Dark Secrets of Big 4s

Hello Everyone, here we are going to discuss a very controversial topic. I will try to be unbiased as I was an article of one of the Big4s. First of all, I have huge respect for them. They are one of the biggest employer and recruiters of Chartered Accountants, employing nearly 1,60,000 CAs. They are trend setters in quality & methodology of work. They are known for their professionalism, but some disturbing facts about them cannot be ignored.

Concentration of work & power By Big4s Worldwide

Recent Study shows that Big4s have captured 80% to 90% of audit revenue worldwide. Whereas in Asia pacific region the revenue of big fours was 21.49 billion US $ in 2017. The European Union want to break up this oligopoly of big4s. As they are getting bigger and powerful, they have access to loads on information, they are in dominating position. This is anti-competitive. In India they have acquired many midsized firms again to become bigger and powerful.  Many Central Council Members are from Big4s and some are indirectly supported by big4s. No wonder you don’t see any action against them from ICAI even after Sataym & GTB scams.

 

Are they Legal, is big debate?

Foreign firms and professionals cannot directly practice in India as per CA Act and give Audit Services. As Indian firms cannot directly function in foreign countries they cannot function in India as per Sec 29 of CA Act. Audit constitutes more than 50% of there total revenue worldwide.

 

So, they took help of Indian Chartered Accountants, created firms with all Indian CAs as partners. Like EY created SR Batliboi & Co, KPMG created BSR & Co further Big4s are on acquisition spree. PWC acquired Dala & Shah and so on. Now these Indian firms have their offices with foreign brands, they work closely with corresponding consulting companies, they cross sell services to clients, they share systems & software’s with them. They are virtually integrated with them. They pump money in these Indian firms. PWC Netherland gave 41 crores as interest free loan to PWC Kolkata partners who in turn, introduced it as capital and then acquired Dalal & Shah. PWC has given around 240 crores to Indian affiliate firms. PWC has indemnity insurance policy of 280 crores which is collectively used by all sister firms which again shows. They are virtually one only legally different. If they are doing so much they must be getting something in return in the form of charges for these services. So basically, they have full control of these Indian firms and in short, they are indirectly practicing in India. It is clearly killing of spirit of law created. They are violating Sec 25 CAs creating corporates for accountancy services, Sec 29 doing practice in India when we cannot do it in US or UK. Advertisement Clause / Sharing of Fees Clause. Open many websites and you will find ads from Big4s.

 

Impact of Indian CA Firms

Indian CA firms are muscled out with financial and tactical powers of Big4s. It is killing entrepreneurship of Indian CAs. Reducing their revenue and profits, these profits go to Big4s and to their foreign headquarters. They are not entertained for big assignments, even many government contracts are bagged by them.

Some Indian CAs are fighting against these powers through legal and other modes. But it will need a lot to bring a change. Reliance Industries always employs Indian firms as joint auditors. Modiji said we want our Indian firms as big4s.

It affects India as nation also, all crucial information about companies, economy is indirectly available to foreign controllers.

Video on above article

https://www.youtube.com/watch?v=FUZCld0HXeY

Legal Proceeding and Judgements:

Please refer the below link for Supreme Court latest Judgement on the issue discussed above:

https://sci.gov.in/supremecourt/2013/35041/35041_2013_Judgement_23-Feb-2018.pdf

Further Detailed discussion:

The above issue regarding MAF’s V/s ICAF’s and decision of the Supreme Court has required a detailed study of every aspect of allegation and violation.

For detailed study Please refer the link:

https://1drv.ms/b/s!AqxpYGo5-Bccg4BEuY0RWECk70Ngfg

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