Stop MAFs from Operating illegally in India
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Multinational Accounting Firms, who are operating in India by violating Section 25 and 29 of CA Act, 1949 and various other laws should be stopped from providing Taxation, Audit and Assurance Services in India.
Reg.: Issue of Multinational Accounting Firms (MAFs) practicing in India
As you must be aware, the Hon’ble Supreme court of India gave a historical judgement on 13th day of March 2018 wherein it banned Foreign Law firms from practice in India. It also negated the judgement of Madras High Court that allowed them fly-in and fly-out practice to advice their client. This judgement has come as a breather for Indian Lawyers and Law Firms and now they don’t have to face competition from Foreign Law Firms.
Can’t ICAI take lead from this decision and ban foreign MAFs which are illegally practicing in India and providing Audit and Assurance Services. I am referring this matter to you as President of ICAI who is in Power to take decisions/initiative and regulate the profession. In today’s scenario we have to face tough competition from MAFs who have support from Foreign Countries and their marketing budget is sanctioned from there. They are pitching for big Public and Private sector assignments and succeed in getting the same (many a times even without the knowledge of existence of such an assignment in Public Domain). The Local firms are certainly left high and dry. As already observed by the Apex court, these firms are operating in India in violation of section 25 and 29 of CA Act and our Institute, so far, has not taken any concrete step to stop their illegal activities.
I feel that many Indian firms are no less competent or capable than these Foreign Accounting firms, in terms of infrastructure, talent and efficiency to execute any large-sized assignment, but every time these MAFs are able to takeaway major Audits and Consultancy Projects. We need to seriously introspect on this matter and take strong step of banning these MAFs from entering into areas like Accounting, Auditing, book-keeping, Taxation etc., in order to to save our local talent. If these malpractices of MAFs continue, our local CA firms will never be able to grow big.
The Apex court in its judgement dated 23-02-2018, has also given following directions to ICAI at Para-58(iii):
"ICAI may further examine all the related issues at appropriate level as far as possible within three months and take such further steps as may e considered necessary"
I request you to take immediate action on this matter and create an example in a time when everyone is seeing our profession with suspicious eyes and young Chartered Accountants are suffering because of lack of work and tough competition from MAFs. It is also pertinent to mention here that MAFs are using local firms as a mask for executing Audit, Assurance and Taxation assignments which they are not allowed to do. Moreover, they are spending huge amount of money for advertising their brand. Their source of investments is suspicious and we as a premier Accounting body are doing nothing about it.
Hope you will immediately look in this matter in the interest of local CA Firms and ban these MAFs from illegally operating in India.
CA KANTA SHARMA
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