Industry

Large listed companies prefer ‘Big Four’ auditor

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The ‘Big Four’ audit firms — Deloitte, EY, KPMG and Price Waterhouse — have continued their dominance in the Indian market even as new norms related to auditor rotation are set to come into effect next year.

The four entities together handled assignments from as many as 401 of the 1,519 companies — 26 per cent of the total — listed on the National Stock Exchange (NSE), as per an analysis by Prime Database. Their dominance was even stronger in the Nifty-500 universe where they handled 234 of the 500 audits or 47 per cent of the total, according to the study.

Mandatory change

According to the Companies Act 2013, companies have to compulsorily change their auditors after two terms of five years each. The new norms will come into effect from April 1, 2017. Simply put, if a company has had the same auditor for 10 years, then it will have to be changed in the subsequent year.

Interestingly, auditor rotation has already picked up momentum with as many as 178 NSE-listed companies changing their auditors in 2015-16 and a further in 152 companies doing so thus far in 2016-17.

The coming years would see several more companies rotating their auditors to comply with the regulations. According to Prime Database, tenures of auditors in 94 companies will expire in 2017-18 followed by those whose tenure with 168 companies ends in 2018-19.

Among the ‘Big Four’, Deloitte leads the pack with 158 companies, followed by EY Group (114), KPMG Group (66) and Price Waterhouse Group (65).

Overall, 830 audit firms provided their services for 1,519 NSE-listed companies in 2015-16, while the top 10 audit firms accounted for 549, or 36 per cent of the total.

The list of top 10 audit firms in terms of number of companies audited include entities like Walker Chandiok & Co LLP, Haribhakti & Co, Lodha & Co, S. S. Kothari Mehta & Co, Brahmayya & Co and Chaturvedi & Shah.

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