In recent years, companies in India have seen a wave of problems related to audit service performed by companies in the Big 4.
Concerns have arisen from audits being conducted by Deloitte, KPMG and PwC with companies in India operating in the world of shadow banking.
An affiliate of Deloitte and KPMG (BSR) is facing potential criminal charges and a 5 year ban after a major finance group (ILFS) nearly collapsed. Indian prosecutors are leveling heavy accusations that they were ‘complicit in conducting the fraud’.
PwC was banned from auditing for two years when it failed to identify a $1.7B fraud at Satyam Computer Services.
In a surprising move, PwC resigned from an audit engagement with Reliance Capital claiming that they were abiding by Indian regulations which requires them to report suspicions of fraud, but Reliance came out strong against the accusations by releasing a public statement claiming these allegations were ‘baseless’ and ‘unjustified’.
Obviously…things aren’t going so well.
What does this information tell us?
That this is why audit service seems to be almost continuously under fire for failing to live up to expectations.
What can be done to improve?
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To start, we could build a case with an irrefutable amount of evidence to support our findings. If you’ve identified fraud, collect all the evidence you need to prove it without a shadow of a doubt.
How do we do this?
Automation. It’s becoming more difficult for accounting firms to perform audit because the amount of data is multiplying. Audit teams are outmatched and can’t keep up, but automation can help. You need to train your team on how to use automation tools to increase their leverage.
Since it seems that simply hiring more accountants clearly isn’t getting the job done.