PM Modi's dream of a Big Indian audit firm is not far away. Accounting practices with ambition will soon go global.

Indian accounting firms have yet to become top global players.

"Your signature carries immense faith, please do not break that trust that is placed in you" Modi Ji told the CA community while talking about old women and other people investing in mutual funds and other schemes on the basis of their faith in the reports signed by the auditors.

Referring to the 'Big 4' -- a term used for the world's four biggest accounting firms -- the Prime Minister said there are so many accounting firms in India but none of them has managed to find a place among the top global players.

This was in 2017 and even in 2022 almost 6 years later Indian CA Firms are yet to get into the top league. 

If data has to be believed today, there are not more than 12 Indian firms that have more than 1000 member employees. And only a handful of them have global offices.

But why haven’t we gotten there yet?

The dream of Big Indian audit firm will soon become a reality

The Intent to go big

Guru Prasad - Founder & Managing Partner at Guru & Jana Chartered Accountants, who has built a 500-member firm from scratch says:

"It's quite difficult to answer why Indian firms have not gone global but I would also say till recently there were no large Indian firms at all. 

A survey conducted by IIM Indore revealed that many Indian firms that were started in 1948, have not grown a lot, even though the founders of those firms were some of the top brains in taxation and accounting standards. 

The problem is not of the talent but of the intent to go global. 

Rajat Mohan, CA, and Managing Partner of AMRG Associates took his father’s firm of 25 to a team of 150 in less than five years. 

What did he do? 

He teamed up with his IITian techie brother Gaurav Mohan to scale up the firm. He says,

“India covers more than 1/5th of the population worldwide, can’t we have 4 more firms globally? We can. 

We have the entrepreneurial spirit, and most importantly we have talent. 

If we want to match up to the Big 4, India has to merge its big pool of talent with technology and entrepreneurial skill. 

History has a role to play 

One has to realise that it took some good fifty years after independence to see Indian names like the Tatas and Infosys go global.  

It is perhaps the history that has locked us up and therefore is an albatross to the Indian audit firm. 

Ajay Sethi, Managing Partner of ASA & Associates says, 

“Similarly for Indian accounting firms to reach that level will also take some time. 

Now if you go to the 80s and see the accounting history of Europe and Australia, you will notice they went through the same past that we are going through right now. 

At that time, they were scattered around, their audit fees were low, the regulators came in.

But today look at all the mid-segment firms in Europe, UK, and Australia, that have 80 to 90 partners. You think it happened instantly? It took them over 20 - 40 years to reach there.

So I would say, give India some time, it will happen eventually.” 

Started in an 8 x 10 feet office, ASA & Associates has close to 1000 employees and 32 Partners and it is probably the only Indian accounting firm without an international network. 

Pallavi Dinodia, Partner at S R Dinodia, one of the oldest and legacy CA Firms in India resonates with Ajay Sethi;

"If you look at the Big Four, they have come from economies that were far more developed than ours. 

If you are keeping up with the news, India is also on the path to becoming a more developed economy. Plus, the new aspirants have a very different mindset than those who were first-generation CAs in the 1950s. 

Maybe that will help them aim for the global position.”

Also Read

CA Pallavi, Partner at S R Dinodia says, Indian CAs in the post-independence era focused on establishing their practices, so going global was not a priority. But now CAs are fuelled to take risks.

Value yourself 

India has around 300,000 chartered accountants.

Not only do Indian CAs understand Indian laws, but they understand the laws of foreign countries also, be it transfer pricing, indirect taxes coming in the Middle East or in other parts of Asia.  

But the problem arises when the chartered accountants in this country are unable to recognize their value. 

While for a similar job an MNC firm charges a whopping INR 10 lakhs, an Indian firm with a better service charges only INR 40,000. That is very alarming. 

You have to ask what is rightfully yours.

"There are some professionals who have outstanding knowledge that no MNC can match.

But sometimes they underestimate their worth. 

If these Indian CAs learn to position themselves properly in the market, nobody is going to stop them from going global. It is vital that they scale their practice" says CA Guru Prasad. 

Build heroes within our profession, don’t hunt them down 

Atul Gupta, former President of the Institute of Chartered Accountants of India (ICAI) encourages every CA firm to continue dreaming. 

“We have 5 or 6 desks outside, but have chosen to stay away from a large network. 

At the same time, I know a lot of counterparts who had representative offices like us, have gone ahead and set up full-fledged offices. So the moment has started,” says Ajay Sethi.

He further elaborates,

“We should also give credit to the person who started this in the 1960s; Mr. Ratan S Mama.

He set up an office in Dubai before anybody could think of it. He was way ahead of his time,

I think in 5 to 6 years you will see a major uproar because The Institute of Chartered Accountants of India has agreed that other professionals like Company Secretary and Cost Accountants can come together and form partnerships. 

Now, that is going to give me a big leap because I could partner up with other professionals. 

The moment they allow me to tie up with lawyers, (I believe in Germany it’s allowed to have a mix of lawyers and accountants) our firepower will go up. 

And I think in 5 to 6 years we will see major changes where mid-sized firms that are more agile will scale and grow. But crystal gazing has to begin now.” 

Also Read

Will joint audits & oversight accounting bodies push Indian firms to go global? A discussion with founder of ASA, one of India’s Top 10 accounting and consulting firms.

Joint audits are here to stay

One way the ICAI believes Indian firms will grow is through Joint Audits. 

A special committee at ICAI is already looking into the subject of what should be done for Indian firms to go global. 

One of them is a provision for joint audits. 

Today in the Audit segments, Big 4 companies are holding 80% of the market share. 

A Joint Audit mandates a firm to bring in an Indian audit firm as a joint audit partner along with the foreign firm. 

Here the Indian firm will bring its expertise in a subject but will work with the MNC audit firm where it will learn about processes, technology, and scale. 

In a conversation with CA Atul Gupta, Past President of ICAI and a Board Member at The International Federation of Accountants (IFAC) he reveals, 

“Today, our country is a $3 trillion economy and we aspire to be a $10 trillion economy. CAs should help the country in getting there.  

With the aspiration of a mechanism of joint audit, (which is a need and a demand of the ICAI), Indian firms can dream to build the next Big 4 firm from India.”

CA Rajat Mohan, Managing Partner at AMRG Associates says

"Countries like Denmark, France, UK, and South Africa, already have a lot of provisions with regard to joint audits.  

I think the RBI has mandated joint audits in certain cases. The MCA came out with a paper in 2020 on joint audits and how it benefits the industry. 

Joint Audit allows Indian firms to have access to technology and also the foreign firms get an expert who can go to tier 2 and 3 cities. 

Local firms can help foreign firms in understanding the tax laws. 

Our partnerships between a larger firm and a smaller Indian firm is the right mix for every joint audit, which will not only benefit the smaller firm but also benefit the investors in the larger firms. Joint Audits are the future.”

Can the Government help?

"The government has a huge role to play in all this. After all, only they can nudge Indian firms in the right direction to go global" Pallavi believes.

CA Ajay Sethi further adds, “Our regulators are also pressing the accelerator for tighter norms. 

We have an oversight body in the US called the Public Company Accounting Oversight Board (PCAOB), and in India, we have National Financial Reporting Authority (NFRA).  

In my opinion, the presence of an oversight body is important for our profession. Their presence will create a better ecosystem and environment for the future.” 

Edited by Preeti Mondal

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