ICAI: open audit industry under FTAs reciprocally implies the business opportunity for international and Indian auditors. The president of ICAI, Debashis Mithra, said the above statement at a gathering. The institute is checking the pros and cons of the recommendation. The Big four firms that operate in foreign countries are enjoying high revenue. EY India is concluding that the year 2023 statement will bring a revenue of billions of dollars. The revenue record of the Indian firms is far behind that of international firms. Global companies are dealing with big numbers. If there is an open market, the influence of money-making tactics will enter the Indian audit market. The exchange of auditing services will end up in profit generation and influence the international markets. This blog defines the terminologies and functions related to the open-audit market.
What is Free trade agreement?
In the year 2022, the government of India concluded the India-UAE CEPA trade agreement. By entering into Free trade agreements countries smoothen the functions of export, import, and trade. It defends intellectual property rights and investors. The government allow sellers and buyers with fewer trade restrictions. This option is to promote sales and marketing for certain types of products. The trade agreements are of three types. They are bilateral trade agreements, unilateral trade agreements, and multilateral trade agreements. The idea of trade agreements is to create new markets and plan the business strategically. The unilateral trade agreement loosens the restrictions for foreign products. In the export and import of products, if the other countries are not using the trade restrictions, it is not reciprocated. In such a situation, the participating country will liberate to be competitive in the global market. The bilateral trade agreement has two countries. Both countries will free up the restrictions to improve business opportunities. The multilateral trade agreement is the involvement of three or more countries. Here the negotiations are many. Each country has a needs and pricing system for the products. In such a case, the countries negotiate to improve the market competition. It is predicted that in some instances, the market competition ends with job losses. So, favouring the production and employment market is the focal point. For rapid economic growth, the favourable market is the mix of local production and imported products. From a financial viewpoint, it promotes domestic producers. It engages the natural resources. The FDI policy of India restricts the appointment of an auditor for a foreign company. The auditing conducted in the foreign subsidiary company is called the joint audit. Foreign companies make money only after meeting the Indian tax liability and standards. Free trade agreements promote foreign direct investments.
Influence of other countries in India:
WTO suggest India be independent on subsidies. The challenges in the domestic trade of India are complex processes, high transaction costs, infrastructure bottlenecks, and inadequate diversification in the export market. The government is promoting the export market of high-value goods. The products that fall under high-value are pharmaceuticals, drugs, agriculture, textiles, chemicals, electronics and engineering goods. In global trade, India is contributing a percentage of thirty. Some products offer direct growth, whereas other channels offer indirect development to the economy. The direct channels that contribute are the reduction in the cost of capital, domestic savings, technical advancement and growth of the financial sector. Technology and finance contribute directly to economic growth. The indirect factors that contribute to economic growth are risk management, specialization, and increased production.
The economic and financial policies of the country are divided based on open and closed operations. Open financial policies intrigue countries that value transparency. Some countries believe in a closed-financial policy. It enhances security. Financial globalisation ends up with a crisis in the currency market and increases capital circulation. Trade openness has a positive side. It improves sales and production. Financial openness has positive and negative sides. It ends with growth and risk. So, it is essential to think about the risk factor. In the global market, the risk of the product or service goes to the global market. The income increases and brings changes in the currency and economic factors. So, risk management is the indirect channel. And it is the most important element of globalisation.
What is the difference between AS and IFRS?
IFRS is suitable for companies operating in foreign countries. Indian AS is designed especially for Indian companies. IFRS is modified as per the operations of Indian companies. The Indian version of IFRS is called Indian AS. The difference in the format are as follows:
• IFRS consist of the statement of financial position, changes in equity, profit and loss statement, and cash flow for the given period. The Indian AS measure the financial position with the balance sheet, profit and loss, cash flow statement, statement of changes with equity, notes from financial statements, and disclosures.
• IFRS is followed in 144 countries. Indian AS is exclusively for India.
• The IFRS standard insists companies prepare the balance sheet with discrimination of current and non-current operations. Indian AS demands the companies follow the format described for the balance sheet. The guidelines remain the same for one year with minimum periodical changes.
Advantages and disadvantages of open auditing service:
Open auditing services help professionals to understand the difference between the Indian accounting system and the foreign accounting system. Domestic and international knowledge helps individuals render service in different types of accounting systems. The plus and minus of the open auditing services affect the employees, employers, profits, and tax payments. Let us shed light on the topic with an understanding of employment opportunities, maximisation of profit and tax planning. The advantages and disadvantages of open audit services are listed below:
The advantages are as follows:
• Open audit services improve employment opportunities.
• Open audit services increase the demand for Indian professionals.
• Open audit services make other countries realise the value of Indian accounting standards.
The advantages are as follows:
• The risk of creating fewer employment opportunities.
• The risk of facing loss due to changing domestic and international laws.
Final words:
The question that comes to mind after listening to the advantages of open audit service is “Is the auditing service changing as a BPO service?” The answer is selling products and services in the global market brings growth. In a developing country like India, it resolves unemployment and enhances foreign income. Open audit service is a good idea suggested by the president of ICAI. It takes time for professionals and a competitive market to impress the global environment.
