Major Korean Accounting Firms Prioritize Consulting Over Audits, Raising Independence Concerns: Could India Face the Same Risk?
Korea’s audit firms face scrutiny for favoring consulting, will India risk the same loss of auditor independence?
Major Korean Accounting
Major Korean Accounting
Major accounting firms in South Korea are being criticized for focusing more on consulting than on traditional auditing. Regulators there have warned that this growing dependence on non-audit services could threaten auditor independence and weaken public confidence in financial reporting.
South Korea’s Financial Supervisory Service recently reported that top accounting firms are earning a large portion of their revenue from consulting, tax, and digital advisory services. These high-margin businesses are expanding faster than audit practices, raising concerns that auditors may hesitate to question management decisions for fear of losing consulting contracts.
Big Changes in the Companies Act! Are You Updated? Click here
This debate is now finding echoes in India. The National Financial Reporting Authority (NFRA), India’s audit regulator, has been flagging similar issues. Recent inspection reports revealed serious lapses in major Indian audit firms, including violations of auditor independence rules and inadequate scrutiny of related-party transactions.
A report by the Economic Times - CFO section highlighted that NFRA found some firms offering non-audit services to their audit clients, which violates Section 144 of the Companies Act, 2013. In April 2025, Financial Express reported that NFRA found audit and independence gaps at SRBC & Co LLP, an EY network firm.
NFRA observed that the firm’s internal policies did not fully address risks linked to its global network. The regulator has also announced that it will target firms with large listed-company portfolios using data analytics to detect independence issues.
At the same time, the Indian government is promoting the “Build India’s Big Four” plan to develop large domestic audit and consultancy firms. As multidisciplinary firms grow, India must strengthen safeguards to separate auditing from consulting, similar to lessons emerging from Korea.
The challenge for India will be to build globally competitive firms while maintaining strict auditor independence ensuring growth does not come at the cost of public trust.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
