Small NBFCs: plea for audit

For the annual audit of NBFCs, the SECP is following State Bank of Pakistan's circulars to commercial banks. These commercial banks have paid-up capital of Rs 3000 million plus. But SECP uses SBP circulars for engaging auditors and instructs all small and large NBFCs to use "Category-A" auditors only.
These audit firms are 13(thirteen) in number only, and SECP even knows that some of the NBFC's are so small, that their paid-up capital ranges between Rs 30 million to Rs 100 million.
However, per the SECP circulars, even small NBFCs have to use the services of these large audit firms of "Category-A", who are heavily booked, and if they do accept the assignments from small NBFCs, their fee is usually too high, but small NBFCs have to engage these large firms of auditors per the SECP directive, while it is worth mentioning that SBP does notify category "B" and "C" auditors who are thoroughly screened by SBP and are equally qualified and licensed by ICAP to perform equally acceptable job, like "Category-A" auditors.
It may be added here that SECP directing small NBFCs to induct large audit firms leads one to believe that the entire financial sector of the country is placed in the hands of 13 large audit firms, and this lets them to charge similar fees from small NBFCs as they do in the case of larger banks, while the resultant benefits to all stakeholders for engaging "Category-A" instead of Categories "B" and "C" are identical.
Thus competent authorities should let "B" and "C" categories of auditors to also undertake audit assignments small NBFCs on the basis of paid-up capital. For example, NBFCs with Rs 100 million or less may be allowed to even engage "Category-C" auditors, while those having paid-up capital of more than Rs 100 million to Rs 300 million, should use atleast "Category-B" audit firms, but NBFCs with paid-up capital of Rs 300 million and above, must engage "Category-A" auditors only.
Following this, NBFCs with small paid-up capital shall have wider and economical options of engaging audit firms providing quality audit meeting all stakeholders' requirements. This modality shall not only help NBFCs but audit firms of category "B" & "C" shall also have sense of participation in audit of all sub-sectors of the banking, finance and allied sectors.