A consultation paper to examine the existing provisions of law and make suitable amendments therein to enhance audit independence and accountability has been placed and need suggestions/comments.
- Whether to reduce the number of audits per one audit firm/ auditor?
- Whether to reduce or set the number of partners under one audit firm?
- How can those Big-4’s burden be reduced? Which other audit firms are in a position to compete with them and reduce the workload of Big4?
- Whether the auditors in listed companies to be appointed from a separate auditors ‘ panel to be repaired by NFRA?
- Whether non-audit services can be included in the list u/s 144?
- Whether the Joint Audit for bigger companies should be made compulsory?
- What should be the threshold for the bigger companies?
Economic Concentration of audit [Big 4] – Positive & Negative effects on the economy
Most of the large global corporations use the Big Four accounting companies to audit their financial statements.This audit industry concentration of listed companies is characterized by an oligopoly of “Big Four” audit firms and in large-company audits would result in inadequate levels of competition.
Finding a new auditor would be more complicated because
- Less competition in many geographic markets where some of these companies do not have a significant presence.
- The lack of sufficient auditing experience by the remaining companies, in particular industries.
- Many other businesses are not independent because of the provision of non-audit services
The Companies Act, 2013 provides mandatory audit firm rotation and non-audit services In order to tackle this economic concentration of audit. The main purpose of this provision is to increase the number of audit firms capable of carrying out the most complex audits.
Non-audit services not to be taken by auditors
It has been noted that some of the audit firms are observing self-regulation and are making decisions not to participate in non-attested work such as consultancy and transaction advisory services from listed companies that they are auditing. Such a move that comes in the midst of auditors who are facing heat in high-profile corporate scandals seems a welcome change. Deloitte announced recently that it will not underatake any non- audit services in public domain.i.e. listed entities with Banks & Insurance Companies in particular.
To know more Click here
Latest Updates
- Navigating GST Changes: 5 Essential Updates on E-Way Bill and E-InvoiceNavigating GST Changes: 5 Essential Updates on E-Way Bill and E-Invoice As we step into the new financial year 2025-26, businesses must gear up for key compliance changes in GST, particularly concerning E-Invoicing and E-Way Bills. These aren’t just procedural formalities—they’re critical documents that validate tax liability and the movement of […]
- Pros and Cons of Presumptive Taxation Scheme for ProfessionalsPros and Cons of Presumptive Taxation Scheme for Professionals To reduce the compliance burden for small professionals, the Income Tax Act introduced the Presumptive Taxation Scheme under Section 44ADA. This scheme is especially useful for professionals like doctors, lawyers, architects, engineers, and others specified under Section 44AA. What is Section 44ADA? […]
- Understanding Form 3CD Amendments: What Changed from April 1, 2025Understanding Form 3CD Amendments: What Changed from April 1, 2025 The Central Board of Direct Taxes (CBDT), via Notification No. 23/2025 dated March 28, 2025, has introduced key amendments to Form 3CD under the Income-tax Rules, 1962. These changes come into effect for all tax audit reports signed on or after […]
- GST Compliance Checklist for Financial Year 2025-26GST Compliance Checklist for Financial Year 2025-26 Strategic Review & Action Plan for Businesses As the new financial year 2025–26 begins, businesses must undertake a comprehensive introspection of their GST compliance framework. This includes both substantive law changes and procedural reforms. With several amendments becoming effective from April 1, 2025, aligning […]
- Mutual Funds and Stocks: Understanding Capital Gains Tax Implications in 2025Mutual Funds and Stocks: Understanding Capital Gains Tax Implications in 2025 Investing in mutual funds and stocks is a time-tested route to building wealth. However, returns from these assets attract capital gains tax, and staying informed about tax rules is crucial to avoid unexpected liabilities. As of 2025, the tax landscape for investors […]