Deloitte has said that the auditor and its network firms in India will discontinue non-audit services to clients. The Indian affiliate of Deloitte Haskins (which is a part of the Big4 audit firms) announced on Sunday that it will no longer offer non-audit services such as consulting, due diligence or any other consultancy services to public interest entities which are its audit clients.
Simply stated, the public interest firms would encompass all listed entities and all companies where public money is involved such as banks and insurance companies. Deloitte specifies public interest entities under the rules prescribed by the Institute of Chartered Accounts of India (ICAI).
"We believe this would increase the public's confidence in auditor independence and quality and will remove ambiguity in a public and business environment that demands greater clarity about our services," a Deloitte spokesperson said on Sunday.
The audit major has become the third such company following PW India and Grant Thornton and is the second among the big four. Lacking clear regulatory rules specifying the definition of non-audit services and binding on which type of companies, audit firms are deriving their own interpretations.
For instance, where PW India complies with National Financial Regulatory Authority as a yardstick for identifying companies and non-audit services, Deloitte takes ICAI as a benchmark and Grand Thorton is restricted to listed firms.
Meanwhile, Deloitte's announcement comes on the heels of the Corporate Affairs Ministry's move to float a consultation paper on strengthening audit freedom and accountability. The 20-page consultation document had invited comments from several government departments and regulatory bodies on a wide range of issues impacting audit freedom by February 28.
The discussion papers also included a suggestion to forbid the monopoly of "Big4" audit firms and assigning new audit regulatory NFRA to select a separate panel of auditors for appointment as auditors of listed firms.