McA Presents Proposal to PMO to Establish Domestic Audit Ecosystem, Government Likely to Amend Three Laws This Year

Government to Amend Key Acts to Facilitate Multidisciplinary Audit and Consulting Firms

The government is expected to amend the Chartered Accountants Act, Cost and Works Accountants Act, and Company Secretaries Act this year to enable the formation of multidisciplinary audit and consulting firms. This move is aimed at creating large domestic players capable of competing with global Big Four firms, such as PwC, EY, and BDO.

Key Proposal

The proposed amendments will allow integrated service offerings across accounting, cost auditing, and company secretary functions, which are currently restricted under separate regulatory frameworks. This change is expected to facilitate the growth of domestic firms and reduce concentration in the audit and consulting market.

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Rationale

The government's push for multidisciplinary firms is driven by concerns around data sensitivity and the outflow of high-value advisory work to global networks. Developing a domestic ecosystem of consulting and auditing firms is a priority area, and the Ministry of Corporate Affairs made a presentation on this topic at a meeting chaired by Principal Secretary to the Prime Minister Shaktikanta Das.

Market Implications

The proposed amendments are expected to be accompanied by broader policy measures to support domestic firms, including easing regulatory constraints, encouraging consolidation, and expanding opportunities through government and public sector mandates. The move aims to strengthen India's professional services ecosystem and create credible alternatives to global networks.

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Regulatory Context

The National Financial Reporting Authority (NFRA) has flagged deficiencies in audit quality at firms affiliated with global networks, including inadequate documentation of audit procedures and weaknesses in internal quality control systems. The regulator has called for stronger safeguards, including tighter monitoring of independence norms and improved governance frameworks.