India may be blocking the Big Four (KPMG, Deloitte, Ernst & Young and PwC) from rendering audit services to clients in that country because of several major scandals involving entities for which they are the external auditors. These include political influence used by the Gupta family in South Africa to, among others, win lucrative contracts estimated at US$4.4 billion with the country’s rail and port company; allegations of misappropriation of more than US$4 billion involving a former Malaysian Prime Minister relating to the defunct State Development Fund 1MDB using mainly shell companies and layered transactions; Carrilion, one of the largest construction companies in the UK suddenly becoming bankrupt without prior warning signals from the auditors; and ‘gross failure in corporate governance, several conflicts of interest and even undue personal enrichment of some key personnel’ involving the Mumbai-based Infrastructure Leasing & Financial Services (IL&FS) resulting in the company defaulting in loan repayment. (https://www. moneylife.in/article/ilfs-scandal-sfio-uncovers-grave-irregularities-on-corporate-governance-and-financial-parameters-says-report/55831.html)
In the UK, for a second year in a row, all the major auditing firms failed to meet the quality requirements set by the Financial Reporting Council (FRC), including the Big Four, Grant Thornton, BDO and Mazars. They did not achieve the 90 percent target for the audits to be considered good or required limited improvement. According to the FRC, only 75 percent of the sample of audits of UK’s 350 top listed companies met the target overall, ‘as accountants failed to challenge information clients gave to them’ (https://uk.reuters.com/article/uk-britain-accounts-regulator/uk-watchdog-says-all-top-accountants-fail-audit-quality-test-idUKKCN1U42QN)
