analysis: as more u.s. audit work moves to india, concerns arise - smart board in india

by:ITATOUCH     2020-03-30
analysis: as more u.s. audit work moves to india, concerns arise  -  smart board in india
New York/Mumbai (Reuters)-Auditing of U. S.
The company's financial books are an important foundation for investor confidence and are increasingly dependent on India's work. India does not have a clear supervision system. U. S.
Audit Regulators do not conduct regular physical inspections of offshore centres in India. S.
Accounting officials in India and employees of large audit firms told Reuters that the audit was in progress. The U. S.
Weapons of the four major audit firms
Deloitte Tohmatsu Limited, KPMG, pricewaterhousec and Ernst & Young Global Limited-
He said that the work handled by Indian employees was routine and systematically sent back to the United States for review.
But some audit companies are layering the more complex tasks of offshore centers, and Indian workers are rising to senior positions in the audit department, said employees of the four major companies in the Indian accounting industry and others.
Given the failure of the United StatesS.
Auditors have performed so amazingly in recent accounting issues
For example, on February, Ann Yong was fined $2 million in past medical company audits.
Some experts say getting more Indian auditors working could lead to better audits.
However, there is growing concern that there is no coherent regulatory system to closely monitor India's work, measure its quality and act when problems arise.
Maybe up to 5% of AmericaS.
M said the audit is currently under way in India. G.
Professor of Accounting at Florida State University, research offshore outsourcing.
When these companies launched the offshore outsourcing pilot project about five years ago, the figure ranged from 1 to 2%.
"If it's done well, that's OK, but the risk is that the job will be outsourced, beyond the training, skills and experience of the people outsourced, "said Douglas Carmichael, former chief auditor of the board of accounting oversight of listed companies in the United States (PCAOB. S. watchdog group.
Audit is Laborintensive.
In the offshore center from Mumbai to Bangalore, throngs enter
Level worker review file pile and cross
Check the figures on the balance sheet.
In India, many Cainiao accountants think the annual salary is $10,000. their U. S.
The peers earned five times.
Attracted by wage savings and Indian mastery of English, the United StatesS.
Branches of the big four companies have opened offices or joint ventures in India and have hired thousands of local workers to complete a range of tasks, including tax, consulting and auditing.
James Doty, chairman of PCAOB, said that offshore outsourcing helps large enterprises to improve efficiency.
He added: "We must be vigilant when efficiency becomes an enemy of quality.
"These companies say their offshore audit work meets the same quality standards as in the US.
A PwC executive said about 4% of the company's American employeesS.
The company's audit is conducted at an "alternative delivery center" located inside and outside the United States.
"The work carried out in these delivery centers is limited to specific standardized tasks that do not involve the auditor's judgment and are reviewed and supervised by the US governmentS.
Michael Gallagher, PwC's managing partner, said.
Dennis Nelly, PwC's global chairman, said PwC's goal is to send about 20% of its audit work to the delivery center.
Deloitte said auditors in India were "trained in line with the United States ". S.
Colleagues, their work is reviewed and supervised by professionals in the United States.
"The virus Thakker is Mumbai.
Partner at KPMG headquarters.
Its offshore center in India is responsible for auditing, taxation and consulting.
Offshore outsourcing has brought low returns to the company's overseas customers, he said.
"Reaching out to a large number of people who are really smart and talented will have to pay the price.
EY did not respond to requests for comment.
About a decade ago, the big four banks began outsourcing offshore to India, mainly preparing tax returns.
According to industry insiders, these companies now employ about 22,000 people in India for offshore business, mainly in tax and consulting business.
Until the beginning of 2011, Bill Gradison, a member of PCAOB, said that the audit company told him that they were slowly moving to offshore outsourcing, but some of the company's partners were worried about control.
"I have a feeling that there is some resistance within the company to some of them in the US," he said . ".
Communication is another problem.
"It is difficult to monitor remotely," said Carmichael, former chief auditor of PCAOB . ".
"You can look at the working papers, but look in the eyes of the other party and let them respond to spontaneous problems, which is where you really assess their abilities," he said . ".
Bruce Pode, professional program director at SmartPros, said having offices around the world rarely prevents the big four companies from moving more work to countries where they can do it cheaply, A company that provides education to accountants.
In the United States, PCAOB is responsible for corporate audits.
The board was founded ten years after the book was published.
Cooking scandals at Enron and some other big American companiesS. businesses.
By law, any company that audits or plays a major role in public audits in the United StatesS.
The company must register with PCAOB.
Hundreds of companies from more than 85 countries are registered.
In fact, this means that the PCAOB must establish working relationships with national audit regulators around the world, and it has established working relationships with at least a dozen countries, including the UK, Germany and Japan.
PCAOB is working hard to reach a cooperation agreement with China, where dozens of accounting scandals broke out in US-listed companiesS. exchanges.
PCAOB is banned from checking audit companies in China
The PCAOB is considering a solution to such a serious problem.
Registered Chinese audit firm
No country can ever host America again. S.
Audit work than India.
No audit failure is tracked to offshore work there, and the audit work done in India is usually sent back to the United States where the PCAOB can review.
However, there is no formal offshore outsourcing agreement with India, which makes it possible for the PCAOB to access the auditing company without restriction.
PCAOB's Indian counterpart, the Indian Institute of Chartered Accountants, has no supervision over the audit work of India's overseas centers in the United StatesS.
Book of the company
Greg Scates, deputy chief auditor at PCAOB, told Reuters: "In the offshore outsourcing sector in India, there is no standard to limit what you can do . ".
He added, "The key question here is whether the employees engaged in this work are properly trained and supervised?
He added: "PCAOB would be concerned if the company outsourced audit work involving high risk and judgement.
When the main part of the audit is conducted overseas, the PCAOB is considering having the auditor disclose it in the audit report.
Previously, the PCAOB inspector found many problems in overseas audits.
On April 2011, PCAOB imposed a $1 fine on an Indian subsidiary of PwC.
5 million audit of Satyam Computer Services, a software company.
In response to the PCAOB disclosure proposal, some audit companies requested exemption from disclosure in the case of Indian overseas workers supporting the United StatesS. -
The headquarters audit team that still controls the audit. Like other U. S.
Companies and auditing companies are not required by law to publicly disclose offshore recruitment.
The audit firm said they disclosed the offshore business in the letter of appointment
Basically signing contracts with customers
But these letters are private.
Anne Simpson, corporate governance director of the largest California Public Employee Retirement System in the United StatesS.
Public pension funds and major institutional investors said: "If companies are fully convinced that the decisions they make with respect to offshore outsourcing are sensible, it should be simply disclosed.
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