ICAI: Open audit industry under FTAs reciprocally
Dec 3, 2022
India should open up its market to foreign audit firms under free trade agreements (FTAs) only on a reciprocal basis, said Debashis Mitra, president of the accounting rule-maker Institute of Chartered Accountants of India (ICAI)
ICAI’s committee on international trade will meet shortly to set out its position on FTAs relating to the audit sector, following which its governing council will deliberate the matter on 15 December. “After the deliberations in the council, we shall submit our recommendations to the government," Mitra said.
Without going into the details of the recommendations ICAI will make on FTAs, Mitra said that as a professional body, it has stood for greater opportunities for professionals.
“We have always said it should be reciprocal. If people from outside come, our professionals should also be allowed to go and practice there. That is what we have always maintained. It cannot be one-way. They must give us visas. In Europe, if you have to practice, visas should be given to our practitioners. Our qualifications should be recognized that much more," said Mitra.
India signed an early harvest deal with Australia in June, called the Economic Cooperation and Trade Agreement, which includes a section on the movement of natural persons across borders covering accounting and book-keeping services, but it specifically excludes statutory audit.
The deal takes effect on 29 December. ICAI’s views on the issue of opening up the statutory audit market come amid talks between India and Australia for a larger deal.
India is also in talks with the UK and the European Union for free trade deals and is set to start negotiations with the Gulf Cooperation Council. Movement of personnel is one of the modes of services trade covered under these deals.
Referring to the trade deal with Australia, commerce minister Piyush Goyal said on 22 November that for the first time, India has got visas for Indian chefs and yoga instructors and has also got a commitment that every student who goes from India to study in Australia will get an opportunity to work there, depending on the level of education.
According to Arpita Mukherjee, professor at the Indian Council for Research on International Economic Relations (ICRIER), for the movement of people under trade deals to become a success, a lot depends on the professional bodies of the countries signing the agreement.
“So much depends on the professional bodies of the two countries signing the trade deal or a mutual recognition agreement (MRA). Legal systems differ. For instance, India is more influenced by the British legal system, but other countries are different. So, a trade agreement’s role is very limited. It only facilitates and keeps a provision for it to happen," said Mukherjee.
She said India had not seen success in the movement of chartered accountants under trade deals. “We sign MRAs for a lot of professions. But we have only found success in medical and nursing professionals," Mukherjee said.
ICAI is willing to accept foreign audit firms subject to reciprocity as foreign professionals and audit firms may be interested only in offering services to the Indian arms of their global clients. “Their clientele is different from that of small and medium practitioners in India. Suppose the foreign audit firm is auditing a company in New York, and the company sets up a subsidiary in India. For that subsidiary in India, they may prefer the same audit firm which has audited the parent," said Mitra.