Battle Of The Beancounters.

(From Business Today (India))

Byline: Ashish Gupta

On December 16, 2003, just three days before the scheduled beginning of the Institute of Chartered Accountants of India's (ICAI) 30-member council elections, most of its 1,15,000 members got an e-mail in their in-boxes. It was a powerpoint file that coaxed, cajoled and even warned its recipients against voting for candidates who represented the Big Four global accounting firms, namely KPMG, PricewaterhouseCoopers (PWC), Ernst & Young, and Deloitte, Touche & Tohmatsu. Purportedly sent out by the Chennai-based Chartered Accountants' Action Committee for Level Playing Field (CAACLPF)-quite a mouthful, but an organisation that is headed by Swadeshi Jagran Manch and MNC-basher S. Gurumurthy, himself a ca and an ICAI member-the e-mail was the beginning of yet another round in the war against the Big Four or, in Gurumurthy's more colourful description, "multinational accounting firms".

The swadeshi vs. videshi fight in the Indian audit industry is relatively recent. More than a decade back foreign consultancy firms-the Big Four included-were allowed to set up shop in India. To be sure, these firms were allowed to operate as consultants in India, but not as accounting firms. And that rule still holds good. But Indian audit firms-with the CAACLPF as their crusader-allege that the Big Four are blatantly operating as accounting firms by proxy through their Indian associates. The accusations gained momentum last July when the CAACLPF released a "white paper" on multinational accounting firms, accusing them of entering the Indian market surreptitiously and advocating their removal from the country. The current spat is a continuation of that.

Although caaclpf and Guru-murthy have denied having anything to do with the December e-mail, the powerpoint file reeks of swadeshi fervour, accusing the Big Four of "turning the ICA of India into ICA of America" and that electing their representatives would not only mean "mortgaging their own future, but also pledging the country's honour". The CAACLPF charges the Big Four of operating by proxy-through their Indian associates-and of even remitting "hundreds of crores of rupees" to their parent entities, thereby harming the interests of Indian accountancy and audit firms. The Big Four deny all these charges. All auditing work is undertaken by Indian firms (read associates of the four), which are the ones-and not the four big ones-that sign off the audited balance-sheets of their clients. Moreover, they say that since the Big Four had clearly separated their consulting arms from their auditing entities, it makes even lesser sense to point a finger at these firms.

Besides, says Rathin Dutta, CEO of the 130-year-old PWC's Indian operations, none of the Big Four firms is foreign-owned or managed, or pays any royalty for the use of the name. "We don't pay a single paisa for the free, non-exclusive use of the PWC name. We are all members of an international network of independent firms, each of which is a national firm in its respective country."

Not Just Us Vs Them