Following in the footsteps of Price Waterhouse (PW) India, Deloitte Haskins & Sells has said its network of firms in India will not offer non-audit services to public interest entities they audit here.
This means Deloitte India would not provide non-audit services to all listed companies and other entities where public money is involved such as banks and insurance companies if they are its audit clients.
A Deloitte spokesperson stated, “We believe this would increase public confidence in auditor independence and quality and will remove ambiguity in public and business environment that demands greater clarity about our services.”
Doing so, Deloitte has become the third such company to do so after PW India and Grant Thornton and is the second among the big four.
In the press statement, Deloitte stated that the voluntary action was in the spirit of self-regulation and extended beyond non-audit services permissible under prevailing rules and regulations in India.
While the voluntary step is admirable, it also needs to be remembered that Deloitte was among the two firms that the Serious Fraud Investigation Office had asked the National Company Law Tribunal to bar for alleged lapses in auditing the books of IL&FS Financial Services. The Bombay High Court had granted interim relief to the auditors against any coercive action in November. However, it seems there was pressure from stakeholders to keep audit and non-audit at arm’s length to avoid conflict of interest. The move is expected to increase the public’s confidence in auditor independence and quality going forward while at the same time also change the way things happen in the consulting business going forward.