete under prevalent regulations.

“There is an immediate need for local CA firms to aggregate and grow big, to take part in this huge market. For this, necessary regulatory changes must be made by governments — both at the Centre and the states — in the tendering eligibility norms on the one hand, and ICAI regulations on networking and advertisements. Indian firms need a level playing field,” said a noted Ahmedabad-based CA. 

Not only will the blueprint encourage the formation of large Indian CA firms, but also protect individual CAs spread across Tier 2 and Tier 3 cities. “We will take care that the formation of large companies does not go against the interests of individual CAs,” said Kabra.