PW India becomes first of top 4 audit firms to not provide non-audit services
Price Waterhouse Network of Firms in India (PW India) on Thursday announced their decision to no longer provide non-audit related services to their audit clients in India which are governed by National Financial Reporting Authority (NFRA). This comes after a ministry of corporate affairs (MCA) discussion paper which had proposed to ban audit firms from offering non-audit services and proposed to reduce the oligopoly of top 4 audit firms.
“Given the important role that auditing plays in the Indian economy, everyone that relies on audit needs to have the same high level of confidence in auditor’s independence, objectivity and effectiveness. Today’s announcement is a demonstration of our commitment to invest in audit quality with a view to continually improve and strengthen it, along with auditor independence,” said Subramanian Vivek, Partner – Price Waterhouse.
According to the audit firm, this voluntary action will further strengthen the audit profession in India and enhance trust in the Indian capital markets, society and Indian economy at large.
The MCA in a discussion paper last Friday has proposed five steps which according to it hinders the independence of auditors. These aspects include prohibition of providing non-audit services, fees to be charged by auditors, stringent quality review procedures within firms, prohibition of personal relationships with clients, rotation of audit partners and appointment of auditors by external authorities like Comptroller Auditor General (CAG).
Last year, Grant Thornton had taken a stand that it would not take up non-attest work like consulting and transaction advisory services from listed companies that are being audited by them. MCA had sought comments that whether all auditors should follow suit. Under section 144 of the Companies Act auditors are prevented from offering eight services. MCA is seeking that whether more such services should be included in the list.
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