With over 600 companies changing auditors by financial year 2029, the country’s largest audit firms are beefing up their teams with data scientists, artificial intelligence (AI)/cyber experts and fraud specialists. They are nudged by the demand from businesses that have become increasingly digital, automated and data-heavy, with their boards looking beyond the traditional audit bench.
So, this wider mix of skills in the team could now decide who gets the mandate.
India's top audit firms—Deloitte Haskins & Sells, S.R. Batliboi & Co. (the audit network firm for EY Global) , Price Waterhouse LLP, BSR & Co (assurance firm of KPMG), MSKA & Associates LLP (a member firm of BDO International) have stacked such specialists. Winning a mandate now means proving the team can spot bot-driven reconciliations, flag who holds "superuser" access to a client's data and confirm management knows its own risks.
With more work done remotely and data volumes surging, tech expertise is no longer a bonus; it's the price of entry. As India Inc heads into its biggest audit rotation in a decade, this new bench strength could decide who wins the mandate.
“Broadly, 70-75% of an audit team continues to comprise chartered accountants (CAs), with the remaining team bringing specialized capabilities across technology, data, cyber, industry and other areas of expertise,” said Samir Shah, audit leader at Deloitte Haskins & Sells LLP.
The top audit firms typically have a team strength of 3,000-5,000 each. According to senior auditors in the firms mentioned above, more than 95% of the teams comprised CAs just about a decade ago.
The teams now include data scientists and analytics professionals who analyze large datasets and identify anomalies and risks; cybersecurity specialists who evaluate cyber controls and organizational resilience; and IT auditors and enterprise resource planning (ERP) experts, who assess automated controls and broader technology risks.
These more well-rounded teams have eyed mandates of 600 companies, who have changed or will go in for an auditor change between FY26 to FY29 as per the Companies Act regulations, setting in motion a once-in-a-decade churn that will transform India’s audit market.
Deloitte points out that this time around, the auditors will have to prepare for developments such as implementation of Ind AS 118 disclosure standards, environmental, social and governance (ESG) sustainability reporting requirements, enhanced disclosure expectations and industry-specific regulatory developments. Controls around unpublished price sensitive information (UPSI), along with labour and wage code compliance requirements, also require greater management attention and assurance.
Importantly, the auditors must now be aware of the impact of AI, which can throw up plausible but inaccurate company details. There “is an explosion of AI and automation in finance itself, with teams using Microsoft Copilot in Excel, ChatGPT for reconciliations and robotic process automation (RPA) bots to perform journal postings and bank reconciliations. We need to audit the bot identity as if it were a user,” said Vishal Divadkar, managing partner and head of audit and assurance MSKA & Associates LLP, a member firm of BDO International.
The expertise ask is getting niche. For instance, for the upcoming mandates, audit firms will need specialists who can trace “superusers”—individuals with elevated or privileged access to critical systems. And these experts may have to figure out when was the access used, whether it was justified, time-bound, monitored and independently reviewed.
The managing partner noted that the composition of audit teams has “completely changed in the past decade or so, and it isn’t just the conventional CA partner, senior, manager or only financial audit anymore”. The new teams are “multidisciplinary” to include technology experts, forensic/fraud specialists for whistleblower/super abuse cases, domain experts to address the remote working/ voluminous data/regulatory reporting requirements.
Experts are recruited from their respective industries, and in some cases even trained internally to pick up the new specialization. A senior auditor in one of the five firms mentioned above said he had to learn with the AI team to make simulations to convince clients and had various models for the same. Diverse teams lead to accepting more complex and large audits, which in turn could lead to the ability to command higher fees.
Clients are picky
Audit firms need to put their most diverse and capable auditing foot forward as India Inc is getting choosy about who can scrutinize them.
“Over the past few years, large companies across sectors have faced significant disruption and transformation, driven by geopolitical developments, geographic expansion, increasingly complex regulatory requirements and, most notably, the rise of big data and AI,” said Arvind Sethi, national leader, S.R. Batliboi & Co. (the audit network firm for EY Global). “As a result, they are increasingly assessing auditors' capabilities to keep pace with technological advancements, using AI effectively in audits and providing confidence to stakeholders.” The firm's team strength is over 5,000.
Auditors need to convince clients that they are equipped to look into businesses that have now gone digital, global and more complex. “In a digital business, the audit trail begins before the first number reaches the ledger. Trust in the numbers now depends on trust in the systems, access rights and data that create them,” said Abhishek Rara, partner at Price Waterhouse LLP. “The auditor must understand not only the financial transaction, but also the technology, data flows and control environment behind it. That calls for an integrated approach across financial audit, IT, data, cybersecurity and other specialist teams”.
Apart from these new-era factors, the selection process, of course, involves deeper reviews on audit quality. “We are seeing a shift in how companies assess and select audit firms. Audit quality indicators are receiving greater focus, and boards are increasingly taking into account the outcomes of regulatory inspections, including observations from bodies such as National Financial Reporting Authority (NFRA), as part of their overall evaluation process,” said Sudhir Soni, head of audit at BSR & Co LLP.