Inside the secret world of auditing: Business Todaytakes a peek into the inscrutable Indian operations of the global Big Four. Do they deserve the flak they've come in for in the wake of the Satyam fraud? Yes and no. Suman Layak & Puja Mehra go into the details

6.Local firms can leave one umbrella and enter a rival oneTo be sure, it didn't need a fraud in India to provide an opportunity to take the accountants to the cleaners. Every accounting fraud and there are plenty of them globally is greeted with ridicule being heaped on this fraternity. And it's not just restricted to the Big Four. The US arm of BDO International, the world's #5 accounting firm (which in India has an -affiliation with Haribhakti & Co.), has to pony up damages of $521 million awarded against it for a negligent audit. A month ago, three of the Big Four PwC, KPMG and EY were dragged into Bernard Madoff's alleged $50-billion fraud they were all auditors of the feeder funds that channelled money into the accounts of Madoff's New York brokerage. And let's not forget Deloitte, which as the external auditor to GM in the US, was dragged into an accounting fraud allegedly perpetrated by the automobile giant. Deloitte stood accused of falsely certifying GM's accounts the Detroit major had apparently accelerated the booking of income between 2002 and 2006. The Indian rules, revised in the mid-1980S with an eye on the world Trade Organisation (WTO) negotiations on opening up of services, do not permit the Big Four or any multinational audit or accounting firm to be registered in India as auditors. So two of them EY and KPMG are actually registered in India as management consultants; PwC registered two firms as Price Waterhouse (PW) and Price Waterhouse & Co. back in the pre-Independence era and Deloitte had registered one firm under the name Deloitte Haskins & Sells in 1978 before these rules came into force. That may explain why the audit business of the Big Four is smaller than the rest of their operations advisory, corporate finance and tax. Audit (assurance in accounting jargon) is conducted by local audit firms who are part of the respective networks of the Big Four (for example, S.R. Batliboi does it for EY, A.F. Ferguson and C.C. Choksi for Deloitte, BSR for KPMG and PW and Lovelock & Lewes for PwC). The chartered accountants and audit firms in India are regulated by the Institute of Chartered Accountants of India (ICAI) and, therefore, the Big Four must have as local members firms registered in the name of local chartered accountants. All the audit work is handled by the local firm, which supposedly follows global standards. The global brand is still not allowed to be used in the audit business. The ICAI, for its part, sees the MNCs' entry into