CCI will have to investigate to see if the Big Four -- PwC, EY, Deloitte and KPMG -- are abusing their dominant position in the Indian audit market.

Govt wants CCI to assess if the Big Four auditing firms are hurting competition
Money Auditing Wednesday, July 24, 2019 - 13:48

It is not just the giant ecommerce firms that are being investigated by the Competition Commission of India (CCI). The government is staring down on the four top consulting firms, KPMG, PwC, EY and Deloitte. The government reportedly wants CCI to investigate if the four are engaged in keeping competition at bay and appropriating whatever business there is from India’s top companies. The Big Four, as these four auditing and consultancy firms are referred to, practically straddle India’s corporate scene by handling the auditing assignments of the maximum number out of the top 500 companies.

Interestingly, almost each one among the Big Four have come under the cosh in recent times. PwC had to sit out for 2 full years after an accounting fraud that was going on for many years was. There is a similar ban on one of the Ernst & Young (EY) firms which is currently on and will run till 2020.

The IL&FS issue is coming to haunt both KPMG and Deloitte as the Ministry of Corporate Affairs wants to put a ban on both of them for 5 years. The top consulting firms want to fight this legally.

The issue in all this is that almost all these consulting companies manage to secure business of consulting and other advisory services from the companies where they are the statutory auditors. This is done by group companies of the Big Four and may sound legal on the face of it, but there is definitely an issue of ethics here. The Ministry of Company Affairs (MCA) sees red.

The CCI may be nudged by the MCA to undertake the investigation of these four companies on all these issues. The investigation if it is carried out will be focused on whether the big four are also indulging in preventing competition from bagging the audit assignments with the top Indian companies.

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