MUMBAI: Audit firms are turning to commerce graduates as they anticipate a demand of about 16,000 at the starting level in the next three years amid an expected pickup in business due to the rotation of auditors mandated by the Companies Act and the restriction on the number of chartered accountants that can be hired by a firm.
According to the new Companies Act, all companies will have to rotate auditors every 10 years, starting from April 2017. As a result, most of the bigger companies that have stuck to just one auditor for a long time may select one of the top players as their new auditor. Besides, there is a cap of 5% on the number of CAs that can be hired by a firm in a year. About 6,000 CAs join the workforce in the country annually, with the number representing just 8% of the 75,000 people who appear for the CA examinations each year. "India does not have as many CAs as required. So we are looking at commerce graduates, mainly focusing on students who have passed their CA inter (and failed in final)," says the head of accounting advisory services at one of the big four consultancies, requesting not to be named. The consultancy plans to hire about 3,000 people in the next three years, of which 70-80% will be commerce graduates, he said.
The starting salary will be Rs 30,000-60,000 per month, the person says, adding, "The demand is huge and we are going to tier 3 and tier 4 cities as the graduates from smaller cities tend to stick around with us for at least three to four years." In India, the domestic players have enjoyed an upper hand in auditing. According to a recent research by Prime Database, about 781 firms audited 1,437 companies.
Although the top 10 audit firms accounted for audit of as many as 524 companies, the big four — Deloitte, KPMG, EY and PwC — between them audited about 27% of the 1,437 firms. This is a much smaller share than in the developed markets, where the big four companies handle more than 70% of the top 500 listed companies.