ICAI Focusing on top 4 affiliates’ relationships with global Businesses

The Big Four affiliate firms, key players in auditing, are embroiled in a protracted legal battle with the Institute of Chartered Accountants of India (ICAI) over their ties to global entities, resource sharing, control, and referral fees. The conflict stems from the institute’s disciplinary committee instructing EY affiliates to sever ties with multinational entities (EY Global), citing violations of the Chartered Accountants Act of 1949.

Additionally, the committee mandated the removal of two retired partners from the affiliate firms and imposed a ₹5,00,000 fine on each, with a 90-day compliance deadline. The affected EY affiliates include SV Ghatalia & Associates, SR Batliboi & Associates LLP, SRBC & Co. LLP, and SR Batliboi & Co. LLP.

The institute’s publication of the order on its website on Thursday stirred controversy within the auditing community.

Foreseeing a similar outcome, partners of PwC affiliates secured a stay order from the Telangana and Punjab & Haryana High Court against ICAI’s disciplinary actions, while BSR & Co. (a KPMG affiliate) partners obtained a similar order from the Punjab and Haryana High Court last week. Deloitte’s partners had previously obtained a stay order from the Delhi High Court against disciplinary proceedings.

The spokesperson for the EY affiliate firm, SRBC & Co. LLP, stated their intention to address the issues raised in the order and explore legal options, including the appeals process. However, the absence of an appellate tribunal designated to hear appeals poses a challenge.