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Audit work that accounting firms in the United States outsource to centres in India
is not routinely inspected by American regulators, according to Indian accounting
officials and employees of large audit firms.
Almost 5 percent of U.S. audit work is now carried out in India, an American ac-
counting professor told Reuters. That figure is up from 1 to 2 percent five years ago.
Douglas Carmichael, former chief auditor of the Public Company Account-
ing Oversight Board , told Reuters that "the risks are that the work will be
offshored that is beyond the training, skills and experience of the people that it
is offshored to."
The lower wages in India -- where a junior accountant can earn less than a fifth
of the salary of a United States counterpart -- have prompted the U.S. arms of the
Big Four to open centres across India. In total, Deloitte, Ernst & Young, KPMG and
PricewaterhouseCoopers now employ 22,000 workers there. Three of the firms
replied to Reuters' requests for comment, stating that work done in India is routine
and reviewed to meet the same standards as work done in the U.S.
An executive from PwC, which has transferred 4 percent of its audit work
to "alternate delivery centers" outside the U. S., said the work done offshore is
"limited to standardized tasks, none of which involves auditor judgment."
Although work done in India is sent back to the U.S. where the PCAOB can re-
view it, there is no formal agreement that allows the board to inspect audit firms
in India. In addition, the Institute of Chartered Accountants of India has no way of
regulating centres carrying out U.S. work.
World Bank says 600 million
new jobs needed by 2020
A study by the World Bank states that the global
economy needs to produce at least 600 million
new jobs by 2020 to absorb a surging workforce
and keep current employment levels constant,
particularly in Asia and sub-Saharan Africa. The
report, 2013 World Development Report, stated
that the private sector is the main engine of job
creation and urged governments to implement
policies that encourage businesses to hire more
India, Australia to increase
trade under new pact
India and Australia have agreed to double bilat-
eral trade to US$40 billion by 2015 under a new
agreement signed last month. While New Delhi
is reforming its aviation, energy and retail indus-
tries, Australia has changed its position on ban-
ning the sale of uranium to India -- changes that
will allow greater economic cooperation. Current
two-way trade has increased by 13 percent an-
nually in the past five years and stands at US$21
Japan cabinet to draw up
fresh stimulus plans
Yoshihiko Noda, the Japanese prime minister, has
ordered his cabinet to draw up a stimulus pack-
age by the end of this month in a bid to boost Ja-
pan's subdued economy. Hurt by falling demand
for exports and low domestic consumption,
Japan's economy grew by just 0.3 percent in the
second quarter of this year. No details of the size
of the package have been revealed.
Models sue agencies for
Fashion models are suing several agencies in
the United States claiming that they have lost up
to US$20 million due to fraudulent accounting
methods. The class-action lawsuit accuses the
modelling agencies of hiding funds and not pro-
viding accurate financial statements. Companies
being sued include Wilhelmina Models, Ford
Models, Trump Model Management and Elite
Models Management, advertising agencies Saat-
chi & Saatchi and Leo Burnett, and the cosmetics
giants Revlon and Maybelline.
New combined CPA designation to be
rolled out in Canada from 1 January
The Canadian Institute of Chartered Accountants and CMA Canada have
announced they will jointly oversee a new Chartered Professional Accountant
The two accounting organizations said they will launch a new combined
oversight body for the new designation on 1 January 2013, as part of a larger plan
to merge CAs and CMAs across Canada and create a new CPA designation that
would streamline regulation.
The new body will create a certification programme for new CPAs and hold the
first examinations in 2015.
Accounting is regulated on a provincial level in Canada and accounting
organizations in each province must agree to merge and create the new CPA
designation before it can actually be adopted. When the new CPA is launched,
the CICA and CMA Canada will also continue their separate operations until all
member provinces have merged.
CAs and CMAs have agreed to merger talks in seven of Canada's 10 provinces.
Provincial bodies of Canada's third main accounting body -- the Certified General
Accountants Association -- have opted out of the merger plan.
Concerns mount over U.S.
audit work done in India
Ex-PCAOB official criticizes oversight
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