I don’t know why Sir Mike Rake (KPMGs lame duck CEO) thinks it’s a good idea to have a crack at restrictive practices in India. In the FT (sorry – paywall), reporters Sundeep Tucker and Barney Jopson say that in India:
Firms can service no more than 30 statutory audit clients per partner and local firms cannot join a “big four†international network unless the bosses of that network agree not to have any other office in the country.
Also, the number of partners a firm in India can employ is limited to 20 while the number of students larger firms can recruit each year is limited to a ratio of two per partner. India has 130,000 chartered accountants, fewer than in the UK, and the profession is dominated by smaller firms and sole practitioners.
I don’t have a problem with this. There is no proven correlation between firm size and service quality. I enjoyed my time in a small firm. Client intimacy, the need for constant re-invention, trying to keep pace with technology and legislation. It was a rewarding and varied life. Some of the best firms I know are 10 partner affairs. One of the best tax practices I know has three partners. I can see a lot of sense in creating a thriving, competitive market for audit services. Sometimes, that means regulation to ensure the little guy gets a fair crack of the whip.
I suspect Mike is once again banging the Big Four non-choice quality drum. On this occasion, he’s up against something even he can’t influence – a government prepared to plough its own furrow. Which is more than can be said of outgoing Chancellor Gordon Brown’s swan song.
Speaking of which – Richard has done a great job working out the Budget realities, almost as quickly as Sky BBC commentators. What he didn’t pick up is the continuance of a system that is reckoned to be second only to India for its complexity. Brown could have taken a serious step forward in that regard and made everyone happy. Except of course the aggressive tax planners.
